Document:

SECURITIES
        PURCHASE AGREEMENT

       

      SECURITIES
        PURCHASE AGREEMENT (this
        “Agreement”),
        dated
        as of May __, 2007, is by and between VeruTEK Technologies, Inc., a Nevada
        corporation (the “Company”),
        each
        purchaser listed on Exhibit
        A
        attached
        hereto (individually, a “Purchaser”
and,
        collectively, the “Purchasers”),
        and
        Nite Capital Master, LTD, in its capacity collateral agent for the benefit
        of
        the Purchasers (the “Collateral
        Agent”).

       

      WHEREAS:

       

      A. Each
        Purchaser wishes to purchase, and the Company wishes to sell, upon the terms
        and
        subject to the conditions stated in this Agreement, (i) a 6% Secured Convertible
        Note in the form attached hereto as Exhibit
        B
        (a
“Note”
and,
        collectively, the “Notes”),
        and
        (ii) a warrant in the form attached hereto as Exhibit
        C
        (a
“Warrant”
and,
        collectively, the “Warrants”).
        The
        Notes will be convertible under certain conditions into shares of the Company’s
        common stock, par value $0.001 per share (the “Common
        Stock”).
        The
        Warrant issued to a Purchaser will entitle the holder thereof to purchase
        a
        number of shares of Common Stock equal to 50% of the number of shares of
        Common
        Stock which the Note purchased by such Purchaser is convertible
        into.

       

      B. The
        shares of Common Stock into which the Notes are convertible are referred
        to
        herein as the “Conversion
        Shares”
and
        the
        shares of Common Stock into which the Warrants are exercisable are referred
        to
        herein as the “Warrant
        Shares.”
The
        Notes, the Conversion Shares, the Warrants and the Warrant Shares are
        collectively referred to herein as the “Securities.”

       

      C. The
        Company has agreed to effect the registration of the Conversion Shares and
        the
        Warrant Shares under the Securities Act (as defined below) pursuant to a
        Registration Rights Agreement in the form attached hereto as Exhibit
        D
        (the
“Registration
        Rights Agreement”).

       

      D. The
        sale
        of the Securities to the Purchasers will be effected in reliance upon the
        exemption from securities registration afforded by Section 4(2) of the Exchange
        Act (as defined below) and Rule 506 of Regulation D (“Regulation
        D”)
        as
        promulgated by the Securities and Exchange Commission (the “Commission”)
        under
        the Securities Act.

       

      E. The
        Notes
        will rank junior to the Permitted Senior Debt (as defined below) and will
        be
        secured by a perfected security interest in all of the assets of the Company
        pursuant to the terms of a Security Agreement in the form attached hereto
        as
Exhibit
        E
        (the
“Security
        Agreement”).
        

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      F. Upon
        execution and delivery of this Agreement, each Purchaser will wire its purchase
        price to an escrow account set forth in this Agreement and it is a condition
        precedent to the consummation of the purchase and sale of the Notes and Warrants
        and the other transactions contemplated by this Agreement and the other
        Transaction Documents (as defined below) that, contemporaneously with the
        Closing (as defined below), the Company shall have merged with and into
        Streamscape Minerals, Inc., which is a publicly traded company (the
“Acquisition”).

       

      NOW,
        THEREFORE, in consideration of the mutual promises made herein and other
        good
        and valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, the Company and each Purchaser hereby agree as
        follows:

       

      1. PURCHASE
        AND SALE OF NOTES AND WARRANTS; DEFINITIONS.

       

      1.1 Purchase
        and Sale of Notes and Warrants.
        Upon
        the terms and subject to the satisfaction or waiver of the conditions set
        forth
        herein, the Company agrees to sell, and each Purchaser agrees to purchase,
        (i) a
        Note with a principal amount equal to the amount set forth opposite such
        Purchaser’s name on Exhibit
        A
        hereto
        and (ii) a Warrant. The purchase price for the Note and the Warrant being
        purchased by a Purchaser (the “Purchase
        Price”)
        shall
        be equal to the principal amount of such Note. The date on which the closing
        of
        the purchase and sale of the Notes and Warrants occurs (the “Closing”)
        is
        hereinafter referred to as the “Closing
        Date.”
The
        Closing will be deemed to occur when (A) this Agreement and the other
        Transaction Documents (as defined below) have been executed and delivered
        by the
        Company and each Purchaser (which delivery may be effected by facsimile
        transmission), (B) each of the conditions to the Closing described in
Sections
        6
        and
7
        hereof
        has been satisfied or waived as specified therein and (C) full payment of
        each
        Purchaser’s Purchase Price has been made by wire transfer of immediately
        available funds in accordance with Section
        11.

       

      1.2 Certain
        Definitions.
        When
        used herein, the following terms shall have the respective meanings
        indicated:

       

      “Affiliate”
means,
        as to any Person (the “subject Person”), any other Person (i) that directly or
        indirectly through one or more intermediaries controls or is controlled by,
        or
        is under direct or indirect common control with, the subject Person, (ii)
        that
        directly or indirectly beneficially owns or holds ten percent (10%) or more
        of
        any class of voting equity of the subject Person, or (iii) ten percent (10%)
        or
        more of the voting equity of which is directly or indirectly beneficially
        owned
        or held by the subject Person. For the purposes of this definition, “control”
when used with respect to any Person means the power to direct the management
        and policies of such Person, directly or indirectly, whether through the
        ownership of voting securities, through representation on such Person’s board of
        directors or other management committee or group, by contract or
        otherwise.

       

      “Approved
        Stock Plan”
means
        any employee benefit plan which has been approved or will be by the Board
        of
        Directors of the Company (including a majority of the independent members
        of the
        Board), pursuant to which the Company’s securities may be issued to any
        employee, officer, director or consultant for services provided to the
        Company.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      “Business
        Day”
means
        any day other than a Saturday, a Sunday or a day on which the New York Stock
        Exchange is closed or on which banks are authorized by law to close in New
        York,
        New York.

       

      “Collateral”
has
        the
        meaning set forth in the Security Agreement. 

       

      “Common
        Stock Equivalent”
means,
        collectively, Options and Convertible Securities.

       

      “Contingent
        Obligation”
means,
        as to any Person, any direct or indirect liability, contingent or otherwise,
        of
        that Person with respect to any indebtedness, lease, dividend or other
        obligation of another Person if the primary purpose or intent of the Person
        incurring such liability, or the primary effect thereof, is to provide assurance
        to the obligee of such liability that such liability will be paid or discharged,
        or that any agreements relating thereto will be complied with, or that the
        holders of such liability will be protected (in whole or in part) against
        loss
        with respect thereto.

       

      “Convertible
        Securities”
means
        any (i) stock or securities (other than Options) of the Company convertible
        into
        or exercisable or exchangeable for Common Stock and/or (ii) any Debt but
        only if
        such Debt is issued in connection with the immediately preceding clause (i).
        .

       

      “Conversion
        Price”
has
        the
        meaning set forth in the Notes.

       

      “Debt”
means,
        as to any Person at any time: (i) all indebtedness for borrowed money, (ii)
        all
        obligations issued, undertaken or assumed as the deferred purchase price
        of
        property or services (other than trade payables entered into in the ordinary
        course of business), (iii) all reimbursement or payment obligations with
        respect
        to letters of credit, surety bonds and other similar instruments, (iv) all
        obligations evidenced by notes, bonds, debentures or similar instruments,
        including obligations so evidenced incurred in connection with the acquisition
        of property, assets or businesses, (v) all indebtedness created or arising
        under
        any conditional sale or other title retention agreement, or incurred as
        financing, in either case with respect to any property or assets acquired
        with
        the proceeds of such indebtedness (even though the rights and remedies of
        the
        seller or bank under such agreement in the event of default are limited to
        repossession or sale of such property), (vi) all monetary obligations under
        any
        leasing or similar arrangement which, in connection with generally accepted
        accounting principles, consistently applied for the periods covered thereby,
        is
        classified as a capital lease, (vii) all indebtedness referred to in clauses
        (i)
        through (vi) above secured by (or for which the holder of such Debt has an
        existing right, contingent or otherwise, to be secured by) any mortgage,
        lien,
        pledge, charge, security interest or other encumbrance upon or in any property
        or assets (including accounts and contract rights) owned by any Person, even
        though the Person which owns such assets or property has not assumed or become
        liable for the payment of such indebtedness, and (viii) all Contingent
        Obligations in respect of indebtedness or obligations of others of the kinds
        referred to in clauses (i) through (vii) above.

       

      “EDGAR”
means
        the Commission’s Electronic Data Gathering, Analysis, and Retrieval
        system.

       

      “Effective
        Date”
has
        the
        meaning set forth in the Registration Rights Agreement.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      “Environmental
        Law”
means
        all federal, state, local or foreign laws relating to pollution or protection
        of
        human health or the environment (including, without limitation, ambient air,
        surface water, groundwater, land surface or subsurface strata), including,
        without limitation, laws relating to emissions, discharges, releases or
        threatened releases of chemicals, pollutants, contaminants, or toxic or
        hazardous substances or wastes (collectively, “Hazardous
        Materials”)
        into
        the environment, or otherwise relating to the manufacture, processing,
        distribution, use, treatment, storage, disposal, transport or handling of
        Hazardous Materials, as well as all authorizations, codes, decrees, demands
        or
        demand letters, injunctions, judgments, licenses, notices or notice letters,
        orders, permits, plans or regulations issued, entered, promulgated or approved
        thereunder.

       

      “ERISA”
means
        the Employee Retirement Income Security Act of 1974, as amended, and the
        regulations and published interpretations thereunder.

       

      “Event
        of Default”
has
        the
        meaning set forth in the Notes.

       

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended (or any successor act), and
        the
        rules and regulations thereunder (or respective successors
        thereto).

       

      “Excluded
        Securities”
means
        Common Stock or Common Stock Equivalents issued or issuable: (i) in connection
        with any Approved Stock Plan; (ii) upon exercise of any Options or conversion
        of
        any Convertible Securities which are outstanding on the day immediately
        preceding the Closing Date and are disclosed in a schedule to this Agreement,
        provided that the terms of such Options or Convertible Securities are not
        amended, modified or changed on or after the Closing Date; (iii) pursuant
        to a
        bona fide firm commitment underwritten public offering with a
        nationally-recognized investment banking firm which generates gross proceeds
        to
        the Company in excess of $25,000,000 (other than an “at-the-market offering” as
        defined in Rule 415(a)(4) under the Securities Act or an “equity line”
arrangement); and (iv) in connection with any acquisition by the Company,
        whether through an acquisition of stock or a merger of any business, assets
        or
        technologies the primary purpose of which is not to raise equity capital
        in an
        amount not to exceed, in the aggregate, 10% of the outstanding shares of
        Common
        Stock in any calendar year.

       

      “Exercise
        Price”
has
        the
        meaning set forth in the Warrants.

       

      “GAAP”
means
        generally accepted accounting principles, applied on a consistent basis,
        as set
        forth in (i) opinions of the Accounting Principles Board of the American
        Institute of Certified Public Accountants, (ii) statements of the Financial
        Accounting Standards Board, and/or (iii) interpretations of the Commission
        and
        the Staff of the Commission and each of their respective successors and which
        are applicable in the circumstances as of the date in question. Accounting
        principles are applied on a “consistent basis” when the accounting principles
        applied in a current period are comparable in all material respects to those
        accounting principles applied in a preceding period.

       

      “Governing
        Documents”
means,
        as of any date, (i) in the case of a corporation, its certificate of
        incorporation and by-laws, (ii) in the case of a partnership, its certificate
        of
        partnership and partnership agreement, (iii) in the case of a limited liability
        company, its certificate of organization and limited liability company operating
        agreement, and (iv) any similar governing document of any such entity, in
        each
        such case as amended through such date.

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      “Governmental
        Authority”
means
        any nation or government, any state, provincial or political subdivision
        thereof
        and any entity exercising executive, legislative, judicial, regulatory or
        administrative functions of or pertaining to government, including without
        limitation any stock exchange, securities market or self-regulatory
        organization.

       

      “Governmental
        Requirement”
means
        any law, statute, code, ordinance, order, rule, regulation, judgment, decree,
        injunction, franchise, license or other directive or requirement of any federal,
        state, county, municipal, parish, provincial or other Governmental Authority
        or
        any department, commission, board, court, agency or any other instrumentality
        of
        any of them.

       

      “Holder(s)”
has
        the
        meaning set forth in the Registration Rights Agreement.

       

      “Insolvent”
means,
        with respect to the Company, that (i) the Company is unable to pay its debts
        and
        liabilities, subordinated, contingent or otherwise, as such debts and
        liabilities become absolute and matured, (ii) the Company intends to incur
        or
        believes that it will incur debts that would be beyond its ability to pay
        as
        such debts mature or (iii) the Company has unreasonably small capital with
        which
        to conduct the business in which it is engaged as such business is now conducted
        or is about to be conducted.

       

      “Intellectual
        Property”
means
        any U.S. or foreign patents, patent rights, patent applications, trademarks,
        trade names, service marks, brand names, logos and other trade designations
        (including unregistered names and marks), trademark and service mark
        registrations and applications, copyrights and copyright registrations and
        applications, inventions, invention disclosures, protected formulae,
        formulations, processes, methods, trade secrets, computer software, computer
        programs and source codes, manufacturing research and similar technical
        information, engineering know-how, customer and supplier information, assembly
        and test data drawings or royalty rights.

       

      “Intercreditor
        Agreement”
means
        any intercreditor arrangement which is entered into between the Investors
        and
        the lenders under the Permitted Senior Debt. 

       

      “Lead
        Investor”
means
        Nite Capital Master, LTD.

       

      “Lien”
means,
        with respect to any Property, any mortgage or mortgage, pledge, hypothecation,
        assignment, deposit arrangement, security interest, tax lien, financing
        statement, pledge, charge, or other lien, charge, easement, encumbrance,
        preference, priority or other security agreement or preferential arrangement
        of
        any kind or nature whatsoever on or with respect to such Property (including,
        without limitation, any conditional sale or other title retention agreement
        having substantially the same economic effect as any of the
        foregoing).

       

      “Material
        Adverse Effect”
means
        an effect that is material and adverse to (i) the consolidated business,
        operations, properties, financial condition, prospects or results of operations
        of the Company and its Subsidiaries taken as a whole or (ii) the ability
        of the
        Company to perform its obligations under this Agreement or the other Transaction
        Documents.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      “Material
        Contracts”
means,
        as to the Company, any agreement required pursuant to Item 601 of Regulation
        S-B
        or Item 601 of Regulation S-K, as applicable, promulgated under the Securities
        Act to be filed as an exhibit to any report, schedule, registration statement
        or
        definitive proxy statement filed or required to be filed by the Company with
        the
        Commission under the Exchange Act or any rule or regulation promulgated
        thereunder, and any and all amendments, modifications, supplements, renewals
        or
        restatements thereof.

       

      “NASD”
means
        the National Association of Securities Dealers, Inc.

       

      “Obligations”
means
        any and all indebtedness, liabilities and obligations of the Company to the
        Purchaser evidenced by and/or arising pursuant to this Agreement or the Notes
        or
        any other Transaction Documents, now existing or hereafter arising, whether
        direct, indirect, related, unrelated, fixed, contingent, liquidated,
        unliquidated, joint, several or joint and several, including, without
        limitation, the obligations of the Company to repay principal of the Notes,
        to
        pay interest on the Notes (including, without limitation, interest accruing
        after any bankruptcy, insolvency, reorganization or other similar filing)
        and to
        pay all fees, indemnities, costs and expenses (including attorneys’ fees)
        provided for in this Agreement or the Notes or any other Transaction
        Documents.

       

      “Options”
means
        any rights, warrants or options to subscribe for, purchase or receive Common
        Stock or Convertible Securities.

       

      “Permitted
        Liens”
means
        the following:

       

      (i) encumbrances
        consisting of easements, rights-of-way, zoning restrictions or other
        restrictions on the use of real Property or imperfections to title that do
        not
        (individually or in the aggregate) materially impair the ability of the Company
        or any of its Subsidiaries to use such Property in its businesses, and none
        of
        which is violated in any material respect by existing or proposed structures
        or
        land use;

       

      (ii) Liens
        for
        taxes, assessments or other governmental charges (including without limitation
        in connection with workers’ compensation and unemployment insurance) that are
        not delinquent or which are being contested in good faith by appropriate
        proceedings, which proceedings have the effect of preventing the forfeiture
        or
        sale of the Property subject to such Liens, and for which adequate reserves
        (as
        determined in accordance with GAAP) have been established;

       

      (iii) Liens
        of
        mechanics, materialmen, warehousemen, carriers, landlords or other similar
        statutory Liens securing obligations that are not yet due and are incurred
        in
        the ordinary course of business or which are being contested in good faith
        by
        appropriate proceedings, which proceedings have the effect of preventing
        the
        forfeiture or sale of the Property subject to such Liens, for which adequate
        reserves (as determined in accordance with GAAP) have been established and
        which
        have been bonded over and omitted from the Title Policy;

       

      (iv) purchase
        money Liens to finance property or assets of the Company or any Subsidiary
        of
        the Company acquired in the ordinary course of business; provided,
        however,
        that
        (A) the related purchase money Debt shall not exceed the cost of such property
        or assets (including the cost of design, development, improvement, production,
        acquisition, construction, installation and integration) and shall not be
        secured by any property or assets of the Company or any Subsidiary of the
        Company other than the property and assets so acquired or constructed (and
        any
        improvements thereto) and (B) the Lien securing such Debt shall be created
        within ten (10) days of such acquisition, construction or
        improvement;

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      (v) Liens
        upon specific items of inventory or other goods and proceeds of any Person
        securing such Person’s obligations in respect of bankers’ acceptances issued or
        created for the account of such Person to facilitate the purchase, shipment
        or
        storage of such inventory or other goods; 

       

      (vi) Liens
        encumbering deposits made to secure obligations arising from statutory,
        regulatory, contractual, or warranty requirements of the Company or any of
        its
        Subsidiaries, including rights of offset and set-off; and

       

      (vii) Liens
        incurred in connection with the Permitted Senior Debt. 

       

      “Permitted
        Senior Debt”
means
        the following: (1) the Company, as borrower, executed a term promissory note
        with Webster National Bank, N.A. (the “Bank”)
        on
        August 16, 2006 in the amount of $82,500 for a term of sixty months at the
        rate
        of 9.25% per year (the “Term
        Note”);
        (2)
        the Company, as borrower, executed a revolving credit promissory note with
        the
        Bank on May 26, 2006 in the amount of $350,000, terminating on May 25, 2007
        (the
“Revolving
        Note”);
        and
        (3) any debt facility which replaces and satisfies the Term Note or the
        Revolving Note in its entirety, including but not limited to outstanding
        principal, accrued interest, default penalties and any other payments
        thereunder.

       

      “Person”
means
        any individual, corporation, trust, association, company, partnership, joint
        venture, limited liability company, joint stock company, Governmental Authority
        or other entity.

       

      “Property”
means
        property and/or assets of all kinds, whether real, personal or mixed, tangible
        or intangible (including, without limitation, all rights relating
        thereto).

       

      “Registrable
        Securities”
has
        the
        meaning set forth in the Registration Rights Agreement.

       

      “Required
        Holders”
means
        the holders of at least two-thirds (2/3) of the Registrable Securities into
        which all of the Notes then outstanding are convertible (without regard to
        any
        limitation on such conversion or exercise); provided,
        however,
        that
        solely with respect to Section
        12.5,
        “Required Holders” means the holders of at least two-thirds (2/3) of the
        Registrable Securities into which all of the Notes and Warrants then outstanding
        are convertible or exercisable (without regard to any limitation on such
        conversion or exercise).

       

      “Restricted
        Payment”
means
        (i) any dividend or other distribution (whether in cash, Property or
        obligations), direct or indirect, on account of (or the setting apart of
        money
        for a sinking or other analogous fund for the benefit of) any shares of any
        class of capital stock of the Company or any of its Subsidiaries now or
        hereafter outstanding, except a dividend payable solely in shares of that
        class
        of stock to all of the holders of that class; (ii) any redemption, exchange,
        retirement, sinking fund or similar payment, purchase or other acquisition
        for
        value, direct or indirect, of any shares of any class of capital stock of
        the
        Company or any of its Affiliates now or hereafter outstanding, except the
        Securities; (iii) except in connection with any replacement debt facility
        as
        contemplated in clause (3) of the “Permitted Senior Debt” definition, any
        prepayment of principal of, premium, if any, or interest on, or any redemption,
        conversion, exchange, purchase, retirement, sinking fund or defeasance of,
        any
        Debt (whether upon acceleration of such Debt or otherwise) other than the
        Securities; and (iv) any loan, advance or payment to any officer, director
        or
        stockholder of the Company or any of its Affiliates, exclusive of (A) reasonable
        compensation and reimbursements paid to officers or directors in the ordinary
        course of business and (B) the scheduled repayment of principal and interest
        with respect to any loans made by any such Affiliate to the Company and
        outstanding as of the date hereof and set forth on Schedule
        1.2
        hereto;
provided,
        however,
        that
        the following shall not be deemed to constitute a Restricted Payment: (I)
        the
        issuance of securities upon exercise or conversion of the Company’s Options or
        Convertible Securities under an Approved Stock Plan, and (II) the issuance
        of
        equity securities to, or making payments under license, joint venture or
        similar
        agreements with, persons with whom the Company has a joint venture, strategic
        alliance or other commercial relationship in connection with the operation
        of
        the Company’s business, and not in connection with a transaction the purpose of
        which is to raise equity capital.

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

      “Securities
        Act”
        means
        the Securities Act of 1933, as amended (or any successor act), and the rules
        and
        regulations thereunder (or respective successors thereto). 

       

      “Security
        Documents”
means
        the Security Agreement and any other agreement certificate, document, instrument
        or agreement delivered in connection herewith or the Security Agreement which
        purports to grant or perfect a Lien in favor of Purchaser to secure all or
        any
        of the obligations hereunder or under any of the other Transaction Documents,
        including, without limitation, financing statements, each of the patent,
        trademark and copyright security agreements to be filed with the United States
        Patent and Trademark Office and/or the United States Copyright Office, as
        may be
        applicable, and all other certificates and instruments necessary to perfect
        the
        security interests granted under the Security Agreement.

       

      “Subordinated
        Debt”
means
        Debt of the Company which meets each of the following requirements: (i) such
        Debt is wholly unsecured or any Liens securing such Debt constitute Permitted
        Liens; and (ii) such Debt is contractually subordinated, as to payment and
        liquidation, to the payment in full of the Notes and the Obligations on such
        terms and pursuant to written agreements in such form and substance as are
        reasonably satisfactory to Purchasers holding at least fifty percent (50%)
        of
        the aggregate principal amount of the Notes outstanding on the date such
        Debt is
        incurred.

       

      “Subsidiary”
means,
        exclusive of HES, LLC, a company wholly owned by George Hoag, with respect
        to
        any Person, any corporation or other entity of which at least a majority
        of the
        outstanding shares of stock or other ownership interests having by the terms
        thereof ordinary voting power to elect a majority of the board of directors
        (or
        Persons performing similar functions) of such corporation or entity
        (irrespective of whether or not at the time, in the case of a corporation,
        stock
        of any other class or classes of such corporation shall have or might have
        voting power by reason of the happening of any contingency) is at the time
        directly or indirectly owned or controlled by such Person or one or more
        of its
        Subsidiaries or by such Person and one or more of its Subsidiaries.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      “Termination
        Date”
means
        the first date on which there are no Notes or Obligations
        outstanding.

       

      “Transaction
        Documents”
means
        (i) this Agreement, (ii) the Notes, (iii) the Warrants, (iv) the Registration
        Rights Agreement, (v) the Security Documents, (vi) the Intercreditor Agreement,
        if any, and (vii) all other agreements, documents and other instruments executed
        and delivered by or on behalf of the Company or its officers at the
        Closing.

       

      1.3 Other
        Definitional Provisions.
        All
        definitions contained in this Agreement are equally applicable to the singular
        and plural forms of the terms defined. The words “hereof”, “herein” and
“hereunder” and words of similar import referring to this Agreement refer to
        this Agreement as a whole and not to any particular provision of this
        Agreement.

       

      
        2. REPRESENTATIONS
          AND WARRANTIES OF THE PURCHASERS.

         

      

      Each
        Purchaser represents and warrants to the Company, with respect to itself
        only,
        and agrees with the Company, that:

       

      2.1 No
        Public Sale or Distribution.
        Such
        Purchaser is acquiring the Note and the Warrant being purchased by it in
        the
        ordinary course of business for its own account and not with a view towards,
        or
        for resale in connection with, the public sale or distribution thereof, except
        pursuant to sales that are registered under the Securities Act or are exempt
        from the requirement to be registered thereunder. Such Purchaser does not
        presently have any agreement, arrangement or understanding, directly or
        indirectly, with any Person to distribute or effect any distribution of any
        of
        the Securities (or any securities which are derivatives thereof) to or through
        any person or entity; provided,
        however,
        that in
        making such representations, such Purchaser does not agree to hold any of
        the
        Securities for any minimum or other specific term and reserves the right
        to
        dispose of the Securities at any time in accordance with or pursuant to an
        effective registration statement or an exemption under the Securities
        Act.

       

      2.2 Accredited
        Investor Status.
        Such
        Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of
        Regulation D.

       

      2.3 Reliance
        on Exemptions.
        Such
        Purchaser understands that the Securities are being offered and sold to it
        in
        reliance on specific exemptions from the registration requirements of United
        States federal and state securities laws and that the Company is relying
        in part
        upon the truth and accuracy of, and such Purchaser’s compliance with, the
        representations, warranties, agreements, acknowledgments and understandings
        of
        such Purchaser set forth herein in order to determine the availability of
        such
        exemptions and the eligibility of such Purchaser to acquire the
        Securities.

       

      2.4 Information.
        Such
        Purchaser and its advisors, if any, have been furnished with all materials
        relating to the business, finances and operations of the Company and materials
        relating to the offer and sale of the Securities which have been requested
        by
        such Purchaser. Such Purchaser and its advisors, if any, have been afforded
        the
        opportunity to ask questions of the Company. Neither such inquiries nor any
        other due diligence investigations conducted by such Purchaser or its advisors,
        if any, or its representatives shall modify, amend or affect such Purchaser’s
        right to rely on the Company’s representations and warranties contained herein.
        Such Purchaser understands that its investment in the Securities involves
        a high
        degree of risk and is able to afford a complete loss of such investment.
        Such
        Purchaser has sought such accounting, legal and tax advice as it has considered
        necessary to make an informed investment decision with respect to its
        acquisition of the Securities.

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      2.5 No
        Governmental Review.
        Such
        Purchaser understands that no United States federal or state agency or any
        other
        government or governmental agency has passed on or made any recommendation
        or
        endorsement of the Securities or the fairness or suitability of the investment
        in the Securities nor have such authorities passed upon or endorsed the merits
        of the offering of the Securities.

       

      2.6 Transfer
        or Resale.
        Such
        Purchaser understands that, except as provided in the Registration Rights
        Agreement: (i) the Securities have not been and are not being registered
        under
        the Securities Act or any state securities laws, and may not be offered for
        sale, sold, assigned or transferred unless (A) subsequently registered
        thereunder, (B) such Purchaser shall have delivered to the Company an opinion
        of
        counsel, in a form reasonably acceptable to the Company, to the effect that
        the
        Securities to be sold, assigned or transferred may be sold, assigned or
        transferred pursuant to an exemption from such registration, or (C) such
        Purchaser provides the Company with reasonable assurance that such Securities
        can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
        promulgated under the Securities Act, (collectively, “Rule
        144”);
        (ii)
        any sale of the Securities made in reliance on Rule 144 may be made only
        in
        accordance with the terms of Rule 144 and, further, if Rule 144 is not
        applicable, any resale of the Securities under circumstances in which the
        seller
        (or the Person through which the sale is made) may be deemed to be an
        underwriter (as that term is defined in the Securities Act) may require
        compliance with some other exemption under the Securities Act and (iii) neither
        the Company nor any other Person is under any obligation to register the
        Securities under the Securities Act or any state securities laws or to comply
        with the terms and conditions of any exemption thereunder. Notwithstanding
        the
        foregoing, the Securities may be pledged in connection with a bona fide margin
        account or other loan or financing arrangement secured by the Securities
        and
        such pledge of Securities shall not be deemed to be a transfer, sale or
        assignment of the Securities hereunder, and no Purchaser effecting a pledge
        of
        Securities shall be required to provide the Company with an opinion of counsel
        or otherwise make delivery of any notice or document to the Company pursuant
        to
        this Agreement or any other Transaction Document, including, without limitation,
        this Section
        2.6;
        provided,
        that in
        order to make any sale, transfer or assignment of Securities, such Purchaser
        and
        its pledgee must make such disposition in accordance with or pursuant to
        a
        registration statement or an exemption under the Securities Act.

       

      2.7 Legends.
        Such
        Purchaser understands that until the certificates or other instruments
        representing the Securities have been registered under the Securities Act,
        the
        certificates representing the Securities, except as set forth below, shall
        bear
        any legend required by the “blue sky” laws of any state and a restrictive legend
        in substantially the following form (and a stop-transfer order may be placed
        against transfer of such certificates):

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      NEITHER
        THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
        THE
        SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE OR EXERCISEABLE HAVE
        BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
        SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
        OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
        FOR
        THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
        OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
        IS
        NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
        144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
        PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
        ARRANGEMENT SECURED BY THE SECURITIES.

       

      The
        legend set forth above shall be removed and the Company shall issue a
        certificate without such legend to the holder of the Securities upon which
        it is
        stamped or, if applicable, issue to such holder by electronic delivery at
        the
        applicable balance account at DTC, if, unless otherwise required by state
        securities laws, (i) such Securities are registered for resale under the
        Securities Act, (ii) in connection with a sale, assignment or other transfer
        other than to an Affiliate or partner, shareholder or member of such holder,
        such holder provides the Company, at the sole expense of the Company, with
        an
        opinion of legal counsel reasonably acceptable to the Company to the effect
        that
        such sale, assignment or transfer of the Securities may be made without
        registration under the Securities Act, or (iii) such holder provides the
        Company
        with reasonable assurance that the Securities can be sold, assigned or
        transferred pursuant to Rule 144.

       

      If
        the
        Company shall fail for any reason or for no reason to issue to the holder
        of the
        Securities within three (3) Business Days after the occurrence of any of
        (i)
        through (iii) above, a certificate without such legend to the holder or,
        if
        applicable, to issue such Securities to such holder by electronic delivery
        at
        the applicable balance account at DTC, and if on or after such Business Day
        the
        holder purchases (in an open market transaction or otherwise) shares of Common
        Stock to deliver in satisfaction of a sale by the holder of such Securities
        that
        the holder anticipated receiving without legend from the Company (a
“Buy-In”),
        then
        the Company shall, within three (3) Business Days after such three (3) Business
        Day period, and at the holder’s request and in the holder’s discretion, either
        (i) pay cash to the holder in an amount equal to the holder’s total purchase
        price (including brokerage commissions, if any) for the shares of Common
        Stock
        so purchased (the “Buy-In
        Price”),
        at
        which point the Company’s obligation to deliver such unlegended Securities shall
        terminate, or (ii) promptly honor its obligation to deliver to the holder
        such
        unlegended Securities as provided above and pay cash to the holder in an
        amount
        equal to the excess (if any) of the Buy-In Price over the product of (A)
        such
        number of shares of Common Stock, times (B) the closing sales price of the
        Common Stock on the date of exercise.

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

      2.8 Validity;
        Enforcement.
        This
        Agreement and the Registration Rights Agreement have been duly and validly
        authorized, executed and delivered on behalf of such Purchaser and, when
        executed by all of the parties thereto (including such Purchaser), shall
        constitute the legal, valid and binding obligations of such Purchaser
        enforceable against such Purchaser in accordance with their respective terms,
        except as such enforceability may be limited by general principles of equity
        or
        to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
        and other similar laws relating to, or affecting generally, the enforcement
        of
        applicable creditors’ rights and remedies.

       

      2.9 No
        Conflicts.
        The
        execution, delivery and performance by such Purchaser of this Agreement and
        the
        Registration Rights Agreement and the consummation by such Purchaser of the
        transactions contemplated hereby and thereby will not (i) result in a violation
        of the Governing Documents of such Purchaser, (ii) conflict with, or constitute
        a default (or an event which with notice or lapse of time or both would become
        a
        default) under, or give to others any rights of termination, amendment,
        acceleration or cancellation of, any agreement, indenture or instrument to
        which
        such Purchaser is a party, or (iii) result in a violation of any law, rule,
        regulation, order, judgment or decree (including federal and state securities
        laws) applicable to such Purchaser, except, in the case of clauses (ii) and
        (iii) above, for such conflicts, defaults, rights or violations which would
        not,
        individually or in the aggregate, reasonably be expected to have a Material
        Adverse Effect.

       

      2.10 Residency.
        Such
        Purchaser is a resident of the jurisdiction specified below its address on
        Exhibit
        A.

       

      2.11 Short
        Sales; Trading Restriction.
        No
        Purchaser, directly or indirectly, and no Person acting on behalf of or pursuant
        to any understanding with any Purchaser, has engaged in any transactions
        in the
        securities of the Company (including, without limitation, any Short Sales
        involving any of the Company’s securities) since the time that such Purchaser
        was first contacted by the Company, or
        any
        other Person regarding an investment in the Company. Such Purchaser covenants
        that neither it nor any Person acting on its behalf or pursuant to any
        understanding with such Purchaser will engage, directly or indirectly, in
        any
        transactions in the securities of the Company (including Short Sales) prior
        to
        the time the transactions contemplated by this Agreement are publicly disclosed
        or while the Purchaser is in possession of any material non-public information.
        “Short
        Sales”
        include, without limitation, all “short sales” as defined in Rule 200
        promulgated under Regulation SHO under the Exchange Act and all types of
        direct
        and indirect stock pledges, forward sale contracts, options, puts, calls,
        short
        sales, swaps, derivatives and similar arrangements (including on a total
        return
        basis), and sales and other transactions through non-U.S. broker-dealers
        or
        foreign regulated brokers.

       

      3. REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

       

      The
        Company represents and warrants to each Purchaser and the Placement Agent,
        and
        agrees with each Purchaser and the Placement Agent, that upon the consummation
        of the Acquisition:

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

       

      3.1 Organization
        and Qualification.
        The
        Company is a corporation or other legal entity duly organized and validly
        existing and in good standing under the laws of the jurisdiction in which
        it is
        incorporated or organized, and has the requisite power and authority (corporate
        or otherwise) to own its properties and to carry on its business as now being
        conducted. The Company is duly qualified as a foreign entity to do business
        and
        is in good standing in every jurisdiction in which its ownership of property
        or
        the nature of the business conducted by it makes such qualification necessary,
        except to the extent that the failure to be so qualified or be in good standing
        would not have a Material Adverse Effect. The Company has no Subsidiaries
        except
        as set forth on Schedule
        3.1
        hereto.

       

      3.2 Authorization;
        Enforcement; Validity.
        The
        Company has the requisite corporate power and authority to enter into and
        perform its obligations under this Agreement and the other Transaction
        Documents, including, with respect to the Company, its obligation to issue
        the
        Securities in accordance with the terms hereof and thereof. The execution
        and
        delivery of the Transaction Documents by the Company and the consummation
        by the
        Company of the transactions contemplated hereby and thereby, including without
        limitation (i), with respect to the Company, the issuance of the Notes and
        the
        Warrants and the reservation for issuance and issuance of Conversion Shares
        and
        Warrant Shares and (ii) the granting and perfecting of the security interests
        pursuant to the Security Documents, have been duly authorized by the Company’s
        Board of Directors and no further consent or authorization is required by
        the
        Company, its Board of Directors or its stockholders. This Agreement and the
        other Transaction Documents have been duly executed and delivered by the
        Company, and constitute the legal, valid and binding obligations of the Company,
        enforceable against the Company in accordance with their respective terms,
        except as such enforceability may be limited by general principles of equity
        or
        applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
        or
        similar laws relating to, or affecting generally, the enforcement of applicable
        creditors’ rights and remedies.

       

      3.3 Issuance
        of Securities.
        The
        Notes and the Warrants are duly authorized and, upon issuance in accordance
        with
        the terms of this Agreement, will be validly issued and free from all taxes,
        Liens and charges with respect to the issue thereof. The Conversion Shares
        and
        the Warrant Shares are duly authorized and, upon issuance in accordance with
        the
        terms of the Notes and the Warrants, respectively, will be validly issued,
        fully
        paid and non-assessable and free from all preemptive or similar rights, taxes,
        Liens and charges with respect to the issue thereof. The issuance by the
        Company
        of the Securities is exempt from registration under the Securities
        Act.

       

      3.4 No
        Conflicts.
        Except
        with respect to any default under the Term Note or the Revolving Note which
        may
        be triggered by the consummation of the transactions contemplated hereunder
        and
        under the other Transaction Documents, the execution, delivery and performance
        of the Transaction Documents by the Company and the consummation by each
        of the
        Company of the transactions contemplated hereby and thereby (including, with
        respect to the Company, the issuance of the Notes and Warrants and the
        reservation for issuance and issuance of the Conversion Shares or the Warrant
        Shares) will not (i) result in a violation of the Governing Documents of
        the
        Company or any of its Subsidiaries, (ii) conflict with, or constitute a default
        (or an event which with notice or lapse of time or both would become a default)
        in any respect under, or give to others any rights of termination, amendment,
        acceleration or cancellation of, any material agreement, indenture or instrument
        to which the Company is a party, or (iii) result in a violation of any law,
        rule, regulation, order, judgment or decree (including federal and state
        securities laws and regulations and the rules and regulations of any securities
        exchange or securities market) applicable to the Company or by which any
        property or asset of the Company is bound or affected.

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

      3.5 Consents.
        The
        filing by the Company of a Form D in accordance with Regulation D, and any
        filings to be made with state securities regulatory authorities, the Company
        is
        not required to obtain any consent, authorization or order of, or make any
        filing or registration with, any court, governmental agency or any regulatory
        or
        self-regulatory agency or any other Person in order for it to execute, deliver
        or perform any of its obligations under or contemplated by the Transaction
        Documents, in each case in accordance with the terms hereof or thereof. The
        Company and its Subsidiaries is unaware of any facts or circumstances that
        might
        prevent the Company from obtaining or effecting any of the registration,
        application or filings pursuant to the preceding sentence. 

       

      3.6 Acknowledgment
        Regarding Purchaser’s Purchase of Securities.
        The
        Company acknowledges and agrees that each Purchaser is acting solely in the
        capacity of an arm’s length purchaser with respect to the Transaction Documents
        and the transactions contemplated hereby and thereby and that no Purchaser
        is
        (i) an officer or director of the Company, (ii) an Affiliate of the Company
        or
        any of its Subsidiaries or (iii) to the knowledge of the Company, a “beneficial
        owner” of more than 10% of the Common Stock (as defined for purposes of Rule
        13d-3 of the Exchange Act). The Company further acknowledges that no Purchaser
        is acting as a financial advisor or fiduciary of the Company or any of its
        Subsidiaries (or in any similar capacity) with respect to the Transaction
        Documents and the transactions contemplated hereby and thereby, and has not
        received or relied on any advice given by a Purchaser or any of its
        representatives or agents in connection with the Transaction Documents and
        the
        transactions contemplated hereby and thereby. The Company further represents
        to
        each Purchaser that the Company’s decision to enter into the Transaction
        Documents has been based solely on the independent evaluation by the Company
        and
        its representatives.

       

      3.7 No
        General Solicitation; Fees.
        Neither
        the Company, nor its Affiliates, nor any Person acting on its or their behalf,
        has engaged in any form of general solicitation or general advertising (within
        the meaning of Regulation D) in connection with the offer or sale of the
        Securities. The Company shall be responsible for the payment of any placement
        agent’s fees, financial advisory fees, or brokers’ commissions (other than for
        Persons engaged by any Purchaser or its investment advisor, if any) relating
        to
        or arising out of the transactions contemplated hereby. The Company shall
        pay,
        and hold each Purchaser harmless against, any liability, loss or expense
        (including, without limitation, attorney’s fees and out-of-pocket expenses)
        arising in connection with any such claim. 

       

      3.8 No
        Integrated Offering.
        None of
        the Company, any of its Affiliates, nor any Person acting on their behalf
        has,
        directly or indirectly, made any offers or sales of any security or solicited
        any offers to buy any security, under circumstances that would require
        registration of any of the Securities under the Securities Act or cause the
        offer and sale of the Securities pursuant to this Agreement and the Transaction
        Documents to be integrated with prior offerings by the Company for purposes
        of
        the Securities Act in a manner that would make unavailable the exemption
        from
        registration afforded by Section 4(2) of the Securities Act or Rule 506 of
        Regulation D promulgated under the Securities Act, or any applicable stockholder
        approval provisions, including, without limitation, under the rules and
        regulations of any exchange or automated quotation system on which any of
        the
        securities of the Company are listed or designated. None of the Company,
        its
        Affiliates or any Person acting on their behalf will take any action or steps
        referred to in the preceding sentence that would require registration of
        any of
        the Securities under the Securities Act or cause the offering of the Securities
        to be so integrated with other offerings.

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       

      3.9 Dilutive
        Effect.
        The
        Company understands and acknowledges that the issuance of Conversion Shares
        upon
        conversion of the Notes and the issuance of Warrant Shares upon exercise
        of the
        Warrants may result in dilution of the outstanding shares of Common Stock,
        which
        dilution may be substantial under certain market conditions. The Company
        understands and acknowledges that its obligation to issue Conversion Shares
        and
        Warrants Shares is absolute and unconditional regardless of the dilutive
        effect
        that any such issuance may have on the ownership interests of other stockholders
        of the Company. The Company acknowledges and agrees that such Purchaser may
        enter into short sales in the Company’s securities to the extent permitted by
        this Agreement and applicable law, and that such transactions may result
        in
        selling pressure on the outstanding shares of Common Stock.

       

      3.10 Application
        of Takeover Protections; Rights Agreement.
        The
        Company and its Board of Directors have taken all necessary action, if any,
        in
        order to render inapplicable any control share acquisition, business
        combination, poison pill (including any distribution under a rights agreement)
        or other similar anti-takeover provision under its Governing Documents or
        the
        laws of State of Nevada which is or could become applicable to any Purchaser
        as
        a result of the transactions contemplated by this Agreement, including, without
        limitation, the Company’s issuance of the Securities and any Purchaser’s
        ownership of the Securities. The Company has not adopted a shareholder rights
        plan or similar arrangement relating to accumulations of beneficial ownership
        of
        Common Stock or a change in control of the Company. The transactions and
        obligations of the Company contemplated by the Transaction Documents, including
        without limitation, the issuance and sale of the Securities, will not trigger
        any preemptive or anti-dilution rights (including without limitation pursuant
        to
        any “reset” or similar provisions) or rights of first refusal or first offer, or
        any other rights that would allow or permit the holders of the Company’s
        securities or other Persons to purchase shares of Common Stock or other
        securities of the Company.

       

      3.11 Commission
        Documents; Financial Statements.
        The
        Company is subject to the reporting requirements of the Exchange Act, as
        of the
        Closing Date, and has filed with the Commission all reports, schedules,
        registration statements and definitive proxy statements (if any) that the
        Company was required to file with the Commission (collectively, the
“SEC
        Documents”).
        The
        Company is not aware of any event occurring or expected to occur on or prior
        to
        the Closing Date (other than the transactions effected hereby and related
        hereto) that would require the filing of, or with respect to which the Company
        intends to file, a Form 8-K after the Closing. Each SEC Document, as of the
        date
        of the filing thereof with the Commission, complied in all material respects
        with the requirements of the Securities Act or Exchange Act, as applicable,
        and
        the rules and regulations promulgated thereunder and, as of the date of such
        filing (or if amended or superseded by a filing prior to the date of this
        Agreement, then on the date of such filing), such SEC Document (including
        all
        exhibits and schedules thereto and documents incorporated by reference therein)
        did not contain an untrue statement of material fact or omit to state a material
        fact required to be stated therein or necessary to make the statements therein,
        in light of the circumstances under which they were made, not misleading.
        All
        documents required to be filed as exhibits to the SEC Documents have been
        filed
        as required. Except as set forth in SEC Documents filed and available to
        the
        public on EDGAR at least five (5) Business Days prior to the date of this
        Agreement (the “Disclosure
        Documents”),
        the
        Company has no liabilities, contingent or otherwise, other than liabilities
        incurred in the ordinary course of business which, under GAAP, are not required
        to be reflected in the financial statements included in the Disclosure Documents
        and which, individually or in the aggregate, are not material to the
        consolidated business or financial condition of the Company and its Subsidiaries
        taken as a whole. As of their respective dates, the financial statements
        of the
        Company included in the SEC Documents complied as to form in all material
        respects with applicable accounting requirements and the published rules
        and
        regulations of the Commission with respect thereto. Such financial statements
        have been prepared in accordance with GAAP consistently applied at the times
        and
        during the periods involved (except (i) as may be otherwise indicated in
        such
        financial statements or the notes thereto, or (ii) in the case of unaudited
        interim statements, to the extent they may exclude footnotes or may be condensed
        or summary statements) and fairly present in all material respects the financial
        position of the Company as of the dates thereof and the results of its
        operations and cash flows for the periods then ended (subject, in the case
        of
        unaudited statements, to normal year-end adjustments). No other information
        provided by or on behalf of the Company to the Purchasers which is not included
        in the SEC Documents, including, without limitation, the information referred
        to
        in Section
        2.4
        of this
        Agreement and the disclosure schedules attached hereto, contains any untrue
        statement of a material fact or omits to state any material fact necessary
        in
        order to make the statements therein, in the light of the circumstance under
        which they are or were made, not misleading.

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

      3.12 Absence
        of Certain Changes.
        Since
        December 31, 2006, there has been no material adverse change or development
        in
        the business, properties, operations, condition (financial or otherwise),
        results of operations or prospects of the Company. Since December 31, 2006,
        the
        Company has not (i) declared or paid any dividends, (ii) sold any assets,
        individually or in the aggregate, in excess of $100,000 outside of the ordinary
        course of business or (iii) effected capital expenditures, individually or
        in
        the aggregate, in excess of $100,000. The Company has not taken any steps
        to
        seek protection pursuant to any bankruptcy law nor does the Company have
        any
        knowledge or reason to believe that its creditors intend to initiate involuntary
        bankruptcy proceedings or any actual knowledge of any fact which would
        reasonably lead a creditor to do so. The Company is not, as of the date hereof,
        and will not be, after giving effect to the transactions contemplated by
        this
        Agreement or the Transaction Documents, Insolvent.

       

      3.13 No
        Undisclosed Events, Liabilities, Developments or Circumstances.
        No
        event, liability, development or circumstance has occurred or exists, or
        is
        contemplated to occur with respect to the Company or its business, properties,
        prospects, operations or financial condition, that would be required to be
        disclosed by the Company as of the date hereof under applicable securities
        laws
        and which has not been publicly announced.

       

      3.14 Conduct
        of Business; Regulatory Permits.
        The
        Company is not in violation of any term of or in default under its Governing
        Documents. To the best knowledge of the Company, the Company is not in violation
        of any judgment, decree or order or any statute, ordinance, rule or regulation
        applicable to the Company, and the Company will not conduct its business
        in
        violation of any of the foregoing, except in each case for possible violations
        which could not, individually or in the aggregate, have a Material Adverse
        Effect. The Company possesses all certificates, authorizations and permits
        issued by the appropriate federal, state or foreign regulatory authorities
        necessary to conduct their respective businesses, except where the failure
        to
        possess such certificates, authorizations or permits would not have,
        individually or in the aggregate, a Material Adverse Effect, and the Company
        has
        not received any notice of proceedings relating to the revocation or
        modification of any such certificate, authorization or permit.

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

      3.15 Foreign
        Corrupt Practices.
        The
        Company, nor any director, officer, agent, employee or other Person acting
        on
        behalf of the Company has, in the course of its actions for, or on behalf
        of,
        the Company (i) used any corporate funds for any unlawful contribution, gift,
        entertainment or other unlawful expenses relating to political activity;
        (ii)
        made any direct or indirect unlawful payment to any foreign or domestic
        government official or employee from corporate funds; (iii) violated or is
        in
        violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
        as
        amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
        kickback or other unlawful payment to any foreign or domestic government
        official or employee.

       

      3.16 Sarbanes-Oxley
        Act.
        The
        Company is in compliance with any and all requirements of the Sarbanes-Oxley
        Act
        of 2002 that are effective and applicable to the Company as of the date hereof,
        and any and all applicable rules and regulations promulgated by the Commission
        thereunder that are effective as of the date hereof.

       

      3.17 Transactions
        With Affiliates.
        Except
        for employment agreements with senior management of the Company, and except
        as
        set forth in the SEC Documents filed at least ten (10) days prior to the
        date
        hereof, none of the officers, directors or employees of the Company is presently
        a party to any transaction with the Company or any of its Subsidiaries (other
        than for ordinary course services as employees, officers or directors),
        including any contract, agreement or other arrangement providing for the
        furnishing of services to or by, providing for rental of real or personal
        property to or from, or otherwise requiring payments to or from any such
        officer, director or employee or, to the knowledge of the Company, any
        corporation, partnership, trust or other entity in which any such officer,
        director, or employee has a substantial interest or is an officer, director,
        trustee or partner.

       

      3.18 Equity
        Capitalization; Registration Rights.
        As of
        the date hereof, the authorized capital stock of the Company consists of
        150,000,000
        shares of Common Stock and 150,000,000 shares of Preferred Stock, of which
        as of
        the date hereof, 19,096,334 are  issued and outstanding; 1,560,751 shares
        are reserved
        (or to
        be reserved) for issuance pursuant to the Company’s employee incentive plan and
        other options and warrants outstanding and other securities exercisable or
        exchangeable for, or convertible into, shares of Common Stock. All of such
        outstanding shares have been, or upon issuance will be, validly issued and
        are
        fully paid and non-assessable. Except as set forth on Schedule
        3.18:
        (i) no
        shares of the Company’s capital stock are subject to preemptive rights or any
        other similar rights or any Liens suffered or permitted by the Company; (ii)
        there are no outstanding options, warrants, scrip, rights to subscribe to,
        calls
        or commitments of any character whatsoever relating to, or securities or
        rights
        convertible into, or exercisable or exchangeable for, any shares of capital
        stock of the Company or any of its Subsidiaries, or contracts, commitments,
        understandings or arrangements by which the Company or any of its Subsidiaries
        is or may become bound to issue additional shares of capital stock of the
        Company or any of its Subsidiaries or options, warrants, scrip, rights to
        subscribe to, calls or commitments of any character whatsoever relating to,
        or
        securities or rights convertible into, or exercisable or exchangeable for,
        any
        shares of capital stock of the Company or any of its Subsidiaries; (iii)
        there
        are no agreements or arrangements (except the Registration Rights Agreement)
        under which the Company or any of its Subsidiaries is obligated to register
        the
        sale of any of their securities under the Securities Act (including “piggy-back”
registration rights); (iv) there are no outstanding securities or instruments
        of
        the Company or any of its Subsidiaries which contain any redemption or similar
        provisions, and there are no contracts, commitments, understandings or
        arrangements by which the Company or any of its Subsidiaries is or may become
        bound to redeem a security of the Company or any of its Subsidiaries; (v)
        there
        are no securities or instruments containing anti-dilution or similar provisions
        that will be triggered by the issuance of the Securities; (vi) the Company
        does
        not have any stock appreciation rights or “phantom stock” plans or agreements or
        any similar plan or agreement; and (vii) the Company and its Subsidiaries
        have
        no liabilities or obligations required to be disclosed in the Disclosure
        Documents (as defined herein) but not so disclosed in the SEC Documents.
        The
        Company has furnished or made available to each Purchaser upon such Purchaser’s
        request, true, correct and complete copies of the Company’s Governing Documents,
        as amended and as in effect on the date hereof, and the terms of all securities
        convertible into, or exercisable or exchangeable for, shares of Common Stock
        and
        the material rights of the holders thereof in respect thereto. Schedule
        3.18
        sets
        forth the shares of Common Stock owned beneficially or of record and Common
        Stock Equivalents held by each director and executive officer of the Company.
        

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

       

      3.19 Debt
        and Other Contracts.
        Except
        with respect to any default under the Term Note or the Revolving Note which
        may
        be triggered by the consummation of the transactions contemplated hereunder
        and
        under the other Transaction Documents, this
        Company (i) is not a party to any contract, agreement or instrument, the
        violation of which, or default under which, by the other party(ies) to such
        contract, agreement or instrument would result in a Material Adverse Effect,
        (ii) is not in violation of any term of or in default under any contract,
        agreement or instrument relating to any Debt, except where such violations
        and
        defaults would not result, individually or in the aggregate, in a Material
        Adverse Effect, or (iii) is not a party to any contract, agreement or instrument
        relating to any Debt, the performance of which, in the judgment of the Company’s
        officers, has or is expected to have a Material Adverse Effect. Except as
        set
        forth in Schedule
        3.19,
        there
        is no outstanding Debt of the Company or by which the Company is or may become
        bound. 

       

      3.20 Absence
        of Litigation.
        Except
        as set forth in Schedule
        3.20,
        there
        is no action, suit, proceeding, inquiry or investigation before or by any
        securities exchange or securities market, any court, public board, government
        agency, self-regulatory organization or body pending or, to the knowledge
        of the
        Company, threatened against or affecting the Company, the Common Stock or
        any of
        the Company’s officers or directors, whether of a civil or criminal nature or
        otherwise. The matters set forth on Schedule
        3.20,
        if
        determined adversely to the Company, would not have a Material Adverse
        Effect.

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

      3.21 Insurance.
        The
        Company is insured by insurers of recognized financial responsibility against
        such losses and risks and in such amounts as management of the Company believes
        to be prudent and customary in the businesses in which the Company is engaged.
        The Company has not been refused any insurance coverage sought or applied
        for.
        The Company has no reason to believe that it will not be able to renew its
        existing insurance coverage as and when such coverage expires or to obtain
        similar coverage from similar insurers as may be necessary to continue its
        business at a cost that would not have a Material Adverse Effect.

       

      3.22 Employee
        Relations.
        The
        Company is not a party to any collective bargaining agreement or employs
        any
        member of a union. The Company believes that its relations with its employees
        are in good standing. No executive officer of the Company (as defined in
        Rule
        501(f) of the Securities Act) has notified the Company that such officer
        intends
        to leave the Company or otherwise terminate such officer’s employment with the
        Company. No executive officer of the Company is, or is now expected to be,
        in
        violation of any material term of any employment contract, confidentiality,
        disclosure or proprietary information agreement, non-competition agreement,
        or
        any other contract or agreement or any restrictive covenant, and the continued
        employment of each such executive officer does not subject the Company to
        any
        liability with respect to any of the foregoing matters. The Company is in
        compliance with all federal, state, local and foreign laws and regulations
        respecting labor, employment and employment practices and benefits, terms
        and
        conditions of employment and wages and hours, except where failure to be
        in
        compliance would not, either individually or in the aggregate, reasonably
        be
        expected to result in a Material Adverse Effect.

       

      3.23 Title.
        The
        Company has good and marketable title in fee simple to all real property
        and
        good and marketable title to all personal property owned by it which is material
        to the business of the Company, in each case free and clear of all Liens
        and
        defects except for Permitted Liens. Any real property and facilities held
        under
        lease by the Company are held by it under valid, subsisting and enforceable
        leases with such exceptions as are not material and do not interfere with
        the
        use made and proposed to be made of such property and buildings by the
        Company.

       

      3.24 Intellectual
        Property Rights.
        The
        Company owns or possesses adequate rights or licenses to use all trademarks,
        trade names, service marks, service mark registrations and applications,
        service
        names, patents, patent rights, copyrights, inventions, licenses, approvals,
        governmental authorizations, trade secrets and other intellectual property
        rights, including without limitation the intellectual property acquired pursuant
        to the Acquisition (collectively, “Intellectual
        Property Rights”)
        necessary to conduct their respective businesses as now conducted. Each such
        Intellectual Property Right is set forth on Schedule
        3.24.
        None of
        the Intellectual Property Rights have expired or terminated or have been
        abandoned, or are expected to expire or terminate or expected to be abandoned
        within three years from the date of this Agreement. The Company does not
        have
        any knowledge of any infringement by the Company of Intellectual Property
        Rights
        of others. There is no claim, action or proceeding being made or brought,
        or to
        the knowledge of the Company, being threatened, against the Company regarding
        its Intellectual Property Rights. The Company is not aware of any facts or
        circumstances which might give rise to any of the foregoing infringements
        or
        claims, actions or proceedings. The Company has taken reasonable security
        measures to protect the secrecy, confidentiality and value of all of their
        Intellectual Property Rights.

       

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

       

      3.25 Environmental
        Laws.
        The
        Company and its Subsidiaries (i) are in compliance with any and all applicable
        Environmental Laws, (ii) have received all permits, licenses or other approvals
        required of them under applicable Environmental Laws to conduct their respective
        businesses, (iii) are in compliance with all terms and conditions of any
        such
        permit, license or approval, (iv) do not own or operate any real property
        contaminated with any substance that is in violation of Environmental Laws,
        and
        (v) is liable for any off-site disposal or contamination pursuant to any
        Environmental Laws where, in each of the foregoing clauses (i), (ii), (iii),
        (iv) and (v) the failure to so comply could be reasonably expected to have,
        individually or in the aggregate, a Material Adverse Effect. There is no
        civil,
        criminal or administrative action, suit, investigation, inquiry or proceeding
        pending or, to the knowledge of the Company, threatened by or before any
        court
        or governmental authority against the Company relating to or arising from
        the
        Company’s non-compliance with any Environmental Laws, nor has the Company
        received written notice of any alleged violations of Environmental
        Laws.

       

      3.26 Subsidiary
        Rights.
        The
        Company or one of its Subsidiaries has the unrestricted right to vote, and
        (subject to limitations imposed by applicable law) to receive dividends and
        distributions on, all capital securities of its Subsidiaries as owned by
        the
        Company or such Subsidiary.

       

      3.27 Ranking
        of Notes.
        Except
        for Permitted Senior Debt, no Debt of the Company is senior to or ranks
pari
        passu
        with the
        Notes in right of payment, whether with respect of payment of redemptions,
        interest, damages or upon liquidation or dissolution or otherwise. 

       

      3.28 Acquisition.
        Contemporaneously with the Closing, the Company shall have consummated the
        Acquisition. 

       

      3.29 Tax
        Status.
        The
        Company (i) has made or filed all foreign, federal and state income and all
        other tax returns, reports and declarations (or extensions thereof) required
        by
        any jurisdiction to which it is subject, (ii) has paid all taxes and other
        governmental assessments and charges that are material in amount, shown or
        determined to be due on such returns, reports and declarations, except those
        being contested in good faith and (iii) has set aside on its books provision
        reasonably adequate for the payment of all taxes for periods subsequent to
        the
        periods to which such returns, reports or declarations apply. There are no
        unpaid taxes in any material amount claimed to be due by the taxing authority
        of
        any jurisdiction, and the officers of the Company know of no basis for any
        such
        claim.

       

      3.30 Internal
        Accounting and Disclosure Controls.
        The
        Company maintains its internal accounting controls in a manner sufficient
        to
        provide reasonable assurance that (i) transactions are executed in accordance
        with management’s general or specific authorizations, (ii) transactions are
        recorded as necessary to permit preparation of financial statements in
        conformity with its system of accounting and reporting and to maintain asset
        and
        liability accountability, (iii) access to assets or incurrence of liabilities
        is
        permitted only in accordance with management’s general or specific authorization
        and (iv) the recorded accountability for assets and liabilities is compared
        with
        the existing assets and liabilities at reasonable intervals and appropriate
        action is taken with respect to any difference. The Company maintains disclosure
        controls and procedures (as such term is defined in Rule 13a-14 under the
        Exchange Act) that are effective in ensuring that information required to
        be
        disclosed by the Company in the reports that it files or submits under the
        Exchange Act is recorded, processed, summarized and reported, within the
        time
        periods specified in the rules and forms of the Commission, including, without
        limitation, controls and procedures designed in to ensure that information
        required to be disclosed by the Company in the reports that it files or submits
        under the Exchange Act is accumulated and communicated to the Company’s
        management, including its principal executive officer or officers and its
        principal financial officer or officers, as appropriate, to allow timely
        decisions regarding required disclosure. Except as disclosed in the audited
        financial statements of the Company, during the twelve (12) months prior
        to the
        date hereof neither the Company nor any of its Subsidiaries have received
        any
        notice or correspondence from any accountant relating to any potential material
        weakness in any part of the system of internal accounting controls of the
        Company.

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

       

      3.31 Off
        Balance Sheet Arrangements.
        There
        is no transaction, arrangement, or other relationship between the Company
        and an
        unconsolidated or other off balance sheet entity that is required to be
        disclosed by the Company in its Exchange Act filings and is not so disclosed
        or
        that otherwise would be reasonably likely to have a Material Adverse
        Effect.

       

      3.32 Manipulation
        of Price.
        The
        Company has not, and to its knowledge no one acting on its behalf has, (i)
        taken, directly or indirectly, any action designed to cause or to result
        in the
        stabilization or manipulation of the price of any security of the Company
        to
        facilitate the sale or resale of any of the Securities, (ii) other than any
        placement agent, sold, bid for, purchased, or paid any compensation for
        soliciting purchases of, any of the Securities, or (iii) other than any
        placement agent, paid or agreed to pay to any person any compensation for
        soliciting another to purchase any other securities of the Company.

       

      3.33 Transfer
        Taxes.
        On the
        Closing Date, all stock transfer or other taxes (other than income or similar
        taxes) which are required to be paid in connection with the sale and transfer
        of
        the Securities to be sold to each Purchaser hereunder will be, or will have
        been, fully paid or provided for by the Company, and all laws imposing such
        taxes will be or will have been complied with.

       

      3.34 Disclosure.
        The
        Company confirms that neither it nor any other Person acting on its behalf
        has
        provided any of the Purchasers or their respective agents or counsel with
        any
        information that constitutes or could reasonably be expected to constitute
        material, nonpublic information. The Company understands and confirms that
        each
        of the Purchasers will rely on the foregoing representations in effecting
        transactions in securities of the Company. All disclosure provided to the
        Purchasers regarding the Company, its business and the transactions contemplated
        hereby, including the schedules to this Agreement, furnished by or on behalf
        of
        the Company is true and correct and does not contain any untrue statement
        of a
        material fact or omit to state any material fact necessary in order to make
        the
        statements made therein, in the light of the circumstances under which they
        were
        made, not misleading. Each press release issued by the Company did not at
        the
        time of release contain any untrue statement of a material fact or omit to
        state
        a material fact required to be stated therein or necessary in order to make
        the
        statements therein, in the light of the circumstances under which they were
        made, not misleading. No event or circumstance has occurred or information
        exists with respect to the Company or its respective business, properties,
        prospects, operations or financial conditions, which, under applicable law,
        rule
        or regulation, requires public disclosure or announcement by the Company
        but
        which has not been so publicly announced or disclosed (assuming for this
        purpose
        that the Company’s reports filed under the Exchange Act are being incorporated
        into an effective registration statement filed by the Company under the
        Securities Act). The Company acknowledges and agrees that no Purchaser makes
        or
        has made any representations or warranties with respect to the transactions
        contemplated hereby other than those specifically set forth in Section
        2.

       

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

       

      3.35 Reporting
        Company; Listing.
        The
        Company is not in violation of any of the rules, regulations or requirements
        relating to trading of the Common Stock on any securities exchange or securities
        market and has no knowledge of any facts or circumstances that would reasonably
        be expected to result in a suspension or restriction of the Common Stock
        from
        trading on any securities exchange or securities market in the foreseeable
        future. 

       

      3.36 Form
        SB-2.
        The
        Company is eligible to register the Conversion Shares and Warrant Shares
        for
        resale in a secondary offering by each Purchaser on a registration statement
        on
        Form SB-2 under the Securities Act. To the Company’s knowledge, there exist no
        facts or circumstances (including without limitation any required approvals
        or
        waivers of any circumstances that may delay or prevent the obtaining of
        accountant’s consents) that could reasonably be expected to prohibit or delay
        the preparation and filing of a registration statement on Form SB-2 that
        will be
        available for the resale of all Conversion Shares and Warrant Shares by each
        Purchaser.

       

      3.37 Investment
        Company Status.
        The
        Company is not, and immediately after receipt of payment for the Notes and
        the
        Warrants issued under this Agreement will not be, an “investment company” or an
        entity “controlled” by an “investment company” within the meaning of the
        Investment Company Act of 1940, as amended (the “Investment
        Company Act”),
        and
        shall conduct its business in a manner so that it will not become subject
        to the
        Investment Company Act.

       

      3.38 Customers
        and Suppliers.
        The
        Company maintains relationships with their material customers and suppliers
        on
        commercially reasonable terms. To the Company’s knowledge, no customer or
        supplier of the Company has any plan or intention to terminate any agreement
        or
        arrangement with the Company, which termination would reasonably be expected
        to
        have a Material Adverse Effect.

       

      3.39 No
        Other Agreements.
        The
        Company has not, directly or indirectly, entered into any agreement with
        or
        granted any right to any Purchaser relating to the terms or conditions of
        the
        transactions contemplated by the Transaction Documents, except as expressly
        set
        forth in the Transaction Documents.

       

      4. COVENANTS
        AND ACKNOWLEDGEMENTS OF THE PARTIES.

       

      4.1 Best
        Efforts.
        Each
        party shall use its best efforts to timely satisfy each of the terms and
        conditions of this Agreement.

       

      4.2 Form
        D
        and Blue Sky; Other Filings and Consents.
        The
        Company agrees to file a Form D with respect to the Securities as required
        under
        Regulation D and to provide a copy thereof to each Purchaser promptly after
        such
        filing. The Company shall, on or before the Closing Date, take such action
        as
        the Company shall reasonably determine is necessary in order to obtain an
        exemption for or to qualify the Securities for sale to the Purchasers at
        the
        Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
        qualification), and shall provide evidence of any such action so taken to
        the
        Purchasers on or before the Closing Date. The Company shall make all filings
        and
        reports relating to the offer and sale of the Securities required under
        applicable securities or “Blue Sky” laws of the states of the United States
        following the Closing Date. The Company undertakes as promptly as reasonably
        practicable after the date hereof to (i) make such filings and apply for
        such
        registrations, or (ii) use its reasonable best efforts to obtain, as applicable,
        all such consents, authorizations and orders, in each such case, which are
        required to be made or obtained by the Company pursuant to applicable law,
        rule
        or regulation in order to consummate the transactions contemplated by this
        Agreement and the other Transaction Documents.

       

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

       

      4.3 Reporting
        Status.
        Until
        the date on which the Holders have sold all Registrable Securities to the
        public
        pursuant to an effective registration statement or Rule 144 (the “Reporting
        Period”),
        the
        Company shall timely file all reports required to be filed with the Commission
        pursuant to the Exchange Act, and the Company shall not terminate its status
        as
        an issuer required to file reports under the Exchange Act even if the Exchange
        Act or the rules and regulations thereunder would otherwise permit such
        termination.

       

      4.4 Use
        of
        Proceeds.
        The
        Company will use the proceeds from the sale of the Securities for general
        corporate purposes, and not for (i) the repayment of any outstanding
        Indebtedness of the Company or any of its Subsidiaries or (ii) redemption
        or
        repurchase of any of its or its Subsidiaries’ equity securities.

       

      4.5 Financial
        Information.
        The
        Company agrees to send the following to each Holder during the Reporting
        Period
        (i) unless the following are filed with the Commission and are available
        to the
        public through EDGAR, within one (1) Business Day after the filing thereof
        with
        the Commission, a copy of its Annual Reports on Form 10-KSB or 10-K, its
        Quarterly Reports on Form 10-QSB or 10-Q, any Current Reports on Form 8-K
        and
        any registration statements (other than on Form S-8) or amendments filed
        pursuant to the Securities Act, (ii) on the same day as the release thereof,
        facsimile copies of all press releases issued by the Company or any of its
        Subsidiaries, and (iii) copies of any notices and other information made
        available or given to the stockholders of the Company generally,
        contemporaneously with the making available or giving thereof to the
        stockholders.

       

      4.6 Listing.
        In
        accordance with the Registration Rights Agreement, the Company shall promptly
        secure the listing of all of the Registrable Securities upon each national
        securities exchange and automated quotation system, if any, upon which shares
        of
        Common Stock are then listed (subject to official notice of issuance) and
        shall
        maintain, so long as any other shares of Common Stock shall be so listed,
        such
        listing of all Registrable Securities from time to time issuable under the
        terms
        of the Transaction Documents. Upon securing a listing in accordance with
        this
Section
        4.6,
        the
        Company shall maintain the Common Stock’s authorization for listing on the
        applicable securities exchange or securities market and neither the Company
        nor
        any of its Subsidiaries shall take any action which would be reasonably expected
        to result in the delisting or suspension of the Common Stock on the applicable
        securities exchange or securities market. The Company shall pay all fees
        and
        expenses in connection with satisfying its obligations under this Section
        4.6.

       

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

       

      4.7 Fees.
        Subject
        to Section
        8
        below,
        at the Closing, the Company shall reimburse the Lead Investor for its legal
        and
        due diligence expenses incurred in connection with the transactions contemplated
        by the Transaction Documents in an amount not to exceed $40,000, which amount
        (to the extent not already paid by the Company) shall be withheld from the
        Purchase Price payable by the Lead Investor at the Closing. The Company shall
        be
        responsible for the payment of any placement agent’s fees, financial advisory
        fees, or broker’s commissions relating to or arising out of the transactions
        contemplated hereby. The Company shall pay, and hold each Purchaser harmless
        against, any liability, loss or expense (including, without limitation,
        reasonable attorney’s fees and out-of-pocket expenses) arising in connection
        with any claim relating to any such payment.

       

      4.8 Pledge
        by Purchaser.
        The
        Company acknowledges and agrees that the Securities may be pledged by a Holder
        in connection with a bona fide margin agreement or other loan or financing
        arrangement that is secured by the Securities. The pledge of Securities shall
        not be deemed to be a transfer, sale or assignment of the Securities hereunder,
        and no Holder effecting a pledge of Securities shall be required to provide
        the
        Company with any notice thereof or otherwise make any delivery to the Company
        pursuant to this Agreement or any other Transaction Document, including,
        without
        limitation, Section
        2.6 of
        this
        Agreement; provided that a Holder and its pledgee shall be required to comply
        with the provisions of Section
        2.6
        of this
        Agreement in order to effect a sale, transfer or assignment of Securities
        to
        such pledgee. The Company hereby agrees to execute and deliver such
        documentation as a pledgee of the Securities may reasonably request in
        connection with a pledge of the Securities to such pledgee by a
        Holder.

       

      4.9 Disclosure
        of Transactions and Other Material Information.
        On or
        before 9:00 a.m., New York City time, on the first Business Day following
        the
        date of this Agreement, the Company shall issue a press release announcing
        the
        transactions contemplated by the Transaction Documents and on or before 5:00
        p.m., New York City time on the fourth day following the date of this Agreement
        the Company shall file a Current Report on Form 8-K describing the terms
        of the
        transactions contemplated by the Transaction Documents in the form required
        by
        the Exchange Act, and attaching the material Transaction Documents (including,
        without limitation, this Agreement (and all schedules to this Agreement)
        the
        form of the Note, the form of the Warrant and the Registration Rights Agreement)
        as exhibits to such filing (including all attachments, the “8-K
        Filing”).
        The
        Company acknowledges, agrees and represents that from and after the date
        of the
        press release and 8-K Filing, no Purchaser shall be in possession of any
        material, nonpublic information received from the Company, any of its
        Subsidiaries or any of its respective officers, directors, employees or agents,
        that is not disclosed in the press release and 8-K Filing. The Company shall
        not, and shall cause each of its Subsidiaries and each of their respective
        officers, directors, employees and agents, not to, provide any Purchaser
        with
        any material, nonpublic information regarding the Company or any of its
        Subsidiaries from and after the date of the press release and 8-K Filing
        without
        the express written consent of such Purchaser. From and after the deadlines
        specified above, if a Purchaser has, or believes it has, received any such
        material, nonpublic information regarding the Company or any of its
        Subsidiaries, it shall provide the Company with written notice thereof. The
        Company shall, within five (5) Business Days of receipt of such notice, make
        public disclosure of such material, nonpublic information. In the event of
        a
        breach of the foregoing covenant by the Company, and provided that the Company
        shall have failed (following proper written request therefor) to make an
        appropriate public disclosure consistent with the requirements of Regulation
        FD
        under the Exchange Act, any Subsidiary, or its each of respective officers,
        directors, employees and agents, in addition to any other remedy provided
        herein
        or in the Transaction Documents, a Purchaser shall have the right to make
        a
        public disclosure, in the form of a press release, public advertisement or
        otherwise, of such material, nonpublic information without the prior approval
        by
        the Company, its Subsidiaries, or any of its or their respective officers,
        directors, employees or agents. No Purchaser shall have any liability to
        the
        Company, its Subsidiaries, or any of its or their respective officers,
        directors, employees, shareholders or agents for any such disclosure. Subject
        to
        the foregoing, neither the Company, its Subsidiaries nor any Purchaser shall
        issue any press releases or any other public statements with respect to the
        transactions contemplated hereby; provided, however, that the Company shall
        be
        entitled, without the prior approval of any Purchaser, to make any press
        release
        or other public disclosure with respect to such transactions (i) in substantial
        conformity with the press release and 8-K Filing and contemporaneously therewith
        and (ii) as is required by applicable law and regulations (provided that
        in the
        case of clause (i) each Purchaser shall be consulted by the Company in
        connection with any such press release or other public disclosure prior to
        its
        release).

       

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

       

      4.10 Corporate
        Existence.
        Until
        the date on which there are no Notes or Warrants outstanding, the Company
        shall
        maintain its corporate existence and shall not sell all or substantially
        all of
        the Company’s assets, except in the event of a merger or consolidation or sale
        of all or substantially all of the Company’s assets, where the surviving or
        successor entity in such transaction (i) assumes the Company’s obligations
        hereunder and under the agreements and instruments entered into in connection
        herewith and (ii) is a publicly traded corporation whose common stock is
        listed
        for trading on the New York Stock Exchange, the American Stock Exchange,
        the
        Nasdaq Global Select Market or the Nasdaq Global Market.

       

      4.11 Reservation
        of Common Stock.
        The
        Company shall, on or before the Closing Date, authorize and reserve for
        issuance, free from any preemptive rights, a number of shares of Common Stock
        (the “Reserved
        Amount”)
        equal
        to no less than one hundred and fifty percent (150%) of the maximum number
        of
        shares of Common Stock issuable upon (i) conversion of the outstanding Notes
        in
        full at the Conversion Price then in effect and (ii) exercise of the outstanding
        Warrants in full at the Exercise Price then in effect, in each such case
        without
        regard to any limitation or restriction on such conversion or exercise that
        may
        be set forth in the Notes or the Warrants. In the event that, as a result
        of an
        adjustment to the Conversion Price of the Notes or the Exercise Price for
        the
        Warrants (pursuant to anti-dilution adjustments or otherwise), the Reserved
        Amount is less than 125% of the number of shares of Common Stock then issuable
        upon conversion of all of the Notes and exercise of all of the Warrants then
        outstanding (without regard to any limitation or restriction on such conversion
        or exercise that may be set forth in the Notes or the Warrants), the Company
        shall take action (including without limitation seeking stockholder approval
        for
        the authorization or reservation of additional shares of Common Stock) as
        soon
        as practicable (but in no event later than the tenth (10th)
        business day or, in the event that stockholder approval is required, the
        sixtieth (60th)
        day
        following such date) to increase the Reserved Amount to no less than 150%
        of the
        number of shares of Common Stock into which such outstanding Notes are then
        convertible and such outstanding Warrants are exercisable. The Company shall
        not
        reduce the number of shares reserved for issuance hereunder without obtaining
        the written consent of the holders of two-thirds (2/3) of the Registrable
        Securities. The initial Reserved Amount shall be allocated pro rata among
        the
        Purchasers based on the principal amount of the Notes issued to each Purchaser
        at the Closing. Each increase in the Reserved Amount shall be allocated pro
        rata
        among the Holders based on the amount of Registrable Securities into which
        all
        of the Notes and Warrants held by such Holder at the time of such increase
        are
        convertible or exercisable (without regard to any limitation on such conversion
        or exercise). In the event that a Holder shall sell or otherwise transfer
        any of
        such Holder’s Notes, each transferee shall be allocated a pro rata portion of
        such transferor’s Reserved Amount. Any portion of the Reserved Amount which
        remains allocated to any person or entity which does not hold any Notes shall
        be
        reallocated to the remaining Holders pro rata based on the amount of Registrable
        Securities into which all of the outstanding Notes and Warrants at the time
        of
        such increase are convertible or exercisable (without regard to any limitation
        on such conversion or exercise).

       

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

        

      

       

      4.12 Opinion
        of Counsel.
        The
        Company shall cause its outside counsel to deliver to each Purchaser a written
        opinion, dated as of and delivered on the Closing Date, in substantially
        the
        form of Exhibit
        G
        attached
        hereto.

       

      4.13 Limitation
        on Debt, Liens.
        During
        the period beginning on the date of this Agreement and ending on the Termination
        Date, the Company shall refrain from (i) incurring any Debt (including without
        limitation by issuing any Debt securities), other than Subordinated Debt,
        or
        increasing the amount of any existing line of credit or other Debt facility
        beyond the maximum amount outstanding thereon on the date hereof or (ii)
        granting, establishing or maintaining any Lien on any of its assets, including
        without limitation any pledge of securities owned or held by it (including
        without limitation any securities issued by any such Subsidiary), other than
        Permitted Liens. Notwithstanding the foregoing, the Company may incur Debt
        for
        purposes of effecting one or more acquisitions (by means of purchase of all
        or
        substantially all of the assets of another entity), provided
        that the
        aggregate amount of such new Debt shall not exceed $1,000,000 and,
        notwithstanding the foregoing, the Company may incur debt upon approval of
        the
        Required Holders.

       

      4.14 Restricted
        Payments.
        During
        the period beginning on the date of this Agreement and ending on the Termination
        Date, the Company will not make any Restricted Payments, except
        that:

       

      (a) the
        Company may make regularly schedule payments of principal and interest accrued
        on the Permitted Senior Debt if and to the extent (but only if and to the
        extent) permitted by the express terms of the documents governing the Permitted
        Senior Debt; and

       

      (b) the
        Company may make regularly scheduled payments of principal and interest accrued
        on any Subordinated Debt if and to the extent (but only if and to the extent)
        permitted by the express terms of the documents governing such
        Debt;

       

      provided,
        however,
        that no
        Restricted Payment may be made pursuant to clause (a), (b) or (c) above if
        an
        Event of Default (or an event or circumstance that, with the giving of notice
        or
        lapse of time or both, would constitute an Event of Default) exists at the
        time
        or would exist as a result of such Restricted Payment.

       

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

      

       

      4.15 Disposition
        of Property.
        During
        the period beginning on the date of this Agreement and ending on the Termination
        Date, the Company will not, nor will it permit any Subsidiary of the Company
        to,
        sell, lease, assign, transfer or otherwise dispose of any of its Property,
        except (i) dispositions of inventory by the Company and its Subsidiaries
        in the
        ordinary course of business and (ii) expenditures of money (including, without
        limitation, money held in deposit accounts) made in the ordinary course of
        business or for the purpose of making Restricted Payments expressly permitted
        in
        accordance with this Agreement.

       

      4.16 Certain
        Transactions.
        During
        the period beginning on the date of this Agreement and ending on the Termination
        Date, and except as may be expressly permitted or required by the Transaction
        Documents, the Company will not create or otherwise cause or permit to exist
        or
        become effective any consensual encumbrance or restriction of any kind on
        the
        ability of the Company to (i) pay dividends or make any other distribution
        to
        the Company in respect of capital stock or with respect to any other interest
        or
        participation in, or measured by, its profits, (ii) pay any Debt owed by
        the
        Company, (iii) make any loan or advance or capital contribution to the Company,
        (iv) sell, lease or transfer any of its Property except in the ordinary course
        of business, or (v) grant a Lien on any of its Properties other then any
        Lien
        incurred in connection with any replacement debt facility contemplated in
        clause
        (3) of the definition “Permitted Senior Debt.”

       

      4.17 Modification
        of Certain Agreements.
        During
        the period beginning on the date of this Agreement and ending on the Termination
        Date, the Company will not consent to or implement any termination, amendment,
        modification, supplement or waiver of (i) the Governing Documents of the
        Company
        or (ii) any Material Contract to which it is a party; provided,
        however,
        that
        any of such documents may be amended or modified if and to the extent that
        such
        change or modification is necessary in order to carry out the intent of any
        Transaction Document.

       

      4.18 Issuance
        Limitation.
        During
        the period beginning on the date of this Agreement and ending on the Termination
        Date, the Company shall not issue, sell or exchange, or agree or obligate
        itself
        to issue, sell or exchange or reserve, agree to or set aside for issuance,
        sale
        or exchange, (i) any Common Stock Equivalents, (ii) any other equity security
        of
        the Company, including without limitation shares of preferred stock, or (iii)
        any other security of the Company which by its terms is convertible into
        or
        exchangeable or exercisable for preferred stock or other equity security,
        which
        rank senior to the preferences, rights and/or privileges of the Notes;
provided,
        however,
        that
        the foregoing restrictions shall not apply if the holders of at least
        three-fourths (3/4) of the outstanding Notes at such time consent in writing
        to
        such issue, sale, exchange, agreement or obligation, as the case may
        be.

       

      4.19 Right
        of First Offer.
        Subject
        to the terms and conditions of this Section
        4.19
        and
        applicable securities laws, if the Company proposes to offer or sell any
        New
        Securities, the Company shall first offer such New Securities to each Purchaser
        (or any assignee thereof). A Purchaser shall be entitled to apportion the
        right
        of first offer hereby granted to it among itself and its Affiliates in such
        proportions as it deems appropriate.

       

      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

        

      

       

      (a) The
        Company shall give notice (the “Offer
        Notice”)
        to
        each Purchaser, stating (i) its bona fide intention to offer such New
        Securities, (ii) the number of such New Securities to be offered, and (iii)
        the
        price and terms, if any, upon which it proposes to offer such New
        Securities.

       

      (b) By
        notification to the Company within ten (10) days after the Offer Notice is
        given, each Purchaser may elect to purchase or otherwise acquire, at the
        price
        and on the terms specified in the Offer Notice, up to that portion of such
        New
        Securities which equals the proportion that the Common Stock issued and held,
        or
        issuable (directly or indirectly) upon conversion and/or exercise, as
        applicable, of the Notes by such Purchaser bears to the total Common Stock
        of
        the Company then outstanding (assuming full conversion and/or exercise, as
        applicable, of all the Notes. At the expiration of such ten (10) day period,
        the
        Company shall promptly notify each Purchaser that elects to purchase or acquire
        all the shares available to it (each, a “Fully
        Exercising Purchaser”)
        of any
        other Purchaser’s failure to do likewise. During the ten (10) day period
        commencing after the Company has given such notice, each Fully Exercising
        Purchaser may, by giving notice to the Company, elect to purchase or acquire,
        in
        addition to the number of shares specified above, up to that portion of the
        New
        Securities for which Purchasers were entitled to subscribe but that were
        not
        subscribed for by the Purchasers which is equal to the proportion that the
        Common Stock issued and held, or issuable upon conversion and/or exercise,
        as
        applicable, of the Notes then held, by such Fully Exercising Purchaser bears
        to
        the Common Stock issued and held, or issuable (directly or indirectly) upon
        conversion and/or exercise, as applicable, of the Notes then held, by all
        Fully
        Exercising Purchasers who wish to purchase such unsubscribed shares. The
        closing
        of any sale pursuant to this Section
        4.19(b)
        shall
        occur within the later of one hundred twenty (120) days of the date that
        the
        Offer Notice is given and the date of initial sale of New Securities pursuant
        to
Section
        4.19(c).

       

      (c) If
        all
        New Securities referred to in the Offer Notice are not elected to be purchased
        or acquired as provided in Section
        4.19(b),
        the
        Company may, during the ninety (90) day period following the expiration of
        the
        periods provided in Section
        4.19(b),
        offer
        and sell the remaining unsubscribed portion of such New Securities to any
        Person
        or Persons at a price not less than, and upon terms no more favorable to
        the
        offeree than, those specified in the Offer Notice. If the Company does not
        enter
        into an agreement for the sale of the New Securities within such period,
        or if
        such agreement is not consummated within thirty (30) days of the execution
        thereof, the right provided hereunder shall be deemed to be revived and such
        New
        Securities shall not be offered unless first reoffered to the Purchasers
        in
        accordance with this Section
        4.19.

       

      (d) The
        right
        of first offer in this Section
        4.19
        shall
        not be applicable to (i) Excluded Securities; and (ii) shares of Common Stock
        issued in an initial public offering.

       

      4.20 Permitted
        Senior Debt.
        If the
        consummation of the transactions contemplated hereunder and by the other
        Transaction Documents trigger an event of default under the Term Note or
        the
        Revolving Note, the Company shall have sixty (60) days from the date of such
        default to refinance such Debt with a debt facility which will be sufficient
        to
        replace and satisfy such Debt in its entirety, including but not limited
        to
        outstanding principal, accrued interest, default penalties and any other
        payments thereunder.

       

      
        
          
          

        

        
          -28-

          
            

          

        

        
          
          

        

      

       

      5. TRANSFER
        AGENT INSTRUCTIONS.

       

      On
        or
        prior to the Closing Date, the Company shall execute and deliver irrevocable
        written instructions to the transfer agent for its Common Stock (the
“Transfer
        Agent”),
        and
        provide each Purchaser with a copy thereof, directing the Transfer Agent
        (i) to
        issue certificates representing Conversion Shares upon conversion of the
        Notes
        and receipt of a valid Conversion Notice (as defined in the Notes) from a
        Purchaser, in the amount specified in such Conversion Notice, in the name
        of
        such Purchaser or its nominee, (ii) to issue certificates representing Warrant
        Shares upon exercise of the Warrants and receipt of a valid Exercise Notice
        (as
        defined in the Warrants) from a Purchaser, in the amount specified in such
        Exercise Notice, in the name of such Purchaser or its nominee and (iii) to
        deliver such certificates to such Purchaser no later than the close of business
        on the third (3rd)
        Business Day following the related Conversion Date (as defined in the Notes)
        or
        Exercise Date (as defined in the Warrant), as the case may be. Such certificates
        may bear legends pursuant to applicable provisions of this Agreement or
        applicable law. The Company shall instruct the transfer agent that, in lieu
        of
        delivering physical certificates representing shares of Common Stock to an
        Purchaser upon conversion of the Notes, or exercise of the Warrants, and
        as long
        as the Transfer Agent is a participant in the Depository Trust Company
        (“DTC”)
        Fast
        Automated Securities Transfer program, and such Purchaser has not informed
        the
        Company that it wishes to receive physical certificates therefor, and no
        restrictive legend is required to appear on any physical certificate if issued,
        the transfer agent may effect delivery of Conversion Shares or Warrant Shares,
        as the case may be, by crediting the account of such Purchaser or its nominee
        at
        DTC for the number of shares for which delivery is required hereunder within
        the
        time frame specified above for delivery of certificates. The Company represents
        to and agrees with each Purchaser that it will not give any instruction to
        the
        Transfer Agent that will conflict with the foregoing instruction or otherwise
        restrict such Purchaser’s right to convert the Notes or to receive Conversion
        Shares in accordance with the terms of the Notes or to exercise the Warrant
        or
        to receive Warrant Shares upon exercise of the Warrants. In the event that
        the
        Company’s relationship with the Transfer Agent should be terminated for any
        reason, the Company shall use its best efforts to cause the Transfer Agent
        to
        continue acting as transfer agent pursuant to the terms hereof until such
        time
        that a successor transfer agent is appointed by the Company and receives
        the
        instructions described above.

       

      The
        legend set forth in Section
        2.7
        shall be
        removed and the Company shall issue a certificate without such legend or
        any
        other legend to the holder of the applicable Securities upon which it is
        stamped, if (i) such Securities are registered for resale under the Securities
        Act, (ii) in connection with a sale, assignment or other transfer, such holder
        provides the Company with an opinion of counsel, in a form reasonably acceptable
        to the Company, to the effect that such sale, assignment or transfer of such
        Securities may be made without registration under the applicable requirements
        of
        the Securities Act, or (iii) such holder provides the Company with reasonable
        assurance that such Securities can be sold, assigned or transferred pursuant
        to
        Rule 144. Following the Effective Date or at such earlier time as a legend
        is no
        longer required, the Company will no later than three (3) Business Days
        following the delivery by a Purchaser to the Company or the Company’s transfer
        agent of a legended certificate representing such Securities, deliver or
        cause
        to be delivered to such Purchaser a certificate representing such Securities
        that is free from all restrictive and other legends. Following the Effective
        Date and upon the delivery to any Purchaser of any certificate representing
        Securities that is free from all restrictive and other legends, such Purchaser
        agrees that any sale of such Securities shall be made pursuant to the
        Registration Statement and in accordance with the plan of distribution described
        therein or pursuant to an available exemption from the registration requirements
        of the Securities Act. Without the consent of a majority of the Holders or
        specific instruction from the SEC or other applicable regulatory body, the
        Company may not make any notation on its records or give instructions to
        any
        transfer agent of the Company that enlarge the restrictions on transfer set
        forth in Section
        2.6.
        The
        Company will not effect or publicly announce its intention to effect any
        exchange, recapitalization or other transaction that effectively requires
        or
        rewards physical delivery of certificates evidencing the Common
        Stock.

       

      
        
          
          

        

        
          -29-

          
            

          

        

        
          
          

        

      

       

      6. CONDITIONS
        TO THE COMPANY’S OBLIGATION TO SELL.

       

      The
        obligation of the Company hereunder to issue and sell a Note and Warrant
        to each
        Purchaser at the Closing is subject to the satisfaction, on or before the
        Closing Date, of each of the following conditions, provided that these
        conditions are for the Company’s sole benefit and may be waived by the Company
        at any time in its sole discretion by providing each Purchaser with prior
        written notice thereof:

       

      (a) Such
        Purchaser shall have executed and delivered to the Company (i) this Agreement,
        (ii) the Registration Rights Agreement, and (iii) each other Transaction
        Document to which it is a party.

       

      (b) Such
        Purchaser shall have tendered to the Company the Purchase Price (less the
        amounts withheld pursuant to Section
        4.7)
        for the
        Note and Warrant being purchased by such Purchaser at the Closing by wire
        transfer of immediately available funds pursuant to Section
        11.

       

      (c) The
        representations and warranties of such Purchaser shall be true and correct
        in
        all material respects as of the date when made and as of the Closing Date
        as
        though made at that time (except for representations and warranties that
        speak
        as of a specific date), and such Purchaser shall have performed, satisfied
        and
        complied in all material respects with the covenants, agreements and conditions
        required by this Agreement to be performed, satisfied or complied with by
        such
        Purchaser at or prior to the Closing Date.

       

      7. CONDITIONS
        TO EACH PURCHASER’S OBLIGATION TO PURCHASE.

       

      The
        obligation of each Purchaser hereunder to purchase a Note and Warrant at
        the
        Closing is subject to the satisfaction, at or before the Closing Date, of
        each
        of the following conditions, provided that these conditions are for such
        Purchaser’s sole benefit and may be waived by such Purchaser at any time in its
        sole discretion by providing the Company with prior written notice
        thereof:

       

      (a) The
        Company shall have executed and delivered to such Purchaser (i) this Agreement,
        (ii) a Note, (iii) a Warrant, (iv) the Registration Rights Agreement, (v)
        the
        Security Agreement and any other Security Documents required for Closing
        to
        which it is a party, and (vi) each other Transaction Document to which it
        is a
        party.

       

      
        
          
          

        

        
          -30-

          
            

          

        

        
          
          

        

      

       

      (b) The
        Company shall have delivered to such Purchaser a copy of the Irrevocable
        Transfer Agent Instructions, which instructions shall have been delivered
        to and
        acknowledged in writing by the Company’s transfer agent.

       

      (c) The
        Company shall have delivered to such Purchaser a certificate evidencing the
        incorporation or organization and good standing of the Company and each of
        its
        operating Subsidiaries in such entity’s state of incorporation or organization
        issued by the Secretary of State of such state as of a date within ten (10)
        days
        of the Closing Date.

       

      (d) The
        Company shall have delivered to such Purchaser a certificate, signed by the
        Secretary or an Assistant Secretary of the Company, attaching (i) the Governing
        Documents of the Company, and (ii) resolutions passed by its Board of Directors,
        or a duly authorized committee thereof, to authorize the transactions
        contemplated hereby and by the other Transaction Documents, and certifying
        that
        such documents are true and complete copies of the originals and that such
        resolutions have not been amended or superseded, it being understood that
        such
        Purchaser may rely on such certificate as a representation and warranty of
        the
        Company made herein.

       

      (e) The
        representations and warranties of the Company shall be true and correct as
        of
        the date when made and as of the Closing Date as though made at that time
        (except for representations and warranties that speak as of a specific date)
        and
        the Company shall have performed, satisfied and complied in all respects
        with
        the covenants, agreements and conditions required by the Transaction Documents
        to be performed, satisfied or complied with by the Company at or prior to
        the
        Closing Date. Such Purchaser shall have received a certificate, executed
        by the
        Chief Executive Officer of the Company, dated as of the Closing Date, to
        the
        foregoing effect and as to such other matters as may be reasonably requested
        by
        such Purchaser.

       

      (f) The
        Company shall have delivered an opinion of counsel as required by Section
        4.12.
        

       

      (g) The
        Company shall have delivered to such Purchaser a letter from the Company’s
        transfer agent certifying the number of shares of Common Stock outstanding
        as of
        a date within five (5) days of the Closing Date.

       

      (h) The
        Company shall have obtained all governmental, regulatory or third party consents
        and approvals, if any, necessary for the sale of the Notes, Warrants, Conversion
        Shares and Warrant Shares.

       

      (i) Concurrently
        with the Closing, the Acquisition shall be consummated. 

       

      (j) The
        Company shall have delivered to such Purchaser such other documents relating
        to
        the transactions contemplated by this Agreement as such Purchaser or its
        counsel
        may reasonably request.

       

      
        
          
          

        

        
          -31-

          
            

          

        

        
          
          

        

      

       

      8. TERMINATION.

       

      In
        the
        event that the Closing shall not have occurred with respect to a Purchaser
        on or
        before May 9, 2007 due to the Company’s or such Purchaser’s failure to satisfy
        the conditions set forth in Sections
        6
        and
7
        above
        (and the non-breaching party’s failure to waive such unsatisfied condition(s)),
        the non-breaching party shall have the option to terminate this Agreement
        with
        respect to such breaching party at the close of business on such date without
        liability of any party to any other party; provided,
        however,
        this if
        this Agreement is terminated pursuant to this Section
        8,
        the
        Company shall remain obligated to reimburse the non-breaching Purchasers
        for the
        expenses described in Section
        4.7 above.

       

      
        9. APPOINTMENT,
          DUTIES AND RIGHTS OF THE COLLATERAL AGENT

         

      

      9.1 Appointment
        and Duties of Collateral Agent.

       

      (a) The
        Purchasers hereby designate and appoint Nite Capital Master, LTD to act as
        the
        Collateral Agent and hereby authorize Nite Capital Master, LTD, as the
        Collateral Agent, to take such actions on their behalf under the provisions
        of
        this Agreement, the Security Documents and the Intercreditor Agreement and
        to
        exercise such powers and perform such duties as are expressly delegated to
        the
        Collateral Agent by the terms hereof and thereof. The Collateral Agent shall
        hold and safeguard the Collateral during the term of this Agreement in trust
        for
        the Purchasers, and shall hold the Collateral in accordance with the terms
        of
        the Security Documents and as security for the obligations of the Company
        under
        the Transaction Documents. 

       

      (b) Notwithstanding
        any provision to the contrary elsewhere in this Agreement or the Security
        Documents, the Collateral Agent shall not have any duties or responsibilities,
        except those expressly set forth in this Agreement and the Security Documents,
        or any fiduciary relationship with any Purchaser, no implied covenants,
        functions or responsibilities shall be read into this Agreement or the Security
        Documents or otherwise exist against the Collateral Agent and no permissive
        or
        discretionary power or authority available to the Collateral Agent shall
        be
        construed to be a duty imposed on the Collateral Agent (unless the Collateral
        Agent shall have received written instructions from the Required Holders
        relating to any such discretionary power or authority). The Collateral Agent
        shall not be liable for any action taken or omitted to be taken by it hereunder
        or under the Security Documents, or in connection herewith or therewith,
        or in
        connection with the Collateral, unless caused by its gross negligence or
        willful
        misconduct.

       

      (c) The
        Collateral Agent shall not be responsible for recording or filing or
        re-recording or re-filing any financing or continuation statement or recording
        or re-recording any document or instrument in any public office at any time
        or
        times or otherwise perfecting or maintaining the perfection of any Lien on
        or
        security interest in any of the Collateral unless so directed by the Required
        Holders with respect to any such recording or filing.

       

      
        
          
          

        

        
          -32-

          
            

          

        

        
          
          

        

      

       

      9.2 Reliance
        on the Collateral Agent.
        The
        Purchasers and the Company expressly acknowledge that neither the Collateral
        Agent nor any of its respective officers, directors or employees has made
        any
        representations or warranties to it and that no act by the Collateral Agent
        hereinafter taken, including, without limitation, any review of the affairs
        of
        the Company, shall be deemed to constitute any representation or warranty
        by the
        Collateral Agent to any Purchaser. Except for notices, reports and other
        documents expressly required to be furnished to the Purchasers by the Collateral
        Agent hereunder and under the Security Documents, the Collateral Agent shall
        have no duty or responsibility to provide any Purchaser with any credit or
        other
        information concerning the business, operations, property, financial and
        other
        condition or creditworthiness of the Company which may come into the possession
        of the Collateral Agent or any of its officers, directors or
        employees.

       

      9.3 Successor
        Collateral Agent.

       

      (a) The
        Collateral Agent may resign as Collateral Agent upon twenty (20) days' notice
        to
        the Company and the Purchasers, and the Required Holders may remove the
        Collateral Agent at any time with or without cause by providing notice to
        such
        effect to the Collateral Agent, with any such resignation or removal to become
        effective only upon the appointment of a successor Collateral Agent under
        this
Section
        9.3.
        Under
        no circumstances shall the Company be entitled to remove the Collateral Agent
        without the consent of each of the Required Holders.

       

      (b) If
        the
        Collateral Agent shall resign or shall have been removed as Collateral Agent,
        then the Required Holders shall appoint a successor collateral agent for
        the
        Purchasers, which successor collateral agent shall be reasonably acceptable
        to
        the Company and the Required Holders. If no successor Collateral Agent shall
        have been so appointed within thirty days after the retiring or removed
        Collateral Agent's giving, or receipt, of such notice of resignation or removal,
        as the case may be, the retiring or removed Collateral Agent may, on behalf
        of
        the Purchasers, with the reasonable consent of the Company, appoint a successor
        Collateral Agent.

       

      (c) Any
        successor collateral agent appointed in accordance with the terms hereof
        shall
        succeed to the rights, powers and duties of the "Collateral Agent" and the
        term
        "Collateral Agent" shall mean such successor collateral agent effective upon
        its
        appointment, and the former Collateral Agent's rights, powers and duties
        as
        Collateral Agent shall be terminated, without any other or further act or
        deed
        on the part of such former Collateral Agent (except that the resigning or
        removed Collateral Agent shall deliver all Collateral then in its possession
        to
        the successor Collateral Agent) or any of the Purchasers. After any retiring
        Collateral Agent's resignation or removal hereunder as Collateral Agent,
        the
        provisions of this Agreement shall inure to its benefit as to any actions
        taken
        or omitted to be taken by it while it was Collateral Agent.

       

      9.4 Collateral
        Agent May Act Through Agents.
        The
        Collateral Agent may execute any of its duties under any of the Transaction
        Documents by or through agents or attorneys-in-fact and shall be entitled
        to
        advice of counsel concerning all matters pertaining to such duties and shall
        not
        be responsible for any misconduct or negligence on the part of any agent
        or
        attorney appointed hereunder with due care and the advice of such counsel
        shall
        be full and complete authorization and protection in respect of any action
        taken, suffered or omitted by the Collateral Agent hereunder or thereunder
        in
        good faith and in reliance thereon.

       

      
        
          
          

        

        
          -33-

          
            

          

        

        
          
          

        

      

       

      9.5 Limitation
        of Liability.

       

      (a) Neither
        the Collateral Agent nor any of its officers, directors or employees shall
        be
        (i) liable to any Person or Persons for any action lawfully taken or omitted
        to
        be taken by it under or in connection with any of the Transaction Documents
        (except for its gross negligence or willful misconduct), or (ii) responsible
        in
        any manner to any of the Purchasers for any recitals, statements,
        representations or warranties made by the Company or any representative thereof
        contained in this Agreement or any of the other Transaction Documents or
        in any
        certificate, report, statement or other document referred to or provided
        for in,
        or received by the Collateral Agent under or in connection with, this Agreement
        or any of the other Transaction Documents or for the value, validity,
        effectiveness, genuineness, enforceability or sufficiency of this Agreement
        or
        any of the other Transaction Documents (other than with respect to the
        Collateral Agent, the due authorization, execution and delivery of this
        Agreement and each other Transaction Document to which it is a party) or
        for any
        failure of the Company to perform its obligations hereunder or thereunder.
        The
        Collateral Agent shall not be under any obligation to any Purchaser to ascertain
        or to inquire as to the observance or performance of any of the agreements
        contained in, or conditions of, this Agreement or any of the other Transaction
        Documents, or to inspect the properties, books or records of the
        Company.

       

      (b) Anything
        in this Agreement or in any other Transaction Document notwithstanding, in
        no
        event shall the Collateral Agent be liable for special, indirect or
        consequential loss or damage of any kind whatsoever (including but not limited
        to lost profits), even if the Collateral Agent has been advised of such loss
        or
        damage and regardless of the form of action taken resulting in such loss
        or
        damage.

       

      9.6 Reliance
        by the Collateral Agent.
        The
        Collateral Agent shall be entitled to rely, and shall be fully protected
        in
        relying, upon any note, writing, resolution, notice, consent, certificate,
        affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
        statement, order or other document or conversation believed by it to be genuine
        and in conformance with the applicable requirements (if any) of the relevant
        Transaction Documents and to have been signed, sent or made by the
        representative of the proper Person or Persons concerned and upon advice
        and
        statements of legal counsel (including, without limitation, counsel to the
        the
        Company), independent accountants and other experts selected by the Collateral
        Agent. In connection with any request of the Required Holders, the Collateral
        Agent shall be fully protected in relying on a certificate of any Person,
        signed
        or purported to be signed by an authorized representative of such Person.
        The
        Collateral Agent shall be fully justified in failing or refusing to take
        any
        action under this Agreement or any of the other Transaction Documents (a)
        if
        such action would, in the reasonable opinion of the Collateral Agent, be
        contrary to law or the terms of this Agreement or any of the other Transaction
        Document, (b) if such action is not specifically provided for in this Agreement
        or any of the other Transaction Documents, it shall not have received any
        such
        advice or concurrence of the Required Holders as it deems appropriate, or
        (c)
        if, in connection with the taking of any such action that would constitute
        an
        exercise of remedies under this Agreement or any of the other Transaction
        Documents, it shall not first be indemnified to its reasonable satisfaction
        by
        the Company or the Purchasers against any and all liability and expense which
        may be incurred by it by reason of taking or continuing to take any such
        action.
        The Collateral Agent shall in all cases be fully protected in acting, or
        in
        refraining from acting, under this Agreement or any of the other Transaction
        Documents in accordance with a request of the Required Holders, and such
        request
        and any action taken or failure to act pursuant hereto or thereto shall be
        binding upon all the Purchasers. The Collateral Agent shall be entitled to
        rely,
        and shall be fully protected in relying upon, any certificate of the Company
        (or
        any paying agent, registrar or other agent of the Company) or holder of the
        Permitted Senior Debt as to the identity and amount of Permitted Senior Debt
        held by a holder of the Permitted Senior Debt.

       

      
        
          
          

        

        
          -34-

          
            

          

        

        
          
          

        

      

       

      9.7 Ambiguity
        or Inconsistency in this Agreement with Proposed Actions.
        If,
        with respect to a proposed action to be taken by it, the Collateral Agent
        shall
        determine in good faith that the provisions of this Agreement or any of the
        other Transaction Documents relating to the functions or responsibilities
        or
        discretionary powers of the Collateral Agent are or may be ambiguous or
        inconsistent, the Collateral Agent shall notify the Purchasers and the Company,
        identifying the proposed action and the provisions that it considers are
        or may
        be ambiguous or inconsistent, and may decline either to perform such function
        or
        responsibility or to exercise such discretionary power unless it has received
        written confirmation that the Required Holders and, if no Event of Default
        has
        occurred and is continuing, the Company, concur that the action proposed
        to be
        taken by the Collateral Agent is consistent with the terms of this Agreement
        or
        any of the other Transaction Documents or is otherwise appropriate. The
        Collateral Agent shall be fully protected in acting or refraining from acting
        upon the confirmation of the Required Holders and the Company in this respect,
        and such confirmation shall be binding upon the Collateral Agent and the
        Purchasers.

       

      9.8 Knowledge
        of Event of Default.
        The
        Collateral Agent shall not be deemed to have actual, constructive, direct
        or
        indirect knowledge or notice of the occurrence of any Default or Event of
        Default unless and until the Collateral Agent has received a notice or a
        certificate from any Purchaser or the Company stating that an Event of Default
        has occurred. The Collateral Agent shall have no obligation whatsoever either
        prior to or after receiving such notice or certificate to inquire whether
        an
        Event of Default has in fact occurred and shall be entitled to rely
        conclusively, and shall be fully protected in so relying, on any notice or
        certificate so furnished to it. No provision of this Agreement or any other
        Transaction Document shall require the Collateral Agent to expend or risk
        its
        own funds or otherwise incur any financial liability in the performance of
        any
        of its duties hereunder or in the exercise of any of its rights or powers,
        if it
        shall have reasonable grounds for believing that repayment of such funds
        or
        adequate indemnity against such risk or liability is not reasonably assured
        to
        it. In the event that the Collateral Agent receives a notice of the occurrence
        of any Event of Default from the Company or any Purchaser, the Collateral
        Agent
        shall give notice thereof to each of the Purchasers. The Collateral Agent
        shall
        take such action with respect to such Event of Default as so directed pursuant
        to the terms of the Transaction Documents or, in the event such action is
        discretionary on the part of the Collateral Agent, as so directed by the
        Required Holders.

       

      9.9 Indemnification.
        Without
        duplication of any amounts received by an Indemnitees Person (as defined
        below
        in this Section
        11.11)
        from
        the Company pursuant to an indemnity provision contained in any of the Security
        Documents, the Company agrees to indemnify and hold the Collateral Agent,
        its
        officers, directors, employees, agents, professional advisors and Affiliates
        (each an “Indemnified
        Person”)
        harmless from and against any and all claims, damages (other than consequential
        damages), losses, liabilities, costs or expenses (including reasonable
        attorneys' fees and expenses) which any Indemnified Person may incur or which
        may be claimed against any Indemnified Person by any Person arising out of,
        relating to or in connection with this Agreement or any other Transaction
        Document, including by reason of or in connection with any investigation,
        litigation or other proceeding relating to this Agreement (including, without
        limitation, enforcement of this Agreement or any other Transaction Document),
        other than as a result of the Indemnified Person's material breach of this
        Agreement, gross negligence or willful misconduct.

       

      
        
          
          

        

        
          -35-

          
            

          

        

        
          
          

        

      

       

      
        10. ESCROW.

         

      

      10.1 Escrow
        Arrangement.

       

      (a)
         Simultaneously
        with the execution and delivery of this Agreement by a Purchaser, such Purchaser
        shall promptly cause a wire transfer of immediately available funds (U.S.
        dollars) in an amount representing such Purchaser’s Purchase Price, to be paid
        to a non-interest bearing escrow account of Lowenstein Sandler PC (the
“Lead
        Investor Counsel”)
        (the
        aggregate amounts received being held in escrow by Lead Investor Counsel
        are
        referred to herein as the “Escrow
        Amount”).
        Lead
        Investor Counsel shall hold the Escrow Amount in escrow in accordance with
        Section
        10.1(b).
        

      

      (b) Lead
        Investor Counsel shall continue to hold the Escrow Amount in escrow in
        accordance with and subject to this Agreement, from the date of its receipt
        of
        the funds constituting the Escrow Amount until the soonest of: 

      

      (i)
        the
        date this Agreement is terminated pursuant to Section
        8,
        in
        which case, if Lead Investor Counsel then holds any portion of the Escrow
        Amount, then: (A) Lead Investor Counsel shall return the portion of the Escrow
        Amount received from each Purchaser which it then holds, to each such Purchaser,
        in accordance with written wire transfer instructions received from such
        Purchaser; and (B) if Lead Investor Counsel has not received written wire
        transfer instructions from any Purchaser before such termination date, then
        Lead
        Investor Counsel may, in its sole and absolute discretion, either (x) deposit
        that portion of the Escrow Amount to be returned to such Purchaser in a court
        of
        competent jurisdiction on written notice to such Purchaser, and Lead Investor
        Counsel shall thereafter have no further liability with respect to such
        deposited funds, or (y) continue to hold such portion of the Escrow Amount
        pending receipt of written wire transfer instructions from such Purchaser
        or an
        order from a court of competent jurisdiction; OR

      

      (ii)
        in
        the case of the Closing, receipt of written instructions from both the Company
        and the Lead Investor that the Closing shall have been consummated, in which
        case, Lead Investor Counsel shall release the Escrow Amount as per the joint
        instructions received from the Company and the Lead Investor.

      

      
        
          
          

        

        
          -36-

          
            

          

        

        
          
          

        

         

      

      10.2. Duties;
        Responsibilities.
        The
        Company and the Purchasers acknowledge and agree for the benefit of Lead
        Investor Counsel (which shall be deemed to be a third party beneficiary of
        this
Section
        10)
        as
        follows: 

      

      (a) Lead
        Investor Counsel: (i) is not responsible for the performance by the Company
        or
        the Purchasers of this Agreement or any of the Transaction Documents or for
        determining or compelling compliance therewith; (ii) is only responsible
        for (A)
        holding the Escrow Amount in escrow pending receipt of written instructions
        from
        the Company and the Lead Investor directing the release of the Escrow Amount,
        and (B) disbursing the Escrow Amount in accordance with the written instructions
        from the Company and the Lead Investor, each of the responsibilities of Lead
        Investor Counsel in clause (A) and (B) is ministerial in nature, and no implied
        duties or obligations of any kind shall be read into this Agreement against
        or
        on the part of Lead Investor Counsel (collectively, the “Lead
        Investor Counsel Duties”);
        (iii)
        shall not be obligated to take any legal or other action hereunder which
        might
        in its judgment involve or cause it to incur any expense or liability unless
        it
        shall have been furnished with indemnification acceptable to it, in its sole
        discretion; (iv) may rely on and shall be protected in acting or refraining
        from
        acting upon any written notice, instruction (including, without limitation,
        wire
        transfer instructions, whether incorporated herein or provided in a separate
        written instruction), instrument, statement, certificate, request or other
        document furnished to it hereunder and believed by it to be genuine and to
        have
        been signed or presented by the proper Person, and shall have no responsibility
        for making inquiry as to, or for determining, the genuineness, accuracy or
        validity thereof, or of the authority of the Person signing or presenting
        the
        same; and (v) may consult counsel satisfactory to it, and the opinion or
        advice
        of such counsel in any instance shall be full and complete authorization
        and
        protection in respect of any action taken, suffered or omitted by it hereunder
        in good faith and in accordance with the opinion or advice of such counsel.
        Documents and written materials referred to in this Section
        11.2(a)
        include,
        without limitation, e-mail and other electronic transmissions capable of
        being
        printed, whether or not they are in fact printed; and any such e-mail or
        other
        electronic transmission may be deemed and treated by Lead Investor Counsel
        as
        having been signed or presented by a Person if it bears, as sender, the Person’s
        e-mail address. 

       

      (b) Lead
        Investor Counsel shall not be liable to anyone for any action taken or omitted
        to be taken by it hereunder, except in the case of Lead Investor Counsel’s gross
        negligence or willful misconduct in breach of the Lead Investor Counsel Duties.
        IN NO EVENT SHALL LEAD INVESTOR COUNSEL BE LIABLE FOR INDIRECT, PUNITIVE,
        SPECIAL OR CONSEQUENTIAL DAMAGE OR LOSS (INCLUDING BUT NOT LIMITED TO LOST
        PROFITS) WHATSOEVER, EVEN IF LEAD INVESTOR COUNSEL HAS BEEN INFORMED OF THE
        LIKELIHOOD OF SUCH LOSS OR DAMAGE AND REGARDLESS OF THE FORM OF ACTION.

      

      (c) The
        Company and the Purchasers hereby indemnify and hold harmless Lead Investor
        Counsel from and against any and all loss, liability, cost, damage and expense,
        including, without limitation, reasonable counsel fees and expenses, which
        Lead
        Investor Counsel may suffer or incur by reason of any action, claim or
        proceeding brought against Lead Investor Counsel arising out of or relating
        to
        the performance of the Lead Investor Counsel Duties, unless such action,
        claim
        or proceeding is exclusively the result of the willful misconduct, bad faith
        or
        gross negligence of Lead Investor Counsel. 

      

      
        
          
          

        

        
          -37-

          
            

          

        

        
          
          

        

         

      

      (d) Lead
        Investor Counsel shall have the right at any time to resign for any reason
        and
        be discharged of its duties as escrow agent hereunder (including without
        limitation the Lead Investor Counsel Duties) by giving written notice of
        its
        resignation to the Company and the Lead Investor at least ten (10) calendar
        days
        prior to the specified effective date of such resignation. All obligations
        of
        the Lead Investor Counsel hereunder shall cease and terminate on the effective
        date of its resignation and its sole responsibility thereafter shall be to
        hold
        the Escrow Amount, for a period of ten (10) calendar days following the
        effective date of resignation, at which time,

      

      (i) if
        a
        successor escrow agent shall have been appointed and have accepted such
        appointment in a writing to both the Company and the Lead Investor, then
        upon
        written notice thereof given to each of the Purchasers, the Lead Investor
        Counsel shall deliver the Escrow Amount to the successor escrow agent, and
        upon
        such delivery, Lead Investor Counsel shall have no further liability or
        obligation; or

      

      (ii) if
        a
        successor escrow agent shall not have been appointed, for any reason whatsoever,
        Lead Investor Counsel shall at its option in its sole discretion, either
        (A)
        deliver the Escrow Amount to a court of competent jurisdiction selected by
        Lead
        Investor Counsel and give written notice thereof to the Company and the
        Purchasers, or (B) continue to hold Escrow Amount in escrow pending written
        direction from the Company and the Lead Investor in form and formality
        satisfactory to Lead Investor Counsel.

       

      (e) In
        the
        event that the Lead Investor Counsel shall be uncertain as to its duties
        or
        rights hereunder or shall receive instructions with respect to the Escrow
        Amount
        or any portion thereunder which, in its sole discretion, are in conflict
        either
        with other instructions received by it or with any provision of this Agreement,
        Lead Investor Counsel shall have the absolute right to suspend all further
        performance under this Agreement (except for the safekeeping of such Escrow
        Amount) until such uncertainty or conflicting instructions have been resolved
        to
        the Lead Investor Counsel’s sole satisfaction by final judgment of a court of
        competent jurisdiction, joint written instructions from the Company and all
        of
        the Purchasers, or otherwise. In the event that any controversy arises between
        the Company and one or more of the Purchasers or any other party with respect
        to
        this Agreement or the Escrow Amount, the Lead Investor Counsel shall not
        be
        required to determine the proper resolution of such controversy or the proper
        disposition of the Escrow Amount, and shall have the absolute right, in its
        sole
        discretion, to deposit the Escrow Amount with the clerk of a court selected
        by
        the Lead Investor Counsel and file a suit in interpleader in that court and
        obtain an order from that court requiring all parties involved to litigate
        in
        that court their respective claims arising out of or in connection with the
        Escrow Amount. Upon the deposit by the Lead Investor Counsel of the Escrow
        Amount with the clerk of such court in accordance with this provision, the
        Lead
        Investor Counsel shall thereupon be relieved of all further obligations and
        released from all liability hereunder.

      

      (f) The
        provisions of this Section
        10
        shall
        survive any termination of this Agreement.

       

      
        
          
          

        

        
          -38-

          
            

          

        

        
          
          

        

      

       

      11. MISCELLANEOUS.

       

      11.1 Governing
        Law; Jurisdiction; Jury Trial.
        All
        questions concerning the construction, validity, enforcement and interpretation
        of this Agreement shall be governed by the internal laws of the State of
        New
        York, without giving effect to any choice of law or conflict of law provision
        or
        rule (whether of the State of New York or any other jurisdictions) that would
        cause the application of the laws of any jurisdictions other than the State
        of
        New York. Each party hereby irrevocably submits to the exclusive jurisdiction
        of
        the state and federal courts sitting in the City of New York, Borough of
        Manhattan for the adjudication of any dispute hereunder or in connection
        herewith or with any transaction contemplated hereby or discussed herein,
        and
        hereby irrevocably waives, and agrees not to assert in any suit, action or
        proceeding, any claim that it is not personally subject to the jurisdiction
        of
        any such court, that such suit, action or proceeding is brought in an
        inconvenient forum or that the venue of such suit, action or proceeding is
        improper. Each party hereby irrevocably waives personal service of process
        and
        consents to process being served in any such suit, action or proceeding by
        mailing a copy thereof to such party at the address for such notices to it
        under
        this Agreement and agrees that such service shall constitute good and sufficient
        service of process and notice thereof. Nothing contained herein shall be
        deemed
        to limit in any way any right to serve process in any manner permitted by
        law.
        EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
        TO
        REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
        CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
        HEREBY.

       

      11.2 Counterparts.
        This
        Agreement may be executed in two or more identical counterparts, all of which
        shall be considered one and the same agreement and shall become effective
        when
        counterparts have been signed by each party and delivered to the other party;
        provided , that any party may deliver an executed copy of this Agreement
        to any
        other party by facsimile transmission, in which case this Agreement as so
        delivered shall be deemed duly executed and delivered and shall be binding
        upon
        the signatory thereto with the same force and effect as if the signature
        were an
        original.

       

      11.3 Headings.
        The
        headings of this Agreement are for convenience of reference and shall not
        form
        part of, or affect the interpretation of, this Agreement.

       

      11.4 Severability.
        If any
        provision of this Agreement shall be invalid or unenforceable in any
        jurisdiction, such invalidity or unenforceability shall not affect the validity
        or enforceability of the remainder of this Agreement in that jurisdiction
        or the
        validity or enforceability of any provision of this Agreement in any other
        jurisdiction.

       

      11.5 Entire
        Agreement; Amendments.
        This
        Agreement and the other Transaction Documents supersede all other prior oral
        or
        written agreements between the Purchasers, the Company, their affiliates
        and
        Persons acting on their behalf with respect to the matters discussed herein,
        and
        this Agreement, the other Transaction Documents and the instruments referenced
        herein and therein contain the entire understanding of the parties with respect
        to the matters covered herein and therein and, except as specifically set
        forth
        herein or therein, neither the Company nor any Purchaser makes any
        representation, warranty, covenant or undertaking with respect to such matters.
        Except as expressly provided herein, neither this Agreement nor any term
        hereof
        may be amended or waived except pursuant to a written instrument executed
        by the
        Company and the Required Holders, and no provision hereof may be waived other
        than by a written instrument signed by the Required Holders. Any waiver or
        consent shall be effective only in the specific instance and for the specific
        purpose for which given. No such amendment shall be effective to the extent
        that
        it applies to less than all of the holders of the Registrable Securities
        then
        outstanding. No consideration shall be offered or paid to any Person to amend
        or
        consent to a waiver or modification of any provision of any of the Transaction
        Documents unless the same consideration also is offered to all of the parties
        to
        the Transaction Documents, holders of Registrable Securities. The Company
        has
        not, directly or indirectly, made any agreements with any Purchasers relating
        to
        the terms or conditions of the transactions contemplated by the Transaction
        Documents except as set forth in the Transaction Documents.

       

      
        
          
          

        

        
          -39-

          
            

          

        

        
          
          

        

      

       

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

       

      if
        to the
        Company:

       

      VeruTEK
        Technologies, Inc.

      628
        Hebron Avenue

      Building
        2, Suite 505

      Glastonbury,
        CT 06033

      Telephone: (860)
        790-0920

      Facsimile: (860)
        633-6501

      Attention: John
        Collins, Ph.D.

       

      
        
          
          

        

        
          -40-

          
            

          

        

        
          
          

        

      

       

      with
        a
        copy (for informational purposes only) to:

       

      Sichenzia
        Ross Friedman Ference LLP

      61
        Broadway, 32nd
        Floor

      New
        York,
        NY 10006

      Telephone: (212)
        930-9700

      Facsimile: (212)
        930-9725

      Attention: Stephen
        M. Fleming

       

      with
        a
        copy (for informational purposes only) to:

       

      Synergy
        Law Group, LLC.

      730
        West
        Randolph, Suite 600

      Chicago,
        Illinois 60661

      Telephone: (312)
        454-0015

      Facsimile: (312)
        454-0261

      Attention: Bartly
        J.
        Loethen

       

      and
        if to
        a Purchaser, to its address and facsimile number set forth on Exhibit
        A,
        with
        copies to such Purchaser’s representatives as set forth on Exhibit
        A,

       

      or
        to
        such other address and/or facsimile number and/or to the attention of such
        other
        Person as the recipient party has specified by written notice given to each
        other party five (5) days prior to the effectiveness of such change. Written
        confirmation of receipt (A) given by the recipient of such notice, consent,
        waiver or other communication, (B) mechanically or electronically generated
        by
        the sender’s facsimile machine containing the time, date, recipient facsimile
        number and an image of the first page of such transmission or (C) provided
        by an
        overnight courier service shall be rebuttable evidence of personal service,
        receipt by facsimile or receipt from an overnight courier service in accordance
        with clause (i), (ii) or (iii) above, respectively.

       

      11.7 Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their respective successors and assigns, including any purchasers of the
        Notes
        or the Warrants. The Company shall not assign this Agreement or any rights
        or
        obligations hereunder, including by merger or consolidation, without the
        prior
        written consent of at least two-thirds (2/3) of the Registrable Securities
        into
        which all of the Notes and Warrants then outstanding are convertible or
        exercisable (without regard to any limitation on such conversion or exercise).
        A
        Purchaser may assign some or all of its rights hereunder without the consent
        of
        the Company, in which event such assignee shall be deemed to be a Purchaser
        hereunder in respect of such assigned rights.

       

      11.8 No
        Third Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other Person.

       

      11.9 Survival.
        Unless
        this Agreement is terminated under Section
        8,
        the
        representations and warranties of the Company and the Purchasers contained
        in
Sections
        2
        and
3,
        and the
        agreements and covenants set forth in Sections
        4,
        5,
        10
        and
12 shall
        survive the Closing and the delivery and exercise of Securities, as applicable.
        Each Purchaser shall be responsible only for its own representations,
        warranties, agreements and covenants hereunder.

       

      
        
          
          

        

        
          -41-

          
            

          

        

        
          
          

        

      

       

      11.10 Further
        Assurances.
        Each
        party shall do and perform, or cause to be done and performed, all such further
        acts and things, and shall execute and deliver all such other agreements,
        certificates, instruments and documents, as any other party may reasonably
        request in order to carry out the intent and accomplish the purposes of this
        Agreement and the consummation of the transactions contemplated
        hereby.

       

      11.11 Indemnification.
        (a) In
        consideration of each of the Purchasers’ and the Collateral Agent’s execution
        and delivery of the Transaction Documents, to which it is a party, and acquiring
        the Securities thereunder and in addition to all of the Company’s other
        obligations under the Transaction Documents, the Company shall defend, protect,
        indemnify and hold harmless each such Purchaser and the Collateral Agent
        and
        each other holder of the Securities and all of their stockholders, partners,
        members, officers, directors, employees and direct or indirect investors
        and any
        of the foregoing Persons’ agents or other representatives (including, without
        limitation, those retained in connection with the transactions contemplated
        by
        this Agreement) (collectively, the “Indemnitees”)
        from
        and against any and all actions, causes of action, suits, claims, losses,
        costs,
        penalties, fees, liabilities and damages, and expenses in connection therewith
        (irrespective of whether any such Indemnitee is a party to the action for
        which
        indemnification hereunder is sought), and including reasonable attorneys’ fees
        and disbursements (the “Indemnified
        Liabilities”),
        incurred by any Indemnitee as a result of, or arising out of, or relating
        to (a)
        any misrepresentation or breach of any representation or warranty made by
        the
        Company in the Transaction Documents or any other certificate, instrument
        or
        document contemplated hereby or thereby, (b) any breach of any covenant,
        agreement or obligation of the Company contained in the Transaction Documents
        or
        any other certificate, instrument or document contemplated hereby or thereby
        or
        (c) any cause of action, suit or claim brought or made against such Indemnitee
        by a third party (including for these purposes a derivative action brought
        on
        behalf of the Company) and arising out of or resulting from (i) the execution,
        delivery, performance or enforcement of the Transaction Documents or any
        other
        certificate, instrument or document contemplated hereby or thereby, (ii)
        any
        transaction financed or to be financed in whole or in part, directly or
        indirectly, with the proceeds of the issuance of the Securities, (iii) any
        disclosure made by such Purchaser pursuant to Section
        4,
        or (iv)
        the status of such Purchaser or holder of the Securities as an investor in
        the
        Company pursuant to the transactions contemplated by the Transaction Documents.
        The Company shall not be obligated to indemnify an Indemnitee pursuant to
        this
Section
        12.11
        for
        Indemnified Liabilities to the extent such Indemnified Liabilities are caused
        by
        acts of gross negligence or willful misconduct on the part of such Indemnitee.
        To the extent that the foregoing undertaking by the Company may be unenforceable
        for any reason, the Company shall make the maximum contribution to the payment
        and satisfaction of each of the Indemnified Liabilities that is permissible
        under applicable law. Except as otherwise set forth herein, the mechanics
        and
        procedures with respect to the rights and obligations under this Section
        12.11
        shall be
        the same as those set forth in Section 5 of the Registration Rights
        Agreement.

       

      11.12 No
        Strict Construction.
        The
        language used in this Agreement and the other Transaction Documents will
        be
        deemed to be the language chosen by the parties to express their mutual intent,
        and no rules of strict construction will be applied against any
        party.

       

      
        
          
          

        

        
          -42-

          
            

          

        

        
          
          

        

      

       

      11.13 Remedies.
        Each
        Purchaser and each holder of the Securities shall have all rights and remedies
        set forth in the Transaction Documents and all rights and remedies which
        such
        holders have been granted at any time under any other agreement or contract
        and
        all of the rights which such holders have under any law. Any Person having
        any
        rights under any provision of this Agreement shall be entitled to enforce
        such
        rights specifically (without posting a bond or other security), to recover
        damages by reason of any breach of any provision of this Agreement and to
        exercise all other rights granted by law. Furthermore, the Company recognizes
        that in the event that it fails to perform, observe, or discharge any or
        all of
        its obligations under the Transaction Documents, any remedy at law may prove
        to
        be inadequate relief to the Purchasers. The Company therefore agrees that
        the
        Purchasers shall be entitled to seek temporary and permanent injunctive relief
        in any such case without the necessity of proving actual damages and without
        posting a bond or other security.

       

      11.14 Rescission
        and Withdrawal Right.
        Notwithstanding anything to the contrary contained in (and without limiting
        any
        similar provisions of) the Transaction Documents, whenever any Purchaser
        exercises a right, election, demand or option under a Transaction Document
        and
        the Company does not timely perform its related obligations within the periods
        therein provided, then such Purchaser may rescind or withdraw, in its sole
        discretion from time to time upon written notice to the Company, any relevant
        notice, demand or election in whole or in part without prejudice to its future
        actions and rights.

       

      11.15 Payment
        Set Aside.
        To the
        extent that the Company makes a payment or payments to the Purchasers hereunder
        or pursuant to any of the other Transaction Documents or the Purchasers enforce
        or exercise their rights hereunder or thereunder, and such payment or payments
        or the proceeds of such enforcement or exercise or any part thereof are
        subsequently invalidated, declared to be fraudulent or preferential, set
        aside,
        recovered from, disgorged by or are required to be refunded, repaid or otherwise
        restored to the Company, a trustee, receiver or any other Person under any
        law
        (including, without limitation, any bankruptcy law, foreign, state or federal
        law, common law or equitable cause of action), then to the extent of any
        such
        restoration the obligation or part thereof originally intended to be satisfied
        shall be revived and continued in full force and effect as if such payment
        had
        not been made or such enforcement or setoff had not occurred.

       

      11.16 Independent
        Nature of Purchasers’ Obligations and Rights.
        The
        obligations of each Purchaser under any Transaction Document are several
        and not
        joint with the obligations of any other Purchaser, and no Purchaser shall
        be
        responsible in any way for the performance of the obligations of any other
        Purchaser under any Transaction Document. Nothing contained herein or in
        any
        other Transaction Document, and no action taken by any Purchaser pursuant
        hereto
        or thereto, shall be deemed to constitute the Purchasers as, and the Company
        acknowledges that the Purchasers do not so constitute, a partnership, an
        association, a joint venture or any other kind of entity, or create a
        presumption that the Purchasers are in any way acting in concert or as a
        group,
        and the Company will not assert any such claim with respect to such obligations
        or the transactions contemplated by the Transaction Documents and the Company
        acknowledges that the Purchasers are not acting in concert or as a group
        with
        respect to such obligations or the transactions contemplated by the Transaction
        Documents. The Company acknowledges and each Purchaser confirms that it has
        independently participated in the negotiation of the transaction contemplated
        hereby with the advice of its own counsel and advisors. Each Purchaser shall
        be
        entitled to independently protect and enforce its rights, including, without
        limitation, the rights arising out of this Agreement or out of any other
        Transaction Documents, and it shall not be necessary for any other Purchaser
        to
        be joined as an additional party in any proceeding for such
        purpose.

       

      
        
          
          

        

        
          -43-

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        the
        undersigned have caused this Agreement to be duly executed as of the date
        first
        written above.

       

      
        	 	 	 
	 	
                COMPANY:

              
	 	 
	 	
                VERUTEK
                  TECHNOLOGIES, INC.

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

                Name:
                  

              
	 	Title:

      

       

      
        [Signature
          Page to Securities Purchase Agreement]

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

       

      
        	
                Purchaser

              	 	
                Address
                  and

                 Contact

                 Information
                  and

                Jurisdiction
                  of 

                Organization 

              	 	
                Principal

                Amount
                  

                of
                  Note

              	 	
                Purchase

                Price

              	 	
                Number
                  of 

                Warrants

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        B

       

      FORM
        OF  NOTE

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        C

       

      FORM
        OF WARRANT

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        D

       

      FORM
        OF REGISTRATION RIGHTS AGREEMENT

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        E

       

      SECURITY
        AGREEMENT

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        F

       

      FORM
        OF LEGAL OPINION

       

      (a) The
        Company is a corporation validly existing under, and by virtue of, the laws
        of
        the State of Nevada and is in good standing under such laws. The Company
        has
        requisite corporate power to own and operate its properties and assets, and
        to
        carry on its business as presently conducted. The Company is qualified to
        do
        business as a foreign corporation in the states of ________, ________ and
        ________. 

       

      (b) The
        Company has all requisite legal and corporate power to execute and deliver
        the
        Agreement, to sell and issue the Shares and Warrants under the Agreement,
        to
        issue the Warrant Shares issuable upon exercise of the Warrants and to carry
        out
        and perform its obligations under the terms of the Agreement. 

       

      (c) The
        Shares and Warrants have been duly authorized and when issued, delivered
        and
        paid for in accordance with the terms of the Agreement, will be validly issued,
        fully paid and nonassessable. The Warrant Shares have been duly and validly
        reserved, and, when issued in accordance with the terms of the Agreement,
        the
        Warrant and the Company’s Certificate of Incorporation, will be validly issued,
        fully paid and nonassessable

       

      (d) All
        corporate action on the part of the Company necessary for the authorization,
        execution and delivery of the Agreement and the other Transaction Documents
        by
        the Company, the authorization, sale, issuance and delivery of the Shares,
        the
        Warrants and the Warrant Shares and the performance by the Company of its
        obligations under such agreements has been taken. Such agreements have been
        duly
        and validly executed and delivered by the Company and each of them constitutes
        a
        valid and binding obligation of the Company, enforceable against the Company
        in
        accordance with their respective terms. 

       

      (e) The
        execution and delivery by the Company of the Agreement and the other Transaction
        Documents, the performance by the Company of its obligations under the Agreement
        and the other Transaction Documents, and the issuance of the Shares does
        not
        violate any provision of the Certificate of Incorporation or Bylaws, or any
        provision of any applicable federal or state law, rule or regulation known
        to us
        to be customarily applicable to transactions of this nature. The execution
        and
        delivery by the Company of such agreements, the performance by the Company
        of
        its obligations under such agreements, and the issuance of the Shares, the
        Warrants and the Warrant Shares does not materially violate, or constitute
        a
        material default under, any contract or agreement to which the Company is
        a
        party or by which the Company is bound that is filed as an exhibit to the
        Company’s Form 8-K filed with the Securities and Exchange Act under File Number
        [__________] or any filing thereafter with the Securities and Exchange
        Commission pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.
        

       

      (f) No
        consent, approval or authorization of or designation, declaration or filing
        with
        any federal governmental authority on the part of the Company is required
        in
        connection with the valid execution and delivery of the Agreement and the
        other
        Transaction Documents, the offer, sale or issuance of the Shares or the Warrants
        or the consummation by the Company of any other transaction contemplated
        by the
        Agreement except the filing of a Form D pursuant to Regulation D under the
        Securities Act of 1933, as amended.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (g) Subject
        to and assuming the accuracy of the Company’s and the Purchasers’
representations in Sections 2 and 3 of the Agreement, the offer, sale and
        issuance of the Shares and the Warrants in conformity with the terms of the
        Agreement constitute transactions exempt from the registration requirements
        of
        Section 5 of the Securities Act of 1933, as amended.

       

      (h) The
        Security Agreement creates in favor of the Collateral Agent, as security
        for the
        Company’s Obligations, a security interest in all the assets of the Company that
        is described as “Collateral” in the Security Agreement. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      DISCLOSURE
        SCHEDULESLOAN
        AND SECURITY AGREEMENT

      TABLE
        OF CONTENTS

      Page

      
        	
                SECTION
                  1.

              	
                DEFINITIONS

              	
                1

              
	 	 	 
	
                SECTION
                  2.

              	
                CREDIT
                  FACILITIES

              	
                24

              
	 	 	 
	
                2.1

              	
                Loans.

              	
                24

              
	
                2.2

              	
                Letters
                  of Credit.

              	
                25

              
	
                2.3

              	
                Term
                  Loans.

              	
                27

              
	 	 	 
	
                SECTION
                  3.

              	
                INTEREST
                  AND FEES

              	
                28

              
	 	 	 
	
                3.1

              	
                Interest.

              	
                28

              
	
                3.2

              	
                Closing
                  Fee.

              	
                29

              
	
                3.3

              	
                Intentionally
                  omitted

              	
                29

              
	
                3.4

              	
                Servicing
                  Fee.

              	
                29

              
	
                3.5

              	
                Unused
                  Line Fee.

              	
                29

              
	
                3.6

              	
                Letter
                  of Credit Fees

              	
                30

              
	
                3.7

              	
                Changes
                  in Laws and Increased Costs of Loans.

              	
                30

              
	 	 	 
	
                SECTION
                  4.

              	
                CONDITIONS
                  PRECEDENT

              	
                32

              
	 	 	 
	
                4.1

              	
                Conditions
                  Precedent to Initial Loans and Letters of Credit.

              	
                32

              
	
                4.2

              	
                Conditions
                  Precedent to All Loans and Letters of Credit

              	
                34

              
	 	 	 
	
                SECTION
                  5.

              	
                GRANT
                  AND PERFECTION OF SECURITY INTEREST

              	
                34

              
	 	 	 
	
                5.1

              	
                Grant
                  of Security Interest.

              	
                34

              
	
                5.2

              	
                Perfection
                  of Security Interests.

              	
                36

              
	 	 	 
	
                SECTION
                  6.

              	
                COLLECTION
                  AND ADMINISTRATION

              	
                40

              
	 	 	 
	
                6.1

              	
                Borrowers’
                  Loan Accounts.

              	
                40

              
	
                6.2

              	
                Statements.

              	
                40

              
	
                6.3

              	
                Collection
                  of Accounts.

              	
                40

              
	
                6.4

              	
                Payments

              	
                41

              
	
                6.5

              	
                Authorization
                  to Make Loans.

              	
                42

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                6.6

              	
                Use
                  of Proceeds.

              	
                42

              
	
                6.7

              	
                Appointment
                  of Administrative Borrower as Agent for Requesting Loans and Receipts
                  of
                  Loans and Statements

              	
                43

              
	
                6.8

              	
                Bank
                  Products

              	
                43

              
	 	 	 
	
                SECTION
                  7.

              	
                COLLATERAL
                  REPORTING AND COVENANTS

              	
                44

              
	 	 	 
	
                7.1

              	
                Collateral
                  Reporting

              	
                44

              
	
                7.2

              	
                Accounts
                  Covenants

              	
                44

              
	
                7.3

              	
                Inventory
                  Covenants.

              	
                45

              
	
                7.4

              	
                Equipment
                  and Real Property Covenants.

              	
                46

              
	
                7.5

              	
                Power
                  of Attorney.

              	
                46

              
	
                7.6

              	
                Right
                  to Cure.

              	
                47

              
	
                7.7

              	
                Access
                  to Premises.

              	
                48

              
	 	 	 
	
                SECTION
                  8.

              	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                48

              
	 	 	 
	
                8.1

              	
                Corporate
                  Existence, Power and Authority.

              	
                48

              
	
                8.2

              	
                Name;
                  State of Organization; Chief Executive Office; Collateral
                  Locations.

              	
                49

              
	
                8.3

              	
                Financial
                  Statements; No Material Adverse Change.

              	
                49

              
	
                8.4

              	
                Priority
                  of Liens; Title to Properties.

              	
                50

              
	
                8.5

              	
                Tax
                  Returns.

              	
                50

              
	
                8.6

              	
                Litigation.

              	
                50

              
	
                8.7

              	
                Compliance
                  with Other Agreements and Applicable Laws.

              	
                50

              
	
                8.8

              	
                Environmental
                  Compliance.

              	
                51

              
	
                8.9

              	
                Employee
                  Benefits.

              	
                52

              
	
                8.10

              	
                Bank
                  Accounts.

              	
                52

              
	
                8.11

              	
                Intellectual
                  Property.

              	
                52

              
	
                8.12

              	
                Subsidiaries;
                  Affiliates; Capitalization; Solvency.

              	
                53

              
	
                8.13

              	
                Labor
                  Disputes.

              	
                54

              
	
                8.14

              	
                Restrictions
                  on Subsidiaries.

              	
                54

              
	
                8.15

              	
                Material
                  Contracts.

              	
                55

              
	
                8.16

              	
                Payable
                  Practices.

              	
                55

              
	
                8.17

              	
                Accuracy
                  and Completeness of Information.

              	
                55

              
	
                8.18

              	
                Survival
                  of Warranties; Cumulative.

              	
                55

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                SECTION
                  9.

              	
                AFFIRMATIVE
                  AND NEGATIVE COVENANTS

              	
                55

              
	 	 	 
	
                9.1

              	
                Maintenance
                  of Existence

              	
                55

              
	
                9.2

              	
                New
                  Collateral Locations.

              	
                56

              
	
                9.3

              	
                Compliance
                  with Laws, Regulations, Etc.

              	
                56

              
	
                9.4

              	
                Payment
                  of Taxes and Claims.

              	
                57

              
	
                9.5

              	
                Insurance.

              	
                57

              
	
                9.6

              	
                Financial
                  Statements and Other Information.

              	
                58

              
	
                9.7

              	
                Sale
                  of Assets, Consolidation, Merger, Dissolution, Etc.

              	
                60

              
	
                9.8

              	
                Encumbrances.

              	
                62

              
	
                9.9

              	
                Indebtedness.

              	
                63

              
	
                9.10

              	
                Loans,
                  Investments, Etc.

              	
                65

              
	
                9.11

              	
                Dividends
                  and Redemptions.

              	
                67

              
	
                9.12

              	
                Transactions
                  with Affiliates.

              	
                68

              
	
                9.13

              	
                Compliance
                  with ERISA.

              	
                68

              
	
                9.14

              	
                End
                  of Fiscal Years; Fiscal Quarters.

              	
                69

              
	
                9.15

              	
                Change
                  in Business.

              	
                69

              
	
                9.16

              	
                Limitation
                  of Restrictions Affecting Subsidiaries.

              	
                69

              
	
                9.17

              	
                Fixed
                  Charge
                  Coverage.

              	
                69

              
	
                9.18

              	
                Intentionally
                  omitted

              	
                69

              
	
                9.19

              	
                License
                  Agreements.

              	
                69

              
	
                9.20

              	
                Foreign
                  Assets Control Regulations, Etc

              	
                70

              
	
                9.21

              	
                Intentionally
                  omitted

              	
                71

              
	
                9.22

              	
                Costs
                  and Expenses.

              	
                71

              
	
                9.23

              	
                Further
                  Assurances.

              	
                71

              
	 	 	 
	
                SECTION
                  10.

              	
                EVENTS
                  OF DEFAULT AND REMEDIES

              	
                72

              
	 	 	 
	
                10.1

              	
                Events
                  of Default.

              	
                72

              
	
                10.2

              	
                Remedies.

              	
                74

              
	 	 	 
	
                SECTION
                  11.

              	
                JURY
                  TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

              	
                77

              
	 	 	 
	
                11.1

              	
                Governing
                  Law; Choice of Forum; Service of Process; Jury Trial
                  Waiver.

              	
                77

              
	
                11.2

              	
                Waiver
                  of Notices.

              	
                78

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                11.3

              	
                Amendments
                  and Waivers.

              	
                79

              
	
                11.4

              	
                Waiver
                  of Counterclaims.

              	
                79

              
	
                11.5

              	
                Indemnification.

              	
                79

              
	 	 	 
	
                SECTION
                  12.

              	
                TERM
                  OF AGREEMENT; MISCELLANEOUS

              	
                80

              
	 	 	 
	
                12.1

              	
                Term.

              	
                80

              
	
                12.2

              	
                Interpretative
                  Provisions.

              	
                81

              
	
                12.3

              	
                Notices.

              	
                83

              
	
                12.4

              	
                Partial
                  Invalidity.

              	
                84

              
	
                12.5

              	
                Successors.

              	
                84

              
	
                12.6

              	
                Entire
                  Agreement.

              	
                84

              
	
                12.7

              	
                USA
                  Patriot Act

              	
                85

              
	
                12.8

              	
                Counterparts,
                  Etc.

              	
                85

              

      

      

      

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
         

         

        LOAN
          AND SECURITY AGREEMENT

         

        This
          Loan
          and Security Agreement dated May 11, 2007 is entered into by and among
          Wachovia
          Bank, National Association, a national banking association (“Lender” as
          hereinafter further defined) and Langer, Inc, a Delaware corporation (“Langer”),
          Silipos, Inc, a Delaware corporation (“Silipos”), Twincraft, Inc. a Vermont
          corporation (“Twincraft”) and Regal Medical, Inc. (formerly knows as Regal
          Acquisition Co.), a Delaware corporation (“Regal” together with Langer, Silipos,
          Twincraft, and Regal each individually a “Borrower” and a “Guarantor” and
          collectively, “Borrowers” and “Guarantors” as such terms are hereinafter further
          defined).

         

        WITNESSETH:

         

        WHEREAS,
          Borrowers and Guarantors have requested that Lender enter into financing
          arrangements with Borrowers pursuant to which Lender may make loans and
          provide
          other financial accommodations to Borrowers; and

         

        WHEREAS,
          Lender is willing to agree to make such loans and provide such financial
          accommodations on the terms and conditions set forth herein;

         

        NOW,
          THEREFORE, in consideration of the mutual conditions and agreements set
          forth
          herein, and for other good and valuable consideration, the receipt and
          sufficiency of which is hereby acknowledged, the parties hereto agree as
          follows:

        

          SECTION
            1.  DEFINITIONS

           

          For
            purposes of this Agreement, the following terms shall have the respective
            meanings given to them below:

           

          1.1 “Accounts”
            shall mean, as to each Borrower and Guarantor, all present and future
            rights of
            such Borrower and Guarantor to payment of a monetary obligation, whether
            or not
            earned by performance, which is not evidenced by chattel paper or an
            instrument,
            (a) for property that has been or is to be sold, leased, licensed, assigned,
            or
            otherwise disposed of, (b) for services rendered or to be rendered, (c)
            for a
            secondary obligation incurred or to be incurred, or (d) arising out of
            the use
            of a credit or charge card or information contained on or for use with
            the
            card.

           

          1.2 “Adjusted
            Eurodollar Rate” shall mean, with respect to each Interest Period for any
            Eurodollar Rate Loan comprising part of the same borrowing (including
            conversions, extensions and renewals), the rate per annum determined
            by dividing
            (a) the London Interbank Offered Rate for such Interest Period by (b)
            a
            percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
            purposes
            hereof, “Reserve Percentage” shall mean for any day, that percentage (expressed
            as a decimal) which is in effect from time to time under Regulation D
            of the
            Board of Governors of the Federal Reserve System (or any successor),
            as such
            regulation may be amended from time to time or any successor regulation,
            as the
            maximum reserve requirement (including, without limitation, any basic,
            supplemental, emergency, special, or marginal reserves) applicable with
            respect
            to Eurocurrency liabilities as that term is defined in Regulation D (or
            against
            any other category of liabilities that includes deposits by reference
            to which
            the interest rate of Eurodollar Loans is determined), whether or not
            Lender has
            any Eurocurrency liabilities subject to such reserve requirement at that
            time.
            Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
            and as
            such shall be deemed subject to reserve requirements without benefits
            of credits
            for proration, exceptions or offsets that may be available from time
            to time to
            Lender. The Adjusted Eurodollar Rate shall be adjusted automatically
            on and as
            of the effective date of any change in the Reserve Percentage.

           

          
            
               

            

            
              B-1

              
                

              

            

            
               

            

          

           

          1.3 Intentionally
            omitted.

           

          1.4 “Administrative
            Borrower” shall mean Langer in its capacity as Administrative Borrower on behalf
            of itself and the other Borrowers pursuant to Section 6.7 hereof and
            it
            successors and assigns in such capacity.

           

          1.5 “Affiliate”
            shall mean, with respect to a specified Person, any other Person which
            directly
            or indirectly, through one or more intermediaries, controls or is controlled
            by
            or is under common control with such Person, and without limiting the
            generality
            of the foregoing, includes (a) any Person which beneficially owns or
            holds ten
            (10%) percent or more of any class of Voting Stock of such Person or
            other
            equity interests in such Person, (b) any Person of which such Person
            beneficially owns or holds ten (10%) percent or more of any class of
            Voting
            Stock or in which such Person beneficially owns or holds ten (10%) percent
            or
            more of the equity interests and (c) any director or executive officer
            of such
            Person. For the purposes of this definition, the term “control” (including with
            correlative meanings, the terms “controlled by” and “under common control
            with”), as used with respect to any Person, means the possession, directly
            or
            indirectly, of the power to direct or cause the direction of the management
            and
            policies of such Person, whether through the ownership of Voting Stock,
            by
            agreement or otherwise.

           

          1.5.1 “Authorized
            Signatory” shall mean any person designated by Borrower on Schedule 1.5.1 to the
            Information Certificate as having authority to sign documents and request
            advances on behalf of Borrower.

          

          1.5.2 “Availability
            Block” shall mean Ten (10%) percent of the Borrowing Base; provided,
            that,
            the
            Availability Block shall be zero ($0) upon: (a) Lender becoming satisfied
            in its
            discretion with the Borrower’s financial reporting; (b) Lender having received
            satisfactory financial projections; (c) Borrower having maintained or
            on a pro
            forma basis will maintain a Fixed Charge Coverage Ratio of no less than
            1.0
            to1.0; and (d) no Default or Event of Default shall exist or have occurred
            and
            be continuing.

           

          1.5.3 “Bank
            Products” shall mean any one or more of the following types or services or
            facilities provided to Borrowers by Lender or any Affiliate of Lender:
            (a)
            credit cards or stored value cards or (b) cash management or related
            services,
            including (i) the automated clearinghouse transfer of funds for the account
            of
            Borrowers pursuant to agreement or overdraft for any accounts of Borrowers
            maintained at Lender that are subject to the control of Lender, whether
            pursuant
            to any Deposit Account Control Agreement to which Lender is a party or
            by Lender
            being the bank at which the deposit account is maintained, as applicable,
            and
            (ii) controlled disbursement services and (c) Hedge Agreements if and
            to the
            extent permitted hereunder. 

          
             

            
              
                 

              

              
                B-2

                
                  

                

              

              
                 

              

            

             

          

          1.6 “Blocked
            Accounts” shall have the meaning set forth in Section 6.3 hereof.

           

          1.7 “Borrowers”
            shall mean, collectively, the following (together with their respective
            successors and assigns): (a) Langer, (b) Silipos, (c) Twincraft, (d)
            Regal; and
            (e) any other Person that at any time after the date hereof becomes a
            Borrower;
            each sometimes being referred to herein individually as a
“Borrower”.

           

          1.8 “Borrowing
            Base” shall mean, at any time, as to each Borrower, the amount equal
            to:

           

          (a) the
            sum
            of: (i) Eighty-Five (85%) percent of the Eligible Accounts of such Borrower,
            plus
            (ii) the
            lesser of (A) the Foreign Account Loan Limit or (B) Forty (40%) percent
            of the
            Eligible Foreign Accounts, plus
            (iii)
            the lesser of (A) the Fixed Asset Loan Limit or (B) Eighty-Five (85%)
            percent of
            the net orderly liquidation value of Eligible Equipment plus
            Seventy
            (70%) percent of the fair market value of the Eligible Real Property
            plus
            (iv) the
            lesser of (A) the Inventory Loan Limit for such Borrower or (B) the sum
            of: (1)
            Sixty (60 %) percent of the Value of the Eligible Inventory of such Borrower
            consisting of raw materials and finished goods or (C) Eighty-Five (85
            %) percent
            of the Net Recovery Percentage multiplied by the Value of such Eligible
            Inventory, minus 

           

          (b) Letter
            of
            Credit Obligations; minus

           

          (c) The
            balance of all Term Loans; minus

           

          (d) Reserves
            attributable to such Borrower.

           

          For
            purposes only of applying the Inventory Loan Limit, Lender may treat
            the then
            undrawn amounts of outstanding Letters of Credit for the purpose of purchasing
            Eligible Inventory as Revolving Loans to the extent Lender is in effect
            basing
            the issuance of the Letter of Credit on the Value of the Eligible Inventory
            being purchased with such Letter of Credit. In determining the actual
            amounts of
            such Letter of Credit to be so treated for purposes of the sublimit,
            the
            outstanding Revolving Loans and Reserves shall be attributed first to
            any
            components of the lending formulas set forth above that are not subject
            to such
            sublimit, before being attributed to the components of the lending formulas
            subject to such sublimit. The amounts of Eligible Inventory of any Borrower
            shall, at Lender's option, be determined based on the lesser of the amount
            of
            Inventory set forth in the general ledger of such Borrower or the perpetual
            inventory record maintained by such Borrower.

           

          1.9 “Business
            Day” shall mean any day other than a Saturday, Sunday, or other day on which
            commercial banks are authorized or required to close under the laws of
            the State
            of New York or the State of North Carolina, and a day on which Lender is
            open for the transaction of business, except that if a determination
            of a
            Business Day shall relate to any Eurodollar Rate Loans, the term Business
            Day
            shall also exclude any day on which banks are closed for dealings in
            dollar
            deposits in the London interbank market or other applicable Eurodollar
            Rate
            market. When not capitalized, “day” shall mean a calendar day.

          
             

            
              
                 

              

              
                B-3

                
                  

                

              

              
                 

              

            

             

          

          1.10 “Capital
            Leases” shall mean, as applied to any Person, any lease of (or any agreement
            conveying the right to use) any property (whether real, personal or mixed)
            by
            such Person as lessee which in accordance with GAAP is required to be
            reflected
            as a liability on the balance sheet of such Person.

           

          1.11 “Capital
            Stock” shall mean, with respect to any Person, any and all shares, interests,
            participations or other equivalents (however designated) of such Person's
            capital stock or partnership, limited liability company or other equity
            interests at any time outstanding, and any and all rights, warrants or
            options
            exchangeable for or convertible into such capital stock or other interests
            (but
            excluding any debt security that is exchangeable for or convertible into
            such
            capital stock).

           

          1.11.1 “Cash
            Dominion Event” shall mean that (a) a Default or Event of Default shall exist or
            have occurred and be continuing or (b) the Excess Availability shall
            be less
            than $3,000,000; or (c) the Obligations shall be in excess of
            $10,000,000.

           

          1.12 “Cash
            Equivalents” shall mean, at any time, (a) any evidence of Indebtedness with a
            maturity date of ninety (90) days or less issued or directly and fully
            guaranteed or insured by the United States of America or any agency or
            instrumentality thereof; provided,
            that,
            the
            full faith and credit of the United States of America is pledged in support
            thereof; (b) certificates of deposit or bankers' acceptances with a maturity
            of
            ninety (90) days or less of any financial institution that is a member
            of the
            Federal Reserve System having combined capital and surplus and undivided
            profits
            of not less than $1,000,000,000; (c) commercial paper (including variable
            rate
            demand notes) with a maturity of ninety (90) days or less issued by a
            corporation (except an Affiliate of any Borrower or Guarantor) organized
            under
            the laws of any State of the United States of America or the District
            of
            Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a
            division of The McGraw-Hill Companies, Inc. or at least P-1 by Moody's
            Investors
            Service, Inc.; (d) repurchase obligations with a term of not more than
            thirty
            (30) days for underlying securities of the types described in clause
            (a) above
            entered into with any financial institution having combined capital and
            surplus
            and undivided profits of not less than $1,000,000,000; (e) repurchase
            agreements
            and reverse repurchase agreements relating to marketable direct obligations
            issued or unconditionally guaranteed by the United States of America
            or issued
            by any governmental agency thereof and backed by the full faith and credit
            of
            the United States of America, in each case maturing within ninety (90)
            days or
            less from the date of acquisition; provided,
            that,
            the
            terms of such agreements comply with the guidelines set forth in the
            Federal
            Financial Agreements of Depository Institutions with Securities Dealers
            and
            Others, as adopted by the Comptroller of the Currency on October 31,
            1985; (f)
            investments in money market funds and mutual funds which invest substantially
            all of their assets in securities of the types described in clauses (a)
            through
            (e) above; and (g) such other accounts as may be approved in writing
            by
            Lender.

          
             

            
              
                 

              

              
                B-4

                
                  

                

              

              
                 

              

            

             

          

          1.13 “Change
            of Control” shall mean (a) the transfer (in one transaction or a series of
            transactions) of all or substantially all of the assets of any Borrower
            or
            Guarantor to any Person or group (as such term is used in Section 13(d)(3)
            of
            the Exchange Act), other than as permitted in Section 9.7 hereof; (b)
            the
            liquidation or dissolution of any Borrower or Guarantor or the adoption
            of a
            plan by the stockholders of any Borrower or Guarantor relating to the
            dissolution or liquidation of such Borrower or Guarantor, other than
            as
            permitted in Section 9.7 hereof; (c) the acquisition by any Person or
            group (as
            such term is used in Section 13(d)(3) of the Exchange Act) of beneficial
            ownership, directly or indirectly, of a majority of the voting power
            of the
            total outstanding Voting Stock of any Borrower or Guarantor or the Board
            of
            Directors of any Borrower or Guarantor; (d) during any period of two
            (2)
            consecutive years, individuals who at the beginning of such period constituted
            the Board of Directors of any Borrower or Guarantor whose nomination
            for
            election by the stockholders of such Borrower or Guarantor, as the case
            may be,
            was approved by a vote of at least sixty-six and two-thirds (66 2/3%)
            percent of
            the directors then still in office who were either directors at the beginning
            of
            such period or whose election or nomination for election was previously
            so
            approved) cease for any reason to constitute a majority of the Board
            of
            Directors of any Borrower or Guarantor then still in office; or (e) the
            failure
            of Parent to own directly or indirectly one hundred (100%) percent of
            the voting
            power of the total outstanding Voting Stock of any other Borrower or
            Guarantor.

           

          1.14 “Code”
            shall mean the Internal Revenue Code of 1986, as the same now exists
            or may from
            time to time hereafter be amended, modified, recodified or supplemented,
            together with all rules, regulations and interpretations thereunder or
            related
            thereto.

           

          1.15 “Collateral”
            shall have the meaning set forth in Section 5 hereof.

           

          1.16 “Collateral
            Access Agreement” shall mean an agreement in writing, in form and substance
            satisfactory to Lender, from any lessor of premises to any Borrower or
            Guarantor, or any other person to whom any Collateral is consigned or
            who has
            custody, control or possession of any such Collateral or is otherwise
            the owner
            or operator of any premises on which any of such Collateral is located,
            in favor
            of Lender with respect to the Collateral at such premises or otherwise
            in the
            custody, control or possession of such lessor, consignee or other
            person.

           

          1.16.1 “Conversion
            Shares” shall mean the shares of Langer common stock which are issuable
            hereafter upon conversion of the Parent’s Convertible Notes.

           

          1.16.2 “Convertible
            Notes” shall mean the five (5%) percent convertible subordinated notes due
            December 7, 2011, issued by the Parent in the principal amount of
            $28,880,000.

           

          1.17 “Credit
            Facility” shall mean the Loans and Letters of Credit provided to or for the
            benefit of any Borrower pursuant to Sections 2.1, 2.2 and 2.3
            hereof.

           

          1.18 “Default”
            shall mean an act, condition or event which with notice or passage of
            time or
            both would constitute an Event of Default.

          
             

            
              
                 

              

              
                B-5

                
                  

                

              

              
                 

              

            

             

          

          1.19 “Deposit
            Account Control Agreement” shall mean an agreement in writing, in form and
            substance satisfactory to Lender, by and among Lender, the Borrower or
            Guarantor
            with a deposit account at any bank and the bank at which such deposit
            account is
            at any time maintained which provides that such bank will comply with
            instructions originated by Lender directing disposition of the funds
            in the
            deposit account without further consent by such Borrower or Guarantor
            and has
            such other terms and conditions as Lender may require.

           

          1.19.1 “EBITDA”
            shall mean, for any period, all earnings before all interest, tax obligations
            and depreciation and amortization expense of the Company for such period,
            all
            determined in conformity with GAAP on a basis consistent with the latest
            audited
            financial statements of the Company, but excluding the effect of extraordinary
            and/or nonrecurring gains or losses for such period.

          

           

          1.20 “Eligible
            Accounts” shall mean Accounts created by a Borrower that in each case satisfy
            the criteria set forth below as determined by Lender. In general, Accounts
            shall
            be Eligible Accounts if:

           

          (a) such
            Accounts arise from the actual and bona fide
            sale and
            delivery of goods by such Borrower or rendition of services by such Borrower
            in
            the ordinary course of its business which transactions are completed
            in
            accordance with the terms and provisions contained in any documents related
            thereto or, if there are no such documents, the Borrower’s customary practices
            in the sale of goods or rendering of services;

           

          (b) such
            Accounts are not unpaid more than sixty (60) days after the date of the
            original
            due date or ninety (90) days after the original invoice date;

           

          (c) such
            Accounts comply with the terms and conditions contained in Section 7.2(b)
            of
            this Agreement;

           

          (d) such
            Accounts do not arise from sales on consign-ment, guaranteed sale, sale
            and
            return, sale on approval, or other terms under which payment by the account
            debtor may be conditional or contingent;

           

          (e) the
            chief
            executive office of the account debtor with respect to such Accounts
            is located
            in the United States of America or Canada (provided,
            that,
            at any
            time promptly upon Lender's request, such Borrower shall execute and
            deliver, or
            cause to be executed and delivered, such other agreements, documents
            and
            instruments as may be required by Lender to perfect the security interests
            of
            Lender in those Accounts of an account debtor with its chief executive
            office or
            principal place of business in Canada in accordance with the applicable
            laws of
            the Province of Canada in which such chief executive office or principal
            place
            of business is located and take or cause to be taken such other and further
            actions as Lender may request to enable Lender as secured party with
            respect
            thereto to collect such Accounts under the applicable Federal or Provincial
            laws
            of Canada) or, at Lender's option, if the chief executive office and
            principal
            place of business of the account debtor with respect to such Accounts
            is located
            other than in the United States of America or Canada, then if either:
            (i) the
            account debtor has delivered to such Borrower an irrevocable letter of
            credit
            issued or confirmed by a bank satisfactory to Lender and payable only
            in the
            United States of America and in U.S. dollars, sufficient to cover such
            Account,
            in form and substance satisfactory to Lender and if required by Lender,
            the
            original of such letter of credit has been delivered to Lender or Lender's
            agent
            and the issuer thereof, and such Borrower has complied with the terms
            of Section
            5.2(f) hereof with respect to the assignment of the proceeds of such
            letter of
            credit to Lender or naming Lender as transferee beneficiary thereunder,
            as
            Lender may specify, or (ii) such Account is subject to credit insurance
            payable
            to Lender issued by an insurer and on terms and in an amount acceptable
            to
            Lender, or (iii) such Account is otherwise acceptable in all respects
            to Lender
            (subject to such lending formula with respect thereto as Lender may
            determine);

          
             

            
              
                 

              

              
                B-6

                
                  

                

              

              
                 

              

            

             

          

          (f) such
            Accounts do not consist of progress billings (such that the obligation
            of the
            account debtors with respect to such Accounts is conditioned upon such
            Borrower's satisfactory completion of any further performance under the
            agreement giving rise thereto), bill and hold invoices or retainage invoices,
            except as to bill and hold invoices, if Lender shall have received an
            agreement
            in writing from the account debtor, in form and substance satisfactory
            to
            Lender, confirming the unconditional obligation of the account debtor
            to take
            the goods related thereto and pay such invoice; 

           

          (g) the
            account debtor with respect to such Accounts has not asserted a counterclaim,
            defense or dispute and is not owed or does not claim to be owed any amounts
            that
            may give rise to any right of setoff or recoupment against such Accounts
            (but
            the portion of the Accounts of such account debtor in excess of the amount
            at
            any time and from time to time owed by such Borrower to such account
            debtor or
            claimed owed by such account debtor may be deemed Eligible
            Accounts);

           

          (h) there
            are
            no facts, events or occurrences which would impair the validity, enforceability
            or collectability of such Accounts or reduce the amount payable or delay
            payment
            thereunder; 

           

          (i) such
            Accounts are subject to the first priority, valid and perfected security
            interest of Lender and any goods giving rise thereto are not, and were
            not at
            the time of the sale thereof, subject to any liens except those permitted
            in
            this Agreement that are subject to an intercreditor agreement in form
            and
            substance satisfactory to Lender between the holder of such security
            interest or
            lien and Lender;

           

          (j) neither
            the account debtor nor any officer or employee of the account debtor
            with
            respect to such Accounts is an officer, employee, agent or other Affiliate
            of
            any Borrower or Guarantor;

           

          (k) the
            account debtors with respect to such Accounts are not any foreign government,
            the United States of America, any State, political subdivision, department,
            agency or instrumentality thereof, unless, if the account debtor is the
            United
            States of America, any State, political subdivision, department, agency
            or
            instrumentality thereof, upon Lender's request, the Federal Assignment
            of Claims
            Act of 1940, as amended or any similar State or local law, if applicable,
            has
            been complied with in a manner satisfactory to Lender; 

          
             

            
              
                 

              

              
                B-7

                
                  

                

              

              
                 

              

            

             

          

          (l) there
            are
            no proceedings or actions which are threatened or pending against the
            account
            debtors with respect to such Accounts which might result in any material
            adverse
            change in any such account debtor's financial condition (including, without
            limitation, any bankruptcy, dissolution, liquidation, reorganization
            or similar
            proceeding); 

           

          (m) the
            aggregate amount of such Accounts owing by a single account debtor do
            not
            constitute more than fifteen (15%) percent of the aggregate amount of
            all
            otherwise Eligible Accounts;

           

          (n) such
            Accounts are not owed by an account debtor who has Accounts which constitute
            more than fifty (50%) percent of the total Accounts of such account debtor
            which
            remain unpaid in excess of the number of days set forth in
            Section 1.20(b);

           

          (o) the
            account debtor is not located in a state requiring the filing of a Notice
            of
            Business Activities Report or similar report in order to permit such
            Borrower to
            seek judicial enforcement in such State of payment of such Account, unless
            such
            Borrower has qualified to do business in such state or has filed a Notice
            of
            Business Activities Report or equivalent report for the then current
            year or
            such failure to file and inability to seek judicial enforcement is capable
            of
            being remedied without any material delay or material cost;

           

          (p) such
            Accounts are owed by account debtors whose total indebtedness to such
            Borrower
            does not exceed the credit limit with respect to such account debtors
            as
            determined by such Borrower from time to time, to the extent such credit
            limit
            as to any account debtor is established consistent with the current practices
            of
            such Borrower as of the date hereof and such credit limit is acceptable
            to
            Lender (but the portion of the Accounts not in excess of such credit
            limit may
            be deemed Eligible Accounts); and 

           

          (q) such
            Accounts are owed by account debtors deemed creditworthy at all times
            by Lender
            in good faith.

           

          The
            criteria for Eligible Accounts set forth above may only be changed and
            any new
            criteria for Eligible Accounts may only be established by Lender in good
            faith
            based on either: (i) an event, condition or other circumstance arising
            after the
            date hereof, or (ii) an event, condition or other circumstance existing
            on the
            date hereof to the extent Lender has no written notice thereof from a
            Borrower
            prior to the date hereof, in either case under clause (i) or (ii) which
            adversely affects or could reasonably be expected to adversely affect
            the
            Accounts in the good faith determination of Lender. Any Accounts that
            are not
            Eligible Accounts shall nevertheless be part of the Collateral.

           

          1.20.1 “Eligible
            Equipment” shall mean Equipment acceptable to Lender for borrowing purposes
            having been appraised by an appraiser acceptable to Lender in good
            faith.

          
             

            
              
                 

              

              
                B-8

                
                  

                

              

              
                 

              

            

             

          

          1.20.2 “Eligible
            Foreign Accounts” shall mean Accounts created by a Borrower that in each case
            satisfy the criteria set forth below as determined by Lender in good
            faith. In
            general, Accounts shall be Eligible Foreign Accounts if:

           

          (a) such
            Accounts arise from the actual and bona fide
            sale and
            delivery of goods by such Borrower or rendition of services by such Borrower
            in
            the ordinary course of its business which transactions are completed
            in
            accordance with the terms and provisions contained in any documents related
            thereto or, if there are no such documents, the Borrower’s customary practices
            in the sale of goods or rendering of services;

           

          (b) such
            Accounts are not unpaid more than sixty (60) days after the date of the
            original
            due date or ninety (90) days after the original invoice date;

           

          (c) such
            Accounts comply with the terms and conditions contained in Section 7.2(b)
            of
            this Agreement;

           

          (d) such
            Accounts do not arise from sales on consign-ment, guaranteed sale, sale
            and
            return, sale on approval, or other terms under which payment by the account
            debtor may be conditional or contingent;

           

          (e) the
            chief
            executive office of the account debtor with respect to such Accounts
            is located
            in any country other than the United States of America or Canada approved
            in
            writing by the Lender (provided,
            that,
            at any
            time promptly upon Lender's request, such Borrower shall execute and
            deliver, or
            cause to be executed and delivered, such other agreements, documents
            and
            instruments as may be required by Lender to perfect the security interests
            of
            Lender in such Eligible Foreign Accounts of an account debtor provided
            that such
            Account is acceptable in all respects to Lender (subject to such lending
            formula
            with respect thereto as Lender may determine);

           

          (f) such
            Accounts do not consist of progress billings (such that the obligation
            of the
            account debtors with respect to such Accounts is conditioned upon such
            Borrower's satisfactory completion of any further performance under the
            agreement giving rise thereto), bill and hold invoices or retainage invoices,
            except as to bill and hold invoices, if Lender shall have received an
            agreement
            in writing from the account debtor, in form and substance satisfactory
            to
            Lender, confirming the unconditional obligation of the account debtor
            to take
            the goods related thereto and pay such invoice; 

           

          (g) the
            account debtor with respect to such Accounts has not asserted a counterclaim,
            defense or dispute and is not owed or does not claim to be owed any amounts
            that
            may give rise to any right of setoff or recoupment against such Accounts
            (but
            the portion of the Accounts of such account debtor in excess of the amount
            at
            any time and from time to time owed by such Borrower to such account
            debtor or
            claimed owed by such account debtor may be deemed Eligible Foreign
            Accounts);

          
             

            
              
                 

              

              
                B-9

                
                  

                

              

              
                 

              

            

             

          

          (h) there
            are
            no facts, events or occurrences which would impair the validity, enforceability
            or collectability of such Accounts or reduce the amount payable or delay
            payment
            thereunder; 

           

          (i) such
            Accounts are subject to the first priority, valid and perfected security
            interest of Lender and any goods giving rise thereto are not, and were
            not at
            the time of the sale thereof, subject to any liens except those permitted
            in
            this Agreement that are subject to an intercreditor agreement in form
            and
            substance satisfactory to Lender between the holder of such security
            interest or
            lien and Lender;

           

          (j) neither
            the account debtor nor any officer or employee of the account debtor
            with
            respect to such Accounts is an officer, employee, agent or other Affiliate
            of
            any Borrower or Guarantor;

           

          (k) the
            account debtors with respect to such Accounts are not any foreign government;
            

           

          (l) there
            are
            no proceedings or actions which are threatened or pending against the
            account
            debtors with respect to such Accounts which might result in any material
            adverse
            change in any such account debtor's financial condition (including, without
            limitation, any bankruptcy, dissolution, liquidation, reorganization
            or similar
            proceeding); 

           

          (m) the
            aggregate amount of such Accounts owing by a single account debtor do
            not
            constitute more than fifteen (15%) percent of the aggregate amount of
            all
            otherwise Eligible Foreign Accounts;

           

          (n) such
            Accounts are not owed by an account debtor who has Accounts which constitute
            more than fifty (50%) percent of the total Accounts of such account debtor
            which
            remain unpaid in excess of the number of days set forth in
            Section 1.20(b);

           

          (o) the
            account debtor is not located in a state requiring the filing of a Notice
            of
            Business Activities Report or similar report in order to permit such
            Borrower to
            seek judicial enforcement in such State of payment of such Account, unless
            such
            Borrower has qualified to do business in such state or has filed a Notice
            of
            Business Activities Report or equivalent report for the then current
            year or
            such failure to file and inability to seek judicial enforcement is capable
            of
            being remedied without any material delay or material cost;

           

          (p) such
            Accounts are owed by account debtors whose total indebtedness to such
            Borrower
            does not exceed the credit limit with respect to such account debtors
            as
            determined by such Borrower from time to time, to the extent such credit
            limit
            as to any account debtor is established consistent with the current practices
            of
            such Borrower as of the date hereof and such credit limit is acceptable
            to
            Lender (but the portion of the Accounts not in excess of such credit
            limit may
            be deemed Eligible Foreign Accounts); and 

           

          (q) such
            Accounts are owed by account debtors deemed creditworthy at all times
            by Lender
            in good faith.

          
             

            
              
                 

              

              
                B-10

                
                  

                

              

              
                 

              

            

             

          

          The
            criteria for Eligible Foreign Accounts set forth above may only be changed
            and
            any new criteria for Eligible Foreign Accounts may only be established
            by Lender
            in good faith based on either: (i) an event, condition or other circumstance
            arising after the date hereof, or (ii) an event, condition or other circumstance
            existing on the date hereof to the extent Lender has no written notice
            thereof
            from a Borrower prior to the date hereof, in either case under clause
            (i) or
            (ii) which adversely affects or could reasonably be expected to adversely
            affect
            the Accounts in the good faith determination of Lender. Any Accounts
            that are
            not Eligible Foreign Accounts shall nevertheless be part of the
            Collateral.

           

          1.21 “Eligible
            Inventory” shall mean, as to each Borrower, Inventory of such Borrower
            consisting of finished goods held for resale in the ordinary course of
            the
            business of such Borrower and raw materials for such finished goods that,
            in
            each case, satisfy the criteria set forth below as determined in good
            faith by
            Lender. In general, Eligible Inventory shall not include (a) work-in-process;
            (b) components which are not part of finished goods; (c) spare parts
            for
            equipment; (d) packaging and shipping materials; (e) supplies used or
            consumed
            in such Borrower's business; (f) Inventory at premises other than those
            owned or
            leased and controlled by any Borrower; (g) Inventory subject to a security
            interest or lien in favor of any Person other than Lender except those
            permitted
            in this Agreement that are subject to an intercreditor agreement in form
            and
            substance satisfactory to Lender between the holder of such security
            interest or
            lien and Lender; (h) bill and hold goods; (i) unserviceable, obsolete
            or slow
            moving Inventory; (j) Inventory that is not subject to the first priority,
            valid
            and perfected security interest of Lender; (k) returned, damaged and/or
            defective Inventory; (l) Inventory purchased or sold on consignment and
            (m)
            Inventory located outside the United States of America or Canada. The
            criteria
            for Eligible Inventory set forth above may only be changed and any new
            criteria
            for Eligible Inventory may only be established by Lender in good faith
            based on
            either: (i) an event, condition or other circumstance arising after the
            date
            hereof, or (ii) an event, condition or other circumstance existing on
            the date
            hereof to the extent Lender has no written notice thereof from a Borrower
            prior
            to the date hereof, in either case under clause (i) or (ii) which adversely
            affects or could reasonably be expected to adversely affect the Inventory
            in the
            good faith determination of Lender. Any Inventory that is not Eligible
            Inventory
            shall nevertheless be part of the Collateral.

           

          1.21.1 “Eligible
            Real Property” shall mean real property acceptable to Lender for borrowing
            purposes having been appraised by an appraiser acceptable to Lender in
            good
            faith and subject to a Mortgage in favor of Lender.

           

          1.22 “Environmental
            Laws” shall mean all applicable foreign, Federal, State and local laws
            (including common law), legislation, rules, codes, licenses, permits
            (including
            any conditions imposed therein), authorizations, judicial or administrative
            decisions, injunctions or agreements between any Borrower or Guarantor
            and any
            Governmental Authority, (a) relating to pollution and the protection,
            preservation or restoration of the environment (including air, water
            vapor,
            surface water, ground water, drinking water, drinking water supply, surface
            land, subsurface land, plant and animal life or any other natural resource),
            or
            to human health or safety, (b) relating to the exposure to, or the use,
            storage, recycling, treatment, generation, manufacture, processing,
            distribution, transportation, handling, labeling, production, release
            or
            disposal, or threatened release, of Hazardous Materials, or (c) relating to
            all laws with regard to recordkeeping, notification, disclosure and reporting
            requirements respecting Hazardous Materials. The term “Environmental Laws”
includes (i) the Federal Comprehensive Environmental Response, Compensation
            and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization
            Act, the Federal Water Pollution Control Act of 1972, the Federal Clean
            Water
            Act, the Federal Clean Air Act, the Federal Resource Conservation and
            Recovery
            Act of 1976 (including the Hazardous and Solid Waste Amendments thereto),
            the
            Federal Solid Waste Disposal and the Federal Toxic Substances Control
            Act, the
            Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe
            Drinking Water Act of 1974, (ii) applicable state counterparts to such
            laws and
            (iii) any common law or equitable doctrine that may impose liability
            or
            obligations for injuries or damages due to, or threatened as a result
            of, the
            presence of or exposure to any Hazardous Materials.

          
             

            
              
                 

              

              
                B-11

                
                  

                

              

              
                 

              

            

             

          

          1.23 “Equipment”
            shall mean, as to each Borrower and Guarantor, all of such Borrower's
            and
            Guarantor’s now owned and hereafter acquired equipment, wherever located,
            including machinery, data processing and computer equipment (whether
            owned or
            licensed and including embedded software), vehicles, tools, furniture,
            fixtures,
            all attachments, accessions and property now or hereafter affixed thereto
            or
            used in connection therewith, and substitutions and replacements thereof,
            wherever located.

           

          1.24 “ERISA”
            shall mean the Employee Retirement Income Security Act of 1974, together
            with
            all rules, regulations and interpretations thereunder or related
            thereto.

           

          1.25 “ERISA
            Affiliate” shall mean any person required to be aggregated with any Borrower,
            any Guarantor or any of its or their respective Subsidiaries under Sections
            414(b), 414(c), 414(m) or 414(o) of the Code.

           

          1.26 “ERISA
            Event” shall mean (a) any “reportable event”, as defined in Section 4043(c)
            of ERISA or the regulations issued thereunder, with respect to a Pension
            Plan,
            other than events as to which the requirement of notice has been waived
            in
            regulations by the Pension Benefit Guaranty Corporation; (b) the adoption
            of any amendment to a Pension Plan that would require the provision of
            security
            pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
            a
            complete or partial withdrawal by any Borrower, Guarantor or any ERISA
            Affiliate
            from a Multiemployer Plan or a cessation of operations which is treated
            as such
            a withdrawal or notification that a Multiemployer Plan is in reorganization;
            (d) the filing of a notice of intent to terminate, the treatment of a
            Pension Plan amendment as a termination under Section 4041 or 4041A of
            ERISA, or
            the commencement of proceedings by the Pension Benefit Guaranty Corporation
            to
            terminate a Pension Plan; (e) an event or condition which might reasonably
            be expected to constitute grounds under Section 4042 of ERISA for the
            termination of, or the appointment of a trustee to administer, any Plan;
            (f) the
            imposition of any liability under Title IV of ERISA, other than the Pension
            Benefit Guaranty Corporation premiums due but not delinquent under Section
            4007
            of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate in excess
            of
            $250,000 and (g) any other event or condition with respect to a Plan
            including
            any Pension Plan subject to Title IV of ERISA maintained, or contributed
            to, by
            any ERISA Affiliate that could reasonably be expected to result in liability
            of
            any Borrower in excess of $250,000.

           

          
            
               

            

            
              B-12

              
                

              

            

            
               

            

          

           

           

          1.27 “Eurodollar
            Rate Loans” shall mean any Loans or portion thereof on which interest is payable
            based on the Adjusted Eurodollar Rate in accordance with the terms
            hereof.

           

          1.28 “Event
            of
            Default” shall mean the occurrence or existence of any event or condition
            described in Section 10.1 hereof.

           

          1.29 “Excess
            Availability” shall mean, as to each Borrower, the amount, as determined by
            Lender, calculated at any date, equal to: (a) the lesser of: (i) the
            Borrowing
            Base of such Borrower and (ii) the Revolving Loan Limit of such Borrower
            (in
            each case under (i) or (ii) after giving effect to any Reserves other
            than any
            Reserves in respect of Letter of Credit Obligations), minus (b) the sum
            of: (i)
            the amount of all then outstanding and unpaid Obligations of such Borrower
            (but
            not including for this purpose Obligations of such Borrower arising pursuant
            to
            any guarantees in favor of Lender of the Obligations of the other Borrowers
            or
            the then outstanding aggregate principal amount of the Term Loans or
            any
            outstanding Letter of Credit Obligations), plus (ii) the amount of all
            Reserves
            then established in respect of Letter of Credit Obligations, plus (iii)
            the
            aggregate amount of all then outstanding and unpaid trade payables and
            other
            obligations of such Borrower which are outstanding more than thirty (30)
            days
            past due as of the end of the immediately preceding month or at Lender’s option,
            as of a more recent date based on such reports as Lender may from time
            to time
            specify (other than trade payables or other obligations being contested
            or
            disputed by such Borrower in good faith), plus (iv) without duplication,
            the
            amount of checks issued by such Borrower to pay trade payables and other
            obligations which are more than thirty (30) days past due as of the end
            of the
            immediately preceding month or at Lender’s option, as of a more recent date
            based on such reports as Lender may from time to time specify (other
            than trade
            payables or other obligations being contested or disputed by such Borrower
            in
            good faith), but not yet sent.

           

          1.30 “Exchange
            Act” shall mean the Securities Exchange Act of 1934, together with all rules,
            regulations and interpretations thereunder or related thereto.

           

          1.31 Intentionally
            omitted.

           

          1.32 “Existing
            Letters of Credit” shall mean, collectively, the letters of credit issued for
            the account of a Borrower or Guarantor or for which such Borrower or
            Guarantor
            is otherwise liable listed on Schedule 1.32 hereto, as the same now exist
            or may
            hereafter be amended, modified, supplemented, extended, renewed, restated
            or
            replaced.

           

          1.33 “Financing
            Agreements” shall mean, collectively, this Agreement and all notes, guarantees,
            security agreements, deposit account control agreements, investment property
            control agreements, intercreditor agreements and all other agreements,
            documents
            and instr-uments now or at any time hereafter executed and/or delivered
            by
            Borrowers or any Obligor in connection with this Agreement; provided,
            that,
            in no
            event shall the term Financing Agreements be deemed to include any Hedge
            Agreement.

          
             

            
              
                 

              

              
                B-13

                
                  

                

              

              
                 

              

            

             

          1.33.1 “Fixed
            Asset Loan Limit” shall mean, as to each Borrower, at any time, the amount equal
            to $5,000,000 minus the then outstanding principal amount of Term Loans
            to the
            other Borrowers based on Eligible Equipment and Eligible Real
            Property.

           

          1.33.2 “Fixed
            Charge Coverage Ratio” shall mean, for any period, the quotient (expressed as a
            ratio) obtained by dividing (a) EBITDA of the Company on a consolidated
            basis
            for such period by (b) Fixed Charges of the Company on a consolidated
            basis for
            such period.

           

          1.33.3 “Fixed
            Charges” shall mean, for any period, the sum of (a) all interest obligations
            (including the interest component of Capital Leases) of the Company paid
            or due
            during such period, (b) the amount of all scheduled fees paid to the
            the Lender
            during such period, (c) the amount of principal repaid or scheduled to
            be repaid
            on the Term Loans and other Indebtedness of the Company (other than the
            Revolving Loans) during such period, (d) unfinanced Capital Expenditures,
            as
            incurred by the Company during such period, (e) all dividends and distributions
            made to shareholders, (f) all repurchases and redemptions of capital
            stock; and
            (g) all federal, state and local income tax expenses due and payable
            by the
            Company during such period 

          

           

          1.33.3  “Foreign
            Subsidiaries” shall mean Bi-Op Laboratories, Inc, a Quebec corporation
            (“Bi-Op”), Langer (UK) Ltd, an English limited liability company (“Langer UK”),
            Silipos (UK) Limited, an English limited liability company (“Silipos UK”), and
            Langer Canada, Inc., a New Brunswick corporation (“Langer Canada”).

           

          1.33.4 “Foreign
            Account Loan Limit” shall mean, as to each Borrower, at any time, the amount
            equal to $750,000 minus the then outstanding principal amount of Revolving
            Loans
            to the other Borrowers based on Eligible Foreign Accounts.

           

          1.34 “Funding
            Bank” shall have the meaning given to such term in Section 3.7
            hereof.

          

          1.35 “GAAP”
            shall mean generally accepted accounting principles in the United States
            of
            America as in effect from time to time as set forth in the opinions and
            pronouncements of the Accounting Principles Board and the American Institute
            of
            Certified Public Accountants and the statements and pronouncements of
            the
            Financial Accounting Standards Board which are applicable to the circumstances
            as of the date of determination consistently applied, except that, for
            purposes
            of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the basis
            of such
            principles in effect on the date hereof and consistent with those used
            in the
            preparation of the most recent audited financial statements delivered
            to Lender
            prior to the date hereof.

           

          1.36 “Governmental
            Authority” shall mean any nation or government, any state, province, or other
            political subdivision thereof, any central bank (or similar monetary
            or
            regulatory authority) thereof, and any entity exercising executive, legislative,
            judicial, regulatory or administrative functions of or pertaining to
            government.

           

          1.37 “Guarantors”
            shall mean, collectively, the following (together with their respective
            successors and assigns): (a) Langer; (b) Silipos; (c) Twincraft; (d)
            Regal; and
            (e) any other Person that at any time after the date hereof becomes party
            to a
            guarantee in favor of Lender or otherwise liable on or with respect to
            the
            Obligations or who is the owner of any property which is security for
            the
            Obligations (other than Borrowers); each sometimes being referred to
            herein
            individually as a “Guarantor”.

          
             

            
              
                 

              

              
                B-14

                
                  

                

              

              
                 

              

            

             

          

          1.38 “Hazardous
            Materials” shall mean any hazardous, toxic or dangerous substances, materials
            and wastes, including hydrocarbons (including naturally occurring or
            man-made
            petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde
            insulation, radioactive materials, biological substances, polychlorinated
            biphenyls, pesticides, herbicides and any other kind and/or type of pollutants
            or contaminants (including materials which include hazardous constituents),
            sewage, sludge, industrial slag, solvents and/or any other similar substances,
            materials, or wastes and including any other substances, materials or
            wastes
            that are or become regulated under any Environmental Law (including any
            that are
            or become classified as hazardous or toxic under any Environmental
            Law).

           

          1.38.1 “Hedge
            Agreement” shall mean an agreement between any Borrower and Lender, any
            Affiliate of Lender, or any other financial institution that has entered
            into an
            intercreditor agreement in form and substance satisfactory to Lender,
            that is a
            swap agreement as such term is defined in 11 U.S.C. Section 101, and
            including
            any rate swap agreement, basis swap, forward rate agreement, commodity
            swap,
            interest rate option, forward foreign exchange agreement, spot foreign
            exchange
            agreement, rate cap agreement rate, floor agreement, rate collar agreement,
            currency swap agreement, cross-currency rate swap agreement, currency
            option,
            any other similar agreement (including any option to enter into any of
            the
            foregoing or a master agreement for any the foregoing together with all
            supplements thereto) for the purpose of protecting against or managing
            exposure
            to fluctuations in interest or exchange rates, currency valuations or
            commodity
            prices; sometimes being collectively referred to herein as “Hedge
            Agreements”.

           

          1.39 “Indebtedness”
            shall mean, with respect to any Person, without duplication, any liability,
            whether or not contingent, (a) in respect of borrowed money (whether
            or not the
            recourse of the lender is to the whole of the assets of such Person or
            only to a
            portion thereof) or evidenced by bonds, notes, debentures or similar
            instruments; (b) representing the balance deferred and unpaid of the
            purchase
            price of any property or services (other than an account payable to a
            trade
            creditor (whether or not an Affiliate) incurred in the ordinary course
            of
            business of such Person and payable in accordance with customary trade
            practices); (c) all obligations as lessee under leases which have been,
            or
            should be, in accordance with GAAP recorded as Capital Leases; (d) any
            contractual obligation, contingent or otherwise, of such Person to pay
            or be
            liable for the payment of any indebtedness described in this definition
            of
            another Person, including, without limitation, any such indebtedness,
            directly
            or indirectly guaranteed, or any agreement to purchase, repurchase, or
            otherwise
            acquire such indebtedness, obligation or liability or any security therefor,
            or
            to provide funds for the payment or discharge thereof, or to maintain
            solvency,
            assets, level of income, or other financial condition; (e) all obligations
            with
            respect to redeemable stock and redemption or repurchase obligations
            under any
            Capital Stock or other equity securities issued by such Person; (f) all
            reimbursement obligations and other liabilities of such Person with respect
            to
            surety bonds (whether bid, performance or otherwise), letters of credit,
            banker's acceptances, drafts or similar documents or instruments issued
            for such
            Person's account; (g) all indebtedness of such Person in respect of indebtedness
            of another Person for borrowed money or indebtedness of another Person
            otherwise
            described in this definition which is secured by any consensual lien,
            security
            interest, collateral assignment, conditional sale, mortgage, deed of
            trust, or
            other encumbrance on any asset of such Person, whether or not such obligations,
            liabilities or indebtedness are assumed by or are a personal liability
            of such
            Person, all as of such time; (h) all obligations, liabilities and indebtedness
            of such Person (marked to market) arising under swap agreements, cap
            agreements
            and collar agreements and other agreements or arrangements designed to
            protect
            such person against fluctuations in interest rates or currency or commodity
            values; (i) all obligations owed by such Person under License Agreements
            with
            respect to non-refundable, advance or minimum guarantee royalty payments;
            (j)
            indebtedness of any partnership or joint venture in which such Person
            is a
            general partner or a joint venturer to the extent such Person is liable
            therefor
            as a result of such Person’s ownership interest in such entity, except to the
            extent that the terms of such indebtedness expressly provide that such
            Person is
            not liable therefor or such Person has no liability therefor as a matter
            of law
            and (k) the principal and interest portions of all rental obligations
            of such
            Person under any synthetic lease or similar off-balance sheet financing
            where
            such transaction is considered to be borrowed money for tax purposes
            but is
            classified as an operating lease in accordance with GAAP.

          
             

            
              
                 

              

              
                B-15

                
                  

                

              

              
                 

              

            

             

          

          1.40 “Information
            Certificate” shall mean, collectively, the Information Certificates of Borrowers
            and Guarantors constituting Exhibit A hereto containing material information
            with respect to Borrowers and Guarantors, their respective businesses
            and assets
            provided by or on behalf of Borrowers and Guarantors to Lender in connection
            with the preparation of this Agreement and the other Financing Agreements
            and
            the financing arrangements provided for herein.

           

          1.41 “Intellectual
            Property” shall mean, as to each Borrower and Guarantor, such Borrower's and
            Guarantor’s now owned and hereafter arising or acquired: patents, patent rights,
            patent applications, copyrights, works which are the subject matter of
            copyrights, copyright applications, copyright registrations, trademarks,
            servicemarks, trade names, trade styles, trademark and service mark
            applications, and licenses and rights to use any of the foregoing and
            all
            applications, registrations and recordings relating to any of the foregoing
            as
            may be filed in the United States Copyright Office, the United States
            Patent and
            Trademark Office or in any similar office or agency of the United States,
            any
            State thereof, any political subdivision thereof or in any other country
            or
            jurisdiction, together with all rights and privileges arising under applicable
            law with respect to any Borrower’s or Guarantor’s use of any of the foregoing;
            all extensions, renewals, reissues, divisions, continuations, and
            continuations-in-part of any of the foregoing; all rights to sue for
            past,
            present and future infringement of any of the foregoing; inventions,
            trade
            secrets, formulae, processes, compounds, drawings, designs, blueprints,
            surveys,
            reports, manuals, and operating standards; goodwill (including any goodwill
            associated with any trademark or servicemark, or the license of any trademark
            or
            servicemark); customer and other lists in whatever form maintained; trade
            secret
            rights, copyright rights, rights in works of authorship, domain names
            and domain
            name registration; software and contract rights relating to computer
            software
            programs, in whatever form created or maintained.

          
             

            
              
                 

              

              
                B-16

                
                  

                

              

              
                 

              

            

             

          

          1.42 “Interest
            Period” shall mean for any Eurodollar Rate Loan, a period of approximately one
            (1), two (2), or three (3) months duration as any Borrower (or Administrative
            Borrower on behalf of such Borrower) may elect, the exact duration to
            be
            determined in accordance with the customary practice in the applicable
            Eurodollar Rate market; provided, that, such Borrower (or Administrative
            Borrower on behalf of such Borrower) may not elect an Interest Period
            which will
            end after the last day of the then-current term of this Agreement.

           

          1.43 “Interest
            Rate” shall mean, 

           

          (a) Subject
            to clause (b) of this definition below:

           

          (i) as
            to
            Prime Rate Loans, a rate equal to the Prime Rate, 

           

          (ii) as
            to
            Eurodollar Rate Loans, a rate equal to two (2%) percent per annum in
            excess of
            the Adjusted Eurodollar Rate (in each case, based on the London Interbank
            Offered Rate applicable for the Interest Period selected by a Borrower,
            or by
            Administrative Borrower on behalf of such Borrower, as in effect two
            (2)
            Business Days prior to the commencement of the Interest Period, whether
            such
            rate is higher or lower than any rate previously quoted to any Borrower
            or
            Guarantor).

           

          (b) Notwithstanding
            anything to the contrary contained in clause (a) of this definition,
            the
            Interest Rate shall mean the rate of two (2%) percent per annum in excess
            of the
            Prime Rate as to Prime Rate Loans and the rate of four (4%) percent per
            annum in
            excess of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at
            Lender's
            option, without notice, (i) either (A) for the period on and after the
            date of
            termination or non-renewal hereof until such time as all Obligations
            are
            indefeasibly paid and satisfied in full in immediately available funds,
            or (B)
            for the period from and after the date of the occurrence of any Event
            of
            Default, and for so long as such Event of Default is continuing and (ii)
            on the
            Revolving Loans to any Borrower at any time outstanding in excess of
            the
            Borrowing Base of such Borrower or the Revolving Loan Limit of such Borrower
            (whether or not such excess(es) arise or are made with or without Lender’s
            knowledge or consent and whether made before or after an Event of
            Default).

           

          1.44 Intentionally
            omitted.

           

          1.45 “Inventory”
            shall mean, as to each Borrower and Guarantor, all of such Borrower's
            and
            Guarantor’s now owned and hereafter existing or acquired goods, wherever
            located, which (a) are leased by such Borrower or Guarantor as lessor;
            (b) are
            held by such Borrower for sale or lease or to be furnished under a contract
            of
            service; (c) are furnished by such Borrower or Guarantor under a contract
            of
            service; or (d) consist of raw materials, work in process, finished goods
            or
            materials used or consumed in its business.

           

          1.46 “Inventory
            Loan Limit” shall mean, as to each Borrower, at any time, the amount equal to
            $7,500,000 minus the then outstanding principal amount of Revolving Loans
            to the
            other Borrowers based on Eligible Inventory (and including Letters of
            Credit to
            the extent provided in the definition of the term Borrowing Base), except
            that
            until such time as Borrower has obtained an appraisal of the Inventory
            acceptable to Lender in its discretion, the Inventory Loan Limit shall
            be
            $750,000.

          
             

            
              
                 

              

              
                B-17

                
                  

                

              

              
                 

              

            

             

          

          1.47 “Investment
            Property Control Agreement” shall mean an agreement in writing, in form and
            substance satisfactory to Lender, by and among Lender, any Borrower or
            Guarantor
            (as the case may be) and any securities intermediary, commodity intermediary
            or
            other person who has custody, control or possession of any investment
            property
            of such Borrower or Guarantor acknowledging that such securities intermediary,
            commodity intermediary or other person has custody, control or possession
            of
            such investment property on behalf of Lender, that it will comply with
            entitlement orders originated by Lender with respect to such investment
            property, or other instructions of Lender, and has such other terms and
            conditions as Lender may require.

           

          1.48 “Lender”
            shall mean Wachovia Bank, National Association, a national banking association,
            and its successors and assigns.

           

          1.49 “Lender
            Payment Account” shall mean account no. 5000000030279 of Lender at Wachovia
            Bank, National Association or such other account of Lender as Lender
            may from
            time to time designate to Administrative Borrower as the Lender Payment
            Account
            for purposes of this Agreement and the other Financing Agreements.

           

          1.50 “Letter
            of Credit Documents” shall mean, with respect to any Letter of Credit, such
            Letter of Credit, any amendments thereto, any documents delivered in
            connection
            therewith, any application therefor, and any agreements, instruments,
            guarantees
            or other documents (whether general in application or applicable only
            to such
            Letter of Credit) governing or providing for (a) the rights and obligations
            of
            the parties concerned or at risk or (b) any collateral security for such
            obligations.

           

          1.51 “Letter
            of Credit Limit” shall mean $5,000,000.

           

          1.52 “Letter
            of Credit Obligations” shall mean, at any time, the sum of (a) the aggregate
            undrawn amount of all Letters of Credit outstanding at such time, plus
            (b) the
            aggregate amount of all drawings under Letters of Credit for which Lender
            has
            not at such time been reimbursed.

           

          1.53 “Letters
            of Credit” shall mean all letters of credit (whether documentary or stand-by and
            whether for the purchase of inventory, equipment or otherwise) issued
            by Lender
            for the account of any Borrower pursuant to this Agreement, and all amendments,
            renewals, extensions or replacements thereof and including, but not limited
            to,
            the Existing Letters of Credit.

           

          1.54 “License
            Agreements” shall have the meaning set forth in Section 8.11
            hereof.

           

          1.55 “Loan
            Limit” shall mean, as to each Borrower, at any time, the amount equal to the
            Maximum Credit minus the then outstanding principal amount of the Loans
            and the
            Letters of Credit provided to the other Borrowers.

           

          1.56 “Loans”
            shall mean, collectively, the Revolving Loans and the Term Loans.

          
             

            
              
                 

              

              
                B-18

                
                  

                

              

              
                 

              

            

             

          

          1.57 “London
            Interbank Offered Rate” shall mean, with respect to any Eurodollar Loan for the
            Interest Period applicable thereto, the rate of interest per annum (rounded
            upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate
            Page
            3750 (or any successor page) as the London interbank offered rate for
            deposits
            in U.S. Dollars at approximately 11:00 A.M. (London time) two (2) Business
            Days
            prior to the first day of such Interest Period for a term comparable
            to such
            Interest Period; provided, that, if more than one rate is specified on
            Telerate
            Page 3750, the applicable rate shall be the arithmetic mean of all such
            rates.
            If, for any reason, such rate is not available, the term “London Interbank
            Offered Rate” shall mean, with respect to any Eurodollar Loan for the Interest
            Period applicable thereto, the rate of interest per annum (rounded upwards,
            if
            necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
            Page as
            the London interbank offered rate for deposits in Dollars at approximately
            11:00
            A.M. (London time) two (2) Business Days prior to the first day of such
            Interest
            Period for a term comparable to such Interest Period; provided, however,
            if more
            than one rate is specified on Reuters Screen LIBO Page, the applicable
            rate
            shall be the arithmetic mean of all such rates.

           

          1.57.1 “Management
            Fee” shall mean any fee paid by a Borrower to a Person in consideration of
            or
            reimbursement for services provided by such Person to the Borrower, including,
            but not limited to the Borrower’s pro
            rata
            share of
            salaries, benefits, costs and expenses associated with such
            services.

           

          1.58 “Material
            Adverse Effect” shall mean a material adverse effect on (a) the financial
            condition, business, performance or operations of Borrowers, taken as
            a whole;
            (b) the legality, validity or enforceability of this Agreement or any of
            the other Financing Agreements; (c) the legality, validity, enforceability,
            perfection or priority of the security interests and liens of Lender
            upon the
            Collateral; (d) the Collateral or its value; (e) the ability of any
            Borrower to repay the Obligations or of any Borrower to perform its obligations
            under this Agreement or any of the other Financing Agreements as and
            when to be
            performed; or (f) the ability of Lender to enforce the Obligations or
            realize
            upon the Collateral or otherwise with respect to the rights and remedies
            of
            Lender under this Agreement or any of the other Financing
            Agreements.

           

          1.59 “Material
            Contract” shall mean (a) any contract or other agreement (other than the
            Financing Agreements), written or oral, of any Borrower or Guarantor
            involving
            monetary liability of or to any Person in an amount in excess of $500,000
            in any
            fiscal year and (b) any other contract or other agreement (other than
            the
            Financing Agreements), whether written or oral, to which any Borrower
            or
            Guarantor is a party as to which the breach, nonperformance, cancellation
            or
            failure to renew by any party thereto would have a Material Adverse
            Effect.

           

          1.60 “Maximum
            Credit” shall mean the amount of $20,000,000.

           

          1.61 "Mortgage(s)"
            shall mean each mortgage in form and substance satisfactory to Lender,
            executed
            by Borrower, pursuant to which Borrower grants to Lender a lien on and
            mortgage
            covering all real property and improvements thereon in such priority
            and amount
            as may be acceptable to Lender.

          
             

            
              
                 

              

              
                B-19

                
                  

                

              

              
                 

              

            

             

          1.62 “Multiemployer
            Plan” shall mean a “multi-employer plan” as defined in Section 4001(a)(3) of
            ERISA which is or was at any time during the current year or the immediately
            preceding six (6) years contributed to by any Borrower, Guarantor or
            any ERISA
            Affiliate or with respect to which any Borrower, Guarantor or any ERISA
            Affiliate may incur any liability.

           

          1.63 “Net
            Recovery Percentage” shall mean the fraction, expressed as a percentage,
            (a) the numerator of which is the amount equal to the amount of the
            recovery in respect of the Inventory at such time on a “net orderly liquidation
            value” basis as set forth in the most recent acceptable appraisal of Inventory
            received by Lender in accordance with Section 7.3, net of operating expenses,
            liquidation expenses and commissions, and (b) the denominator of which is
            the applicable original cost of the aggregate amount of the Inventory
            subject to
            such appraisal.

           

          1.63.1 "Note
            Purchase Agreement" shall mean that certain Note Purchase Agreement dated
            as of
            December 7, 2006 between Langer and the purchasers of the Convertible
            Notes.

          

          1.64 “Obligations”
            shall mean (a) any and all Loans, Letter of Credit Obligations and all
            other
            obligations, liabilities and indebtedness of every kind, nature and description
            owing by any or all Borrowers to Lender and/or any of its affilitaes,
            including
            principal, interest, charges, fees, costs and expenses, however evidenced,
            whether as principal, surety, endorser, guarantor or otherwise, arising
            under
            this Agreement or any of the other Financing Agreements or on account
            of any
            Letter of Credit and all other Letter of Credit Obligations, whether
            now
            existing or hereafter arising, whether arising before, during or after
            the
            initial or any renewal term of this Agreement or after the commencement
            of any
            case with respect to such Borrower under the United States Bankruptcy
            Code or
            any similar statute (including the payment of interest and other amounts
            which
            would accrue and become due but for the commencement of such case, whether
            or
            not such amounts are allowed or allowable in whole or in part in such
            case),
            whether direct or indirect, absolute or contingent, joint or several,
            due or not
            due, primary or secondary, liquidated or unliquidated, or secured or
            unsecured
            and (b) for purposes only of Section 5.1 hereof and subject to the priority
            in
            right of payment set forth in Section 6.4 hereof, all obligations, liabilities
            and indebtedness of every kind, nature and description owing by Borrower
            to
            Lender or any Affiliate of Lender arising under or pursuant to any Bank
            Products, whether now existing or hereafter arising (and in the case
            of any
            Affiliate of Lender, Lender shall be deemed to act as Lender for such
            Affiliate
            for purposes of Section 5.1 hereof).

          

          1.65 “Parent”
            shall mean Langer, and its successors and assigns.

           

          1.66 “Participant”
            shall mean any financial institution that acquires and holds a participation
            in
            the interest of Lender in any of the Loans and Letters of Credit in conformity
            with the provisions of Section 12.5 of this Agreement governing
            participations.

           

          1.67 Intentionally
            omitted. 

           

          1.68 “Person”
            or “person” shall mean any individual, sole proprietorship, partnership,
            corporation (including any corporation which elects subchapter S status
            under
            the Code), limited liability company, limited liability partnership,
            business
            trust, unincorporated association, joint stock corporation, trust, joint
            venture
            or other entity or any government or any agency or instrumentality or
            political
            subdivision thereof.

          
             

            
              
                 

              

              
                B-20

                
                  

                

              

              
                 

              

            

             

          

          1.69 “Pension
            Plan” shall mean a pension plan (as defined in Section 3(2) of ERISA) subject
            to
            Title IV of ERISA which any Borrower or Guarantor sponsors, maintains,
            or to
            which any Borrower, Guarantor or ERISA Affiliate makes, is making, or
            is
            obligated to make contributions, other than a Multiemployer Plan.

           

          1.70 “Plan”
            shall mean an employee benefit plan (as defined in Section 3(3) of ERISA)
            which
            any Borrower or Guarantor sponsors, maintains, or to which it makes,
            is making,
            or is obligated to make contributions, or in the case of a Multiemployer
            Plan
            has made contributions at any time during the immediately preceding six
            (6) plan
            years or with respect to which any Borrower or Guarantor may incur
            liability.

           

          1.71 “Prime
            Rate” shall mean the higher
            of (i)
            the rate of interest publicly announced from time to time by Lender,
            or its
            successors, as its “prime rate,” subject to each increase or decrease in such
“prime rate” effective as of the day any such change occurs and whether or not
            such announced rate is the best rate available from Lender; or (ii) the
            “Intended Federal Funds Rate” as published from time to time by the United
            States Federal Reserve Board and subject to each increase or decrease
            in such
“Intended Federal Funds Rate” effective as of the day any such change occurs
plus
            0.50%.

           

          1.72 “Prime
            Rate Loans” shall mean any Loans or portion thereof on which interest is payable
            based on the Prime Rate in accordance with the terms thereof.

           

          1.73 “Real
            Property” shall mean all now owned and hereafter acquired real property of each
            Borrower and Guarantor, including leasehold interests, together with
            all
            buildings, structures, and other improvements located thereon and all
            licenses,
            easements and appurtenances relating thereto, wherever located.

           

          1.74 “Receivables”
            shall mean all of the following now owned or hereafter arising or acquired
            property of each Borrower and Guarantor: (a) all Accounts; (b) all interest,
            fees, late charges, penalties, collection fees and other amounts due
            or to
            become due or otherwise payable in connection with any Account; (c) all
            payment
            intangibles of such Borrower or Guarantor; (d) letters of credit, indemnities,
            guarantees, security or other deposits and proceeds thereof issued payable
            to
            any Borrower or Guarantor or otherwise in favor of or delivered to any
            Borrower
            or Guarantor in connection with any Account; or (e) all other accounts,
            contract
            rights, chattel paper, instruments, notes, general intangibles and other
            forms
            of obligations owing to any Borrower or Guarantor, whether from the sale
            and
            lease of goods or other property, licensing of any property (including
            Intellectual Property or other general intangibles), rendition of services
            or
            from loans or advances by any Borrower or Guarantor or to or for the
            benefit of
            any third person (including loans or advances to any Affiliates or Subsidiaries
            of any Borrower or Guarantor) or otherwise associated with any Accounts,
            Inventory or general intangibles of any Borrower or Guarantor (including,
            without limitation, choses in action, causes of action, tax refunds,
            tax refund
            claims, any funds which may become payable to any Borrower or Guarantor
            in
            connection with the termination of any Plan or other employee benefit
            plan and
            any other amounts payable to any Borrower or Guarantor from any Plan
            or other
            employee benefit plan, rights and claims against carriers and shippers,
            rights
            to indemnification, business interruption insurance and proceeds thereof,
            casualty or any similar types of insurance and any proceeds thereof and
            proceeds
            of insurance covering the lives of employees on which any Borrower or
            Guarantor
            is a beneficiary).

          
             

            
              
                 

              

              
                B-21

                
                  

                

              

              
                 

              

            

             

          

          1.75 “Records”
            shall mean, as to each Borrower and Guarantor, all of such Borrower's
            and
            Guarantor’s present and future books of account of every kind or nature,
            purchase and sale agreements, invoices, ledger cards, bills of lading
            and other
            shipping evidence, statements, correspondence, memoranda, credit files
            and other
            data relating to the Collateral or any account debtor, together with
            the tapes,
            disks, diskettes and other data and software storage media and devices,
            file
            cabinets or containers in or on which the foregoing are stored (including
            any
            rights of any Borrower or Guarantor with respect to the foregoing maintained
            with or by any other person).

           

          1.76 “Renewal
            Date” shall have the meaning set forth in Section 13.1 hereof.

           

          1.77 “Reserves”
            shall mean as of any date of determination, such amounts as Lender may
            from time
            to time establish and revise in good faith reducing the amount of Revolving
            Loans and Letters of Credit which would otherwise be available to any
            Borrower
            under the lending formula(s) provided for herein: (a) to reflect events,
            conditions, contingencies or risks which, as determined by Lender in
            good
            faith, adversely
            affect, or would have a reasonable likelihood of adversely
            affecting, either (i) the Collateral or any other property which is security
            for
            the Obligations, its value or the amount that might be received by Lender
            from
            the sale or other disposition or realization upon such Collateral, or
            (ii) the
            assets, business or prospects of any Borrower or Guarantor or (iii) the
            security
            interests and other rights of Lender in the Collateral (including the
            enforceability, perfection and priority thereof) or (b) to reflect Lender's
            good
            faith belief that any collateral report or financial information furnished
            by or
            on behalf of any Borrower or Guarantor to Lender is or may have been
            incomplete,
            inaccurate or misleading in any material respect or (c) to reflect outstanding
            Letters of Credit as provided in Section 2.2 hereof or (d) to
            reflect costs and fees arising out of Bank Products, or (e) to
            reflect license fees and rent reserves which may need to be paid to secure
            any
            Collateral, (f) in respect of any state of facts which Lender determines
            in good
            faith constitutes a Default or an Event of Default. Without limiting
            the
            generality of the foregoing, Reserves may, at Lender’s option, be established to
            reflect: dilution with respect to the Accounts (based on the ratio of
            the
            aggregate amount of non-cash reductions in Accounts for any period to
            the
            aggregate dollar amount of the sales of such Borrower for such period)
            as
            calculated by Lender for any period is or is reasonably anticipated to
            be
            greater than five (5%) percent; that the orderly liquidation value of
            the
            Equipment or fair market value of any of the Real Property as set forth
            in the
            most recent acceptable appraisals received by Lender with respect thereto
            has
            declined so that the then outstanding principal amount of the Term Loans
            is
            greater than such percentage with respect to such appraised values as
            Lender
            used in establishing the original principal amount of the Term Loans
            multiplied
            by such appraised values; returns, discounts, claims, credits and allowances
            of
            any nature that are not paid pursuant to the reduction of Accounts; sales,
            excise or similar taxes included in the amount of any Accounts reported
            to
            Lender; a change in the turnover, age or mix of the categories of Inventory
            that
            adversely affects the aggregate value of all Inventory; amounts due or
            to become
            due to owners and lessors of premises where any Collateral is located,
            other
            than for those locations where Lender has received a Collateral Access
            Agreement
            that Lender has accepted in writing. The amount of any Reserve established
            by
            Lender shall have a reasonable relationship to the event, condition or
            other
            matter which is the basis for such reserve as determined by Lender in
            good faith
            and to the extent that such Reserve is in respect of amounts that may
            be payable
            to third parties Lender may, at its option, deduct such Reserve from
            the
            Revolving Loan Limit, at any time that such limit is less than the amount
            of the
            Borrowing Base. The
            Reserves shall include in addition, and not in limitation, the Availability
            Block. 

          
             

            
              
                 

              

              
                B-22

                
                  

                

              

              
                 

              

            

             

          

          1.77.1 “Reserve
            Percentage” shall have the meaning defined in “Adjusted Eurodollar
            Rate”.

           

          1.78 “Revolving
            Loan Limit” shall mean, as to each Borrower, at any time, the amount equal to
            the $20,000,000 minus the then outstanding principal amount of the Revolving
            Loans, Term Loans and Letters of Credit provided to the other
            Borrowers.

           

          1.79 “Revolving
            Loans” shall mean the loans now or hereafter made by or on behalf of Lender
            for
            the account of any Borrower on a revolving basis (involving advances,
            repayments
            and readvances) as set forth in Section 2.1 hereof.

           

          1.80 “Solvent”
            shall mean, at any time with respect to any Person, that at such time
            such
            Person (a) is able to pay its debts as they mature and has (and has a
            reasonable basis to believe it will continue to have) sufficient capital
            (and
            not unreasonably small capital) to carry on its business consistent with
            its
            practices as of the date hereof, and (b) the assets and properties of such
            Person at a fair valuation (and including as assets for this purpose
            at a fair
            valuation all rights of subrogation, contribution or indemnification
            arising
            pursuant to any guarantees given by such Person) are greater than the
            Indebtedness of such Person, and including subordinated and contingent
            liabilities computed at the amount which, such person has a reasonable
            basis to
            believe, represents an amount which can reasonably be expected to become
            an
            actual or matured liability (and including as to contingent liabilities
            arising
            pursuant to any guarantee the face amount of such liability as reduced
            to
            reflect the probability of it becoming a matured liability).

           

          1.81 “Subsidiary”
            or “subsidiary” shall mean, with respect to any Person, any corporation, limited
            liability company, limited liability partnership or other limited or
            general
            partnership, trust, association or other business entity of which an
            aggregate
            of at least a majority of the outstanding Capital Stock or other interests
            entitled to vote in the election of the board of directors of such corporation
            (irrespective of whether, at the time, Capital Stock of any other class
            or
            classes of such corporation shall have or might have voting power by
            reason of
            the happening of any contingency), managers, trustees or other controlling
            persons, or an equivalent controlling interest therein, of such Person
            is, at
            the time, directly or indirectly, owned by such Person and/or one or
            more
            subsidiaries of such Person.

          
             

            
              
                 

              

              
                B-23

                
                  

                

              

              
                 

              

            

             

          

          1.82 “Term
            Loans” shall mean, collectively, the term loans made by or on behalf of Lender
            and Borrower as provided for in Section 2.3 hereof; sometimes being referred
            to
            herein individually as a “Term Loan”.

           

          1.82.1
            “Twincraft Consideration Shares” shall mean the shares of common stock of Parent
            which may hereafter become issuable pursuant to the provisions of the
            stock
            purchase agreement dated as of November 14, 2006, between Parent, as
            purchaser,
            and Messrs. Peter A. Asch, Richard Asch, Lawrence Litke and Joseph Candido,
            as
            sellers, pursuant to which Parent acquired all of the capital stock of
            Twincraft.

           

          1.83 “UCC”
            shall mean the Uniform Commercial Code as in effect in the State of
            New York, and any successor statute, as in effect from time to time (except
            that terms used herein which are defined in the Uniform Commercial Code
            as in
            effect in the State of New York on the date hereof shall continue to have
            the same meaning notwithstanding any replacement or amendment of such
            statute
            except as Lender may otherwise determine). 

           

          1.83.1 “Unused
            Line” shall mean the amount by which the Maximum Credit exceeds the average
            daily principal balance of the outstanding Revolving Loans, Term Loans
            and
            Letters of Credit.

           

          1.84 “Value”
            shall mean, as determined by Lender in good faith, with respect to Inventory,
            the lower of (a) cost computed on a first-in first-out basis in accordance
            with
            GAAP or (b) market value, provided, that, for purposes of the calculation
            of the
            Borrowing Base, (i) the Value of the Inventory shall not include: (A)
            the
            portion of the value of Inventory equal to the profit earned by any Affiliate
            on
            the sale thereof to any Borrower or (B)  write-ups or write-downs in value
            with respect to currency exchange rates and (ii) notwithstanding anything
            to the
            contrary contained herein, the cost of the Inventory shall be computed
            in the
            same manner and consistent with the most recent appraisal of the Inventory
            received and accepted by Lender prior to the date hereof, if any.

           

          1.85 “Voting
            Stock” shall mean with respect to any Person, (a) one (1) or more classes of
            Capital Stock of such Person having general voting powers to elect at
            least a
            majority of the board of directors, managers or trustees of such Person,
            irrespective of whether at the time Capital Stock of any other class
            or classes
            have or might have voting power by reason of the happening of any contingency,
            and (b) any Capital Stock of such Person convertible or exchangeable
            without
            restriction at the option of the holder thereof into Capital Stock of
            such
            Person described in clause (a) of this definition.

           

          1.86 Intentionally
            omitted.

           

          SECTION
            2.  CREDIT
            FACILITIES

           

          2.1 Loans.

           

          (a) Subject
            to and upon the terms and conditions contained herein, Lender agrees
            to make
            Revolving Loans to each Borrower from time to time in amounts requested
            by such
            Borrower (or Administrative Borrower on behalf of such Borrower) up to
            the
            amount outstanding at any time equal to the lesser of: (i) the Borrowing
            Base of such Borrower at such time or (ii) the Revolving Loan Limit of
            such
            Borrower at such time.

          
             

            
              
                 

              

              
                B-24

                
                  

                

              

              
                 

              

            

             

          

          (b) Except
            in
            Lender's discretion or as otherwise provided herein, (i) the aggregate
            amount of
            the Loans and the Letter of Credit Obligations outstanding at any time
            shall not
            exceed the Maximum Credit, (ii) the aggregate principal amount of the
            Revolving
            Loans and Letter of Credit Obligations outstanding at any time to a Borrower
            shall not exceed the Borrowing Base of such Borrower, (iii) the aggregate
            principal amount of the Loans and Letter of Credit Obligations outstanding
            at
            any time to a Borrower shall not exceed the Loan Limit of such Borrower,
            (iv)
            the aggregate principal amount of the Revolving Loans outstanding to
            a Borrower
            based on the Eligible Inventory of such Borrower shall not exceed the
            Inventory
            Loan Limit of such Borrower and (v) the aggregate principal amount of
            the
            Revolving Loans outstanding at any time to Borrowers based on the Eligible
            Inventory shall not exceed the Inventory Loan Limit.

           

          (c) In
            the
            event that (i) the aggregate amount of the Loans and the Letter of Credit
            Obligations outstanding at any time exceed the Maximum Credit, or (ii)
            except as
            otherwise provided herein, the aggregate principal amount of the Revolving
            Loans
            and Letter of Credit Obligations outstanding to a Borrower exceed the
            Borrowing
            Base of such Borrower or the Revolving Loan Limit of such Borrower, or
            (iii) the
            aggregate principal amount of Revolving Loans and Letter of Credit Obligations
            based on the Eligible Inventory of a Borrower exceed the Inventory Loan
            Limit of
            such Borrower, or (iv) the aggregate principal amount of Revolving Loans
            and
            Letters of Credit based on the Eligible Inventory of all Borrowers exceeds
            the
            sublimit set forth above, such event shall not limit, waive or otherwise
            affect
            any rights of Lender in such circumstances or on any future occasions
            and
            Borrowers shall, upon demand by Lender, which may be made at any time
            or from
            time to time, immediately repay to Lender the entire amount of any such
            excess(es) for which payment is demanded.

           

          2.2 Letters
            of Credit.

           

          (a) Subject
            to and upon the terms and conditions contained herein and in the Letter
            of
            Credit Documents, at the request of a Borrower (or Administrative Borrower
            on
            behalf of such Borrower), Lender agrees to issue for the account of such
            Borrower one or more Letters of Credit, containing
            terms and conditions acceptable to Lender.

           

          (b) The
            Borrower requesting such Letter of Credit (or Administrative Borrower
            on behalf
            of such Borrower) shall give Lender three (3) Business Days’ prior written
            notice of such Borrower’s request for the issuance of a Letter of Credit. Such
            notice shall be irrevocable and shall specify the original face amount
            of the
            Letter of Credit requested, the effective date (which date shall be a
            Business
            Day and in no event shall be a date less than ten (10) days prior to
            the end of
            the then current term of this Agreement) of issuance of such requested
            Letter of
            Credit, whether such Letter of Credit may be drawn in a single or in
            partial
            draws, the date on which such requested Letter of Credit is to expire
            (which
            date shall be a Business Day and shall not be more than one year from
            the date
            of issuance), the purpose for which such Letter of Credit is to be issued,
            and
            the beneficiary of the requested Letter of Credit. The Borrower requesting
            the
            Letter of Credit (or Administrative Borrower on behalf of such Borrower)
            shall
            attach to such notice the proposed terms of the Letter of Credit. The
            renewal or
            extension of any Letter of Credit shall, for purposes hereof, be treated
            in all
            respects the same as the issuance of a new Letter of Credit
            hereunder.

          
             

            
              
                 

              

              
                B-25

                
                  

                

              

              
                 

              

            

             

          

          (c) In
            addition to being subject to the satisfaction of the applicable conditions
            precedent contained in Section 4 hereof and the other terms and conditions
            contained herein, no Letter of Credit shall be available unless each
            of the
            following conditions precedent have been satisfied in a manner satisfactory
            to
            Lender: (i) the Borrower requesting such Letter of Credit (or
            Administrative Borrower on behalf of such Borrower) shall have delivered
            to the
            Lender at such times and in such manner Lender may require, an application,
            in
            form and substance satisfactory to Lender, for the issuance of the Letter
            of
            Credit and such other Letter of Credit Documents as may be required pursuant
            to
            the terms thereof, and the form and terms of the proposed Letter of Credit
            shall
            be satisfactory to Lender, (ii) as of the date of issuance, no order of any
            court, arbitrator or other Governmental Authority shall purport by its
            terms to
            enjoin or restrain money center banks generally from issuing letters
            of credit
            of the type and in the amount of the proposed Letter of Credit, and no
            law, rule
            or regulation applicable to money center banks generally and no request
            or
            directive (whether or not having the force of law) from any Governmental
            Authority with jurisdiction over money center banks generally shall prohibit,
            or
            request that Lender refrain from, the issuance of letters of credit generally
            or
            the issuance of such Letter of Credit, (iii) after giving effect to the
            issuance
            of such Letter of Credit, the Letter of Credit Obligations shall not
            exceed the
            Letter of Credit Limit, and (iv) the Excess Availability of the Borrower
            requesting such Letter of Credit, prior to giving effect to any Reserves
            with
            respect to such Letter of Credit, on the date of the proposed issuance
            of any
            Letter of Credit shall be equal to or greater than: (A) if the proposed
            Letter
            of Credit is for the purpose of purchasing Eligible Inventory and the
            documents
            of title with respect thereto are consigned to Lender, the sum of (1)
            the
            percentage equal to one hundred (100%) percent minus the then applicable
            percentage with respect to Eligible Inventory set forth in the definition
            of the
            term Borrowing Base multiplied by the Value of such Eligible Inventory,
            plus (2)
            freight, taxes, duty and other amounts which Lender estimates must be
            paid in
            connection with such Inventory upon arrival and for delivery to one of
            such
            Borrower's locations for Eligible Inventory within the United States
            of America
            and (B) if the proposed Letter of Credit is for any other purpose or
            the
            documents of title are not consigned to Lender in connection with a Letter
            of
            Credit for the purpose of purchasing Inventory, an amount equal to one
            hundred
            (100%) percent of the Letter of Credit Obligations with respect thereto.
            Effective on the issuance of each Letter of Credit, a Reserve shall be
            established in the applicable amount set forth in Section 2.2(c)(iv)(A)
            or
            Section 2.2(c)(iv)(B).

           

          (d) Except
            in
            Lender's discretion, the amount of all outstanding Letter of Credit Obligations
            shall not at any time exceed the Letter of Credit Limit. 

           

          (e) Each
            Borrower shall reimburse immediately Lender for any draw under any Letter
            of
            Credit issued for the account of such Borrower and pay Lender the amount
            of all
            other charges and fees payable to Lender in connection with any Letter
            of Credit
            issued for the account of such Borrower immediately when due, irrespective
            of
            any claim, setoff, defense or other right which such Borrower may have
            at any
            time against Lender or any other Person. Each drawing under any Letter
            of Credit
            or other amount payable in connection therewith when due shall constitute
            a
            request by the Borrower for whose account such Letter of Credit was issued
            to
            Lender for a Prime Rate Loan in the amount of such drawing or other amount
            then
            due. The date of such Loan shall be the date of the drawing or as to
            other
            amounts, the due date therefor. Any payments made to reimburse Lender
            in
            connection with any Letter of Credit shall constitute additional Revolving
            Loans
            to such Borrower pursuant to this Section 2.

          
             

            
              
                 

              

              
                B-26

                
                  

                

              

              
                 

              

            

             

          

          (f) Borrowers
            and Guarantors shall indemnify and hold Lender harmless from and against
            any and
            all losses, claims, damages, liabilities, costs and expenses which Lender
            may
            suffer or incur in connection with any Letter of Credit and any documents,
            drafts or acceptances relating thereto, including any losses, claims,
            damages,
            liabilities, costs and expenses due to any action taken by Lender or
            correspondent with respect to any Letter of Credit, except for such losses,
            claims, damages, liabilities, costs or expenses that are a direct result
            of the
            gross negligence or willful misconduct of Lender as determined pursuant
            to a
            final non-appealable order of a court of competent jurisdiction. Each
            Borrower
            and Guarantor assumes all risks with respect to the acts or omissions
            of the
            drawer under or beneficiary of any Letter of Credit and for such purposes
            the
            drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower
            and
            Guarantor assumes all risks for, and agrees to pay, all foreign, Federal,
            State
            and local taxes, duties and levies relating to any goods subject to any
            Letter
            of Credit or any documents, drafts or acceptances thereunder. Each Borrower
            and
            Guarantor hereby releases and holds Lender harmless from and against
            any acts,
            waivers, errors, delays or omissions, with respect to or relating to
            any Letter
            of Credit, except for the gross negligence or willful misconduct of Lender
            as
            determined pursuant to a final, non-appealable order of a court of competent
            jurisdiction. The provisions of this Section 2.2(f) shall survive the
            payment of
            Obligations and the termination of this Agreement.

           

          (g) In
            connection with Inventory purchased pursuant to any Letter of Credit,
            Borrowers
            and Guarantors shall, at Lender’s request, instruct all suppliers, carriers,
            forwarders, customs brokers, warehouses or others receiving or holding
            cash,
            checks, Inventory, documents or instruments in which Lender holds a security
            interest that upon Lender’s request, such items are to be delivered to Lender
            and/or subject to Lender’s order, and if they shall come into such Borrower’s or
            Guarantor’s possession, to deliver them, upon Lender's request, to Lender in
            their original form. Except as otherwise provided herein, Lender shall
            not
            exercise such right to request such items so long as no Default or Event
            of
            Default shall exist or have occurred and be continuing. Except as Lender
            may
            otherwise specify, Borrowers and Guarantors shall designate Lender as
            the
            consignee on all bills of lading and other negotiable and non-negotiable
            documents.

           

          (h) Each
            Borrower and Guarantor hereby irrevocably authorizes and directs Lender
            to name
            such Borrower or Guarantor as the account party therein and to deliver
            to Lender
            all instruments, documents and other writings and property received by
            issuer
            pursuant to the Letter of Credit and to accept and rely upon Lender’s
            instructions and agreements with respect to all matters arising in connection
            with the Letter of Credit or the Letter of Credit Documents with respect
            thereto. Nothing contained herein shall be deemed or construed to grant
            any
            Borrower or Guarantor any right or authority to pledge the credit of
            Lender in
            any manner. Borrowers and Guarantors shall be bound by any reasonable
            interpretation made in good faith by Lender under or in connection with
            any
            Letter of Credit or any documents, drafts or acceptances thereunder,
            notwithstanding that such interpretation may be inconsistent with any
            instructions of any Borrower or Guarantor. 

          
             

            
              
                 

              

              
                B-27

                
                  

                

              

              
                 

              

            

             

          

          (i) The
            obligations of Borrowers to pay each Letter of Credit Obligations shall
            be
            absolute, unconditional and irrevocable and shall be performed strictly
            in
            accordance with the terms of this Agreement under any and all circumstances,
            whatsoever.

           

          2.3 Term
            Loans.
            Subject
            to and upon the terms and conditions contained herein, Lender agrees
            to make a
            Term Loan to one or more of the Borrowers in an original principal amount
            not to
            exceed $5,000,000 in the aggregate amount, and any such loan shall not
            exceed
            eighty five (85%) percent of the net orderly liquidation value of Eligible
            Equipment and seventy (70%) percent of the fair market value of Eligible
            Real
            Property. No Term Loans shall be available to the Borrower until such
            time as
            the Availability Block is $0. Each of the Term Loans is (a) evidenced
            by a Term
            Promissory Note in such original principal amount duly executed and delivered
            by
            the applicable Borrower to Lender concurrently herewith; (b) to be repaid,
            together with interest and other amounts, in accordance with this Agreement,
            such Term Promissory Note, and the other Financing Agreements and (c)
            secured by
            all of the Collateral. 

           

          SECTION
            3.  INTEREST
            AND FEES

           

          3.1 Interest.

           

          (a) Borrowers
            shall pay to Lender interest on the outstanding principal amount of the
            Loans at
            the Interest Rate. All interest accruing hereunder on and after the date
            of any
            Event of Default or termination hereof shall be payable on demand. Borrower
            shall have the right to select either a Prime Rate Loan or, if Borrower
            meets
            the criteria set forth below, a Eurodollar Rate Loan with respect to
            each
            borrowing hereunder.

           

          (b) Each
            Borrower (or Administrative Borrower on behalf of such Borrower) may
            from time
            to time request Eurodollar Rate Loans or may request that Prime Rate
            Loans be
            converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
            Loans
            continue for an additional Interest Period. Such request from a Borrower
            (or
            Administrative Borrower on behalf of such Borrower) shall specify the
            amount of
            the Eurodollar Rate Loans or the amount of the Prime Rate Loans to be
            converted
            to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to
            be
            continued (subject to the limits set forth below) and the Interest Period
            to be
            applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
            contained herein, three (3) Business Days after receipt by Lender of
            such a
            request from a Borrower (or Administrative Borrower on behalf of such
            Borrower),
            such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be
            converted
            to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue,
            as the
            case may be, provided,
            that,
            (i) no
            Default or Event of Default shall exist or have occurred and be continuing,
            (ii)
            no party hereto shall have sent any notice of termination of this Agreement,
            (iii) such Borrower (or Administrative Borrower on behalf of such Borrower)
            shall have complied with such customary procedures as are established
            by Lender
            and specified by Lender to Administrative Borrower from time to time
            for
            requests by Borrowers for Eurodollar Rate Loans, (iv) no more than four
            (4)
            Interest Periods may be in effect at any one time, (v) the aggregate
            amount of
            the Eurodollar Rate Loans must be in an amount not less than $2,000,000
            or an
            integral multiple of $500,000 in excess thereof, (vi) the maximum amount of
            the Eurodollar Rate Loans in the aggregate at any time requested by Borrowers
            shall not exceed the amount equal to (A) eighty (80%) percent of the
            lowest
            principal amount of the Revolving Loans which it is anticipated will
            be
            outstanding during the applicable Interest Period, in each case as determined
            by
            Lender in good faith (but with no obligation of Lender to make such Loans),
            and
            (vii) Lender shall have determined that the Interest Period or Adjusted
            Eurodollar Rate is available to Lender and can be readily determined
            as of the
            date of the request for such Eurodollar Rate Loan by Borrower. Any request
            by or
            on behalf of a Borrower for Eurodollar Rate Loans or to convert Prime
            Rate Loans
            to Eurodollar Rate Loans or to continue any existing Eurodollar Rate
            Loans shall
            be irrevocable. Notwithstanding anything to the contrary contained herein,
            Lender shall not be required to purchase United States Dollar deposits
            in the
            London interbank market or other applicable Eurodollar Rate market to
            fund any
            Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply
            as if
            Lender had purchased such deposits to fund the Eurodollar Rate
            Loans.

          
             

            
              
                 

              

              
                B-28

                
                  

                

              

              
                 

              

            

             

          

          (c) Any
            Eurodollar Rate Loans shall automatically convert to Prime Rate Loans
            upon the
            last day of the applicable Interest Period, unless Lender has received
            and
            approved a request to continue such Eurodollar Rate Loan at least three
            (3)
            Business Days prior to such last day in accordance with the terms hereof.
            Any
            Eurodollar Rate Loans shall, at Lender's option, upon notice by Lender
            to
            Parent, be subsequently converted to Prime Rate Loans in the event that
            this
            Agreement shall terminate or not be renewed; provided, however, that
            Lender
            shall not convert any such Eurodollar Rate Loan prior to the expiration
            of the
            applicable Interest Period in respect thereof. Borrowers shall pay to
            Lender,
            upon demand by Lender (or Lender may, at its option, charge any loan
            account of
            any Borrower) any amounts required to compensate Lender or Participant
            for any
            loss (including loss of anticipated profits), cost or expense incurred
            by such
            person, as a result of the conversion of Eurodollar Rate Loans to Prime
            Rate
            Loans pursuant to any of the foregoing.

           

          (d) Interest
            shall be payable by Borrowers to Lender monthly in arrears not later
            than the
            first day of each calendar month and shall be calculated on the basis
            of a three
            hundred sixty (360) day year and actual days elapsed. The interest rate
            on
            non-contingent Obligations (other than Eurodollar Rate Loans) shall increase
            or
            decrease by an amount equal to each increase or decrease in the Prime
            Rate
            effective on the day of any change in such Prime Rate. In no event shall
            charges
            constituting interest payable by Borrowers to Lender exceed the maximum
            amount
            or the rate permitted under any applicable law or regulation, and if
            any such
            part or provision of this Agreement is in contravention of any such law
            or
            regulation, such part or provision shall be deemed amended to conform
            thereto.

           

          (e) In
            no
            event shall the Interest Rate exceed the highest rate permitted under
            any
            applicable law or regulation. If any part or provision of this Agreement
            is in
            contravention of any such law or regulation such part or provision shall
            be
            deemed amended to conform thereto and any payments of interest made in
            excess of
            such highest rate permitted, if any, shall be deemed to be payments of
            principal
            Obligations to the extent of such excess.

          
             

            
              
                 

              

              
                B-29

                
                  

                

              

              
                 

              

            

             

          

          3.2 Closing
            Fee.
            Borrowers shall pay to Lender as a closing fee the amount of $75,000,
            which
            shall be fully earned and payable as of the date hereof.

           

          3.3 Intentionally
            omitted.

           

          3.4 Servicing
            Fee.
            Borrowers shall pay to Lender monthly a servicing fee in an amount equal
            to
            $1,500 in respect of Lender's services for each month (or part thereof)
            while
            this Agreement remains in effect and for so long thereafter as any of
            the
            Obligations are outstanding, which fee shall be fully earned as of and
            payable
            in advance on the date hereof and on the first day of each month hereafter.
            

           

          3.5 Unused
            Line Fee.
            Borrowers shall pay to Lender monthly an Unused Line fee with respect
            to any
            Unused Line existing while this Agreement is in effect and for so long
            thereafter as any of the Obligations are outstanding, which Unused Line
            fee
            shall be payable on the first day of each month in arrears. The Unused
            Line Fee
            shall be calculated as follows: (a) an amount equal to three eights of
            one
            percent (.375%) percent per annum calculated on the first $10,000,000
            of Unused
            Line during the immediately preceding month (or part thereof); plus
            (b) an
            amount equal to one quarter of one percent (.25%) percent per annum calculated
            on the Unused Line in excess of $10,000,000 during the immediately preceding
            month (or part thereof).

           

          3.6 Letter
            of Credit Fees.
            

           

          (a) In
            the
            case of standby letters of credit, Borrowers shall pay to Lender a fee
            at a rate
            equal to two (2%) percent per annum on the average daily maximum amount
            available to be drawn under all of such Letters of Credit for the immediately
            preceding month (or part thereof), payable in arrears as of the first
            day of
            each succeeding month, computed for each day from the date of issuance
            to the
            date of expiration; except that Borrowers shall pay, at Lender's option,
            without
            notice, such fee at a rate two (2%) percent greater than the otherwise
            applicable rate on such average daily maximum amount for: (a) the period
            from
            and after the date of termination or non-renewal hereof until Lender
            has
            received full and final payment of all Obligations (notwithstanding entry
            of a
            judgment against Borrowers) and (b) the period from and after the date
            of the
            occurrence of an Event of Default for so long as such Event of Default
            is
            continuing as determined by Lender. Such letter of credit fees shall
            be
            calculated on the basis of a three hundred sixty (360) day year and actual
            days
            elapsed and the obligation of Borrowers to pay such fee shall survive
            the
            termination or non-renewal of this Agreement.

           

          (b) In
            addition to the letter of credit fees provided above, Borrowers shall
            pay to
            Lender the letter of credit fronting and negotiation fees agreed to by
            Borrowers
            and Lender from time to time and the customary charges from time to time
            of
            Lender with respect to the issuance, amendment, transfer, administration,
            cancellation and conversion of, and drawings under, such Letters of
            Credit.

          
             

            
              
                 

              

              
                B-30

                
                  

                

              

              
                 

              

            

             

          

          3.7 Changes
            in Laws and Increased Costs of Loans.

           

          (a) If
            after
            the date hereof, either (i) any change in, or in the interpretation of,
            any law
            or regulation is introduced, including, without limitation, with respect
            to
            reserve requirements, applicable to Lender or any banking or financial
            institution from whom Lender borrows funds or obtains credit (a “Funding Bank”),
            or (ii) a Funding Bank or Lender complies with any future guideline or
            request
            from any central bank or other Governmental Authority or (iii) a Funding
            Bank or
            Lender determines that the adoption of any applicable law, rule or regulation
            regarding capital adequacy, or any change therein, or any change in the
            interpretation or administration thereof by any Governmental Authority,
            central
            bank or comparable agency charged with the interpretation or administration
            thereof has or would have the effect described below, or a Funding Bank
            or
            Lender complies with any request or directive regarding capital adequacy
            (whether or not having the force of law) of any such authority, central
            bank or
            comparable agency, and in the case of any event set forth in this clause
            (iii),
            such adoption, change or compliance has or would have the direct or indirect
            effect of reducing the rate of return on Lender’s capital as a consequence of
            its obligations hereunder to a level below that which Lender could have
            achieved
            but for such adoption, change or compliance (taking into consideration
            the
            Funding Bank’s or Lender’s policies with respect to capital adequacy) by an
            amount deemed by Lender to be material, and the result of any of the
            foregoing
            events described in clauses (i), (ii) or (iii) is or results in an increase
            in
            the cost to Lender of funding or maintaining the Loans or the Letters
            of Credit,
            then Borrowers and Guarantors shall from time to time upon demand by
            Lender pay
            to Lender additional amounts sufficient to indemnify Lender against such
            increased cost on an after-tax basis (after taking into account applicable
            deductions and credits in respect of the amount indemnified) so long
            as such
            amounts have accrued on or after the day which is one hundred eighty
            (180) days
            prior to the date on which Lender first made a demand thereof. A certificate
            as
            to the amount of such increased cost shall be submitted to Administrative
            Borrower by Lender and shall be conclusive, absent manifest error.

           

          (b) If
            prior
            to the first day of any Interest Period, (i) Lender shall have determined
            in
            good faith (which determination shall be conclusive and binding upon
            Borrowers
            and Guarantors) that, by reason of circumstances affecting the relevant
            market,
            adequate and reasonable means do not exist for ascertaining the Adjusted
            Eurodollar Rate for such Interest Period, (ii) Lender determines that
            the
            Adjusted Eurodollar Rate determined or to be determined for such Interest
            Period
            will not adequately and fairly reflect the cost to Lender of making or
            maintaining Eurodollar Rate Loans during such Interest Period, or (iii)
            Dollar
            deposits in the principal amounts of the Eurodollar Rate Loans to which
            such
            Interest Period is to be applicable are not generally available in the
            London
            interbank market, Lender shall give telecopy or telephonic notice thereof
            to
            Administrative Borrower as soon as practicable thereafter, and will also
            give
            prompt written notice to Administrative Borrower when such conditions
            no longer
            exist. If such notice is given (A) any Eurodollar Rate Loans requested
            to be
            made on the first day of such Interest Period shall be made as Prime
            Rate Loans,
            (B) any Loans that were to have been converted on the first day of such
            Interest
            Period to or continued as Eurodollar Rate Loans shall be converted to
            or
            continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate
            Loan
            shall be converted, on the last day of the then-current Interest Period
            thereof,
            to Prime Rate Loans. Until such notice has been withdrawn by Lender,
            no further
            Eurodollar Rate Loans shall be made or continued as such, nor shall any
            Borrower
            (or Administrative Borrower on behalf of any Borrower) have the right
            to convert
            Prime Rate Loans to Eurodollar Rate Loans.

          
             

            
              
                 

              

              
                B-31

                
                  

                

              

              
                 

              

            

             

          

          (c) Notwithstanding
            any other provision herein, if the adoption of or any change in any law,
            treaty,
            rule or regulation or final, non-appealable determination of an arbitrator
            or a
            court or other Governmental Authority or in the interpretation or application
            thereof occurring after the date hereof shall make it unlawful for Lender
            to
            make or maintain Eurodollar Rate Loans as contemplated by this Agreement,
            (i)
            Lender shall promptly give written notice of such circumstances to
            Administrative Borrower (which notice shall be withdrawn whenever such
            circumstances no longer exist), (ii) the commitment of Lender hereunder
            to make
            Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert
            Prime
            Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and,
            until such
            time as it shall no longer be unlawful for Lender to make or maintain
            Eurodollar
            Rate Loans, Lender shall then have a commitment only to make a Prime
            Rate Loan
            when a Eurodollar Rate Loan is requested and (iii) Loans then outstanding
            as
            Eurodollar Rate Loans, if any, shall be converted automatically to Prime
            Rate
            Loans on the respective last days of the then current Interest Periods
            with
            respect to such Loans or within such earlier period as required by law.
            If any
            such conversion of a Eurodollar Rate Loan occurs on a day which is not
            the last
            day of the then current Interest Period with respect thereto, Borrowers
            and
            Guarantors shall pay to such Lender such amounts, if any, as may be required
            pursuant to Section 3.3(d) below.

           

          (d) Borrowers
            and Guarantors shall indemnify Lender and to hold Lender harmless from
            any loss
            or expense which Lender may sustain or incur as a consequence of (i)
            default by
            any Borrower in making a borrowing of, conversion into or extension of
            Eurodollar Rate Loans after such Borrower has given a notice requesting
            the same
            in accordance with the provisions of this Agreement, (ii) default by
            any
            Borrower in making any prepayment of a Eurodollar Rate Loan after such
            Borrower
            (or Administrative Borrower on behalf of such Borrower) has given a notice
            thereof in accordance with the provisions of this Agreement, and (iii)
            the
            making of a prepayment of Eurodollar Rate Loans on a day which is not
            the last
            day of an Interest Period with respect thereto. With respect to Eurodollar
            Rate
            Loans, such indemnification may include an amount equal to the excess,
            if any,
            of (A) the amount of interest which would have accrued on the amount
            so prepaid,
            or not so borrowed, converted or extended, for the period from the date
            of such
            prepayment or of such failure to borrow, convert or extend to the last
            day of
            the applicable Interest Period (or, in the case of a failure to borrow,
            convert
            or extend, the Interest Period that would have commenced on the date
            of such
            failure) in each case at the applicable rate of interest for such Eurodollar
            Rate Loans provided for herein over (B) the amount of interest (as determined
            by
            such Lender) which would have accrued to Lender on such amount by placing
            such
            amount on deposit for a comparable period with leading banks in the interbank
            Eurodollar market. This covenant shall survive the termination or non-renewal
            of
            this Agreement and the payment of the Obligations.

           

          SECTION
            4.  CONDITIONS
            PRECEDENT

           

          4.1 Conditions
            Precedent to Initial Loans and Letters of Credit.
            The
            obligation of Lender to make the initial Loans or to issue the initial
            Letters
            of Credit hereunder is subject to the satisfaction of, or waiver of,
            immediately
            prior to or concurrently with the making of such Loan or the issuance
            of such
            Letter of Credit of each of the following conditions precedent:

          
             

            
              
                 

              

              
                B-32

                
                  

                

              

              
                 

              

            

             

          

          (a) Lender
            shall have received, in form and substance satisfactory to Lender, all
            releases,
            terminations and such other documents as Lender may request to evidence
            and
            effectuate the termination of all liens and security interests upon the
            Collateral, or any of it except for the security interes and liens set
            forth on
            Schedule 8.4 to the Information Certificate;

           

          (b) all
            requisite corporate action and proceedings in connection with this Agreement
            and
            the other Financing Agreements shall be satisfactory in form and substance
            to
            Lender, and Lender shall have received all information and copies of
            all
            documents, including records of requisite corporate action and proceedings
            which
            Lender may have requested in connection therewith, such documents where
            requested by Lender or its counsel to be certified by appropriate corporate
            officers or Governmental Authority (and including a copy of the certificate
            of
            incorporation of each Borrower and Guarantor certified by the Secretary
            of State
            (or equivalent Governmental Authority) which shall set forth the same
            complete
            corporate name of such Borrower or Guarantor as is set forth herein and
            such
            document as shall set forth the organizational identification number
            of each
            Borrower or Guarantor, if one is issued in its jurisdiction of
            incorporation);

           

          (c) no
            material adverse change shall have occurred in the assets, business or
            prospects
            of Borrowers since the date of Lender's latest field examination (not
            including
            for this purpose the field review referred to in clause (d) below) and
            no change
            or event shall have occurred which would impair the ability of any Borrower
            or
            Guarantor to perform its obligations hereunder or under any of the other
            Financing Agreements to which it is a party or of Lender to enforce the
            Obligations or realize upon the Collateral;

           

          (d) Lender
            shall have completed a field review of the Records and such other information
            with respect to the Collateral as Lender may require to determine the
            amount of
            Loans available to Borrowers (including, without limitation, current
            perpetual
            inventory records and/or roll-forwards of Accounts and Inventory through
            the
            date of closing and test counts of the Inventory in a manner satisfactory
            to
            Lender, together with such supporting documentation as may be necessary
            or
            appropriate, and other documents and information that will enable Lender
            to
            accurately identify and verify the Collateral), the results of which
            each case
            shall be satisfactory to Lender, not more than three (3) Business Days
            prior to
            the date hereof or such earlier date as Lender may agree;

           

          (e) Lender
            shall have received, in form and sub-stance satisfactory to Lender, all
            consents, waivers, acknowl-edgments and other agreements from third persons
            which Lender may deem necessary or desirable in order to permit, protect
            and
            perfect its security interests in and liens upon the Collateral or to
            effectuate
            the provisions or purposes of this Agreement and the other Financing
            Agreements,
            including, without limitation, Collateral Access Agreements;

          
             

            
              
                 

              

              
                B-33

                
                  

                

              

              
                 

              

            

             

          

          (f) the
            Excess Availability as determined by Lender, as of the date hereof, shall
            be not
            less than $4,000,000 after giving effect to the initial Loans made or
            to be made
            and Letters of Credit issued or to be issued in connection with the initial
            transactions hereunder;

           

          (g) Lender
            shall have received, in form and substance satisfactory to Lender, Deposit
            Account Control Agreements by and among Lender, each Borrower and Guarantor,
            as
            the case may be and each bank where such Borrower (or Guarantor) has
            a deposit
            account, in each case, duly authorized, executed and delivered by such
            bank and
            Borrower or Guarantor, as the case may be (or Lender shall be the bank’s
            customer with respect to such deposit account as Lender may
            specify);

           

          (h) Lender
            shall have received evidence, in form and substance satisfactory to Lender,
            that
            Lender has a valid perfected first priority security interest in all
            of the
            Collateral;

           

          (i) Lender
            shall have received and reviewed lien and judgment search results for
            the
            jurisdiction of organization of each Borrower and Guarantor, the jurisdiction
            of
            the chief executive office of each Borrower and Guarantor and all jurisdictions
            in which assets of Borrowers and Guarantors are located, which search
            results
            shall be in form and substance satisfactory to Lender;

           

          (j) Intentionally
            omitted;

           

          (k) Intentionally
            omitted;

           

          (l) Lender
            shall have received originals of the shares of the stock certificates
            representing (i) all of the issued and outstanding shares of the Capital
            Stock
            of each domestic Borrower and Guarantor (other than Parent); and (ii)
            Sixty Five
            (65%) percent of the issued and outstanding capital stock of each foreign
            Borrower and Guarantor, in each case together with stock powers duly
            executed in
            blank with respect thereto;

           

          (m) Lender
            shall have received evidence of insurance and loss payee endorsements
            required
            hereunder and under the other Financing Agreements, in form and substance
            satisfactory to Lender, and certificates of insurance policies and/or
            endorse-ments naming Lender as loss payee;

           

          (n) Lender
            shall have received, in form and substance satisfactory to Lender, such
            opinion
            letters of counsel to Borrowers and Guarantors with respect to the Financing
            Agreements and such other matters as Lender may request; and

           

          (o) the
            other
            Financing Agreements and all instruments and documents hereunder and
            thereunder
            shall have been duly executed and delivered to Lender, in form and substance
            satisfactory to Lender.

           

          4.2 Conditions
            Precedent to All Loans and Letters of Credit.
            The
            obligation of Lender to make the Loans, including the initial Loans,
            or to issue
            any Letter of Credit, including the initial Letters of Credit, is subject
            to the
            further satisfaction of, or waiver of, immediately prior to or concurrently
            with
            the making of each such Loan or the issuance of such Letter of Credit
            of each of
            the following conditions precedent: 

          
             

            
              
                 

              

              
                B-34

                
                  

                

              

              
                 

              

            

             

          

          (a) all
            representations and warranties contained herein and in the other Financing
            Agreements shall be true and correct with the same effect as though such
            representations and warranties had been made on and as of the date of
            the making
            of each such Loan or providing each such Letter of Credit and after giving
            effect thereto, except to the extent that such representations and warranties
            expressly relate solely to an earlier date (in which case such representations
            and warranties shall have been true and accurate on and as of such earlier
            date);

           

          (b) no
            law,
            regulation, order, judgment or decree of any Governmental Authority shall
            exist,
            and no action, suit, investigation, litigation or proceeding shall be
            pending or
            threatened in any court or before any arbitrator or Governmental Authority,
            which (i) purports to enjoin, prohibit, restrain or otherwise affect
            (A) the
            making of the Loans or providing the Letter of Credit, or (B) the consummation
            of the transactions contemplated pursuant to the terms hereof or the
            other
            Financing Agreements or (ii) has or has a reasonable likelihood of having
            a
            Material Adverse Effect; and

           

          (c) no
            Default or Event of Default shall exist or have occurred and be continuing
            on
            and as of the date of the making of such Loan or providing each such
            Letter of
            Credit and after giving effect thereto. 

           

          SECTION
            5.  GRANT
            AND PERFECTION OF SECURITY INTEREST

           

          5.1 Grant
            of Security Interest.
            To
            secure payment and performance of all Obligations, each Borrower and
            Guarantor
            hereby grants to Lender, a continuing security interest in, a lien upon,
            and a
            right of set off against, and hereby assigns to Lender, as security,
            all
            personal and real property and fixtures, and interests in property and
            fixtures,
            of each Borrower and Guarantor, whether now owned or hereafter acquired
            or
            existing, and wherever located (together with all other collateral security
            for
            the Obligations at any time granted to or held or acquired by Lender,
            collectively, the “Collateral”), including:

           

          (a) all
            Accounts;

           

          (b) all
            general intangibles, including, without limitation, all Intellectual
            Property;

           

          (c) all
            goods, including, without limitation, Inventory and Equipment;

           

          (d) all
            Real
            Property and fixtures;

           

          (e) all
            chattel paper, including, without limitation, all tangible and electronic
            chattel paper;

           

          (f) all
            instruments, including, without limitation, all promissory notes;

          
             

            
              
                 

              

              
                B-35

                
                  

                

              

              
                 

              

            

             

          

          (g) all
            documents;

           

          (h) all
            deposit accounts;

           

          (i) all
            letters of credit, banker’s acceptances and similar instruments and including
            all letter-of-credit rights;

           

          (j) all
            supporting obligations and all present and future liens, security interests,
            rights, remedies, title and interest in, to and in respect of Receivables
            and
            other Collateral, including (i) rights and remedies under or relating
            to
            guaranties, contracts of suretyship, letters of credit and credit and
            other
            insurance related to the Collateral, (ii) rights of stoppage in transit,
            replevin, repossession, reclamation and other rights and remedies of
            an unpaid
            vendor, lienor or secured party, (iii) goods described in invoices, documents,
            contracts or instruments with respect to, or otherwise representing or
            evidencing, Receivables or other Collateral, including returned, repossessed
            and
            reclaimed goods, and (iv) deposits by and property of account debtors
            or other
            persons securing the obligations of account debtors;

           

          (k) all
            (i)
            investment property (including securities, whether certificated or
            uncertificated but limited to Sixty-Five (65%) percent of the issued
            and
            outstanding shares of the capital stock of each foreign Borrower or Guarantor),
            securities accounts, security entitlements, commodity contracts or commodity
            accounts) and (ii) monies, credit balances, deposits and other property
            of any
            Borrower or Guarantor now or hereafter held or received by or in transit
            to
            Lender or its Affiliates or at any other depository or other institution
            from or
            for the account of any Borrower or Guarantor, whether for safekeeping,
            pledge,
            custody, transmission, collection or otherwise;

           

          (l) all
            commercial tort claims, including, without limitation, those identified
            in the
            Information Certificate;

           

          (m) to
            the
            extent not otherwise described above, all Receivables; 

           

          (n) all
            Records; and

           

          (o) all
            products and proceeds of the foregoing, in any form, including insurance
            proceeds and all claims against third parties for loss or damage to or
            destruction of or other involuntary conversion of any kind or nature
            of any or
            all of the other Collateral.

           

          5.2 Perfection
            of Security Interests.

           

          (a) So
            long
            as this Agreement is in full force and effect , each Borrower and Guarantor
            irrevocably and unconditionally authorizes Lender (or its agent) to file
            at any
            time and from time to time such financing statements with respect to
            the
            Collateral naming Lender or its designee as the secured party and such
            Borrower
            or Guarantor as debtor, as Lender may require, and including any other
            information with respect to such Borrower or Guarantor or otherwise required
            by
            part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction
            as
            Lender may determine, together with any amendment and continuations with
            respect
            thereto, which authorization shall apply to all financing statements
            filed on,
            prior to or after the date hereof. Each Borrower and Guarantor hereby
            ratifies
            and approves all financing statements heretofore filed and naming Lender
            or its
            designee as secured party and such Borrower or Guarantor, as the case
            may be, as
            debtor with respect to the Collateral (and any amendments with respect
            to such
            financing statements) filed by or on behalf of Lender prior to the date
            hereof
            and ratifies and confirms the authorization of Lender to file such financing
            statements (and amendments, if any). Each Borrower and Guarantor hereby
            authorizes Lender to adopt on behalf of such Borrower and Guarantor any
            symbol
            required for authenticating any electronic filing. In the event that
            the
            description of the collateral in any financing statement naming Lender
            or its
            designee as the secured party and any Borrower or Guarantor as debtor
            includes
            assets and properties of such Borrower or Guarantor that do not at any
            time
            constitute Collateral, whether hereunder, under any of the other Financing
            Agreements or otherwise, the filing of such financing statement shall
            nonetheless be deemed authorized by such Borrower or Guarantor to the
            extent of
            the Collateral included in such description and it shall not render the
            financing statement ineffective as to any of the Collateral or otherwise
            affect
            the financing statement as it applies to any of the Collateral. In no
            event
            shall any Borrower or Guarantor at any time file, or permit or cause
            to be
            filed, any correction statement or termination statement with respect
            to any
            financing statement (or amendment or continuation with respect thereto)
            naming
            Lender or its designee as secured party and such Borrower or Guarantor
            as debtor
            without the prior written consent of Lender, which consent shall not
            be
            unreasonably withheld or delayed.

          
             

            
              
                 

              

              
                B-36

                
                  

                

              

              
                 

              

            

             

          

          (b) Each
            Borrower and Guarantor does not have any chattel paper (whether tangible
            or
            electronic) or instruments as of the date hereof, except as set forth
            in the
            Information Certificate. In the event that any Borrower or Guarantor
            shall be
            entitled to or shall receive any chattel paper or instrument after the
            date
            hereof, Borrowers and Guarantors shall promptly notify Lender thereof
            in
            writing. Promptly upon the receipt thereof by or on behalf of any officer
            of any
            Borrower or Guarantor (including by any agent or representative), such
            Borrower
            or Guarantor shall deliver, or cause to be delivered to Lender, all tangible
            chattel paper and instruments that such Borrower or Guarantor has or
            may at any
            time acquire, accompanied by such instruments of transfer or assignment
            duly
            executed in blank as Lender may from time to time specify, in each case
            except
            as Lender may otherwise agree. At Lender’s option, each Borrower and Guarantor
            shall, or Lender may at any time on behalf of any Borrower or Guarantor,
            cause
            the original of any such instrument or chattel paper to be conspicuously
            marked
            in a form and manner acceptable to Lender with the following legend referring
            to
            chattel paper or instruments as applicable: “This [chattel paper][instrument] is
            subject to the security interest of Wachovia Bank, National Association
            and any
            sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
            violates the rights of such secured party.”

           

          (c) In
            the
            event that any Borrower or Guarantor shall at any time hold or acquire
            an
            interest in any electronic chattel paper or any “transferable record” (as such
            term is defined in Section 201 of the Federal Electronic Signatures in
            Global
            and National Commerce Act or in Section 16 of the Uniform Electronic
            Transactions Act as in effect in any relevant jurisdiction), such Borrower
            or
            Guarantor shall promptly notify Lender thereof in writing. Promptly upon
            Lender’s request, such Borrower or Guarantor shall take, or cause to be taken,
            such actions as Lender may request to give Lender control of such electronic
            chattel paper under Section 9-105 of the UCC and control of such transferable
            record under Section 201 of the Federal Electronic Signatures in Global
            and
            National Commerce Act or, as the case may be, Section 16 of the Uniform
            Electronic Transactions Act, as in effect in such jurisdiction.

          
             

            
              
                 

              

              
                B-37

                
                  

                

              

              
                 

              

            

             

          

          (d) Each
            Borrower and Guarantor does not have any deposit accounts as of the date
            hereof,
            except as set forth in the Information Certificate. Borrowers and Guarantors
            shall not, directly or indirectly, after the date hereof open, establish
            or
            maintain any deposit account unless each of the following conditions
            is
            satisfied: (i) Lender shall have received not less than five (5) Business
            Days
            prior written notice of the intention of any Borrower or Guarantor to
            open or
            establish such account which notice shall specify in reasonable detail
            and
            specificity acceptable to Lender the name of the account, the owner of
            the
            account, the name and address of the bank at which such account is to
            be opened
            or established, the individual at such bank with whom such Borrower or
            Guarantor
            is dealing and the purpose of the account, (ii) the bank where such account
            is
            opened or maintained is Lender or shall be a bank reasonably acceptable
            to
            Lender, and (iii) on or before the opening of such deposit account, such
            Borrower or Guarantor shall, as Lender may specify, either (A) deliver
            to Lender
            a Deposit Account Control Agreement with respect to such deposit account
            duly
            authorized, executed and delivered by such Borrower or Guarantor and
            the bank at
            which such deposit account is opened and maintained, or (B) arrange for
            Lender
            to become the customer of the bank with respect to the deposit account
            on terms
            and conditions acceptable to Lender. The terms of this subsection (d)
            shall not
            apply to deposit accounts specifically and exclusively used for payroll,
            payroll
            taxes and other employee wage and benefit payments to or for the benefit
            of any
            Borrower’s or Guarantor’s salaried employees.

           

          (e) No
            Borrower or Guarantor owns or holds, directly or indirectly, beneficially
            or as
            record owner or both, any investment property, as of the date hereof,
            or have
            any investment account, securities account, commodity account or other
            similar
            account with any bank or other financial institution or other securities
            intermediary or commodity intermediary as of the date hereof, in each
            case
            except as set forth in the Information Certificate.

           

          (i) In
            the
            event that any Borrower or Guarantor shall be entitled to or shall at
            any time
            after the date hereof hold or acquire any certificated securities, such
            Borrower
            or Guarantor shall promptly endorse, assign and deliver the same to Lender,
            accompanied by such instruments of transfer or assignment duly executed
            in blank
            as Lender may from time to time specify. If any securities, now or hereafter
            acquired by any Borrower or Guarantor are uncertificated and are issued
            to such
            Borrower or Guarantor or its nominee directly by the issuer thereof,
            such
            Borrower or Guarantor shall immediately notify Lender thereof and shall
            as
            Lender may specify, either (A) cause the issuer to agree to comply with
            instructions from Lender as to such securities, without further consent
            of any
            Borrower or Guarantor or such nominee, or (B) arrange for Lender to become
            the
            registered owner of the securities. 

           

          (ii) Borrowers
            and Guarantors shall not, directly or indirectly, after the date hereof
            open,
            establish or maintain any investment account, securities account, commodity
            account or any other similar account (other than a deposit account) with
            any
            securities intermediary or commodity intermediary unless each of the
            following
            conditions is satisfied: (A) Lender shall have received not less than
            five (5)
            Business Days prior written notice of the intention of Borrower or Guarantor
            to
            open or establish such account which notice shall specify in reasonable
            detail
            and specificity acceptable to Lender the name of the account, the owner
            of the
            account, the name and address of the securities intermediary or commodity
            intermediary at which such account is to be opened or established, the
            individual at such intermediary with whom such Borrower or Guarantor
            is dealing
            and the purpose of the account, (B) the securities intermediary or commodity
            intermediary (as the case may be) where such account is opened or maintained
            shall be reasonably acceptable to Lender, and (C) on or before the opening
            of
            such investment account, securities account or other similar account
            with a
            securities intermediary or commodity intermediary, such Borrower or Guarantor
            shall as Lender may specify either (1) execute and deliver, and cause
            to be
            executed and delivered to Lender, an Investment Property Control Agreement
            with
            respect thereto duly authorized, executed and delivered by such Borrower
            or
            Guarantor and such securities intermediary or commodity intermediary
            or (2)
            arrange for Lender to become the entitlement holder with respect to such
            investment property on terms and conditions acceptable to Lender.

          
             

            
              
                 

              

              
                B-38

                
                  

                

              

              
                 

              

            

             

          

          (f) Borrowers
            and Guarantors are not the beneficiary or otherwise entitled to any right
            to
            payment under any letter of credit, banker’s acceptance or similar instrument as
            of the date hereof, except as set forth in the Information Certificate.
            In the
            event that any Borrower or Guarantor shall be entitled to or shall receive
            any
            right to payment under any letter of credit, banker’s acceptance or any similar
            instrument, whether as beneficiary thereof or otherwise after the date
            hereof,
            such Borrower or Guarantor shall promptly notify Lender thereof in writing.
            Such
            Borrower or Guarantor shall immediately, as Lender may specify, either
            (i)
            deliver, or cause to be delivered to Lender, with respect to any such
            letter of
            credit, banker’s acceptance or similar instrument, the written agreement of the
            issuer and any other nominated person obligated to make any payment in
            respect
            thereof (including any confirming or negotiating bank), in form and substance
            satisfactory to Lender, consenting to the assignment of the proceeds
            of the
            letter of credit to Lender by such Borrower or Guarantor and agreeing
            to make
            all payments thereon directly to Lender or as Lender may otherwise direct
            or
            (ii) cause Lender to become, at Borrowers’ expense, the transferee beneficiary
            of the letter of credit, banker’s acceptance or similar instrument (as the case
            may be).

           

          (g) Borrowers
            and Guarantors do not have any commercial tort claims as of the date
            hereof,
            except as set forth in the Information Certificate. In the event that
            any
            Borrower or Guarantor shall at any time after the date hereof have any
            commercial tort claims, such Borrower or Guarantor shall promptly notify
            Lender
            thereof in writing, which notice shall (i) set forth in reasonable detail
            the
            basis for and nature of such commercial tort claim and (ii) include the
            express
            grant by such Borrower or Guarantor to Lender of a security interest
            in such
            commercial tort claim (and the proceeds thereof). In the event that such
            notice
            does not include such grant of a security interest, the sending thereof
            by such
            Borrower or Guarantor to Lender shall be deemed to constitute such grant
            to
            Lender. Upon the sending of such notice, any commercial tort claim described
            therein shall constitute part of the Collateral and shall be deemed included
            therein. Without limiting the authorization of Lender provided in Section
            5.2(a)
            hereof or otherwise arising by the execution by such Borrower or Guarantor
            of
            this Agreement or any of the other Financing Agreements, Lender is hereby
            irrevocably authorized from time to time and at any time to file such
            financing
            statements naming Lender or its designee as secured party and such Borrower
            or
            Guarantor as debtor, or any amendments to any financing statements, covering
            any
            such commercial tort claim as Collateral. In addition, each Borrower
            and
            Guarantor shall promptly upon Lender’s request, execute and deliver, or cause to
            be executed and delivered, to Lender such other agreements, documents
            and
            instruments as Lender may require in connection with such commercial
            tort
            claim.

          
             

            
              
                 

              

              
                B-39

                
                  

                

              

              
                 

              

            

             

          

          (h) Borrowers
            and Guarantors do not have any goods, documents of title or other Collateral
            in
            the custody, control or possession of a third party as of the date hereof,
            except as set forth in the Information Certificate and except for goods
            located
            in the United States in transit to a location of a Borrower or Guarantor
            permitted herein in the ordinary course of business of such Borrower
            or
            Guarantor in the possession of the carrier transporting such goods. In
            the event
            that any goods, documents of title or other Collateral are at any time
            after the
            date hereof in the custody, control or possession of any other person
            not
            referred to in the Information Certificate or such carriers, Borrowers
            and
            Guarantors shall promptly notify Lender thereof in writing. Promptly
            upon
            Lender’s request, Borrowers and Guarantors shall deliver to Lender a Collateral
            Access Agreement duly authorized, executed and delivered by such person
            and the
            Borrower or Guarantor that is the owner of such Collateral.

           

          (i) Borrowers
            and Guarantors shall take any other actions reasonably requested by Lender
            from
            time to time to cause the attachment, perfection and first priority of,
            and the
            ability of Lender to enforce, the security interest of Lender in any
            and all of
            the Collateral, including, without limitation, (i) executing, delivering
            and,
            where appropriate, filing financing statements and amendments relating
            thereto
            under the UCC or other applicable law, to the extent, if any, that any
            Borrower's or Guarantor’s signature thereon is required therefor, (ii) causing
            Lender’s name to be noted as secured party on any certificate of title for a
            titled good if such notation is a condition to attachment, perfection
            or
            priority of, or ability of Lender to enforce, the security interest of
            Lender in
            such Collateral, (iii) complying with any provision of any statute, regulation
            or treaty of the United States as to any Collateral if compliance with
            such
            provision is a condition to attachment, perfection or priority of, or
            ability of
            Lender to enforce, the security interest of Lender in such Collateral,
            (iv)
            obtaining the consents and approvals of any Governmental Authority or
            third
            party, including, without limitation, any consent of any licensor, lessor
            or
            other person obligated on Collateral, and taking all actions required
            by any
            earlier versions of the UCC or by other law, as applicable in any relevant
            jurisdiction.

           

          5.3 Borrowers
            and Guarantors shall pledge and assign to Lender Sixty-Five (65%) of
            the issued
            and outstanding shares of stock in the Foreign Subsidiaries and in order
            to
            secure such pledge shall execute and deliver such stock pledge agreements,
            notices of pledge and stock powers and such other documents as Lender
            may
            reasonably require in order to effect such pledge.

           

          SECTION
            6.  COLLECTION
            AND ADMINISTRATION

           

          6.1 Borrowers’
            Loan Accounts.
            Lender
            shall maintain one or more loan account(s) on its books in which shall
            be
            recorded (a) all Loans, Letters of Credit and other Obligations and the
            Collateral, (b) all payments made by or on behalf of any Borrower or
            Guarantor
            and (c) all other appropriate debits and credits as provided in this
            Agreement,
            including fees, charges, costs, expenses and interest. All entries in
            the loan
            account(s) shall be made in accordance with Lender's customary practices
            as in
            effect from time to time.

          
             

            
              
                 

              

              
                B-40

                
                  

                

              

              
                 

              

            

             

          

          6.2 Statements.
            Lender
            shall render to Administrative Borrower each month a statement setting
            forth the
            balance in the Borrowers’ loan account(s) maintained by Lender for Borrowers
            pursuant to the provisions of this Agreement, including principal, interest,
            fees, costs and expenses. Each such statement shall be subject to subsequent
            adjustment by Lender but shall, absent manifest errors or omissions,
            be
            considered correct and deemed accepted by Borrowers and Guarantors and
            conclusively binding upon Borrowers and Guarantors as an account stated
            except
            to the extent that Lender receives a written notice from Administrative
            Borrower
            of any specific exceptions of Administrative Borrower thereto within
            thirty (30)
            days after the date such statement has been received by Parent. Until
            such time
            as Lender shall have rendered to Administrative Borrower a written statement
            as
            provided above, the balance in any Borrower's loan account(s) shall be
            presumptive evidence of the amounts due and owing to Lender by Borrowers
            and
            Guarantors.

           

          6.3 Collection
            of Accounts.

           

          (a) Borrowers
            shall establish and maintain, at their expense, blocked accounts or lockboxes
            and related blocked accounts (in either case, “Blocked Accounts”), as Lender may
            specify, with such banks as are acceptable to Lender into which Borrowers
            shall
            promptly deposit and direct their respective account debtors to directly
            remit
            all payments on Receivables and all payments constituting proceeds of
            Inventory
            or other Collateral in the identical form in which such payments are
            made,
            whether by cash, check or other manner. Borrowers shall deliver, or cause
            to be
            delivered to Lender a Deposit Account Control Agreement duly authorized,
            executed and delivered by each bank where a Blocked Account is maintained
            as
            provided in Section 5.2 hereof or at any time and from time to time Lender
            may
            become the bank’s customer with respect to any of the Blocked Accounts and
            promptly upon Lender’s request, Borrowers shall execute and deliver such
            agreements and documents as Lender may require in connection therewith.
            Each
            Borrower and Guarantor agrees that all payments made to such Blocked
            Accounts
            upon or after a Cash Dominion Event or other funds received and collected
            by
            Lender, whether in respect of the Receivables, as proceeds of Inventory
            or other
            Collateral or otherwise shall be treated as payments to Lender in respect
            of the
            Obligations and therefore shall constitute the property of Lender to
            the extent
            of the then outstanding Obligations.

           

          (b) For
            purposes of calculating the amount of the Loans avail-able to each Borrower,
            such payments will be applied (conditional upon final collection) to
            the
            Obligations on the Business Day of receipt by Lender of immediately available
            funds in the Lender Payment Account provided such payments and notice
            thereof
            are received in accordance with Lender's usual and customary practices
            as in
            effect from time to time and within sufficient time to credit such Borrower's
            loan account on such day, and if not, then on the next Business Day.
            For the
            purposes of calculating interest on the Obligations, such payments or
            other
            funds received will be applied (conditional upon final collec-tion) to
            the
            Obligations one (1) Business Day following the date of receipt of immediately
            available funds by Lender in the Lender Payment Account provided such
            payments
            or other funds and notice thereof are received in accordance with Lender’s usual
            and customary practices as in effect from time to time and within sufficient
            time to credit such Borrower's loan account on such day, and if not,
            then on the
            next Business Day.

          
             

            
              
                 

              

              
                B-41

                
                  

                

              

              
                 

              

            

             

          

          (c) Each
            Borrower and Guarantor and their respective employees, agents and Subsidiaries
            shall, acting as trustee for Lender, receive, as the property of Lender,
            any
            monies, checks, notes, drafts or any other payment relating to and/or
            proceeds
            of Accounts or other Collateral which come into their possession or under
            their
            control and immediately upon receipt thereof, shall deposit or cause
            the same to
            be deposited in the Blocked Accounts, or remit the same or cause the
            same to be
            remitted, in kind, to Lender. In no event shall the same be commingled
            with any
            Borrower's or Guarantor’s own funds. Borrowers agree to reimburse Lender on
            demand for any amounts owed or paid to any bank or other financial institution
            at which a Blocked Account or any other deposit account or investment
            account is
            established or any other bank, financial institution or other person
            involved in
            the transfer of funds to or from the Blocked Accounts arising out of
            Lender's
            payments to or indemnification of such bank, financial institution or
            other
            person. The obligations of Borrowers to reimburse Lender for such amounts
            pursuant to this Section 6.3 shall survive the termination of this
            Agreement.

           

          6.4 Payments.

           

          (a) All
            Obligations shall be payable to the Lender Payment Account as provided
            in
            Section 6.3 or such other place as Lender may designate from time to
            time.
            Subject to the other terms and conditions contained herein, Lender shall
            apply
            payments received or collected from any Borrower or Guarantor or for
            the account
            of any Borrower or Guarantor (including the monetary proceeds of collections
            or
            of realization upon any Collateral) as follows: first,
            to pay
            any fees, indemnities or expense reimbursements then due to Lender from
            any
            Borrower or Guarantor; second,
            to pay
            interest due in respect of any Loans or Letter of Credit Obligations;
            third,
            to pay
            or prepay principal in respect of the Loans and to pay or prepay Obligations
            arising under or pursuant to any Hedge Agreements of Borrower (up to
            the amount
            of any then effective Reserve established in respect of such Obligations),
            on a
pro rata
            basis;
fourth,
            to pay
            or prepay any other Obligations whether or not then due, in such order
            and
            manner as Lender determines or to be held as cash collateral in connection
            with
            any Letters of Credit or other contingent Obligations (but not including
            for
            this purpose any Obligations arising under or pursuant to any Bank Products);
            and fifth,
            to pay
            or prepay any Obligations arising under or pursuant to any Bank Products
            (other
            than to the extent provided for above) on a pro rata
            basis.
            Notwithstanding anything to the contrary contained in this Agreement,
            (i) unless
            so directed by Administrative Borrower, or unless a Default or an Event
            of
            Default shall exist or have occurred and be continuing, Lender shall
            not apply
            any payments which it receives to any Eurodollar Rate Loans, except (A)
            on the
            expiration date of the Interest Period applicable to any such Eurodollar
            Rate
            Loans or (B) in the event that there are no outstanding Prime Rate Loans
            and
            (ii) to the extent any Borrower uses any proceeds of the Loans or Letters
            of
            Credit to acquire rights in or the use of any Collateral or to repay
            any
            Indebtedness used to acquire rights in or the use of any Collateral,
            payments in
            respect of the Obligations shall be deemed applied first to the Obligations
            arising from Loans and Letters of Credit that were not used for such
            purposes
            and second to the Obligations arising from Loans and Letters of Credit
            the
            proceeds of which were used to acquire rights in or the use of any Collateral
            in
            the chronological order in which such Borrower acquired such rights in
            or the
            use of such Collateral.

          
             

            
              
                 

              

              
                B-42

                
                  

                

              

              
                 

              

            

             

          

          (b) 
            At
            Lender's option, all principal, interest, fees, costs, expenses and other
            charges provided for in this Agreement or the other Financing Agreements
            may be
            charged directly to the loan account(s) of any Borrower maintained by
            Lender. If
            after receipt of any payment of, or proceeds of Collateral applied to
            the
            payment of, any of the Obligations, Lender is required to surrender or
            return
            such payment or proceeds to any Person for any reason, then the Obligations
            intended to be satisfied by such payment or proceeds shall be reinstated
            and
            continue and this Agreement shall continue in full force and effect as
            if such
            payment or proceeds had not been received by Lender. Borrowers and Guarantors
            shall be liable to pay to Lender, and do hereby indemnify and hold Lender
            harmless for the amount of any payments or proceeds surrendered or returned.
            This Section 6.4(b) shall remain effective notwithstanding any contrary
            action
            which may be taken by Lender in reliance upon such payment or proceeds.
            This
            Section 6.4 shall survive the payment of the Obligations and the termination
            of
            this Agreement.

           

          6.5 Authorization
            to Make Loans.
            Lender
            is authorized to make the Loans based upon written instructions received
            from an
            Authorized Signatory or, at the discretion of Lender, if such Loans are
            necessary to satisfy any Obligations. All requests for Loans or Letters
            of
            Credit hereunder shall specify the date on which the requested advance
            is to be
            made (which day shall be a Business Day) and the amount of the requested
            Loan.
            Requests received after 11:00 a.m. New York time on any day shall be deemed
            to have been made as of the opening of business on the immediately following
            Business Day. All Loans and Letters of Credit under this Agreement shall
            be
            conclusively presumed to have been made to, and at the request of and
            for the
            benefit of, any Borrower or Guarantor when deposited to the credit of
            any
            Borrower or Guarantor or otherwise disbursed or established in accordance
            with
            the instructions of any Borrower or Guarantor or in accordance with the
            terms
            and conditions of this Agreement.

           

          6.6 Use
            of
            Proceeds.
            Borrowers shall use the initial proceeds of the Loans and Letters of
            Credit
            hereunder only for: (a) payments to each of the persons listed in the
            disbursement direction letter furnished by Borrowers to Lender on or
            about the
            date hereof and (b) costs, expenses and fees in connection with the preparation,
            negotiation, execution and delivery of this Agreement and the other Financing
            Agreements. All other Loans made or Letters of Credit provided to or
            for the
            benefit of any Borrower pursuant to the provisions hereof shall be used
            by such
            Borrower only for general operating, working capital, capital expenditure
            and
            other proper corporate purposes of such Borrower not otherwise prohibited
            by the
            terms hereof including acquisitions approved in writing by Lender. None
            of the
            proceeds will be used, directly or indirectly, for the purpose of purchasing
            or
            carrying any margin security or for the purposes of reducing or retiring
            any
            indebtedness which was originally incurred to purchase or carry any margin
            security or for any other purpose which might cause any of the Loans
            to be
            considered a “purpose credit” within the meaning of Regulation U of the Board of
            Governors of the Federal Reserve System, as amended.

          
             

            
              
                 

              

              
                B-43

                
                  

                

              

              
                 

              

            

             

          

          6.7 Appointment
            of Administrative Borrower as Agent for Requesting Loans and Receipts
            of Loans
            and Statements.

           

          (a) Each
            Borrower hereby irrevocably appoints and constitutes Administrative Borrower
            as
            its agent and attorney-in-fact to request and receive Loans and Letters
            of
            Credit pursuant to this Agreement and the other Financing Agreements
            from Lender
            in the name or on behalf of such Borrower. Lender may disburse the Loans
            to such
            bank account of Administrative Borrower or a Borrower or otherwise make
            such
            Loans to a Borrower and provide such Letters of Credit to a Borrower
            as
            Administrative Borrower may designate or direct, without notice to any
            other
            Borrower or Guarantor. Notwithstanding anything to the contrary contained
            herein, Lender may at any time and from time to time require that Loans
            to or
            for the account of any Borrower be disbursed directly to an operating
            account of
            such Borrower.

           

          (b) Administrative
            Borrower hereby accepts the appointment by Borrowers to act as the agent
            and
            attorney-in-fact of Borrowers pursuant to this Section 6.7. Administrative
            Borrower shall ensure that the disbursement of any Loans to each Borrower
            requested by or paid to or for the account of Parent, or the issuance
            of any
            Letter of Credit for a Borrower hereunder, shall be paid to or for the
            account
            of such Borrower.

           

          (c) Each
            Borrower and other Guarantor hereby irrevocably appoints and constitutes
            Administrative Borrower as its agent to receive statements on account
            and all
            other notices from Lender with respect to the Obligations or otherwise
            under or
            in connection with this Agreement and the other Financing
            Agreements.

           

          (d) 
            Any
            notice, election, representation, warranty, agreement or undertaking
            by or on
            behalf of any other Borrower or any Guarantor by Administrative Borrower
            shall
            be deemed for all purposes to have been made by such Borrower or Guarantor, as
            the case may be, and shall be binding upon and enforceable against such
            Borrower
            or Guarantor to the same extent as if made directly by such Borrower
            or
            Guarantor.

           

          (e) No
            purported termination of the appointment of Administrative Borrower as
            agent as
            aforesaid shall be effective, except after ten (10) days' prior written
            notice
            to Lender.

           

          6.8 Bank
            Products.
            Borrower may (but is not required to) request that Lender or its Affiliates
            provide or arrange for Borrower to obtain Bank Products, and Lender may,
            in its
            sole discretion, provide or arrange for Borrower obtain the requested
            Bank
            Products. Borrower acknowledges and agrees that the obtaining of Bank
            Products
            (a) is in the sole discretion of Lender, and (b) is subject to all rules
            and
            regulations of Lender with respect thereto.

          
             

            
              
                 

              

              
                B-44

                
                  

                

              

              
                 

              

            

             

          

          

           

          SECTION
            7.  COLLATERAL
            REPORTING AND COVENANTS

           

          7.1 Collateral
            Reporting.

           

          (a) Borrowers
            shall provide Lender with the following documents in a form satisfactory
            to
            Lender: 

           

          (i) on
            a
            regular basis as reasonably required by Lender, schedules of sales made,
            credits
            issued and cash received;

           

          (ii) as
            soon
            as possible after the end of each month (but in any event within ten
            (10)
            Business Days after the end thereof), on a monthly basis or more frequently
            as
            Lender may reasonably request, (A) perpetual inventory reports, (B) inventory
            reports by location and category (and including the amounts of Inventory
            and the
            value thereof at, any leased locations and at premises of warehouses,
            processors
            or other third parties), (C) agings of accounts receivable (together
            with a
            reconciliation to the previous month’s aging and general ledger), (D) agings of
            Foreign Accounts sorted by country and customer name, and (E) agings
            of accounts
            payable (and including information indicating the amounts owing to owners
            and
            lessors of leased premises, warehouses, processors and other third parties
            from
            time to time in possession of any Collateral);

           

          (iii) upon
            Lender's reasonable request, (A) copies of customer statements, purchase
            orders,
            sales invoices, credit memos, remittance advices and reports, and copies
            of
            deposit slips and bank statements, (B) copies of shipping and delivery
            documents, and (C) copies of purchase orders, invoices and delivery
            documents for Inventory and Equipment acquired by any Borrower or Guarantor;
            

           

          (iv) such
            other reports as to the Collateral as Lender shall reasonably request
            from time
            to time.

           

          (b) If
            any
            Borrower's or Guarantor’s records or reports of the Collateral are prepared or
            maintained by an accounting service, contractor, shipper or other agent,
            such
            Borrower and Guarantor hereby irrevocably authorizes such service, contractor,
            shipper or agent to deliver such records, reports, and related documents
            to
            Lender and to follow Lender's instructions with respect to further services
            at
            any time that an Event of Default exists or has occurred and is
            continuing.

           

          7.2 Accounts
            Covenants.

           

          (a) Borrowers
            shall notify Lender promptly of: (i) any material delay in any Borrower's
            performance of any of its material obligations to any account debtor
            or the
            assertion of any material claims, offsets, defenses or counterclaims
            by any
            account debtor, or any material disputes with account debtors, or any
            settlement, adjustment or compromise thereof, (ii) all material adverse
            information known to any Borrower or Guarantor relating to the financial
            condition of any account debtor and (iii) any event or circumstance which,
            to
            the best of any Borrower's or Guarantor’s knowledge, would cause Lender to
            consider any then existing Accounts as no longer constituting Eligible
            Accounts.
            No credit, discount, allowance or extension or agreement for any of the
            foregoing shall be granted to any account debtor without Lender's consent,
            except in the ordinary course of a Borrower's or Guarantor’s business in
            accordance with practices and policies previously disclosed in writing
            to Lender
            and except as set forth in the schedules delivered to Lender pursuant
            to Section
            7.1(a) above. So long as no Event of Default exists or has occurred and
            is
            continuing, Borrowers and Guarantors shall settle, adjust or compromise
            any
            claim, offset, counterclaim or dispute with any account debtor. At any
            time that
            an Event of Default exists or has occurred and is continuing, Lender
            shall, at
            its option, have the exclusive right to settle, adjust or compromise
            any claim,
            offset, counterclaim or dispute with account debtors or grant any credits,
            discounts or allowances.

          
             

            
              
                 

              

              
                B-45

                
                  

                

              

              
                 

              

            

             

          

          (b) With
            respect to each Account: (i) the amounts shown on any invoice delivered
            to
            Lender or schedule thereof delivered to Lender shall be true and complete,
            (ii)
            no payments shall be made thereon except payments immediately delivered
            to
            Lender pursuant to the terms of this Agreement, (iii) no credit, discount,
            allowance or extension or agreement for any of the foregoing shall be
            granted to
            any account debtor except as reported to Lender in accordance with this
            Agreement and except for credits, discounts, allowances or extensions
            made or
            given in the ordinary course of each Borrower's business in accordance
            with
            practices and policies previously disclosed to Lender, (iv) there shall
            be no
            setoffs, deductions, contras, defenses, counterclaims or disputes existing
            or
            asserted with respect thereto except as reported to Lender in accordance
            with
            the terms of this Agreement, (v) none of the transa-ctions giving rise
            thereto
            will violate any applicable foreign, Federal, State or local laws or
            regulations, all documentation relating thereto will be legally sufficient
            under
            such laws and regulations and all such documentation will be legally
            enforceable
            in accordance with its terms.

           

          (c) Lender
            shall have the right at any time or times, in Lender's name or in the
            name of a
            nominee of Lender, to verify the validity, amount or any other matter
            relating
            to any Receivables or other Collateral, by mail, telephone, facsimile
            transmission or otherwise.

           

          7.3 Inventory
            Covenants.
            With
            respect to the Inventory: (a) each Borrower and Guarantor shall at all
            times
            maintain inventory records reasonably satisfactory to Lender, keeping
            correct
            and accurate records itemizing and describing the kind, type, quality
            and
            quantity of Inventory, such Borrower's or Guarantor’s cost therefor and daily
            withdrawals therefrom and additions thereto; (b) Borrowers and Guarantors
            shall
            conduct a physical count of the Inventory at least once each year but
            at any
            time or times as Lender may request on or after an Event of Default,
            and
            promptly following such physical inventory shall supply Lender with a
            report in
            the form and with such specificity as may be reasonably satisfactory
            to Lender
            concerning such physical count; (c) Borrowers and Guarantors shall not
            remove
            any Inventory from the locations set forth or permitted herein, without
            the
            prior written consent of Lender which consent shall not be unreasonably
            withheld
            or delayed, except for sales of Inventory in the ordinary course of its
            business
            and except to move Inventory directly from one location set forth or
            permitted
            herein to another such location and except for Inventory shipped from
            the
            manufacturer thereof to such Borrower or Guarantor which is in transit
            to the
            locations set forth or permitted herein; (d) upon Lender's request, Borrowers
            shall, at their expense, no more than one (1) time in any twelve (12)
            month
            period, but at any time or times as Lender may request on or after an
            Event of
            Default, deliver or cause to be delivered to Lender written appraisals
            as to the
            Inventory in form, scope and methodology acceptable to Lender and by
            an
            appraiser acceptable to Lender, addressed to Lender and upon which Lender
            is
            expressly permitted to rely; (e) Borrowers and Guarantors shall produce,
            use, store and maintain the Inventory with all reasonable care and caution
            and
            in accordance with applicable standards of any insurance and in conformity
            with
            applicable laws (including the requirements of the Federal Fair Labor
            Standards
            Act of 1938, as amended and all rules, regulations and orders related
            thereto);
            (f) none of the Inventory or other Collateral constitutes farm products or
            the proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility
            and liability arising from or relating to the production, use, sale or
            other
            disposition of the Inventory; (h) Borrowers and Guarantors shall not
            sell
            Inventory to any customer on approval, or any other basis which entitles
            the
            customer to return or may obligate any Borrower or Guarantor to repurchase
            such
            Inventory; (i) Borrowers and Guarantors shall keep the Inventory in good
            and
            marketable condition; and (j) Borrowers and Guarantors shall not, without
            prior
            written notice to Lender or the specific identification of such Inventory
            in a
            report with respect thereto provided by Administrative Borrower to Lender
            pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on
            consignment or approval. 

          
             

            
              
                 

              

              
                B-46

                
                  

                

              

              
                 

              

            

             

          

          7.4 Equipment
            and Real Property Covenants.
            With
            respect to the Equipment and Real Property: (a) upon Lender’s request, Borrowers
            and Guarantors shall, at their expense, no more than one (1) time in
            any twelve
            (12) month period, but at any time or times as Lender may request on
            or after an
            Event of Default, deliver or cause to be delivered to Lender written
            appraisals
            as to the Equipment and/or the Real Property in form, scope and methodology
            acceptable to Lender and by an appraiser acceptable to Lender, addressed
            to
            Lender and upon which Lender is expressly permitted to rely; (b) Borrowers
            and
            Guarantors shall keep the Equipment in good order, repair, running and
            marketable condition (ordinary wear and tear excepted); (c) Borrowers
            and
            Guarantors shall use the Equipment and Real Property with all reasonable
            care
            and caution and in accordance with applicable standards of any insurance
            and in
            conformity with all applicable laws; (d) the Equipment is and shall be
            used in
            the business of Borrowers and Guarantors and not for personal, family,
            household
            or farming use; (e) Borrowers and Guarantors shall not remove any Equipment
            from
            the locations set forth or permitted herein, except to the extent necessary
            to
            have any Equipment repaired or maintained in the ordinary course of its
            business
            or to move Equipment directly from one location set forth or permitted
            herein to
            another such location and except for the movement of motor vehicles used
            by or
            for the benefit of such Borrower or Guarantor in the ordinary course
            of
            business; (f) the Equipment is now and shall remain personal property
            and
            Borrowers and Guarantors shall not permit any of the Equipment to be
            or become a
            part of or affixed to real property; and (g) each Borrower and Guarantor
            assumes
            all responsibility and liability arising from the use of the Equipment
            and Real
            Property.

           

          7.5 Power
            of Attorney.
            Each
            Borrower and Guarantor hereby irrevocably designates and appoints Lender
            (and
            all persons designated by Lender) as such Borrower's and Guarantor’s true and
            lawful attorney-in-fact, and authorizes Lender, in such Borrower's, Guarantor’s
            or Lender's name, to: (a) at any time an Event of Default exists or has
            occurred
            and is continuing (i) demand payment on Receivables or other Collateral,
            (ii) enforce payment of Receivables by legal proceedings or otherwise,
            (iii)
            exercise all of such Borrower's or Guarantor’s rights and remedies to collect
            any Receivable or other Collateral, (iv) sell or assign any Receivable
            upon such
            terms, for such amount and at such time or times as the Lender deems
            advisable,
            (v) settle, adjust, compromise, extend or renew an Account, (vi) discharge
            and
            release any Receivable, (vii) prepare, file and sign such Borrower's or
            Guarantor’s name on any proof of claim in bankruptcy or other similar document
            against an account debtor or other obligor in respect of any Receivables
            or
            other Collateral, (viii) notify the post office authorities to change
            the
            address for delivery of remittances from account debtors or other obligors
            in
            respect of Receivables or other proceeds of Collateral to an address
            designated
            by Lender, and open and dispose of all mail addressed to such Borrower
            or
            Guarantor and handle and store all mail relating to the Collateral; and
            (ix) do
            all acts and things which are necessary, in Lender's determination, to
            fulfill
            such Borrower's or Guarantor’s obligations under this Agreement and the other
            Financing Agreements and (b) at any time to (i) take control in any manner
            of
            any item of payment in respect of Receivables or constituting Collateral
            or
            otherwise received in or for deposit in the Blocked Accounts or otherwise
            received by Lender, (ii) have access to any lockbox or postal box into
            which remittances from account debtors or other obligors in respect of
            Receivables or other proceeds of Collateral are sent or received,
            (iii) endorse such Borrower's or Guarantor’s name upon any items of payment
            in respect of Receivables or constituting Collateral or otherwise received
            by
            Lender and deposit the same in Lender's account for application to the
            Obligations, (iv) endorse such Borrower's or Guarantor’s name upon any chattel
            paper, document, instrument, invoice, or similar document or agreement
            relating
            to any Receivable or any goods pertaining thereto or any other Collateral,
            including any warehouse or other receipts, or bills of lading and other
            negotiable or non-negotiable documents, (v) clear Inventory the purchase of
            which was financed with a Letter of Credit through U.S. Customs or foreign
            export control authorities in such Borrower’s or Guarantor’s name, Lender’s name
            or the name of Lender’s designee, and to sign and deliver to customs officials
            powers of attorney in such Borrower’s or Guarantor’s name for such purpose, and
            to complete in such Borrower’s or Guarantor’s or Lender’s name, any order, sale
            or transaction, obtain the necessary documents in connection therewith
            and
            collect the proceeds thereof, and (vi) sign such Borrower's or Guarantor’s
            name on any verification of Receivables and notices thereof to account
            debtors
            or any secondary obligors or other obligors in respect thereof. Each
            Borrower
            and Guarantor hereby releases Lender and its officers, employees and
            designees
            from any liabilities arising from any act or acts under this power of
            attorney
            and in furtherance thereof, whether of omission or commission, except
            as a
            result of Lender’s own gross negligence or willful misconduct as determined
            pursuant to a final non-appealable order of a court of competent
            jurisdiction.

          
             

            
              
                 

              

              
                B-47

                
                  

                

              

              
                 

              

            

             

          

          7.6 Right
            to Cure.
            Lender
            may, at its option, upon notice to Administrative Borrower, (a) cure
            any default
            by any Borrower or Guarantor under any Material Contract with a third
            party that
            affects the Collateral, its value or the ability of Lender to collect,
            sell or
            otherwise dispose of the Collateral or the rights and remedies of Lender
            therein
            or the ability of any Borrower or Guarantor to perform its obligations
            hereunder
            or under any of the other Financing Agreements, (b) pay or bond on appeal
            any
            judgment entered against any Borrower or Guarantor, (c) discharge lawful
            taxes,
            liens, security interests or other encumbrances at any time levied on
            or
            existing with respect to the Collateral and (d) pay any amount, incur
            any
            expense or perform any act which, in Lender's reasonable judgment, is
            necessary
            or appropriate to preserve, protect, insure or maintain the Collateral
            and the
            rights of Lender with respect thereto. Lender may add any amounts so
            expended to
            the Obligations and charge any Borrower's account therefor, such amounts
            to be
            repayable by Borrowers on demand. Lender shall be under no obligation
            to effect
            such cure, payment or bonding and shall not, by doing so, be deemed to
            have
            assumed any obligation or liability of any Borrower or Guarantor. Any
            payment
            made or other action taken by Lender under this Section shall be without
            prejudice to any right to assert an Event of Default hereunder and to
            proceed
            accordingly.

          
             

            
              
                 

              

              
                B-48

                
                  

                

              

              
                 

              

            

             

          

          7.7 Access
            to Premises.
            From
            time to time as requested by Lender, at the cost and expense of Borrowers,
            (a)
            Lender or its designee shall have reasonable access to all of each Borrower's
            and Guarantor’s premises during normal business hours and after notice to
            Parent, or at any time and without notice to Administrative Borrower
            if an Event
            of Default exists or has occurred and is continuing, for the purposes
            of
            inspecting, verifying and auditing the Collateral and all of each Borrower's
            and
            Guarantor’s books and records, including the Records, and (b) each Borrower and
            Guarantor shall promptly furnish to Lender such copies of such books
            and records
            or extracts therefrom as Lender may reasonably request, and (c) Lender
            or
            Lender’s designee may use during normal business hours such of any Borrower's
            and Guarantor’s personnel, equipment, supplies and premises as may be reasonably
            necessary for the foregoing and if an Event of Default exists or has
            occurred
            and is continuing for the collection of Receivables and realization of
            other
            Collateral.

           

          SECTION
            8.  REPRESENTATIONS
            AND WARRANTIES 

           

          Each
            Borrower and Guarantor hereby represents and warrants to Lender the following
            (which shall survive the execution and delivery of this Agreement):

           

          8.1 Corporate
            Existence, Power and Authority.
            Each
            Borrower and Guarantor is a corporation duly organized and in good standing
            under the laws of its jurisdiction of organization and is duly qualified
            as a
            foreign corporation and in good standing in all states or other jurisdictions
            where the nature and extent of the business transacted by it or the ownership
            of
            assets makes such qualification necessary, except for those jurisdictions
            in
            which the failure to so qualify would not have a Material Adverse Effect
            on such
            Borrower's or Guarantor’s financial condition, results of operation or business
            or the rights of Lender in or to any of the Collateral. The execution,
            delivery
            and performance of this Agreement, the other Financing Agreements and
            the
            transactions contemplated hereunder and thereunder (a) are all within
            each
            Borrower's and Guarantor’s corporate powers, (b) have been duly authorized, (c)
            are not in contravention of law or the terms of any Borrower's or Guarantor’s
            certificate of incorporation, by-laws, or other organizational documentation,
            or
            any indenture, agreement or undertaking to which any Borrower or Guarantor
            is a
            party or by which any Borrower or Guarantor or its property are bound
            to the
            extent that any conflict could not be reasonably expected to result in
            a
            Material Adverse Effect and (d) will not result in the creation or imposition
            of, or require or give rise to any obligation to grant, any lien, security
            interest, charge or other encumbrance upon any property of any Borrower
            or
            Guarantor. This Agreement and the other Financing Agreements to which
            any
            Borrower or Guarantor is a party constitute legal, valid and binding
            obligations
            of such Borrower and Guarantor enforceable in accordance with their respective
            terms. 

          
             

            
              
                 

              

              
                B-49

                
                  

                

              

              
                 

              

            

             

          

          8.2 Name;
            State of Organization; Chief Executive Office; Collateral
            Locations.

           

          (a) The
            exact
            legal name of each Borrower and Guarantor is as set forth on the signature
            page
            of this Agreement and in the Information Certificate. No Borrower or
            Guarantor
            has, during the five years prior to the date of this Agreement, been
            known by or
            used any other corporate or fictitious name or been a party to any merger
            or
            consolidation, or acquired all or substantially all of the assets of
            any Person,
            or acquired any of its property or assets out of the ordinary course
            of
            business, except as set forth in the Information Certificate.

           

          (b) Each
            Borrower and Guarantor is an organization of the type and organized in
            the
            jurisdiction set forth in the Information Certificate. The Information
            Certificate accurately sets forth the organizational identification number
            of
            each Borrower and Guarantor or accurately states that such Borrower or
            Guarantor
            has none and accurately sets forth the federal employer identification
            number of
            each Borrower and Guarantor.

           

          (c) The
            chief
            executive office and mailing address of each Borrower and Guarantor and
            each
            Borrower's and Guarantor’s Records concerning Accounts are located only at the
            address identified as such in Schedule 8.2 to the Information Certificate
            and
            its only other places of business and the only other locations of Collateral,
            if
            any, are the addresses set forth in Schedule 8.2 to the Information Certificate,
            subject to the rights of any Borrower or Guarantor to establish new locations
            in
            accordance with Section 9.2 below. The Information Certificate correctly
            identifies any of such locations which are not owned by a Borrower or
            Guarantor
            and sets forth the owners and/or operators thereof.

           

          8.3 Financial
            Statements; No Material Adverse Change.
            All
            financial statements relating to any Borrower or Guarantor which have
            been or
            may hereafter be delivered by any Borrower or Guarantor to Lender have
            been
            prepared in accordance with GAAP (except as to any interim financial
            statements,
            to the extent such statements are subject to normal year-end adjustments
            and do
            not include any notes) and fairly present in all material respects the
            financial
            condition and the results of operation of such Borrower and Guarantor
            as at the
            dates and for the periods set forth therein. Except as disclosed in any
            interim
            financial statements furnished by Borrowers and Guarantors to Lender
            prior to
            the date of this Agreement, there has been no act, condition or event
            which has
            had or is reasonably likely to have a Material Adverse Effect since the
            date of
            the most recent audited financial statements of any Borrower or Guarantor
            furnished by any Borrower or Guarantor to Lender prior to the date of
            this
            Agreement. The projections for the fiscal years ending 2007 through 2008
            shall
            be delivered in form and substance reasonably acceptable to Lender no
            later than
            forty-five (45) days following the date of this Agreement. Any projections
            hereafter delivered to Lender shall be prepared in light of the past
            operations
            of the businesses of Borrowers and Guarantors and be based upon estimates
            and
            assumptions stated therein, all of which Borrowers and Guarantors shall
            have
            determined to be reasonable and fair in light of the then current conditions
            and
            current facts and shall reflect the good faith and reasonable estimates
            of
            Borrowers and Guarantors of the future financial performance of Parent
            and its
            Subsidiaries and of the other information projected therein for the periods
            set
            forth therein.

          
             

            
              
                 

              

              
                B-50

                
                  

                

              

              
                 

              

            

             

          

          8.4 Priority
            of Liens; Title to Properties.
            The
            security interests and liens granted to Lender under this Agreement and
            the
            other Financing Agreements constitute valid and perfected first priority
            liens
            and security interests in and upon the Collateral subject only to the
            liens
            indicated on Schedule 8.4 to the Information Certificate and the other
            liens
            permitted under Section 9.8 hereof. Each Borrower and Guarantor has good
            and
            marketable fee simple title to or valid leasehold interests in all of
            its Real
            Property and good, valid and merchantable title to all of its other properties
            and assets subject to no liens, mortgages, pledges, security interests,
            encumbrances or charges of any kind, except those granted to Lender and
            such
            others as are specifically listed on Schedule 8.4 to the Information
            Certificate
            or permitted under Section 9.8 hereof.

           

          8.5 Tax
            Returns.
            Each
            Borrower and Guarantor has filed, or caused to be filed, in a timely
            manner
            (including, where applicable, valid extensions of time to file) all tax
            returns,
            reports and declarations which are required to be filed by it. All information
            in such tax returns, reports and declarations is complete and accurate
            in all
            material respects. Each Borrower and Guarantor has paid or caused to
            be paid all
            taxes due and payable or claimed due and payable in any assessment received
            by
            it, except taxes the validity of which are being contested in good faith
            by
            appropriate proceedings diligently pursued and available to such Borrower
            or
            Guarantor and with respect to which adequate reserves have been set aside
            on its
            books. Adequate provision has been made for the payment of all accrued
            and
            unpaid Federal, State, county, local, foreign and other taxes whether
            or not yet
            due and payable and whether or not disputed.

           

          8.6 Litigation.
            Except
            as set forth on Schedule 8.6 to the Information Certificate, (a) there
            is no
            investigation by any Governmental Authority pending, or to the best of
            any
            Borrower's or Guarantor’s knowledge threatened, against or affecting any
            Borrower or Guarantor, its or their assets or business and (b) there
            is no
            action, suit, proceeding or claim by any Person pending, or to the best
            of any
            Borrower's or Guarantor’s knowledge threatened, against any Borrower or
            Guarantor or its or their assets or goodwill, or against or affecting
            any
            transactions contemplated by this Agreement, in each case, which if adversely
            determined against such Borrower or Guarantor has or could reasonably
            be
            expected to have a Material Adverse Effect.

           

          8.7 Compliance
            with Other Agreements and Applicable Laws.
            

           

          (a) Borrowers
            and Guarantors are not in default in any respect under, or in violation
            in any
            respect of the terms of, any material agreement, contract, instrument,
            lease or
            other commitment to which it is a party or by which it or any of its
            assets are
            bound. Borrowers and Guarantors are in compliance in all material respects
            with
            the requirements of all applicable laws, rules, regulations and orders
            of any
            Governmental Authority relating to their respective businesses, including,
            without limitation, those set forth in or promulgated pursuant to the
            Occupational Safety and Health Act of 1970, as amended, the Fair Labor
            Standards
            Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
            regulations thereunder, and all Environmental Laws.

          
             

            
              
                 

              

              
                B-51

                
                  

                

              

              
                 

              

            

             

          

          (b) Borrowers
            and Guarantors have obtained all material permits, licenses, approvals,
            consents, certificates, orders or authorizations of any Governmental
            Authority
            required for the lawful conduct of its business (the “Permits”) except to the
            extent that the failure to obtain such permit could not reasonably be
            expected
            to have a Material Adverse Effect. All of the Permits are valid and subsisting
            and in full force and effect. There are no actions, claims or proceedings
            pending or to the best of any Borrower’s or Guarantor’s knowledge, threatened
            that seek the revocation, cancellation, suspension or modification of
            any of the
            Permits.

           

          8.8 Environmental
            Compliance.

           

          (a) Except
            as
            set forth on Schedule 8.8 to the Information Certificate, to Borrowers’
knowledge, Borrowers, Guarantors and any Subsidiary of any Borrower or
            Guarantor
            have not generated, used, stored, treated, transported, manufactured,
            handled,
            produced or disposed of any Hazardous Materials, on or off its premises
            (whether
            or not owned by it) in any manner which at any time violates in any material
            respect any applicable Environmental Law or Permit, and the operations
            of
            Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor
            complies
            in all material respects with all Environmental Laws and all
            Permits.

           

          (b) Except
            as
            set forth on Schedule 8.8 to the Information Certificate, there has been
            no
            investigation known to any officer of Borrower by any Governmental Authority
            or
            any proceeding, complaint, order, directive, claim, citation or notice
            by any
            Governmental Authority or any other person nor is any pending or to the
            best of
            any Borrower's or Guarantor’s knowledge threatened, with respect to any
            non-compliance with or violation of the requirements of any Environmental
            Law by
            any Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor
            or the
            release, spill or discharge, threatened or actual, of any Hazardous Material
            or
            the generation, use, storage, treatment, transportation, manufacture,
            handling,
            production or disposal of any Hazardous Materials or any other environmental,
            health or safety matter, which adversely affects or could reasonably
            be expected
            to adversely affect in any material respect any Borrower or Guarantor
            or its or
            their business, operations or assets or any properties at which such
            Borrower or
            Guarantor has transported, stored or disposed of any Hazardous
            Materials.

           

          (c) Except
            as
            set forth on Schedule 8.8 to the Information Certificate, Borrowers,
            Guarantors
            and their Subsidiaries have no knowledge of any material liability (contingent
            or otherwise) in connection with a release, spill or discharge, threatened
            or
            actual, of any Hazardous Materials or the generation, use, storage, treatment,
            transportation, manufacture, handling, production or disposal of any
            Hazardous
            Materials.

           

          (d) 
            Borrowers, Guarantors and their Subsidiaries have all Permits required
            to be
            obtained or filed in connection with the operations of Borrowers and
            Guarantors
            under any Environmental Law (except that to the extent that the failure
            to
            obtain such permit could not reasonably be expected to have a Material
            Adverse
            Effect) and all of such licenses, certif-icates, approvals or similar
            authorizations and other Permits are valid and in full force and
            effect.

          
             

            
              
                 

              

              
                B-52

                
                  

                

              

              
                 

              

            

             

          

          8.9 Employee
            Benefits.

           

          (a) Each
            Plan
            is in compliance in all material respects with the applicable provisions
            of
            ERISA, the Code and other Federal or State law. Each Plan which is intended
            to
            qualify under Section 401(a) of the Code has received a favorable determination
            letter from the Internal Revenue Service and to the best of any Borrower's
            or
            Guarantor’s knowledge, nothing has occurred which would cause the loss of such
            qualification. Each Borrower and its ERISA Affiliates have made all required
            contributions to any Plan subject to Section 412 of the Code, and no
            application
            for a funding waiver or an extension of any amortization period pursuant
            to
            Section 412 of the Code has been made with respect to any Plan.

           

          (b) There
            are
            no pending, or to the best of any Borrower's or Guarantor’s knowledge,
            threatened claims, actions or lawsuits, or action by any Governmental
            Authority,
            with respect to any Plan which if adversely determined against any Borrower
            or
            Guarantor could reasonably be expected to have a Material Adverse Effect.
            There
            has been no prohibited transaction or violation of the fiduciary responsibility
            rules with respect to any Plan.

           

          (c) (i)
            No
            ERISA Event has occurred or is reasonably expected to occur; (ii) based on
            the latest valuation of each Pension Plan and on the actuarial methods
            and
            assumptions employed for such valuation (determined in accordance with
            the
            assumptions used for funding such Pension Plan pursuant to Section 412
            of the
            Code), the aggregate current value of accumulated benefit liabilities
            of such
            Pension Plan under Section 4001(a)(16) of ERISA does not exceed the aggregate
            current value of the assets of such Pension Plan; (iii) each Borrower and
            Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably
            expect to incur, any liability under Title IV of ERISA with respect to
            any Plan
            (other than premiums due and not delinquent under Section 4007 of ERISA);
            (iv) each Borrower and Guarantor, and their ERISA Affiliates, have not
            incurred and do not reasonably expect to incur, any liability (and no event has
            occurred which, with the giving of notice under Section 4219 of ERISA,
            would
            result in such liability) under Section 4201 or 4243 of ERISA with respect
            to a
            Multiemployer Plan; and (v) each Borrower and Guarantor, and their ERISA
            Affiliates, have not engaged in a transaction that would be subject to
            Section
            4069 or 4212(c) of ERISA.

           

          8.10 Bank
            Accounts.
            All of
            the deposit accounts, investment accounts or other accounts in the name
            of or
            used by any Borrower or Guarantor maintained at any bank or other financial
            institution are set forth on Schedule 8.10 to the Information Certificate,
            subject to the right of each Borrower and Guarantor to establish new
            accounts in
            accordance with Section 5.2 hereof.

           

          8.11 Intellectual
            Property.
            Each
            Borrower and Guarantor owns or licenses or otherwise has the right to
            use all
            Intellectual Property necessary for the operation of its business as
            presently
            conducted or proposed to be conducted. As of the date hereof, Borrowers
            and
            Guarantors do not have any Intellectual Property registered, or subject
            to
            pending applications, in the United States Patent and Trademark Office
            or any
            similar office or agency in the United States, any State thereof, any
            political
            subdivision thereof or in any other country, other than those described
            in
            Schedule 8.11 to the Information Certificate and has not granted any
            licenses
            with respect thereto other than as set forth in Schedule 8.11 to the
            Information
            Certificate. No event has occurred which permits or would permit after
            notice or
            passage of time or both, the revocation, suspension or termination of
            such
            rights. To the best of any Borrower's and Guarantor’s knowledge, no slogan or
            other advertising device, product, process, method, substance or other
            Intellectual Property or goods bearing or using any Intellectual Property
            presently contemplated to be sold by or employed by any Borrower or Guarantor
            infringes any patent, trademark, servicemark, tradename, copyright, license
            or
            other Intellectual Property owned by any other Person presently and no
            claim or
            litigation is pending or threatened against or affecting any Borrower
            or
            Guarantor contesting its right to sell or use any such Intellectual Property
            having a Material Adverse Effect except as set forth on Schedule 8.11
            to the
            Information Certificate. Schedule 8.11 to the Information Certificate
            sets forth
            all of the agreements or other arrangements of each Borrower and Guarantor
            pursuant to which such Borrower or Guarantor has a license or other right
            to use
            any trademarks, logos, designs, representations or other Intellectual
            Property
            owned by another person as in effect on the date hereof and the dates
            of the
            expiration of such agreements or other arrangements of such Borrower
            or
            Guarantor as in effect on the date hereof (collectively, together with
            such
            agreements or other arrangements as may be entered into by any Borrower
            or
            Guarantor after the date hereof, collectively, the “License Agreements” and
            individually, a “License Agreement”). No trademark, service mark, copyright or
            other Intellectual Property at any time used by any Borrower or Guarantor
            which
            is owned by another person, or owned by such Borrower or Guarantor subject
            to
            any security interest, lien, collateral assignment, pledge or other encumbrance
            in favor of any person other than Lender, is affixed to any Eligible
            Inventory,
            except (a) to the extent permitted under the term of the license agreements
            listed on Schedule 8.11 to the Information Certificate and (b) to the
            extent the
            sale of Inventory to which such Intellectual Property is affixed is permitted
            to
            be sold by such Borrower or Guarantor under applicable law (including
            the United
            States Copyright Act of 1976).

          
             

            
              
                 

              

              
                B-53

                
                  

                

              

              
                 

              

            

             

          

          8.12 Subsidiaries;
            Affiliates; Capitalization; Solvency.

           

          (a) Each
            Borrower and Guarantor does not have any direct or indirect Subsidiaries
            or
            Affiliates and is not engaged in any joint venture or partnership except
            as set
            forth in Schedule 8.12 to the Information Certificate.

           

          (b) Each
            Borrower and Guarantor is the record and beneficial owner of all of the
            issued
            and outstanding shares of Capital Stock of each of the Subsidiaries listed
            on
            Schedule 8.12 to the Information Certificate as being owned by such Borrower
            or
            Guarantor and there are no proxies, irrevocable or otherwise, with respect
            to
            such shares and no equity securities of any of the Subsidiaries are or
            may
            become required to be issued by reason of any options, warrants, rights
            to
            subscribe to, calls or commitments of any kind or nature and there are
            no
            contracts, commitments, understandings or arrangements by which any Subsidiary
            is or may become bound to issue additional shares of it Capital Stock
            or
            securities convertible into or exchangeable for such shares.

           

          (c) The
            issued and outstanding shares of Capital Stock of each Borrower and Guarantor
            are directly and beneficially owned and held by the persons indicated
            in the
            Information Certificate, and in each case all of such shares have been
            duly
            authorized and are fully paid and non-assessable, free and clear of all
            claims,
            liens, pledges and encumbrances of any kind, except as disclosed in writing
            to
            Lender prior to the date hereof.

          
             

            
              
                 

              

              
                B-54

                
                  

                

              

              
                 

              

            

             

          

          (d) Each
            Borrower and Guarantor is Solvent and will continue to be Solvent after
            the
            creation of the Obligations, the security interests of Lender and the
            other
            transaction contemplated hereunder.

           

          (e) Each
            of
            the Foreign Subsidiaries shall remain free from all debts (other than
            debts
            existing as of the date hereof), whether secured or unsecured, other
            than: (i)
            debts arising from trade debt obtained in the ordinary course of its
            business;
            (ii) debts owing to any other Foreign Subsidiaries or any Borrower and/or
            Guarantor including Management Fees owed or owing to any such entity;
            and (iii)
            loans and advances made by Borrowers and/or Guarantors or any of them
            to Foreign
            Subsidiaries on or after the date hereof not to exeed the amounts as
            follows:

           

          (i) Bi-Op
            and
            Langer Canada                  $650,000

           

          (ii) Langer
            (UK)    $250,000

           

          (iii) Silipos
            (UK)    $250,000

           

          8.13 Labor
            Disputes.

           

          (a) Set
            forth
            on Schedule 8.13 to the Information Certificate is a list (including
            dates of
            termination) of all collective bargaining or similar agreements between
            or
            applicable to each Borrower and Guarantor and any union, labor organization
            or
            other bargaining agent in respect of the employees of any Borrower or
            Guarantor
            on the date hereof.

           

          (b) There
            is
            (i) no significant unfair labor practice complaint pending against any
            Borrower or Guarantor or, to the best of any Borrower's or Guarantor’s
            knowledge, threatened against it, before the National Labor Relations
            Board, and
            no significant grievance or significant arbitration proceeding arising
            out of or
            under any collective bargaining agreement is pending on the date hereof
            against
            any Borrower or Guarantor or, to best of any Borrower's or Guarantor’s
            knowledge, threatened against it, and (ii) no significant strike, labor
            dispute, slowdown or stoppage is pending against any Borrower or Guarantor
            or,
            to the best of any Borrower's or Guarantor’s knowledge, threatened against any
            Borrower or Guarantor.

           

          8.14 Restrictions
            on Subsidiaries.  Except
            for restrictions contained in this Agreement or any other agreement with
            respect
            to Indebtedness of any Borrower or Guarantor permitted hereunder as in
            effect on
            the date hereof, there are no contractual or consensual restrictions
            on any
            Borrower or Guarantor or any of its Subsidiaries which prohibit or otherwise
            restrict (a) the transfer of cash or other assets (i) between any
            Borrower or Guarantor and any of its or their Subsidiaries or (ii) between
            any Subsidiaries of any Borrower or Guarantor or (b) the ability of any
            Borrower or Guarantor or any of its or their Subsidiaries to incur Indebtedness
            or grant security interests to Lender in the Collateral.

          
             

            
              
                 

              

              
                B-55

                
                  

                

              

              
                 

              

            

             

          

          8.15 Material
            Contracts.  Schedule
            8.15 to the Information Certificate sets forth all Material Contracts
            to which
            any Borrower or Guarantor is a party or is bound as of the date hereof.
            Borrowers and Guarantors have delivered true, correct and complete copies
            of
            such Material Contracts to Lender on or before the date hereof. Borrowers
            and
            Guarantors are not in breach or in default in any material respect of
            or under
            any Material Contract and have not received any notice of the intention
            of any
            other party thereto to terminate any Material Contract.

           

          8.16 Payable
            Practices.  Each
            Borrower and Guarantor have not made any material change in the historical
            accounts payable practices from those in effect immediately prior to
            the date
            hereof.

           

          8.17 Accuracy
            and Completeness of Information.
            All
            information furnished by or on behalf of any Borrower or Guarantor in
            writing to
            Lender in connection with this Agreement or any of the other Financing
            Agreements or any transaction contemplated hereby or thereby, including
            all
            information on the Information Certificate is true and correct in all
            material
            respects on the date as of which such information is dated or certified
            and does
            not omit any material fact necessary in order to make such information
            not
            misleading. No event or circumstance has occurred which has had or could
            reasonably be expected to have a Material Adverse Affect, which has not
            been
            fully and accurately disclosed to Lender in writing prior to the date
            hereof.

           

          8.18 Survival
            of Warranties; Cumulative.
            All
            representations and warranties contained in this Agreement or any of
            the other
            Financing Agreements shall: (a) survive the execution and delivery of
            this
            Agreement; (b) shall be deemed to have been made again to Lender on the
            date of
            each additional borrowing or other credit accommodation hereunder, except
            to the
            extent that such representations and warranties expressly relate solely
            to an
            earlier date (in which case such representations and warranties shall
            have been
            true and accurate on and as of such earlier date); and (c) shall be conclusively
            presumed to have been relied on by Lender regardless of any investigation
            made
            or information possessed by Lender. The representations and warranties
            set forth
            herein shall be cumulative and in addition to any other representations
            or
            warranties which any Borrower or Guarantor shall now or hereafter give,
            or cause
            to be given, to Lender.

           

          SECTION
            9.  AFFIRMATIVE
            AND NEGATIVE COVENANTS

           

          9.1 Maintenance
            of Existence.
            

           

          (a) Each
            Borrower and Guarantor shall at all times preserve, renew and keep in
            full force
            and effect its corporate existence and rights and franchises with respect
            thereto and maintain in full force and effect and in accordance with
            their terms
            all licenses, trademarks, tradenames, approvals, authorizations, leases,
            contracts and Permits necessary to carry on the business as presently
            or
            proposed to be conducted, except as to any Guarantor other than Parent
            as
            permitted in Section 9.7 hereto. 

           

          (b) No
            Borrower or Guarantor shall change its name unless each of the following
            conditions is satisfied: (i) Lender shall have received not less than
            thirty
            (30) days prior written notice from Administrative Borrower of such proposed
            change in its corporate name, which notice shall accurately set forth
            the new
            name; and (ii) Lender shall have received a copy of the amendment to
            the
            Certificate of Incorporation of such Borrower or Guarantor providing
            for the
            name change certified by the Secretary of State of the jurisdiction of
            incorporation or organization of such Borrower or Guarantor as soon as
            it is
            available.

          
             

            
              
                 

              

              
                B-56

                
                  

                

              

              
                 

              

            

             

          

          (c) No
            Borrower or Guarantor shall change its chief executive office or its
            mailing
            address or organizational identification number (or if it does not have
            one,
            shall not acquire one) unless Lender shall have received not less than
            thirty
            (30) days’ prior written notice from Administrative Borrower of such proposed
            change, which notice shall set forth such information with respect thereto
            as
            Lender may require and Lender shall have received such agreements as
            Lender may
            reasonably require in connection therewith. No Borrower or Guarantor
            shall
            change its type of organization, jurisdiction of organization or other
            legal
            structure.

           

          9.2 New
            Collateral Locations.
            Each
            Borrower and Guarantor may only open any new location within the continental
            United States provided such Borrower or Guarantor (a) gives Lender thirty
            (30)
            days prior written notice of the intended opening of any such new location
            and
            (b) executes and delivers, or causes to be executed and delivered, to
            Lender
            such agreements, docu-ments, and instruments as Lender may deem reasonably
            necessary or desirable to protect its interests in the Collateral at
            such
            location.

           

          9.3 Compliance
            with Laws, Regulations, Etc.

           

          (a) Each
            Borrower and Guarantor shall, and shall cause any Subsidiary to, at all
            times,
            comply in all material respects with all laws, rules, regulations, licenses,
            approvals, orders and other Permits applicable to it and duly observe
            all
            requirements of any foreign, Federal, State or local Governmental
            Authority.

           

          (b) Borrowers
            and Guarantors shall give written notice to Lender immediately upon any
            Borrower's or Guarantor’s receipt of any notice of, or any Borrower's or
            Guarantor’s otherwise obtaining knowledge of, (i) the occurrence of any event
            involving the release, spill or discharge, threatened or actual, of any
            Hazardous Material or (ii) any investigation, proceeding, complaint,
            order,
            directive, claims, citation or notice with respect to: (A) any material
            non-compliance with or violation of any Environmental Law by any Borrower
            or
            Guarantor or (B) the release, spill or discharge, threatened or actual,
            of any
            Hazardous Material other than in the ordinary course of business and
            other than
            as permitted under any applicable Environmental Law. Copies of all environmental
            surveys, audits, assessments, feasibility studies and results of remedial
            investigations shall be promptly furnished, or caused to be furnished,
            by such
            Borrower or Guarantor to Lender. Each Borrower and Guarantor shall take
            prompt
            action to respond to any material non-compliance with any of the Environmental
            Laws and shall regularly report to Lender on such response.

           

          (c) Without
            limiting the generality of the foregoing, whenever Lender, in good faith,
            reasonably determines that there is non-compliance, or any condition
            which
            requires any action by or on behalf of any Borrower or Guarantor in order
            to
            avoid any non-compliance, with any Environmental Law, Borrowers shall,
            at
            Lender's request and Borrowers’ expense: (i) cause an independent environmental
            engineer reasonably acceptable to Lender to conduct such tests of the
            site where
            non-compliance or alleged non-compliance with such Environmental Laws
            has
            occurred as to such non-compliance and prepare and deliver to Lender
            a report as
            to such non-compliance setting forth the results of such tests, a proposed
            plan
            for responding to any environmental problems described therein, and an
            estimate
            of the costs thereof and (ii) provide to Lender a supplemental report
            of such
            engineer whenever the scope of such non-compliance, or such Borrower's
            or
            Guarantor’s response thereto or the estimated costs thereof, shall change in any
            material respect.

          
             

            
              
                 

              

              
                B-57

                
                  

                

              

              
                 

              

            

             

          

          (d) Each
            Borrower and Guarantor shall indemnify and hold harmless Lender and its
            directors, officers, employees, agents, invitees, representa-tives, successors
            and assigns, from and against any and all losses, claims, damages, liabilities,
            costs, and expenses (including reasonable attorneys' fees and expenses)
            directly
            or indirectly arising out of or attributable to the use, generation,
            manufacture, reproduction, storage, release, threatened release, spill,
            discharge, disposal or presence of a Hazardous Material, including the
            costs of
            any required or necessary repair, cleanup or other remedial work with
            respect to
            any property of any Borrower or Guarantor and the preparation and implementation
            of any closure, remedial or other required plans. All representations,
            warranties, covenants and indemnifications in this Section 9.3 shall
            survive the
            payment of the Obligations and the termination of this Agreement.

           

          9.4 Payment
            of Taxes and Claims.
            Each
            Borrower and Guarantor shall, and shall cause any Subsidiary to, duly
            pay and
            discharge all taxes, assessments, contributions and governmental charges
            upon or
            against it or its properties or assets, except for taxes the validity
            of which
            are being contested in good faith by appropriate proceedings diligently
            pursued
            and available to such Borrower, Guarantor or Subsidiary, as the case
            may be, and
            with respect to which adequate reserves have been set aside on its books.
            Each
            Borrower and Guarantor shall be liable for any tax or penalties imposed
            on
            Lender as a result of the financing arrangements provided for herein
            and each
            Borrower and Guarantor agrees to indemnify and hold Lender harmless with
            respect
            to the foregoing, and to repay to Lender on demand the amount thereof,
            and until
            paid by such Borrower or Guarantor such amount shall be added and deemed
            part of
            the Loans, provided, that, nothing contained herein shall be construed
            to
            require any Borrower or Guarantor to pay any income or franchise taxes
            attributable to the income of Lender from any amounts charged or paid
            hereunder
            to Lender. The foregoing indemnity shall survive the payment of the Obligations
            and the termination of this Agreement. 

           

          9.5 Insurance.
            Each
            Borrower and Guarantor shall, and shall cause any Subsidiary to, at all
            times,
            maintain with financially sound and reputable insurers insurance with
            respect to
            the Collateral against loss or damage and all other insurance of the
            kinds and
            in the amounts customarily insured against or carried by corporations
            of
            established reputation engaged in the same or similar businesses and
            similarly
            situated. Said policies of insurance shall be reasonably satisfactory
            to Lender
            as to form, amount and insurer. Borrowers and Guarantors shall furnish
            certificates, policies or endorsements to Lender as Lender shall reasonably
            require as proof of such insurance, and, if any Borrower or Guarantor
            fails to
            do so, Lender is authorized, but not required, to obtain such insurance
            at the
            expense of Borrowers. All policies shall provide for at least thirty
            (30) days
            prior written notice to Lender of any cancellation or reduction of coverage
            and
            that Lender may act as attorney for each Borrower and Guarantor in obtaining,
            and at any time an Event of Default exists or has occurred and is continuing,
            adjusting, settling, amending and canceling such insurance. Borrowers
            and
            Guarantors shall cause Lender to be named as a loss payee and an additional
            insured (but without any liability for any premiums) under such insurance
            policies and Borrowers and Guarantors shall obtain non-contributory lender’s
            loss payable endorsements to all insurance policies in form and substance
            satisfactory to Lender. Such lender’s loss payable endorsements shall specify
            that the proceeds of such insurance shall be payable to Lender as its
            interests
            may appear and further specify that Lender shall be paid regardless of
            any act
            or omission by any Borrower, Guarantor or any of its or their Affiliates.
            Without limiting any other rights of Lender, any insurance proceeds received
            by
            Lender at any time may be applied to payment of the Obligations, whether
            or not
            then due, in any order and in such manner as Lender may determine. Upon
            application of such proceeds to the Revolving Loans, Revolving Loans
            may be
            available subject and pursuant to the terms hereof to be used for the
            costs of
            repair or replacement of the Collateral lost or damages resulting in
            the payment
            of such insurance proceeds.

          
             

            
              
                 

              

              
                B-58

                
                  

                

              

              
                 

              

            

             

          

          9.6 Financial
            Statements and Other Information.

           

          (a) Each
            Borrower and Guarantor shall, and shall cause any Subsidiary to, keep
            proper
            books and records in which true and complete entries shall be made of
            all
            dealings or transactions of or in relation to the Collateral and the
            business of
            such Borrower, Guarantor and its Subsidiaries in accordance with GAAP.
            Borrowers
            and Guarantors shall promptly furnish to Lender all such financial and
            other
            information as Lender shall reasonably request relating to the Collateral
            and
            the assets, business and operations of Borrowers and Guarantors, and
            to notify
            the auditors and accountants of Borrowers and Guarantors that Lender
            is
            authorized to obtain such information directly from them. Without limiting
            the
            foregoing, Borrowers shall furnish or cause to be furnished to Lender,
            the
            following: 

           

          (i) within
            thirty (30) days after the end of each fiscal month, commencing September
            30,
            2007, monthly unaudited consolidated financial statements and unaudited
            consolidating financial statements (including in each case balance sheets,
            statements of income and loss, statements of cash flow, and statements
            of
            shareholders' equity), all in reasonable detail, fairly presenting in
            all
            material respects the financial position and the results of the operations
            of
            Parent and its Subsidiaries as of the end of and through such fiscal
            month,
            certified to be correct by the chief financial officer of Parent, subject
            to
            normal year-end adjustments and accompanied by a compliance certificate
            substantially in the form of Exhibit B hereto; and

           

          (ii) Intentionally
            omitted.

           

          (iii) within
            ninety (90) days after the end of each fiscal year, audited consolidated
            financial statements and unaudited consolidating financial statements
            of Parent
            and its Subsidiaries (including in each case balance sheets, statements
            of
            income and loss, statements of cash flow, and statements of shareholders'
            equity), and the accompanying notes thereto, all in reasonable detail,
            fairly
            presenting in all material respects the financial position and the results
            of
            the operations of Parent and its Subsidiaries on a consolidated basis
            as of the
            end of and for such fiscal year, together with the unqualified opinion
            of
            independent certified public accountants with respect to the audited
            consolidated financial statements, which accountants shall be an independent
            accounting firm selected by Administrative Borrower and acceptable to
            Lender,
            that such audited consolidated financial statements have been prepared
            in
            accordance with GAAP, and present fairly in all material respects the
            results of
            operations and financial condition of Parent and its Subsidiaries on
            a
            consolidated basis as of the end of and for the fiscal year then ended.
            Each
            document required to be delivered pursuant to this Section 9.6(a) shall
            be
            deemed to have been delivered on the date on which such document is posted
            on
            the SEC’s website at www.sec.gov,
            provided,
            that
            the Parent shall deliver paper copies of all such documents to Lender
            within one
            Business Day following the date in which such document is posted to such
            website; and

          
             

            
              
                 

              

              
                B-59

                
                  

                

              

              
                 

              

            

             

          

          (iv) at
            such
            time as available, but in no event later than thirty (30) days following
            the
            start of each fiscal year (commencing with the fiscal year of Borrowers
            ending
            December 31, 2008), projected consolidated financial statements (including
            in
            each case, forecasted balance sheets and statements of income and loss,
            statements of cash flow, and statements of shareholders’ equity) of Parent and
            its Subsidiaries for the next fiscal year, all in reasonable detail,
            and in a
            format consistent with the projections delivered by Borrowers to Lender
            prior to
            the date hereof subject to such revisions as may be appropriate to account
            for
            facts and circumstance then extant, together with such supporting information
            as
            Lender may reasonably request. Such projected financial statements shall
            be
            prepared on a monthly basis for the next succeeding year. Such projections
            shall
            represent the reasonable best estimate by Borrowers and Guarantors of
            the future
            financial performance of Parent and its Subsidiaries for the periods
            set forth
            therein and shall have been prepared on the basis of the assumptions
            set forth
            therein which Borrowers and Guarantors believe are fair and reasonable
            as of the
            date of preparation in light of current and reasonably foreseeable business
            conditions (it being understood that actual results may differ from those
            set
            forth in such projected financial statements). Borrowers shall provide
            to Lender
            semi-annual updates with respect to such projections or at any time a
            Default or
            Event of Default exists or has occurred and is continuing, more frequently
            as
            Lender may reasonably require.

           

          (b) Borrowers
            and Guarantors shall promptly notify Lender in writing of the details
            of (i) any
            loss, damage, investigation, action, suit, proceeding or claim relating
            to
            Collateral having a value of more than $200,000 or which if adversely
            determined
            would result in any material adverse change in any Borrower's or Guarantor’s
            business, properties, assets, goodwill or condition, financial or otherwise,
            (ii) any Material Contract being terminated or amended or any new Material
            Contract entered into (in which event Borrowers and Guarantors shall
            provide
            Lender with a copy of such Material Contract), (iii) any order, judgment or
            decree in excess of $200,000 in the aggregate shall have been entered
            against
            any Borrower or Guarantor any of its or their properties or assets,
            (iv) any notification of a material violation of laws or regulations
            received by any Borrower or Guarantor which if adversely determined would
            result
            in any material adverse change in any Borrower's or Guarantor’s business,
            properties, assets, goodwill or condition, financial or otherwise, (v) any
            ERISA Event, and (vi) the occurrence of any Default or Event of
            Default.

          
             

            
              
                 

              

              
                B-60

                
                  

                

              

              
                 

              

            

             

          

          (c) Promptly
            after the sending or filing thereof, Borrowers shall send to Lender copies
            of
            (i) all reports which Parent or any of its Subsidiaries sends to its
            shareholders generally (ii) all reports and registration statements which
            Parent
            or any of its Subsidiaries files with the Securities Exchange Commission,
            any
            national or foreign securities exchange or the National Association of
            Securities Dealers, Inc., and such other reports as Lender may hereafter
            specifically identify to Administrative Borrower that Lender will reasonably
            require be provided to Lender, (iii) all press releases and (iv) all
            other
            statements concerning material changes or developments in the business
            of a
            Borrower or Guarantor made available by any Borrower or Guarantor to
            the
            public.

           

          (d) Borrowers
            and Guarantors shall furnish or cause to be furnished to Lender such
            budgets,
            forecasts, projections and other information respecting the Collateral
            and the
            business of Borrowers and Guarantors, as Lender may, from time to time,
            reasonably request. If required by any legal process, Lender is hereby
            authorized to deliver a copy of any financial statement or any other
            information
            relating to the business of Borrowers and Guarantors to any court or
            other
            Governmental Authority or to any Lender or Participant or prospective
            Lender or
            Participant or any Affiliate of any Lender or Participant. Each Borrower
            and
            Guarantor hereby irrevocably authorizes and directs all of Borrowers’
independent accountants or auditors to deliver to Lender, at Borrowers’ expense,
            copies of the financial statements of any Borrower and Guarantor and
            any reports
            or management letters prepared by such accountants or auditors on behalf
            of any
            Borrower or Guarantor and to disclose to Lender such information as they
            may
            have regarding the business of any Borrower and Guarantor. Any documents,
            schedules, invoices or other papers delivered to Lender may be destroyed
            or
            otherwise disposed of by Lender one (1) year after the same are delivered
            to
            Lender, except as otherwise designated by Administrative Borrower to
            Lender in
            writing.

           

          9.7 Sale
            of Assets, Consolidation, Merger, Dissolution, Etc.
            Each
            Borrower and Guarantor shall not, and shall not permit any Subsidiary
            to,
            directly or indirectly, 

           

          (a) merge
            into or with or consolidate with any other Person or permit any other
            Person to
            merge into or with or consolidate with it except that
            any
            wholly-owned Subsidiary of Parent (other than any Borrower) may merge
            with and
            into or consolidate with any other wholly-owned Subsidiary of Parent
            (other than
            any Borrower), provided,
            that,
            each of
            the following conditions is satisfied as determined by Lender in good
            faith: (i)
            Lender shall have received not less than ten (10) Business Days' prior
            written
            notice of the intention of such Subsidiaries to so merge or consolidate,
            which
            notice shall set forth in reasonable detail satisfactory to Lender, the
            persons
            that are merging or consolidating, which person will be the surviving
            entity,
            the locations of the assets of the persons that are merging or consolidating,
            and the material agreements and documents relating to such merger or
            consolidation, (ii) Lender shall have received such other information
            with
            respect to such merger or consolidation as Lender may reasonably request,
            (iii)
            as of the effective date of the merger or consolidation and after giving
            effect
            thereto, no Default or Event of Default shall exist, (iv) Lender shall
            have
            received true, correct and complete copies of all agreements, documents
            and
            instruments relating to such merger or consolidation, including, but
            not limited
            to, the certificate or certificates of merger to be filed with each appropriate
            Secretary of State (with a copy as filed promptly after such filing),
            (v) the
            surviving corporation shall expressly confirm, ratify and assume the
            Obligations
            and the Financing Agreements to which it is a party in writing, in form
            and
            substance satisfactory to Lender, and Borrowers and Guarantors shall
            execute and
            deliver such other agreements, documents and instruments as Lender may
            request
            in connection therewith;

          
             

            
              
                 

              

              
                B-61

                
                  

                

              

              
                 

              

            

             

          

          (b) sell,
            issue, assign, lease, license, transfer, abandon or otherwise dispose
            of any
            Capital Stock or Indebtedness to any other Person or any of its assets
            to any
            other Person, except for

           

          (i) sales
            of
            Inventory in the ordinary course of business,

           

          (ii) the
            sale
            or other disposition of Equipment (including worn-out or obsolete Equipment
            or
            Equipment no longer used or useful in the business of any Borrower or
            Guarantor)
            so long as such sales or other dispositions do not involve Equipment
            having an
            aggregate fair market value in excess of $200,000 for all such Equipment
            disposed of in any fiscal year of Borrowers or as Lender may otherwise
            agree,
            and 

           

          (iii) the
            issuance and sale by any Borrower or Guarantor of Capital Stock of such
            Borrower
            or Guarantor after the date hereof; provided, that, (A) Lender shall
            have
            received not less than ten (10) Business Days’ prior written notice of such
            issuance and sale by such Borrower or Guarantor, which notice shall specify
            the
            parties to whom such shares are to be sold, the terms of such sale, the
            total
            amount which it is anticipated will be realized from the issuance and
            sale of
            such stock and the net cash proceeds which it is anticipated will be
            received by
            such Borrower or Guarantor from such sale, (B) such Borrower or Guarantor
            shall
            not be required to pay any cash dividends or repurchase or redeem such
            Capital
            Stock or make any other payments in respect thereof, except as otherwise
            permitted in Section 9.11 hereof, (C) the terms of such Capital Stock,
            and the
            terms and conditions of the purchase and sale thereof, shall not include
            any
            terms that include any limitation on the right of any Borrower to request
            or
            receive Loans or Letters of Credit or the right of any Borrower and Guarantor
            to
            amend or modify any of the terms and conditions of this Agreement or
            any of the
            other Financing Agreements or otherwise in any way relate to or affect
            the
            arrangements of Borrowers and Guarantors with Lender or are more restrictive
            or
            burdensome to any Borrower or Guarantor than the terms of any Capital
            Stock in
            effect on the date hereof, and (D) as of the date of such issuance and
            sale and
            after giving effect thereto, no Default or Event of Default shall exist
            or have
            occurred,

           

          (iv) the
            issuance of Capital Stock of any Borrower or Guarantor consisting of
            common
            stock pursuant to an existing or future employee stock option or grant
            or
            similar equity plan or 401(k) plans of such Borrower or Guarantor for
            the
            benefit of its employees, directors and consultants, provided, that,
            in no event
            shall such Borrower or Guarantor be required to issue, or shall such
            Borrower or
            Guarantor issue, Capital Stock pursuant to such stock plans or 401(k)
            plans
            which would result in a Change of Control or other Event of
            Default,

          
             

            
              
                 

              

              
                B-62

                
                  

                

              

              
                 

              

            

             

          

          (v) the
            issuance of the Conversion Shares and the Twincraft Consideration
            Shares,

           

          (c) wind
            up,
            liquidate or dissolve except that
            any
            Guarantor (other than Parent) may wind up, liquidate and dissolve, provided,
            that,
            each of
            the following conditions is satisfied, (i) the winding up, liquidation
            and
            dissolution of such Guarantor shall not violate any law or any order
            or decree
            of any court or other Governmental Authority in any material respect
            and shall
            not conflict with or result in the breach of, or constitute a default
            under, any
            indenture, mortgage, deed of trust, or any other agreement or instrument
            to
            which any Borrower or Guarantor is a party or may be bound, (ii) such
            winding up, liquidation or dissolution shall be done in accordance with
            the
            requirements of all applicable laws and regulations, (iii) effective upon
            such winding up, liquidation or dissolution, all of the assets and properties
            of
            such Guarantor shall be duly and validly transferred and assigned to
            a Borrower,
            free and clear of any liens, restrictions or encumbrances other than
            the
            security interest and liens of Lender (and Lender shall have received
            such
            evidence thereof as Lender may require) and Lender shall have received such
            deeds, assignments or other agreements as Lender may request to evidence
            and
            confirm the transfer of such assets of such Guarantor to a Borrower,
            (iv) Lender shall have received all documents and agreements that any
            Borrower or Guarantor has filed with any Governmental Authority or as
            are
            otherwise required to effectuate such winding up, liquidation or dissolution,
            (v) no Borrower or Guarantor shall assume any Indebtedness, obligations
            or
            liabilities as a result of such winding up, liquidation or dissolution,
            or
            otherwise become liable in respect of any obligations or liabilities
            of the
            entity that is winding up, liquidating or dissolving, unless such Indebtedness
            is otherwise expressly permitted hereunder, (vi) Lender shall have received
            not less than ten (10) Business Days prior written notice of the intention
            of
            such Guarantor to wind up, liquidate or dissolve, and (vii) as of the
            date of
            such winding up, liquidation or dissolution and after giving effect thereto,
            no
            Default or Event of Default shall exist or have occurred; or 

           

          (d) agree
            to
            do any of the foregoing.

           

          9.8 Encumbrances.
            Each
            Borrower and Guarantor shall not, and shall not permit any Subsidiary
            to,
            create, incur, assume or suffer to exist any security interest, mortgage,
            pledge, lien, charge or other encumbrance of any nature whatsoever on
            any of its
            assets or properties, including the Collateral, or file or permit the
            filing of,
            or permit to remain in effect, any financing statement or other similar
            notice
            of any security interest or lien with respect to any such assets or properties,
            except: 

           

          (a) the
            security interests and liens of Lender (for itself and any Affiliate,
            in the
            case of Bank Products); 

           

          (b) liens
            securing the payment of taxes, assessments or other governmental charges
            or
            levies either not yet overdue or the validity of which are being contested
            in
            good faith by appropriate proceedings diligently pursued and available
            to such
            Borrower, or Guarantor or Subsidiary, as the case may be and with respect
            to
            which adequate reserves have been set aside on its books; 

          
             

            
              
                 

              

              
                B-63

                
                  

                

              

              
                 

              

            

             

          

          (c) non-consensual
            statutory liens (other than liens securing the payment of taxes) arising
            in the
            ordinary course of such Borrower's, Guarantor’s or Subsidiary's business to the
            extent: (i) such liens secure Indebtedness which is not overdue or (ii)
            such
            liens secure Indebtedness relating to claims or liabilities which are
            fully
            insured and being defended at the sole cost and expense and at the sole
            risk of
            the insurer or being contested in good faith by appropriate proceedings
            diligently pursued and available to such Borrower, Guarantor or such
            Subsidiary,
            in each case prior to the commencement of foreclosure or other similar
            proceedings and with respect to which adequate reserves have been set
            aside on
            its books; 

           

          (d) zoning
            restrictions, easements, licenses, covenants and other restrictions affecting
            the use of Real Property which do not interfere in any material respect
            with the
            use of such Real Property or ordinary conduct of the business of such
            Borrower,
            Guarantor or such Subsidiary as presently conducted thereon or materially
            impair
            the value of the Real Property which may be subject thereto; 

           

          (e) purchase
            money security interests in Equipment (including Capital Leases) and
            purchase
            money mortgages on Real Property to secure Indebtedness permitted under
            Section
            9.9(b) hereof; 

           

          (f) 
            pledges
            and deposits of cash by any Borrower or Guarantor after the date hereof
            in the
            ordinary course of business in connection with workers' compensation,
            unemployment insurance and other types of social security benefits consistent
            with the current practices of such Borrower or Guarantor as of the date
            hereof;

           

          (g) 
            pledges
            and deposits of cash by any Borrower or Guarantor after the date hereof
            to
            secure the performance of tenders, bids, leases, trade contracts (other
            than for
            the repayment of Indebtedness), statutory obligations and other similar
            obligations in each case in the ordinary course of business consistent
            with the
            current practices of such Borrower or Guarantor as of the date hereof;
            provided,
            that,
            in
            connection with any performance bonds issued by a surety or other person,
            the
            issuer of such bond shall have waived in writing any rights in or to,
            or other
            interest in, any of the Collateral in an agreement, in form and substance
            satisfactory to Lender;

           

          (h) liens
            arising from (i) operating leases and the precautionary UCC financing
            statement filings in respect thereof and (ii) equipment or other materials
            which are not owned by any Borrower or Guarantor located on the premises
            of such
            Borrower or Guarantor (but not in connection with, or as part of, the
            financing
            thereof) from time to time in the ordinary course of business and consistent
            with current practices of such Borrower or Guarantor and the precautionary
            UCC
            financing statement filings in respect thereof;

          
             

            
              
                 

              

              
                B-64

                
                  

                

              

              
                 

              

            

             

          

          (i) judgments
            and other similar liens arising in connection with court proceedings
            that do not
            constitute an Event of Default, provided,
            that,
            (i)
            such liens are being contested in good faith and by appropriate proceedings
            diligently pursued, (ii) adequate reserves or other appropriate provision,
            if
            any, as are required by GAAP have been made therefor, (iii) a stay of
            enforcement of any such liens is in effect and (iv) Lender may establish
            a
            Reserve with respect thereto; and

           

          (j) the
            security interests and liens set forth on Schedule 8.4 to the Information
            Certificate.

           

          9.9 Indebtedness.
            Each
            Borrower and Guarantor shall not, and shall not permit any Subsidiary
            to, incur,
            create, assume, become or be liable in any manner with respect to, or
            permit to
            exist, any Indebtedness, or guarantee, assume, endorse, or otherwise
            become
            responsible for (directly or indirectly), the Indebtedness, performance,
            obligations or dividends of any other Person, except: 

           

          (a) the
            Obligations;

           

          (b) purchase
            money Indebtedness (including Capital Leases) arising after the date
            hereof to
            the extent secured by purchase money security interests in Equipment
            (including
            Capital Leases) and purchase money mortgages on Real Property not to
            exceed
            $250,000 in the aggregate at any time outstanding so long as such security
            interests and mortgages do not apply to any property of such Borrower,
            Guarantor
            or Subsidiary other than the Equipment or Real Property so acquired,
            and the
            Indebtedness secured thereby does not exceed the cost of the Equipment
            or Real
            Property so acquired, as the case may be; 

           

          (c) guarantees
            by any Borrower or Guarantor of the Obligations of the other Borrowers
            or
            Guarantors in favor of Lender;

           

          (d) the
            Indebtedness of any Borrower or Guarantor to any other Borrower or Guarantor
            arising after the date hereof pursuant to loans by any Borrower or Guarantor
            permitted under Section 9.10(g) hereof;

           

          (e) unsecured
            Indebtedness of any Borrower or Guarantor arising after the date hereof
            to any
            third person (but not to any other Borrower or Guarantor), provided,
            that,
            each of
            the following conditions is satisfied as determined by Lender: (i) such
            Indebtedness shall be on terms and conditions reasonably acceptable to
            Lender
            and shall be subject and subordinate in right of payment to the right
            of Lender
            to receive the prior indefeasible payment and satisfaction in full payment
            of
            all of the Obligations pursuant to the terms of an intercreditor agreement
            between Lender and such third party, in form and substance reasonably
            satisfactory to Lender, (ii) Lender shall have received not less than
            ten (10)
            days prior written notice of the intention of such Borrower or Guarantor
            to
            incur such Indebtedness, which notice shall set forth in reasonable detail
            satisfactory to Lender the amount of such Indebtedness, the person or
            persons to
            whom such Indebtedness will be owed, the interest rate, the schedule
            of
            repayments and maturity date with respect thereto and such other information
            as
            Lender may request with respect thereto, (iii) Lender shall have received
            true,
            correct and complete copies of all agreements, documents and instruments
            evidencing or otherwise related to such Indebtedness, (iv) except as
            Lender may
            otherwise agree in writing, all of the proceeds of the loans or other
            accommodations giving rise to such Indebtedness shall be paid to Lender
            for
            application to the Obligations in such order and manner as Lender may
            determine
            or at Lender's option, to be held as cash collateral for the Obligations,
            (v) in
            no event shall the aggregate principal amount of such Indebtedness incurred
            during the term of this Agreement exceed $5,000,000, (vi) as of the date
            of
            incurring such Indebtedness and after giving effect thereto, no Default
            or Event
            of Default shall exist or have occurred, (vii) such Borrower and Guarantor
            shall
            not, directly or indirectly, (A) amend, modify, alter or change the terms
            of
            such Indebtedness or any agreement, document or instrument related thereto,
            except,
            that,
            such
            Borrower or Guarantor may, after prior written notice to Lender, amend,
            modify,
            alter or change the terms thereof so as to extend the maturity thereof,
            or defer
            the timing of any payments in respect thereof, or to forgive or cancel
            any
            portion of such Indebtedness (other than pursuant to payments thereof),
            or to
            reduce the interest rate or any fees in connection therewith, or (B)
            redeem,
            retire, defease, purchase or otherwise acquire such Indebtedness (except
            pursuant to regularly scheduled payments permitted herein), or set aside
            or
            otherwise deposit or invest any sums for such purpose, and (viii) Borrowers
            and
            Guarantors shall furnish to Lender all notices or demands in connection
            with
            such Indebtedness either received by any Borrower or Guarantor or on
            its behalf
            promptly after the receipt thereof, or sent by any Borrower or Guarantor
            or on
            its behalf concurrently with the sending thereof, as the case may
            be;

          
             

            
              
                 

              

              
                B-65

                
                  

                

              

              
                 

              

            

             

          

          (f) the
            Indebtedness set forth on Schedule 9.9 to the Information Certificate;
            provided,
            that,
            (i)
            Borrowers and Guarantors may only make regularly scheduled payments of
            principal
            and interest in respect of such Indebtedness in accordance with the terms
            of the
            agreement or instrument evidencing or giving rise to such Indebtedness
            as in
            effect on the date hereof, (ii) Borrowers and Guarantors shall not, directly
            or
            indirectly, (A) amend, modify, alter or change the terms of such Indebtedness
            or
            any agreement, document or instrument related thereto as in effect on
            the date
            hereof except,
            that,
            Borrowers and Guarantors may, after prior written notice to Lender, amend,
            modify, alter or change the terms thereof so as to extend the maturity
            thereof,
            or defer the timing of any payments in respect thereof, or to forgive
            or cancel
            any portion of such Indebtedness (other than pursuant to payments thereof),
            or
            to reduce the interest rate or any fees in connection therewith, or (B)
            redeem,
            retire, defease, purchase or otherwise acquire such Indebtedness, or
            set aside
            or otherwise deposit or invest any sums for such purpose, and (iii) Borrowers
            and Guarantors shall furnish to Lender all notices or demands in connection
            with
            such Indebtedness either received by any Borrower or Guarantor or on
            its behalf,
            promptly after the receipt thereof, or sent by any Borrower or Guarantor
            or on
            its behalf, concurrently with the sending thereof, as the case may be,
            nothing
            in this Section 9.9(f) shall be construed to prohibit Langer from calling
            the
            Convertible Notes in accordance with the terms of Article XIII of the
            Note
            Purchase Agreement;

           

          (g) the
            Indebtedness of any Borrower or Guarantor entered into in the ordinary
            course of
            business pursuant of a Hedge Agreement.

          
             

            
              
                 

              

              
                B-66

                
                  

                

              

              
                 

              

            

             

          

          9.10 Loans,
            Investments, Etc.
            Each
            Borrower and Guarantor shall not, and shall not permit any Subsidiary
            to,
            directly or indirectly, make any loans or advance money or property to
            any
            person, or invest in (by capital contribution, dividend or otherwise)
            or
            purchase or repurchase the Capital Stock or Indebtedness or all or a
            substantial
            part of the assets or property of any person, or form or acquire any
            Subsidiaries, or agree to do any of the foregoing, except:

           

          (a) the
            endorsement of instruments for collection or deposit in the ordinary
            course of
            business;

           

          (b) investments
            in cash or Cash Equivalents, provided,
            that,
            (i) no
            Loans are then outstanding and (ii) the terms and conditions of Section
            5.2
            hereof shall have been satisfied with respect to the deposit account,
            investment
            account or other account in which such cash or Cash Equivalents are
            held;

           

          (c) the
            existing equity investments of each Borrower and Guarantor as of the
            date hereof
            in its Subsidiaries, provided,
            that,
            no
            Borrower or Guarantor shall have any further obligations or liabilities
            to make
            any capital contributions or other additional investments or other payments
            to
            or in or for the benefit of any of such Subsidiaries;

           

          (d) loans
            and
            advances by any Borrower or Guarantor to employees of such Borrower or
            Guarantor
            not to exceed the principal amount of $200,000 in the aggregate at any
            time
            outstanding for: (i) reasonably and necessary work-related travel or
            other
            ordinary business expenses to be incurred by such employee in connection
            with
            their work for such Borrower or Guarantor and (ii) reasonable and necessary
            relocation expenses of such employees (including home mortgage financing
            for
            relocated employees); 

           

          (e) stock
            or
            obligations issued to any Borrower or Guarantor by any Person (or the
            representative of such Person) in respect of Indebtedness of such Person
            owing
            to such Borrower or Guarantor in connection with the insolvency, bankruptcy,
            receivership or reorganization of such Person or a composition or readjustment
            of the debts of such Person; provided,
            that,
            the
            original of any such stock or instrument evidencing such obligations
            shall be
            promptly delivered to Lender, upon Lender's request, together with such
            stock
            power, assignment or endorsement by such Borrower or Guarantor as Lender
            may
            request;

           

          (f) obligations
            of account debtors to any Borrower or Guarantor arising from Accounts
            which are
            past due evidenced by a promissory note made by such account debtor payable
            to
            such Borrower or Guarantor; provided,
            that,
            promptly upon the receipt of the original of any such promissory note
            by such
            Borrower or Guarantor, such promissory note shall be endorsed to the
            order of
            Lender by such Borrower or Guarantor and promptly delivered to Lender
            as so
            endorsed;

           

          (g) loans
            by
            a Borrower or Guarantor to another Borrower or Guarantor after the date
            hereof,
provided,
            that,
            

          
             

            
              
                 

              

              
                B-67

                
                  

                

              

              
                 

              

            

             

          

          (i) as
            to all
            of such loans, (A) within thirty (30) days after the end of each fiscal
            month, Borrowers shall provide to Lender a report in form and substance
            satisfactory to Lender of the outstanding amount of such loans as of
            the last
            day of the immediately preceding month and indicating any loans made
            and
            payments received during the immediately preceding month, (B) the
            Indebtedness arising pursuant to any such loan shall not be evidenced
            by a
            promissory note or other instrument, unless the single original of such
            note or
            other instrument is promptly delivered to Lender upon its request to
            hold as
            part of the Collateral, with such endorsement and/or assignment by the
            payee of
            such note or other instrument as Lender may require, (C) as of the date of
            any such loan and after giving effect thereto, the Borrower or Guarantor
            making
            such loan shall be Solvent, and (D) as of the date of any such loan and
            after giving effect thereto, no Default or Event of Default shall exist
            or have
            occurred and be continuing,

           

          (ii) as
            to
            loans by a Guarantor to a Borrower, (A) the Indebtedness arising pursuant
            to such loan shall be subject to, and subordinate in right of payment
            to, the
            right of Lender to receive the prior final payment and satisfaction in
            full of
            all of the Obligations on terms and conditions acceptable to Lender,
            (B) promptly upon Lender’s request, Lender shall have received a
            subordination agreement, in form and substance reasonably satisfactory
            to
            Lender, providing for the terms of the subordination in right of payment
            of such
            Indebtedness of such Borrower to the prior final payment and satisfaction
            in
            full of all of the Obligations, duly authorized, executed and delivered
            by such
            Guarantor and such Borrower, and (C) such Borrower shall not, directly or
            indirectly make, or be required to make, any payments in respect of such
            Indebtedness prior to the end of the then current term of this
            Agreement;

           

          (h) the
            loans
            and advances set forth on Schedule 9.10 to the Information Certificate;
            provided,
            that,
            as to
            such loans and advances, (i) Borrowers and Guarantors shall not, directly
            or
            indirectly, amend, modify, alter or change the terms of such loans and
            advances
            or any agreement, document or instrument related thereto and (ii) Borrowers
            and
            Guarantors shall furnish to Lender all notices or demands in connection
            with
            such loans and advances either received by any Borrower or Guarantor
            or on its
            behalf, promptly after the receipt thereof, or sent by any Borrower or
            Guarantor
            or on its behalf, concurrently with the sending thereof, as the case
            may
            be.

           

          9.11 Dividends
            and Redemptions.
            Each
            Borrower and Guarantor shall not, directly or indirectly, declare or
            pay any
            dividends on account of any shares of class of any Capital Stock of such
            Borrower or Guarantor now or hereafter outstanding, or set aside or otherwise
            deposit or invest any sums for such purpose, or redeem, retire, defease,
            purchase or otherwise acquire any shares of any class of Capital Stock
            (or set
            aside or otherwise deposit or invest any sums for such purpose) for any
            consideration or apply or set apart any sum, or make any other distribution
            (by
            reduction of capital or otherwise) in respect of any such shares or agree
            to do
            any of the foregoing, except that:

           

          (a) any
            Borrower or Guarantor may declare and pay such dividends or redeem, retire,
            defease, purchase or otherwise acquire any shares of any class of Capital
            Stock
            for consideration in the form of shares of common stock (so long as after
            giving
            effect thereto no Change of Control or other Default or Event of Default
            shall
            exist or occur);

          
             

            
              
                 

              

              
                B-68

                
                  

                

              

              
                 

              

            

             

          

          (b) Borrowers
            and Guarantors may pay dividends to the extent permitted in Section 9.12
            below;

           

          (c) any
            Subsidiary of a Borrower or Guarantor may pay dividends to a
            Borrower;

           

          (d) Borrowers
            and Guarantors may repurchase Capital Stock consisting of common stock
            held by
            employees pursuant to any employee stock ownership plan thereof upon
            the
            termination, retirement or death of any such employee in accordance with
            the
            provisions of such plan, provided,
            that,
            as to
            any such repurchase, each of the following conditions is satisfied: (i)
            as of
            the date of the payment for such repurchase and after giving effect thereto,
            no
            Default or Event of Default shall exist or have occurred and be continuing,
            (ii) such repurchase shall be paid with funds legally available therefor,
            (iii) such repurchase shall not violate any law or regulation or the
            terms of
            any indenture, agreement or undertaking to which such Borrower or Guarantor
            is a
            party or by which such Borrower or Guarantor or its or their property
            are bound,
            and (iv) the aggregate amount of all payments for such repurchases in
            any
            calendar year shall not exceed $250,000; 

           

          (e) Langer
            may call all or any lesser portion of the Convertible Notes in accordance
            with
            the terms of Article XIII of the Note Purchase Agreement.

           

          9.12 Transactions
            with Affiliates.
            Each
            Borrower and Guarantor shall not, directly or indirectly:

           

          (a) purchase,
            acquire or lease any property from, or sell, transfer or lease any property
            to,
            any officer, director or other Affiliate of such Borrower or Guarantor,
            except
            in the ordinary course of and pursuant to the reasonable requirements
            of such
            Borrower's or Guarantor’s business (as the case may be) and upon fair and
            reasonable terms no less favorable to such Borrower or Guarantor than
            such
            Borrower or Guarantor would obtain in a comparable arm's length transaction
            with
            an unaffiliated person; or

           

          (b) make
            any
            payments (whether by dividend, loan or otherwise) of management, consulting
            or
            other fees for management or similar services, or of any Indebtedness
            owing to
            any officer, employee, shareholder, director or any other Affiliate of
            such
            Borrower or Guarantor, except
            (i)
            compensation to officers, employees, consultants, Affiliates and directors
            for
            services rendered to such Borrower or Guarantor, (ii)  payments
            by any such Borrower to another Borrower for reasonable out-of-pocket
            legal and
            accounting, insurance, corporate or similar overhead, marketing, Management
            Fees, payroll and similar types of services paid for by a Borrower on
            behalf of
            such other Borrower, in the ordinary course of their respective businesses
            or as
            the same may be directly attributable to such Borrower and for the payment
            of
            taxes by or on behalf of such other Borrower; and (iii) pursuant to the
            agreements set forth on Schedule 9.12 to the Information
            Certificate.

          
             

            
              
                 

              

              
                B-69

                
                  

                

              

              
                 

              

            

             

          

          9.13 Compliance
            with ERISA.
            Each
            Borrower and Guarantor shall, and shall cause each of its ERISA Affiliates
            to:
            (a) maintain each Plan in compliance in all material respects with the
            applicable provisions of ERISA, the Code and other Federal and State
            law;
            (b) cause each Plan which is qualified under Section 401(a) of the Code to
            maintain such qualification; (c)not terminate any Pension Plan so as
            to incur
            any material liability to the Pension Benefit Guaranty Corporation; (d) not
            allow or suffer to exist any prohibited transac-tion involving any Plan
            or any
            trust created thereunder which would subject such Borrower, Guarantor
            or such
            ERISA Affiliate to a material tax or other liability on prohibited transactions
            imposed under Section 4975 of the Code or ERISA; (e) make all required
            contributions to any Plan which it is obligated to pay under Section
            302 of
            ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or
            suffer to exist any accumulated funding deficiency, whether or not waived,
            with
            respect to any such Pension Plan; (g)  not engage in a transaction that
            could be subject to Section 4069 or 4212(c) of ERISA; or (h) not allow
            or suffer
            to exist any occurrence of a reportable event or any other event or condition
            which presents a material risk of termination by the Pension Benefit
            Guaranty
            Corporation of any Plan that is a single employer plan, which termination
            could
            result in any material liability to the Pension Benefit Guaranty
            Corporation.

           

          9.14 End
            of
            Fiscal Years; Fiscal Quarters.  Each
            Borrower and Guarantor shall, for financial reporting purposes, cause
            its, and
            each of its Subsidiaries’ (a) fiscal years to end on December 31 of each
            year and (b) fiscal quarters to end on March 31, June 30, September 30, and
            December 31 of each year.

           

          9.15 Change
            in Business.
            Each
            Borrower and Guarantor shall not engage in any business other than the
            business
            of such Borrower or Guarantor on the date hereof and any business reasonably
            related, ancillary or complimentary to the business in which such Borrower
            or
            Guarantor is engaged on the date hereof without the prior written consent
            of
            Lender.

           

          9.16 Limitation
            of Restrictions Affecting Subsidiaries.  Each
            Borrower and Guarantor shall not, directly, or indirectly, create or
            otherwise
            cause or suffer to exist any encumbrance or restriction which prohibits
            or
            limits the ability of any Subsidiary of such Borrower or Guarantor to
            (a) pay dividends or make other distributions or pay any Indebtedness owed
            to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor;
            (b) make loans or advances to such Borrower or Guarantor or any Subsidiary
            of such Borrower or Guarantor, (c) transfer any of its properties or assets
            to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor;
            or (d) create, incur, assume or suffer to exist any lien upon any of its
            property, assets or revenues, whether now owned or hereafter acquired,
            other
            than encumbrances and restrictions arising under (i) applicable law,
            (ii) this Agreement, (iii) customary provisions restricting subletting
            or assignment of any lease governing a leasehold interest of such Borrower
            or
            Guarantor or any Subsidiary of such Borrower or Guarantor, (iv) customary
            restrictions on dispositions of real property interests found in reciprocal
            easement agreements of such Borrower or Guarantor or any Subsidiary of
            such
            Borrower or Guarantor, (v) any agreement relating to permitted Indebtedness
            incurred by a Subsidiary of such Borrower or Guarantor prior to the date
            on
            which such Subsidiary was acquired by such Borrower or such Guarantor
            and
            outstanding on such acquisition date, and (vi) the extension or
            continuation of contractual obligations in existence on the date hereof;
            provided, that, any such encumbrances or restrictions contained in such
            extension or continuation are no less favorable to Lender than those
            encumbrances and restrictions under or pursuant to the contractual obligations
            so extended or continued.

          
             

            
              
                 

              

              
                B-70

                
                  

                

              

              
                 

              

            

             

          

          9.17 Fixed
            Charge Coverage.
            Borrower
            shall maintain a Fixed Charge Coverage Ratio of no less than 1.0 to 1.0
            at all
            times that Excess Availability is less than Three Million ($3,000,000)
            Dollars.

           

          9.18 Intentionally
            omitted.

           

          9.19 License
            Agreements.

           

          (a) Each
            Borrower and Guarantor shall (i) promptly and faithfully observe and
            perform all of the material terms, covenants, conditions and provisions
            of the
            material License Agreements to which it is a party to be observed and
            performed
            by it, at the times set forth therein, if any, (ii) not do, permit, suffer
            or refrain from doing anything that could reasonably be expected to result
            in a
            default under or breach of any of the terms of any material License Agreement,
            (iii) not cancel, surrender, modify, amend, waive or release any material
            License Agreement in any material respect or any term, provision or right
            of the
            licensee thereunder in any material respect, or consent to or permit
            to occur
            any of the foregoing; except,
            that,
            subject
            to Section 9.19(b) below, such Borrower or Guarantor may cancel, surrender
            or
            release any material License Agreement in the ordinary course of the
            business of
            such Borrower or Guarantor; provided,
            that,
            such
            Borrower or Guarantor (as the case may be) shall give Lender not less
            than
            fifteen (15) days prior written notice of its intention to so cancel,
            surrender
            and release any such material License Agreement, (iv) give Lender prompt
            written notice of any material License Agreement entered into by such
            Borrower
            or Guarantor after the date hereof, together with a true, correct and
            complete
            copy thereof and such other information with respect thereto as Lender
            may
            request, (v) give Lender prompt written notice of any material breach of
            any obligation, or any default, by any party under any material License
            Agreement which if not cured would have a Material Adverse Effect, and
            deliver
            to Lender (promptly upon the receipt thereof by such Borrower or Guarantor
            in
            the case of a notice to such Borrower or Guarantor and concurrently with
            the
            sending thereof in the case of a notice from such Borrower or Guarantor)
            a copy
            of each notice of default and every other notice and other communication
            received or delivered by such Borrower or Guarantor in connection with
            any
            material License Agreement which relates to the right of such Borrower
            or
            Guarantor to continue to use the property subject to such License Agreement,
            and
            (vi) furnish to Lender, promptly upon the request of Lender, such
            information and evidence as Lender may reasonably require from time to
            time
            concerning the observance, performance and compliance by such Borrower
            or
            Guarantor or the other party or parties thereto with the material terms,
            covenants or provisions of any material License Agreement.

           

          (b) Each
            Borrower and Guarantor will either exercise any option to renew or extend
            the
            term of each material License Agreement to which it is a party in such
            manner as
            will cause the term of such material License Agreement to be effectively
            renewed
            or extended for the period provided by such option and give prompt written
            notice thereof to Lender or give Lender prior written notice that such
            Borrower
            or Guarantor does not intend to renew or extend the term of any such
            material
            License Agreement or that the term thereof shall otherwise be expiring,
            not less
            than sixty (60) days prior to the date of any such non-renewal or expiration.
            In
            the event of the failure of such Borrower or Guarantor to extend or renew
            any
            material License Agreement to which it is a party, Lender shall have,
            and is
            hereby granted, the irrevocable right and authority, at its option, to
            renew or
            extend the term of such material License Agreement, whether in its own
            name and
            behalf, or in the name and behalf of a designee or nominee of Lender
            or in the
            name and behalf of such Borrower or Guarantor, as Lender shall determine
            at any
            time that an Event of Default shall exist or have occurred and be continuing.
            Lender may, but shall not be required to, perform any or all of such
            obligations
            of such Borrower or Guarantor under any of the License Agreements, including,
            but not limited to, the payment of any or all sums due from such Borrower
            or
            Guarantor thereunder. Any sums so paid by Lender shall constitute part
            of the
            Obligations.

          
             

            
              
                 

              

              
                B-71

                
                  

                

              

              
                 

              

            

             

          

          9.20 Foreign
            Assets Control Regulations, Etc.
            None of
            the requesting or borrowing of the Loans or the requesting or issuance,
            extension or renewal of any Letter of Credit or the use of the proceeds
            of any
            thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as
            amended) (the “Trading With the Enemy Act”) or any of the foreign assets control
            regulations of the United States Treasury Department (31 C.F.R., Subtitle
            B,
            Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any
            enabling legislation or executive order relating thereto (including,
            but not
            limited to (a) Executive order 13224 of September 21, 2001 Blocking Property
            and
            Prohibiting Transactions With Persons Who Commit, Threaten to Commit,
            or Support
            Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the
            Uniting and Strengthening America by Providing Appropriate Tools Required
            to
            Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56). None
            of
            Borrowers or any of their Subsidiaries or other Affiliates is or will
            become a
“blocked person” as described in the Executive Order, the Trading with the Enemy
            Act or the Foreign Assets Control Regulations or engages or will engage
            in any
            dealings or transactions, or be otherwise associated, with any such “blocked
            person”.

           

          9.21 Intentionally
            omitted.

           

          9.22 Costs
            and Expenses.
            Borrowers and Guarantors shall pay to Lender on demand all costs, expenses,
            filing fees and taxes paid or payable in connection with the preparation,
            negotiation, execution, delivery, recording, syndication, administr-ation,
            collection, liquidation, enforcement and defense of the Obligations,
            Lender's
            rights in the Collateral, this Agreement, the other Financing Agreements
            and all
            other documents related hereto or thereto, including any amendments,
            supplements
            or consents which may hereafter be contemplated (whether or not executed)
            or
            entered into in respect hereof and thereof, including: (a) all costs
            and
            expenses of filing or recording (including Uniform Commercial Code financing
            statement filing taxes and fees, documentary taxes, intangibles taxes
            and
            mortgage recording taxes and fees, if appl-icable); (b) costs and expenses
            and fees for insurance premiums, environmental audits, title insurance
            premiums,
            surveys, assessments, engineering reports and inspections, appraisal
            fees and
            search fees, background checks, costs and expenses of remitting loan
            proceeds,
            collecting checks and other items of payment, and establishing and maintaining
            the Blocked Accounts, together with Lender's customary charges and fees
            with
            respect thereto; (c) charges, fees or expenses charged by any bank or
            issuer in
            connection with any Letter of Credit; (d) costs and expenses of preserving
            and
            protecting the Collateral; (e) costs and expenses paid or incurred in
            connection
            with obtaining payment of the Obligations, enforcing the security interests
            and
            liens of Lender, selling or otherwise realizing upon the Collateral,
            and
            otherwise enforcing the provisions of this Agreement and the other Financing
            Agreements or defending any claims made or threatened against Lender
            arising out
            of the transactions contemplated hereby and thereby (including preparations
            for
            and consultations concerning any such matters); (f) all out-of-pocket
            expenses
            and costs heret-ofore and from time to time hereafter incurred by Lender
            during
            the course of periodic field examinations of the Collateral and such
            Borrower's
            or Guarantor’s operations, plus a per diem charge at Lender’s then standard rate
            for Lender's examiners in the field and office (which rate as of the
            date hereof
            is $900 per person per day); and (g) the fees and disbursements of counsel
            (including legal assistants) to Lender in connection with any of the
            foregoing.

          
             

            
              
                 

              

              
                B-72

                
                  

                

              

              
                 

              

            

             

          

          9.23 Further
            Assurances.
            At the
            request of Lender at any time and from time to time, Borrowers and Guarantors
            shall, at their expense, duly execute and deliver, or cause to be duly
            executed
            and delivered, such further agreements, documents and instruments, and
            do or
            cause to be done such further acts as may be necessary or proper to evidence,
            perfect, maintain and enforce the security interests and the priority
            thereof in
            the Collateral and to otherwise effectuate the provisions or purposes
            of this
            Agreement or any of the other Financing Agreements. Lender may at any
            time and
            from time to time request a certificate from an officer of any Borrower
            or
            Guarantor representing that all conditions precedent to the making of
            Loans and
            providing Letters of Credit contained herein are satisfied. In the event
            of such
            request by Lender, Lender may, at Lender’s option, cease to make any further
            Loans or provide any further Letters of Credit until Lender has received
            such
            certificate and, in addition, Lender has determined that such conditions
            are
            satisfied. 

           

          SECTION
            10.  EVENTS
            OF DEFAULT AND REMEDIES

           

          10.1 Events
            of Default.
            The
            occurrence or existence of any one or more of the following events are
            referred
            to herein individually as an “Event of Default”, and collectively as “Events of
            Default”: 

           

          (a) (i)
            any
            Borrower fails to pay any of the Obligations when due or (ii) any Borrower
            or
            Guarantor fails to perform any of the covenants contained in Sections
            9.3, 9.4,
            9.13, 9.14, 9.15, and 9.16 of this Agreement and such failure shall continue
            for
            ten (10) days folloinwg Borrower’s receipt of notice from either Lender or any
            Governmental Authority; provided,
            that,
            such
            ten (10) day period shall not apply in the case of: (A) any failure to
            observe
            any such covenant which is not capable of being cured at all or within
            such ten
            (10) day period or which has been the subject of a prior failure within
            a six
            (6) month period or (B) an intentional breach by any Borrower or Guarantor
            of
            any such covenant or (iii) any Borrower or Guarantor fails to perform
            any of the
            terms, covenants, conditions or provisions contained in this Agreement
            or any of
            the other Financing Agreements other than those described in Sections
            10.1(a)(i)
            and 10.1(a)(ii) above;

          
             

            
              
                 

              

              
                B-73

                
                  

                

              

              
                 

              

            

             

          

          (b) any
            representation, warranty or statement of fact made by any Borrower or
            Guarantor
            in this Agreement, the other Financing Agreements or any other written
            agreement, schedule, confirmatory assignment or otherwise shall when
            made or
            deemed made be false or misleading in any material respect 

           

          (c) any
            Guarantor revokes or terminates or purports to revoke or terminate, or
            fails to
            perform any of the terms, covenants, conditions or provisions of any
            guarantee,
            endorsement or other agreement of such party in favor of Lender;

           

          (d) any
            judgment for the payment of money is rendered against any Borrower or
            Guarantor
            in excess of $200,000 in any one case or in excess of $500,000 in the
            aggregate
            (to the extent not covered by insurance where the insurer has assumed
            responsibility in writing for such judgment) and shall remain undischarged
            or
            unvacated for a period in excess of thirty (30) days or execution shall
            at any
            time not be effectively stayed, or any judgment other than for the payment
            of
            money, or injunction, attachment, garnishment or execution is rendered
            against
            any Borrower or Guarantor or any of the Collateral having a value in
            excess of
            $25,000;

           

          (e) any
            Guarantor (being a natural person or a general partner of a Guarantor
            which is a
            partnership) dies or any Borrower or Guarantor, which is a partnership,
            limited
            liability company, limited liability partnership or a corporation, dissolves
            or
            suspends or discontinues doing business;

           

          (f) any
            Borrower or Guarantor makes an assignment for the benefit of creditors,
            makes or
            sends notice of a bulk transfer or calls a meeting of its creditors or
            principal
            creditors in connection with a moratorium or adjustment of the Indebtedness
            due
            to them; 

           

          (g) a
            case or
            proceeding under the bankruptcy laws of the United States of America
            now or
            hereafter in effect or under any insolvency, reorganization, receivership,
            readjustment of debt, dissolution or liquidation law or statute of any
            jurisdiction now or hereafter in effect (whether at law or in equity)
            is filed
            against any Borrower or Guarantor or all or any part of its properties
            and such
            petition or application is not dismissed within forty-five (45) days
            after the
            date of its filing or any Borrower or Guarantor shall file any answer
            admitting
            or not contesting such petition or application or indicates its consent
            to,
            acquiescence in or approval of, any such action or proceeding or the
            relief
            requested is granted sooner;

           

          (h) a
            case or
            proceeding under the bankruptcy laws of the United States of America
            now or
            hereafter in effect or under any insolvency, reorganization, receivership,
            readjustment of debt, dissolution or liquidation law or statute of any
            jurisdiction now or hereafter in effect (whether at a law or equity)
            is filed by
            any Borrower or Guarantor or for all or any part of its property; 

          
             

            
              
                 

              

              
                B-74

                
                  

                

              

              
                 

              

            

             

          

          (i) any
            default in respect of any Indebtedness of any Borrower or Guarantor (other
            than
            Indebtedness owing to Lender hereunder), in any case in an amount in
            excess of
            $100,000,
            which
            default continues for more than the applicable cure period, if any, with
            respect
            thereto or any default by any Borrower or Guarantor under any Material
            Contract,
            which default continues for more than the applicable cure period, if
            any, with
            respect thereto and/or is not waived in writing by the other parties
            thereto;

           

          (j) any
            material provision hereof or of any of the other Financing Agreements
            shall for
            any reason cease to be valid, binding and enforceable with respect to
            any party
            hereto or thereto (other than Lender) in accordance with its terms, or
            any such
            party shall challenge the enforceability hereof or thereof, or shall
            assert in
            writing, or take any action or fail to take any action based on the assertion
            that any provision hereof or of any of the other Financing Agreements
            has ceased
            to be or is otherwise not valid, binding or enforceable in accordance
            with its
            terms, or any security interest provided for herein or in any of the
            other
            Financing Agreements shall cease to be a valid and perfected first priority
            security interest in any of the Collateral purported to be subject thereto
            (except as otherwise permitted herein or therein);

           

          (k) an
            ERISA
            Event shall occur which results in or could reasonably be expected to
            result in
            liability of any Borrower in an aggregate amount in excess of
            $200,000;

           

          (l) any
            Change of Control;

           

          (m) the
            indictment of any Borrower or Guarantor or officer of any Borrower or
            Guarantor,
            or receipt of notice by any Governmental Authority that any Borrower
            or
            Guarantor or any officer of any Borrower or Guarantor is a target of
            a criminal
            investigation, or in either case, as to which there is a reasonable possibility
            of an adverse determination, in the good faith determination of Lender,
            under
            any criminal statute, or commencement of criminal or civil proceedings
            against
            such Borrower or Guarantor, pursuant to which statute or proceedings
            the
            penalties or remedies sought or available include forfeiture of (i) any
            of the
            Collateral having a value in excess of $50,000 or (ii) any other property
            of any
            Borrower or Guarantor which is necessary or material to the conduct of
            its
            business;

           

          (n) there
            shall be a material adverse change in the business or assets of any Borrower
            or
            Guarantor after the date hereof; or

           

          (o) there
            shall be an event of default under any of the other Financing Agreements
            which
            remains uncured following any applicable cure period, if any.

           

          10.2 Remedies.

           

          (a) At
            any
            time an Event of Default exists or has occurred and is continuing, Lender
            shall
            have all rights and remedies provided in this Agreement, the other Financing
            Agreements, the UCC and other applicable law, all of which rights and
            remedies
            may be exercised without notice to or consent by any Borrower or Guarantor,
            except as such notice or consent is expressly provided for hereunder
            or required
            by applicable law. All rights, remedies and powers granted to Lender
            hereunder,
            under any of the other Financing Agreements, the UCC or other applicable
            law,
            are cumulative, not exclusive and enforceable, in Lender's discr-etion,
            alternatively, successively, or concurrently on any one or more occasions,
            and
            shall include, without limitation, the right to apply to a court of equity
            for
            an injunction to restrain a breach or threatened breach by any Borrower
            or
            Guarantor of this Agreement or any of the other Financing Agreements.
            Lender
            may, at any time or times, proceed directly against any Borrower or Guarantor
            to
            collect the Obligations without prior recourse to the Collateral.

          
             

            
              
                 

              

              
                B-75

                
                  

                

              

              
                 

              

            

             

          

          (b) Without
            limiting the foregoing, at any time an Event of Default exists or has
            occurred
            and is continuing, Lender may, in its discretion, (i) accelerate the
            payment of
            all Obligations and demand immediate payment thereof to Lender, (provided,
            that,
            upon
            the occurrence of any Event of Default described in Sections 10.1(g)
            and
            10.1(h), all Obligations shall automatically become immediately due and
            payable), (ii) with or without judicial process or the aid or assistance
            of
            others, enter upon any premises on or in which any of the Collateral
            may be
            located and take possession of the Collateral or complete processing,
            manufacturing and repair of all or any portion of the Collateral, (iii)
            require
            any Borrower or Guarantor, at Borrowers’ expense, to assemble and make available
            to Lender any part or all of the Collateral at any place and time designated
            by
            Lender, (iv) collect, foreclose, receive, appropriate, setoff and realize
            upon
            any and all Collateral, (v) remove any or all of the Collateral from
            any
            premises on or in which the same may be located for the purpose of effecting
            the
            sale, foreclosure or other disposition thereof or for any other purpose,
            (vi)
            sell, lease, transfer, assign, deliver or otherwise dispose of any and
            all
            Collateral (including entering into contracts with respect thereto, public
            or
            private sales at any exchange, broker's board, at any office of Lender
            or
            elsewhere) at such prices or terms as Lender may deem reasonable, for
            cash, upon
            credit or for future delivery, with the Lender having the right to purchase
            the
            whole or any part of the Collateral at any such public sale, all of the
            foregoing being free from any right or equity of redemption of any Borrower
            or
            Guarantor, which right or equity of redemption is hereby expressly waived
            and
            released by Borrowers and Guarantors and/or (vii) terminate this Agreement.
            If any of the Collateral is sold or leased by Lender upon credit terms
            or for
            future delivery, the Obligations shall not be reduced as a result thereof
            until
            payment therefor is finally collected by Lender. If notice of disposition
            of
            Collateral is required by law, ten (10) days prior notice by Lender to
            Administrative Borrower designating the time and place of any public
            sale or the
            time after which any private sale or other intended disposition of Collateral
            is
            to be made, shall be deemed to be reasonable notice thereof and Borrowers
            and
            Guarantors waive any other notice. In the event Lender institutes an
            action to
            recover any Collateral or seeks recovery of any Collateral by way of
            prejudgment
            remedy, each Borrower and Guarantor waives the posting of any bond which
            might
            otherwise be required. At any time an Event of Default exists or has
            occurred
            and is continuing, upon Lender’s request, Borrowers will either, as Lender shall
            specify, furnish cash collateral to the issuer to be used to secure and
            fund
            Lender’s reimbursement obligations to the issuer in connection with any Letter
            of Credit Obligations or furnish cash collateral to Lender for the Letter
            of
            Credit Obligations. Such cash collateral shall be in the amount equal
            to one
            hundred ten (110%) percent of the amount of the Letter of Credit Obligations
            plus the amount of any fees and expenses payable in connection therewith
            through
            the end of the latest expiration date of the Letters of Credit giving
            rise to
            such Letter of Credit Obligations.

          
             

            
              
                 

              

              
                B-76

                
                  

                

              

              
                 

              

            

             

          

          (c) At
            any
            time or times that an Event of Default exists or has occurred and is
            continuing,
            Lender may, in its discretion, enforce the rights of any Borrower or
            Guarantor
            against any account debtor, secondary obligor or other obligor in respect
            of any
            of the Accounts or other Receivables. Without limiting the generality
            of the
            foregoing, Lender may, in its discretion, at such time or times (i) notify
            any
            or all account debtors, secondary obligors or other obligors in respect
            thereof
            that the Receivables have been assigned to Lender and that Lender has
            a security
            interest therein and Lender may direct any or all account debtors, secondary
            obligors and other obligors to make payment of Receivables directly to
            Lender,
            (ii) extend the time of payment of, compromise, settle or adjust for
            cash,
            credit, return of merchandise or otherwise, and upon any terms or conditions,
            any and all Receivables or other obligations included in the Collateral
            and
            thereby discharge or release the account debtor or any secondary obligors
            or
            other obligors in respect thereof without affecting any of the Obligations,
            (iii) demand, collect or enforce payment of any Receivables or such other
            obligations, but without any duty to do so, and Lender shall not be liable
            for
            any failure to collect or enforce the payment thereof nor for the negligence
            of
            its agents or attorneys with respect thereto and (iv) take whatever other
            action
            Lender may deem necessary or desirable for the protection of its interests.
            At
            any time that an Event of Default exists or has occurred and is continuing,
            at
            Lender's request, all invoices and statements sent to any account debtor
            shall
            state that the Accounts and such other obligations have been assigned
            to Lender
            and are payable directly and only to Lender and Borrowers and Guarantors
            shall
            deliver to Lender such originals of documents evidencing the sale and
            delivery
            of goods or the performance of services giving rise to any Accounts as
            Lender
            may require. In the event any account debtor returns Inventory when an
            Event of
            Default exists or has occurred and is continuing, Borrowers shall, upon
            Lender's
            request, hold the returned Inventory in trust for Lender, segregate all
            returned
            Inventory from all of its other property, dispose of the returned Inventory
            solely according to Lender's instructions, and not issue any credits,
            discounts
            or allowances with respect thereto without Lender's prior written
            consent.

           

          (d) To
            the
            extent that applicable law imposes duties on Lender to exercise remedies
            in a
            commercially reasonable manner (which duties cannot be waived under such
            law),
            each Borrower and Guarantor acknowledges and agrees that it is not commercially
            unreasonable for Lender (i) to fail to incur expenses reasonably deemed
            significant by Lender to prepare Collateral for disposition or otherwise
            to
            complete raw material or work in process into finished goods or other
            finished
            products for disposition, (ii) to fail to obtain third party consents
            for access
            to Collateral to be disposed of, or to obtain or, if not required by
            other law,
            to fail to obtain consents of any Governmental Authority or other third
            party
            for the collection or disposition of Collateral to be collected or disposed of,
            (iii) to fail to exercise collection remedies against account debtors,
            secondary
            obligors or other persons obligated on Collateral or to remove liens
            or
            encumbrances on or any adverse claims against Collateral, (iv) to exercise
            collection remedies against account debtors and other persons obligated
            on
            Collateral directly or through the use of collection agencies and other
            collection specialists, (v) to advertise dispositions of Collateral through
            publications or media of general circulation, whether or not the Collateral
            is
            of a specialized nature, (vi) to contact other persons, whether or not
            in the
            same business as any Borrower or Guarantor, for expressions of interest
            in
            acquiring all or any portion of the Collateral, (vii) to hire one or
            more
            professional auctioneers to assist in the disposition of Collateral,
            whether or
            not the collateral is of a specialized nature, (viii) to dispose of Collateral
            by utilizing Internet sites that provide for the auction of assets of
            the types
            included in the Collateral or that have the reasonable capability of
            doing so,
            or that match buyers and sellers of assets, (ix) to dispose of assets
            in
            wholesale rather than retail markets, (x) to disclaim disposition warranties,
            (xi) to purchase insurance or credit enhancements to insure Lenders against
            risks of loss, collection or disposition of Collateral or to provide
            to Lender a
            guaranteed return from the collection or disposition of Collateral, or
            (xii) to
            the extent deemed appropriate by Lender, to obtain the services of other
            brokers, investment bankers, consultants and other professionals to assist
            Lender in the collection or disposition of any of the Collateral. Each
            Borrower
            and Guarantor acknowledges that the purpose of this Section is to provide
            non-exhaustive indications of what actions or omissions by Lender would
            not be
            commercially unreasonable in the exercise by any Lender of remedies against
            the
            Collateral and that other actions or omissions by Lender shall not be
            deemed
            commercially unreasonable solely on account of not being indicated in
            this
            Section. Without limitation of the foregoing, nothing contained in this
            Section
            shall be construed to grant any rights to any Borrower or Guarantor or
            to impose
            any duties on Lender that would not have been granted or imposed by this
            Agreement or by applicable law in the absence of this Section.

          
             

            
              
                 

              

              
                B-77

                
                  

                

              

              
                 

              

            

             

          

          (e) For
            the
            purpose of enabling Lender to exercise the rights and remedies hereunder,
            each
            Borrower and Guarantor hereby grants to Lender, to the extent assignable,
            an
            irrevocable, non-exclusive license (exercisable at any time an Event
            of Default
            shall exist or have occurred and for so long as the same is continuing)
            without
            payment of royalty or other compensation to any Borrower or Guarantor,
            to use,
            assign, license or sublicense any of the trademarks, service-marks, trade
            names,
            business names, trade styles, designs, logos and other source of business
            identifiers and other Intellectual Property and general intangibles now
            owned or
            hereafter acquired by any Borrower or Guarantor, wherever the same maybe
            located, including in such license reasonable access to all media in
            which any
            of the licensed items may be recorded or stored and to all computer programs
            used for the compilation or printout thereof.

           

          (f) At
            any
            time an Event of Default exists or has occurred and is continuing, Lender
            may
            apply the cash proceeds of Collateral actually received by Lender from
            any sale,
            lease, foreclosure or other disposition of the Collateral to payment
            of the
            Obligations, in whole or in part and in accordance with the terms hereof,
            whether or not then due or may hold such proceeds as cash collateral
            for the
            Obligations. Borrowers and Guarantors shall remain liable to Lender for
            the
            payment of any deficiency with interest at the highest rate provided
            for herein
            and all costs and expenses of collection or enforcement, including attorneys'
            fees and expenses.

           

          (g) Without
            limiting the foregoing, upon the occurrence of a Default or an Event
            of Default,
            Lender may, at Lender’s option, without notice, (i) cease making Loans or
            arranging for Letters of Credit or reduce the lending formulas or amounts
            of
            Loans and Letters of Credit available to Borrowers and/or (ii) terminate
            any
            provision of this Agreement providing for any future Loans or Letters
            of Credit
            to be made by Lender to Borrowers and/or (iii) establish such Reserves
            as Lender
            determines, without limitation or restriction, notwithstanding anything
            to the
            contrary contained herein.

          
             

            
              
                 

              

              
                B-78

                
                  

                

              

              
                 

              

            

             

          

          SECTION
            11.  JURY
            TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
            GOVERNING LAW       

           

          11.1 Governing
            Law; Choice of Forum; Service of Process; Jury Trial Waiver.

           

          (a) The
            validity, interpretation and enforcement of this Agreement and the other
            Financing Agreements (except as otherwise provided therein) and any dispute
            arising out of the relationship between the parties hereto, whether in
            contract,
            tort, equity or otherwise, shall be governed by the internal laws of
            the State
            of New York but excluding any principles of conflicts of law or other
            rule of
            law that would cause the application of the law of any jurisdiction other
            than
            the laws of the State of New York.

           

          (b) Borrowers,
            Guarantors and Lender irrevocably consent and submit to the non-exclusive
            jurisdiction of the Supreme Court of the State of New York and the United
            States
            District Court for the Eastern District of New York, whichever Lender
            may elect,
            and waive any objection based on venue or forum non conveniens
            with
            respect to any action instituted therein arising under this Agreement
            or any of
            the other Financing Agreements or in any way connected with or related
            or
            incidental to the dealings of the parties hereto in respect of this Agreement
            or
            any of the other Financing Agreements or the transactions related hereto
            or
            thereto, in each case whether now existing or hereafter arising, and
            whether in
            contract, tort, equity or otherwise, and agree that any dispute with
            respect to
            any such matters shall be heard only in the courts described above (except
            that
            Lender shall have the right to bring any action or proceeding against
            any
            Borrower or Guarantor or its or their property in the courts of any other
            jurisdiction which Lender deems necessary or appropriate in order to
            realize on
            the Collateral or to otherwise enforce its rights against any Borrower
            or
            Guarantor or its or their property).

           

          (c) Each
            Borrower and Guarantor hereby waives personal service of any and all
            process
            upon it and consents that all such service of process may be made by
            certified
            mail (return receipt requested) directed to its address set forth herein
            and
            service so made shall be deemed to be completed five (5) days after the
            same
            shall have been so deposited in the U.S. mails, or, at Lender’s option, by
            service upon any Borrower or Guarantor (or Administrative Borrower on
            behalf of
            such Borrower or Guarantor) in any other manner provided under the rules
            of any
            such courts. Within thirty (30) days after such service, such Borrower
            or
            Guarantor shall appear in answer to such process, failing which such
            Borrower or
            Guarantor shall be deemed in default and judgment may be entered by Lender
            against such Borrower or Guarantor for the amount of the claim and other
            relief
            requested.

           

          (d) BORROWERS,
            GUARANTORS AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
            ANY
            CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT
            OR ANY
            OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
            RELATED
            OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
            AGREEMENT
            OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
            HERETO OR
            THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
            IN
            CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS AND LENDER
            HEREBY
            AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
            SHALL
            BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR
            OR
            LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
            ANY
            COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
            WAIVER OF
            THEIR RIGHT TO TRIAL BY JURY.

          
             

            
              
                 

              

              
                B-79

                
                  

                

              

              
                 

              

            

             

          

          (e) Lender
            shall not have any liability to any Borrower or Guarantor (whether in
            tort,
            contract, equity or otherwise) for losses suffered by such Borrower or
            Guarantor
            in connection with, arising out of, or in any way related to the transactions
            or
            relationships contemplated by this Agreement, or any act, omission or
            event
            occurring in connection herewith, unless it is determined by a final
            and
            non-appealable judgment or court order binding on Lender , that the losses
            were
            the result of acts or omissions constituting gross negligence or willful
            misconduct. In any such litigation, Lender shall be entitled to the benefit
            of
            the rebuttable presumption that it acted in good faith and with the exercise
            of
            ordinary care in the performance by it of the terms of this Agreement.
            Each
            Borrower and Guarantor: (i) certifies that neither Lender nor any
            representative, agent or attorney acting for or on behalf of Lender has
            represented, expressly or otherwise, that Lender would not, in the event
            of
            litigation, seek to enforce any of the waivers provided for in this Agreement
            or
            any of the other Financing Agreements and (ii) acknowledges that in entering
            into this Agreement and the other Financing Agreements, Lender is relying
            upon,
            among other things, the waivers and certifications set forth in this
            Section
            11.1 and elsewhere herein and therein.

           

          11.2 Waiver
            of Notices.
            Each
            Borrower and Guarantor hereby expressly waives demand, presentment, protest
            and
            notice of protest and notice of dishonor with respect to any and all
            instruments
            and chattel paper, included in or evidencing any of the Obligations or
            the
            Collateral, and any and all other demands and notices of any kind or
            nature
            whatsoever with respect to the Obligations, the Collateral and this Agreement,
            except such as are expressly provided for herein. No notice to or demand
            on any
            Borrower or Guarantor which Lender may elect to give shall entitle such
            Borrower
            or Guarantor to any other or further notice or demand in the same, similar
            or
            other circumstances.

           

          11.3 Amendments
            and Waivers.
            Neither
            this Agreement nor any provision hereof shall be amended, modified, waived
            or
            discharged orally or by course of conduct, but only by a written agreement
            signed by an authorized officer of Lender, and as to amendments, as also
            signed
            by an authorized officer of Borrowers. Lender shall not, by any act,
            delay,
            omission or otherwise be deemed to have expressly or impliedly waived
            any of its
            rights, powers and/or remedies unless such waiver shall be in writing
            and signed
            by an authorized officer of Lender. Any such waiver shall be enforceable
            only to
            the extent specifically set forth therein. A waiver by Lender of any
            right,
            power and/or remedy on any one occasion shall not be construed as a bar
            to or
            waiver of any such right, power and/or remedy which Lender would otherwise
            have
            on any future occasion, whether similar in kind or otherwise.

          
             

            
              
                 

              

              
                B-80

                
                  

                

              

              
                 

              

            

             

          

          11.4 Waiver
            of Counterclaims.
            Each
            Borrower and Guarantor waives all rights to interpose any claims, deductions,
            setoffs or counterclaims of any nature (other then compulsory counterclaims)
            in
            any action or proceeding with respect to this Agreement, the Obligations,
            the
            Collateral or any matter arising therefrom or relating hereto or
            thereto.

           

          11.5 Indemnification.
            Each
            Borrower and Guarantor shall, jointly and severally, indemnify and hold
            Lender,
            and its officers, directors, agents, employees, advisors and counsel
            and their
            respective Affiliates (each such person being an “Indemnitee”), harmless from
            and against any and all losses, claims, damages, liabilities, costs or
            expenses
            (including attorneys’ fees and expenses) imposed on, incurred by or asserted
            against any of them in connection with any litigation, investigation,
            claim or
            proceeding commenced or threatened related to the negotiation, preparation,
            execution, delivery, enforcement, performance or administration of this
            Agreement, any other Financing Agreements, or any undertaking or proceeding
            related to any of the transactions contemplated hereby or any act, omission,
            event or transaction related or attendant thereto, including amounts
            paid in
            settlement, court costs, and the fees and expenses of counsel except
            that
            Borrowers and Guarantors shall not have any obligation under this Section
            11.5
            to indemnify an Indemnitee with respect to a matter covered hereby resulting
            from the gross negligence or willful misconduct of such Indemnitee as
            determined
            pursuant to a final, non-appealable order of a court of competent jurisdiction
            (but without limiting the obligations of Borrowers or Guarantors as to
            any other
            Indemnitee). To the extent that the undertaking to indemnify, pay and
            hold
            harmless set forth in this Section may be unenforceable because it violates
            any
            law or public policy, Borrowers and Guarantors shall pay the maximum
            portion
            which it is permitted to pay under applicable law to Lender in satisfaction
            of
            indemnified matters under this Section. To the extent permitted by applicable
            law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor
            hereby waives, any claim against any Indemnitee, on any theory of liability,
            for
            special, indirect, consequential or punitive damages (as opposed to direct
            or
            actual damages) arising out of, in connection with, or as a result of,
            this
            Agreement, any of the other Financing Agreements or any undertaking or
            transaction contemplated hereby. No Indemnitee referred to above shall
            be liable
            for any damages arising from the use by unintended recipients of any
            information
            or other materials distributed by it through telecommunications, electronic
            or
            other information transmission systems in connection with this Agreement
            or any
            of the other Financing Agreements or the transaction contemplated hereby
            or
            thereby. All amounts due under this Section shall be payable upon demand.
            The
            foregoing indemnity shall survive the payment of the Obligations and
            the
            termination or non-renewal of this Agreement.

           

          SECTION
            12.  TERM
            OF AGREEMENT; MISCELLANEOUS

           

          12.1 Term.

           

          (a) This
            Agreement and the other Financing Agreements shall become effective as
            of the
            date set forth on the first page hereof (the “Effective Date”) and shall
            continue in full force and effect for a term ending on September 30,
            2011 (the
“Renewal Date”), and from year to year thereafter, unless sooner terminated
            pursuant to the terms hereof. Lender may, at its option, terminate this
            Agreement and the other Financing Agreements, or Administrative Borrower
            or any
            Borrower may terminate this Agreement and the other Financing Agreements,
            each
            case, effective on the Renewal Date or on the anniversary of the Renewal
            Date in
            any year by giving to the other party at least sixty (60) days prior
            written
            notice; provided,
            that,
            this
            Agreement and all other Financing Agreements must be terminated simultaneously.
            In addition, Borrowers may terminate this Agreement at any time upon
            ten (10)
            days prior written notice to Lender (which notice shall be irrevocable)
            and
            Lender may, at its option, terminate this Agreement at any time on or
            after an
            Event of Default. Upon the Renewal Date or any other effective date of
            termination of the Financing Agreements, Borrowers shall pay to Lender
            all
            outstanding and unpaid Obligations and shall furnish cash collateral
            to Lender
            (or at Lender’s option, a letter of credit issued for the account of Borrowers
            and at Borrowers’ expense, in form and substance satisfactory to Lender, by an
            issuer acceptable to Lender and payable to Lender as beneficiary) in
            such
            amounts as Lender determines are reasonably necessary to secure Lender
            and
            Lenders from loss, cost, damage or expense, including attorneys' fees
            and
            expenses, in connection with any contingent Obligations, including issued
            and
            outstanding Letters of Credit Obligations and checks or other payments
            provisionally credited to the Obligations and/or as to which Lender has
            not yet
            received final and indefeasible payment and any continuing obligations
            of Lender
            pursuant to any Deposit Account Control Agreement. The amount of such
            cash
            collateral (or letter of credit, as Lender may determine) as to any Letter
            of
            Credit Obligations shall be in the amount equal to one hundred ten (110%)
            percent of the amount of the Letter of Credit Obligations plus the amount
            of any
            fees and expenses payable in connection therewith through the end of
            the latest
            expiration date of the Letters of Credit giving rise to such Letter of
            Credit
            Obligations. Such payments in respect of the Obligations and cash collateral
            shall be remitted by wire transfer in Federal funds to the Lender Payment
            Account or such other bank account of Lender, as Lender may, in its discretion,
            designate in writing to Administrative Borrower for such purpose. Interest
            shall
            be due until and including the next Business Day, if the amounts so paid
            by
            Borrowers to the Lender Payment Account or other bank account designated
            by
            Lender are received in such bank account later than 12:00 noon, New York
            time.

          
             

            
              
                 

              

              
                B-81

                
                  

                

              

              
                 

              

            

             

          

          (b) No
            termination of this Agreement or any of the other Financing Agreements
            shall
            relieve or discharge any Borrower or Guarantor of its respective duties,
            obligations and covenants under this Agreement or any of the other Financing
            Agreements until all Obligations have been fully and finally discharged
            and
            paid, and Lender's continuing security interest in the Collateral and
            the rights
            and remedies of Lender hereunder, under the other Financing Agreements
            and
            applicable law, shall remain in effect until all such Obligations have
            been
            fully and finally discharged and paid. Accordingly, each Borrower and
            Guarantor
            waives any rights it may have under the UCC to demand the filing of termination
            statements with respect to the Collateral and Lender shall not be required
            to
            send such termination statements to Borrowers or Guarantors, or to file
            them
            with any filing office, unless and until this Agreement shall have been
            terminated in accordance with its terms and all Obligations paid and
            satisfied
            in full in immediately available funds.

           

          (c) If
            for
            any reason this Agreement is terminated on or prior to the second anniversary
            of
            the Effective Date for any reason other than a refinancing with another
            division
            of Lender, in view of the impracticality and extreme difficulty of ascertaining
            actual damages and by mutual agreement of the parties as to a reasonable
            calculation of Lender’s lost profits as a result thereof, Borrowers agree to pay
            to Lender, upon the effective date of such termination, an early termination
            fee
            in the amount equal to one-half of one (.5%) percent of the Maximum Credit.
            In
            the event that at a time prior to the second anniversary of the Effective
            Date,
            Parent has requested authorization to make an acquisition and Lender
            has
            declined such request and
            Borrower
            has notified Lender that it is terminating this Agreement and paying
            off the
            Obligations in full, Borrower shall pay Lender, upon the effective date
            of such
            termination, an early termination fee in an amount equal to one-quarter
            of one
            (.25%) percent of the Maximum Credit.

          
             

            
              
                 

              

              
                B-82

                
                  

                

              

              
                 

              

            

             

          

          Such
            early termination fee shall be presumed to be the amount of damages sustained
            by
            Lender as a result of such early termination and Borrowers and Guarantors
            agree
            that it is reasonable under the circumstances currently existing (including,
            but
            not limited to, the borrowings that are reasonably expected by Borrowers
            hereunder and the interest, fees and other charges that are reasonably
            expected
            to be received by Lender). In addition, Lender shall be entitled to such
            early
            termination fee upon the occurrence of any Event of Default described
            in
            Sections 10.1(g) and 10.1(h) hereof which occurs on or prior to the second
            anniversary of the Effective Date, even if Lender does not exercise the
            right to
            terminate this Agreement, but elects, at its option, to provide financing
            to any
            Borrower or permit the use of cash collateral under the United States
            Bankruptcy
            Code. The early termination fee provided for in this Section 12.1 shall
            be
            deemed included in the Obligations.

           

          12.2 Interpretative
            Provisions.

           

          (a) All
            terms
            used herein which are defined in Article 1, Article 8 or Article 9 of
            the UCC
            shall have the meanings given therein unless otherwise defined in this
            Agreement. 

           

          (b) All
            references to the plural herein shall also mean the singular and to the
            singular
            shall also mean the plural unless the context otherwise requires. 

           

          (c) All
            references to any Borrower, Guarantor and Lender pursuant to the definitions
            set
            forth in the recitals hereto, or to any other person herein, shall include
            their
            respective successors and assigns. 

           

          (d) The
            words
“hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import
            when used in this Agreement shall refer to this Agreement as a whole
            and not any
            particular provision of this Agreement and as this Agreement now exists
            or may
            hereafter be amended, modified, supplemented, extended, renewed, restated
            or
            replaced. 

           

          (e) The
            word
“including” when used in this Agreement shall mean “including, without
            limitation” and the word “will” when used in this Agreement shall be construed
            to have the same meaning and effect as the word “shall”. 

           

          (f) An
            Event
            of Default shall exist or continue or be continuing until such Event
            of Default
            is waived in accordance with Section 11.3 or is cured in a manner satisfactory
            to Lender, if such Event of Default is capable of being cured as determined
            by
            Lender. 

          
             

            
              
                 

              

              
                B-83

                
                  

                

              

              
                 

              

            

             

          

          (g) All
            references to the term “good faith” used herein when applicable to Lender shall
            mean, notwithstanding anything to the contrary contained herein or in
            the UCC,
            honesty in fact in the conduct or transaction concerned. Borrowers and
            Guarantors shall have the burden of proving any lack of good faith on
            the part
            of Lender alleged by any Borrower or Guarantor at any time. 

           

          (h) Any
            accounting term used in this Agreement shall have, unless otherwise specifically
            provided herein, the meaning customarily given in accordance with GAAP,
            and all
            financial computations hereunder shall be computed unless otherwise specifically
            provided herein, in accordance with GAAP as consistently applied and
            using the
            same method for inventory valuation as used in the preparation of the
            financial
            statements of Parent most recently received by Lender prior to the date
            hereof.
            Notwithstanding anything to the contrary contained in GAAP or any
            interpretations or other pronouncements by the Financial Accounting Standards
            Board or otherwise, the term “unqualified opinion” as used herein to refer to
            opinions or reports provided by accountants shall mean an opinion or
            report that
            is unqualified and also does not include any explanation, supplemental
            comment
            or other comment concerning the ability of the applicable person to continue
            as
            a going concern or the scope of the audit.

           

          (i) In
            the
            computation of periods of time from a specified date to a later specified
            date,
            the word “from” means “from and including”, the words “to” and “until” each mean
“to but excluding” and the word “through” means “to and including”.

           

          (j) Unless
            otherwise expressly provided herein, (i) references herein to any
            agreement, document or instrument shall be deemed to include all subsequent
            amendments, modifications, supplements, extensions, renewals, restatements
            or
            replacements with respect thereto, but only to the extent the same are
            not
            prohibited by the terms hereof or of any other Financing Agreement, and
            (ii) references to any statute or regulation are to be construed as
            including all statutory and regulatory provisions consolidating, amending,
            replacing, recodifying, supplementing or interpreting the statute or
            regulation.

           

          (k) The
            captions and headings of this Agreement are for convenience of reference
            only
            and shall not affect the interpretation of this Agreement.

           

          (l) This
            Agreement and other Financing Agreements may use several different limitations,
            tests or measurements to regulate the same or similar matters. All such
            limitations, tests and measurements are cumulative and shall each be
            performed
            in accordance with their terms.

           

          (m) This
            Agreement and the other Financing Agreements are the result of negotiations
            among and have been reviewed by counsel to Lender and the other parties,
            and are
            the products of all parties. Accordingly, this Agreement and the other
            Financing
            Agreements shall not be construed against Lender merely because of Lender’s
            involvement in their preparation.

          
             

            
              
                 

              

              
                B-84

                
                  

                

              

              
                 

              

            

             

          

          12.3 Notices.
            All
            notices, requests and demands hereunder shall be in writing and deemed
            to have
            been given or made: if delivered in person, immediately upon delivery;
            if by
            telex, telegram or facsimile transmission, immediately upon sending and
            upon
            confirmation of receipt; if by nationally recognized overnight courier
            service
            with instructions to deliver the next Business Day, one (1) Business
            Day after
            sending; and if by certified mail, return receipt requested, five (5)
            days after
            mailing. Notices delivered through electronic communications shall be
            effective
            to the extent set forth in Section 13.3(b) below. All notices, requests
            and
            demands upon the parties are to be given to the following addresses (or
            to such
            other address as any party may designate by notice in accordance with
            this
            Section):

           

          
            	
                    If
                      to any Borrower 
or Guarantor:

                  	
                    Langer,
                      Inc.

                    450
                      Commack Road

                    Deer
                      Park, New York 11729 

                    Attention:
                      W. Gray Hudkins

                    Telephone
                      No.: 631 667 1200 

                    Telecopy
                      No.:631 667 1203

                  
	 	 
	
                    with
                      a copy to:

                  	
                    Kane
                      Kessler P.C.

                    1350
                      Avenue of the Americas

                    New
                      York, New York 10019

                    Attention:
                      Steven E. Cohen, Esq.

                    Telephone
                      No.: (212) 541 6222

                    Telecopy
                      No.: (212) 245 3009

                  
	 	 
	
                    If
                      to Lender:

                  	
                    Wachovia
                      Bank, National Association

                    1133
                      Avenue of the Americas

                    New
                      York, New York 10036

                    Attention:
                      Marc J. Breier

                    Telephone
                      No. (212) 545-4506

                    Telecopy
                      No.: (212) 545-4283

                  
	 	 
	
                    With
                      a copy to

                  	
                    Ruskin
                      Moscou Faltischek, P.C.

                    East
                      Tower, 15th
                      Floor

                    1425
                      RexCorp Plaza

                    Uniondale,
                      NY 11556-1425

                    Attention:
                      Jeffrey A. Wurst, Esq.

                    Telephone
                      No: (516) 663-6535

                    Telecopy
                      No.: (516) 663-6735

                  

          

           

          (a) Notices
            and other communications to Lenders hereunder may be delivered or furnished
            by
            electronic communication (including e-mail and Internet or intranet websites)
            pursuant to procedures approved by Lender or as otherwise determined
            by Lender.
            Lender or any Borrower or Guarantor may, in its discretion, agree to
            accept
            notices and other communications to it hereunder by electronic communications
            pursuant to procedures approved by it, provided, that, approval of such
            procedures may be limited to particular notices or communications. Unless
            Lender
            otherwise requires, (i) notices and other communications sent to an e-mail
            address shall be deemed received upon the sender’s receipt of an acknowledgement
            from the intended recipient (such as by the “return receipt requested” function,
            as available, return e-mail or other written acknowledgement), provided,
            that,
            if such notice or other communication is not given during the normal
            business
            hours of the recipient, such notice shall be deemed to have been sent
            at the
            opening of business on the next Business Day for the recipient, and (ii)
            notices
            or communications posted to an Internet or intranet website shall be
            deemed
            received upon the deemed receipt by the intended recipient at its e-mail
            address
            as described in the foregoing clause (i) of notification that such notice
            or
            communications is available and identifying the website address
            therefor.

          
             

            
              
                 

              

              
                B-85

                
                  

                

              

              
                 

              

            

             

          

          12.4 Partial
            Invalidity.
            If any
            provision of this Agreement is held to be invalid or unenforceable, such
            invalidity or unenforceability shall not invalidate this Agreement as
            a whole,
            but this Agreement shall be construed as though it did not contain the
            particular provision held to be invalid or unenforceable and the rights
            and
            obligations of the parties shall be construed and enforced only to such
            extent
            as shall be permitted by applicable law.

           

          12.5 Successors.
            This
            Agreement, the other Financing Agreements and any other document referred
            to
            herein or therein shall be binding upon and inure to the benefit of and
            be
            enforceable by Lender and Borrowers and their respective successors and
            assigns,
            except that Borrowers may not assign their rights under this Agreement,
            the
            other Financing Agreements and any other document referred to herein
            or therein
            without the prior written consent of Lender. Any such purported assignment
            without such express prior written consent shall be void. Lender may,
            after
            notice to Administrative Borrower, assign its rights and delegate its
            obligations under this Agreement and the other Financing Agreements and
            further
            may assign, or sell participations in, all or any part of the Loans,
            the Letters
            of Credit or any other interest herein to another financial institution
            or other
            person on terms and conditions acceptable to Lender.

           

          12.6 Entire
            Agreement.
            This
            Agreement, the other Financing Agreements, any supplements hereto or
            thereto,
            and any instru-ments or documents delivered or to be delivered in connection
            herewith or therewith represents the entire agreement and understanding
            concerning the subject matter hereof and thereof between the parties
            hereto, and
            supersede all other prior agreements, understandings, negotiations and
            discussions, representations, warranties, commitments, proposals, offers
            and
            contracts concerning the subject matter hereof, whether oral or written.
            In the
            event of any inconsistency between the terms of this Agreement and any
            schedule
            or exhibit hereto, the terms of this Agreement shall govern.

           

          12.7 USA
            Patriot Act.
            Lender
            hereby notifies Borrowers and Guarantors that pursuant to the requirements
            of
            the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October
            26,
            2001) (the “Act”), it is required to obtain, verify and record information that
            identifies each person or corporation who opens an account and/or enters
            into a
            business relationship with it, which information includes the name and
            address
            of Borrowers and Guarantors and other information that will allow such
            Lender to
            identify such person in accordance with the Act and any other applicable
            law.
            Borrowers and Guarantors are hereby advised that any Loans or Letters
            of Credit
            hereunder are subject to satisfactory results of such verification.

          
             

            
              
                 

              

              
                B-86

                
                  

                

              

              
                 

              

            

             

          

          12.8 Counterparts,
            Etc.
            This
            Agreement or any of the other Financing Agreements may be executed in
            any number
            of counterparts, each of which shall be an original, but all of which
            taken
            together shall constitute one and the same agreement. Delivery of an
            executed
            counterpart of this Agreement or any of the other Financing Agreements
            by
            telefacsimile or other electronic method of transmission shall have the
            same
            force and effect as the delivery of an original executed counterpart
            of this
            Agreement or any of such other Financing Agreements. Any party delivering
            an
            executed counterpart of any such agreement by telefacsimile or other
            electronic
            method of transmission shall also deliver an original executed counterpart,
            but
            the failure to do so shall not affect the validity, enforceability or
            binding
            effect of such agreement.

           

          

           

          (SIGNATURES
            FOLLOW)

           

          
            
               

            

            
              B-87

              
                

              

            

            
               

            

          

          IN
            WITNESS WHEREOF, Lender, Borrowers and Guarantors have caused these presents
            to
            be duly executed as of the day and year first above written.

           

          
            	
                    LENDER

                  	
                    BORROWERS
                      AND GUARANTORS

                  
	 	 
	
                    WACHOVIA
                      BANK, NATIONAL ASSOCIATION

                     

                    By:
                      ______________________________

                    Peter
                      Provenzale

                    Director

                  	
                    LANGER,
                      INC.

                     

                    By:
                      ______________________________

                    W.
                      Gray Hudkins

                    President
                      and Chief Executive Officer

                  
	 	 
	 	
                    SILIPOS,
                      INC.

                     

                    By:
                      ______________________________

                    W.
                      Gray Hudkins

                    President
                      

                  
	 	 
	 	
                    TWINCRAFT,
                      INC

                     

                    By:
                      ______________________________

                    W.
                      Gray Hudkins

                    Executive
                      Chairman

                  
	 	 
	 	
                    REGAL
                      MEDICAL, INC.

                     

                    By:
                      ______________________________

                    W.
                      Gray Hudkins

                    President
                      

                  
	 	 

          

          

          
            
               

            

            
              B-88

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]