Document:

Exhibit 10,35

 

EXHIBIT 10.35

HEALTH CARE REIT, INC.

Summary of Director Compensation

     For the 2006 calendar year, each non-employee member of the Board of Directors of Health Care
REIT, Inc. (the “Company”) will receive an annual retainer of $45,000, payable in equal quarterly
installments. Additionally, each of the chairs of the Audit Committee and the Compensation
Committee will receive an additional retainer of $10,000 and the chair of the Nominating/Corporate
Governance Committee will receive an additional retainer of $7,500. If the Board of Directors
holds more than four meetings in a year, each non-employee member of the Board will receive $1,500
for each meeting attended in excess of four meetings. With respect to the Audit, Compensation,
Executive and Nominating/Corporate Governance Committees, if any of these committees holds more
than four meetings in a year, each non-employee member of these committees will receive $1,000 for
each meeting attended in excess of four meetings.

     Non-employee directors of the Company are eligible to receive a variety of equity awards under
the Company’s 2005 Long-Term Incentive Plan (the “Plan”). On January 23, 2006, the Compensation
Committee, which administers the Plan, granted each of the non-employee directors deferred stock
units with a value of $70,000. The deferred stock units are converted into shares of common stock
of the Company in three equal installments on the first three anniversaries of the date of the
grant. Recipients of the deferred stock units are also entitled to dividend equivalent rights.Exhibit 10.1

 

Exhibit 10.1

 

LOAN AGREEMENT 

Dated as of March 6, 2006

between

HOME SOLUTIONS OF AMERICA, INC.

and

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

 

 

 

Table of Contents

 

  	 	Page
	

ARTICLE I           
DEFINITIONS

      	1
	  	 
	 	

Section 1.1 
Definitions

      	1
	 	

Section 1.2  Accounting
Matters

      	9
	 	

Section 1.3  Other Definitional
Provisions

      	9
	 	  	 
	

ARTICLE II          
ADVANCES AND LETTERS OF
CREDIT

      	9
	  	 
	 	

Section 2.1 
Advances

      	9
	 	

Section 2.2  General Provisions Regarding Interest;
Etc.

      	11
	 	

Section 2.3  Unused Facility
Fee

      	11
	 	

Section 2.4  Use of
Proceeds

      	11
	 	

Section 2.5  Letters of
Credit

      	11
	 	

Section 2.6  Letter of Credit
Fees

      	12
	 	

Section 2.7  Commitment
Fee

      	12
	 	  	 
	

ARTICLE III        
PAYMENTS

      	12
	  	 
	 	

Section 3.1  Method of
Payment

      	12
	 	

Section 3.2 
Prepayments

      	12
	 	  	 
	

ARTICLE IV        
SECURITY

      	13
	  	 
	 	

Section 4.1 
Collateral

      	13
	 	

Section 4.2 
Setoff

      	13
	 	

Section 4.3  Notice to Account
Debtors

      	13
	 	  	 
	

ARTICLE V         
CONDITIONS
PRECEDENT

      	13
	  	 
	 	

Section 5.1  Initial Extension of
Credit

      	13
	 	

Section 5.2  All Extensions of
Credit

      	15
	 	  	 
	

ARTICLE VI        
REPRESENTATIONS AND
WARRANTIES

      	15
	  	 
	 	

Section 6.1    Corporate
Existence

      	15
	 	

Section 6.2    Financial Statements;
Etc.

      	16
	 	

Section 6.3    Action; No
Breach

      	16
	 	

Section 6.4    Operation of
Business

      	16
	 	

Section 6.5    Litigation and
Judgments

      	17
	 	

Section 6.6    Rights in Properties;
Liens

      	17
	 	

Section 6.7    Enforceability

      	17
	 	

Section 6.8    Approvals

      	17
	 	

Section 6.9    Debt

      	17
	 	

Section 6.10 
Taxes

      	17
	 	

Section 6.11  Use of Proceeds; Margin
Securities

      	17
	 	

Section 6.12  ERISA

      	17

--

Table of Contents

 

	 	 	Page
	 	

Section 6.13 
Disclosure

    	18
	 	

Section 6.14  Subsidiaries, Ventures,
Etc.

    	18
	 	

Section 6.15 
Agreements

    	18
	 	

Section 6.16  Compliance with
Laws

    	18
	 	

Section 6.17 
Inventory

    	18
	 	

Section 6.18  Investment Company
Act

    	18
	 	

Section 6.19  Public Utility Holding Company
Act

    	19
	 	

Section 6.20  Environmental
Matters

    	19
	 	

Section 6.21  Intellectual
Property

    	20
	 	

Section 6.22  Depository
Relationship

    	20
	 	  	 
	

ARTICLE VII       
AFFIRMATIVE
COVENANTS

    	20
	  	 
	 	

Section 7.1  Reporting
Requirements

    	20
	 	

Section 7.2  Maintenance of Existence; Conduct of
Business

    	22
	 	

Section 7.3  Maintenance of
Properties

    	22
	 	

Section 7.4  Taxes and
Claims

    	22
	 	

Section 7.5 
Insurance

    	22
	 	

Section 7.6  Inspection
Rights

    	23
	 	

Section 7.7  Keeping Books and
Records

    	23
	 	

Section 7.8  Compliance with
Laws

    	23
	 	

Section 7.9  Compliance with
Agreements

    	23
	 	

Section 7.10  Further
Assurances

    	23
	 	

Section 7.11  ERISA

    	23
	 	

Section 7.12  Additional
Guarantors

    	23
	 	  	 
	

ARTICLE VIII       NEGATIVE
COVENANTS

    	24
	  	 
	 	

Section 8.1 
Debt

    	24
	 	

Section 8.2  Limitation on
Liens

    	24
	 	

Section 8.3  Mergers,
Etc.

    	24
	 	

Section 8.4  Restricted
Payments

    	25
	 	

Section 8.5  Loans and
Investments

    	25
	 	

Section 8.6  Limitation on Issuance of
Equity

    	25
	 	

Section 8.7  Transactions With
Affiliates

    	25
	 	

Section 8.8  Disposition of
Assets

    	25
	 	

Section 8.9  Sale and
Leaseback

    	26
	 	

Section 8.10  Prepayment of
Debt

    	26
	 	

Section 8.11  Nature of
Business

    	26
	 	

Section 8.12  Environmental
Protection

    	26
	 	

Section 8.13 
Accounting

    	26
	 	

Section 8.14  No Negative
Pledge

    	26
	 	

Section 8.15 
Subsidiaries

    	26
	

 

    	 

--

Table of Contents

 

	 	 	Page
	ARTICLE IX        
    FINANCIAL
    COVENANTS	26
	  	 
	 	

Section 9.1  Current
Ratio

    	26
	 	

Section 9.2  Debt Service Coverage
Ratio

    	27
	 	  	 
	

ARTICLE X         
DEFAULT

    	27
	  	 
	 	

Section 10.1  Events of
Default

    	27
	 	

Section 10.2  Remedies Upon
Default

    	29
	 	

Section 10.3  Performance by the
Lender

    	29
	 	  	 
	

ARTICLE XI        
MISCELLANEOUS

    	29
	  	 
	 	

Section 11.1 
Expenses

    	29
	 	

Section 11.2 
INDEMNIFICATION

    	30
	 	

Section 11.3  Limitation of
Liability

    	31
	 	

Section 11.4  No
Duty

    	31
	 	

Section 11.5  Lender Not
Fiduciary

    	31
	 	

Section 11.6  Equitable
Relief

    	31
	 	

Section 11.7  No Waiver; Cumulative
Remedies

    	31
	 	

Section 11.8  Successors and
Assigns

    	31
	 	

Section 11.9 
Survival

    	32
	 	

Section 11.10  ENTIRE AGREEMENT;
AMENDMENT

    	32
	 	

Section 11.11 
Notices

    	32
	 	

Section 11.12  Governing Law; Venue; Service of
Process

    	32
	 	

Section 11.13 
Counterparts

    	33
	 	

Section 11.14 
Severability

    	33
	 	

Section 11.15 
Headings

    	33
	 	

Section 11.16 
Conflicts

    	33
	 	

Section 11.17  Participations;
Etc.

    	33
	 	

Section 11.18 
Construction

    	33
	 	

Section 11.19  Independence of
Covenants

    	33
	 	

Section 11.20  WAIVER OF JURY
TRIAL

    	33
	 	

Section 11.21  Additional Interest
Provision

    	33
	 	

Section 11.22  Ceiling Election

    	34
	 	

Section 11.23  USA Patriot Act Notice,
Etc.

    	35

--

LOAN AGREEMENT

THIS LOAN AGREEMENT (the "Agreement"),
dated as of March 6, 2006, is between HOME SOLUTIONS OF AMERICA, INC., a
Delaware corporation (the "Borrower"), and TEXAS CAPITAL BANK,
NATIONAL ASSOCIATION, a national banking association (the "Lender").

RECITALS

The Borrower has requested that the Lender extend credit
to the Borrower in as described in this Agreement.  The Lender is willing to
make such credit available to the Borrower upon and subject to the provisions,
terms and conditions hereinafter set forth.

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

ARTICLE
I

DEFINITIONS

Section 1.1             
Definitions.  As used in this Agreement, all exhibits, appendices
and schedules hereto and in any note, certificate, report or other Loan
Documents made or delivered pursuant to this Agreement, the following terms
will have the meanings given such terms in this Section 1 or in the
provision, section or recital referred to below:

"Advance" means an advance by the Lender
to the Borrower pursuant to Article II or any advance made by the Lender to
cover any drawing under any Letters of Credit.

"Advance Request Form" means a
certificate, in a form approved by the Lender, properly completed and signed by
the Borrower requesting a Revolving Credit Advance.

"Affiliate" means, as to any Person, any
other Person (a) that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
such Person; (b) that directly or indirectly beneficially owns or holds five
percent (5%) or more of any class of voting stock of such Person; or (c) five
percent (5%) or more of the voting stock of which is directly or indirectly
beneficially owned or held by such Person.  The term "control" means
the possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise; provided, however,
in no event shall the Lender be deemed an Affiliate of the Borrower or any of its
Subsidiaries or Affiliates.

"Aged AR Reserves" means any reserve
specifically established against Aged Receivables to the extent deducted in
determining Net Income for the period in question.

"Aged Receivables" means the aggregate
face amount of accounts receivable of the Borrower and its Subsidiaries unpaid
180 days or more after invoice date.

"Agreement" has the meaning set forth in
the introductory paragraph hereto, as the same may, from time to time, be
amended, modified, restated, renewed, replaced, extended, waived, supplemented,
or otherwise changed from time to time, and includes all schedules, exhibits
and appendices attached or otherwise identified therewith.

 

LOAN AGREEMENT - Page 1

"Annualized" means, as of any date of
determination, EBIDA or Net Income, as applicable, for the quarter then ended
and the immediately preceding three quarters.

"Base Rate" has the meaning assigned to
it in the Note.

"Borrowing Base" means, at any time, an
amount equal to two times the Free Cash Flow of the immediately preceding two
calendar quarters minus Aged Receivables plus Aged AR Reserves.

"Borrowing Base Report" means, as of any
date of preparation, a certificate setting forth the Borrowing Base (in
substantially the form of Exhibit A attached hereto) prepared by
and certified by the chief financial officer of the Borrower.

"Borrower" means the Person identified
as such in the Introductory Paragraph hereto, and its successors and assigns to
the extent permitted by Section 11.8.

"Business Day" has the meaning assigned
to it in the Note.

"Capitalized Lease Obligation" means the
amount of Debt under a lease of Property by a Person that would be shown as a
liability on a balance sheet of such Person prepared for financial reporting
purposes in accordance with GAAP.

"Change of Control" means the occurrence
of either of the following events:

(a)        Any
Person or "group" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a Person will be deemed to have
"beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 33-1/3% of the
voting power of all classes of stock of the Borrower; or

(b)        During
any consecutive two-year period, individuals who at the beginning of such
period constituted the board of directors of the Borrower (together with any
new directors whose election to such board of directors, or whose nomination
for election by stockholders of the Borrower, was approved by a vote of two
thirds 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 the Borrower then in office.

"Code" means the Internal Revenue Code
of 1986, as amended, and the regulations promulgated and rulings issued
thereunder.

"Collateral" has the meaning for such
term set forth in Section 4.1.

"Commitment" means the obligation of the
Lender to make Revolving Credit Advances pursuant to Section 2.1 in
an aggregate principal amount at any time outstanding up to but not exceeding Ten
Million and No/100 Dollars ($10,000,000.00), subject, however, to termination
pursuant to Section 10.2.

 

LOAN AGREEMENT - Page 2

 

"Commitment Fee" means $100,000.00.

"Compliance Certificate" means a
certificate, substantially in the form of Exhibit B attached
hereto, prepared by and executed by the chief financial officer of the
Borrower.

"Constituent Documents" means
(a) in the case of a corporation, its articles or certificate of
incorporation and bylaws; (b) in the case of a general partnership, its
partnership agreement; (c) in the case of a limited partnership, its
certificate of limited partnership and partnership agreement; (d) in the
case of a trust, its trust agreement; (e) in the case of a joint venture,
its joint venture agreement; (f) in the case of a limited liability
company, its articles of organization and operating agreement or regulations
and/or other organizational and governance documents and agreements; and
(g) in the case of any other entity, its organizational and governance
documents and agreements.

"Cornerstone" means Cornerstone Building
and Remodeling, Inc., a Florida corporation.

"Current Maturities of Long-Term Indebtedness"
means, in respect of a Person and as of any applicable date of determination
thereof, that portion of Long-Term Indebtedness that should be classified as
current in accordance with GAAP.

"Current Ratio" means the ratio of
current assets to current liabilities (the classification of current assets and
current liabilities being in accordance with GAAP at all times and any
outstandings under the Commitment being classified as current liabilities).

"Debt" means in respect of a Person at
any time (without duplication):  (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
notes, debentures, or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of Property or services, except
trade accounts payable of such Person arising in the ordinary course of business
that are not past due by more than 90 days or are not otherwise being contested
in good faith and for which appropriate reserves under GAAP are being
maintained, (d) all Capital Lease Obligations of such Person, (e) all
Debt or other obligations of others Guaranteed by such Person, (f) all
obligations secured by a Lien existing on Property owned by such Person,
whether or not the obligations secured thereby have been assumed by such Person
or are non-recourse to the credit of such Person, (g) any other obligation
for borrowed money or other financial accommodations which in accordance with
GAAP would be shown as a liability on the balance sheet of such Person,
(h) any repurchase obligation or liability of a Person with respect to
accounts, chattel paper or notes receivable sold by such Person, (i) any
liability under a sale and leaseback transaction that is not a Capital Lease
Obligation, (j) any obligation under any so‐called "synthetic
leases", (k) any obligation arising with respect to any other transaction
that is the functional equivalent of borrowing but which does not constitute a
liability on the balance sheet of a Person, (l) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds and similar
instruments, and (m) all liabilities of such Person in respect of unfunded
vested benefits under any Plan.

LOAN AGREEMENT - Page 3

"Debt Service Coverage Ratio" means, in
respect of a Person and for any period of determination, the ratio, computed on
a rolling four quarter basis, of (a) Net Income plus interest expense minus
dividends and distributions to (b) Current Maturities of Long-Term
Indebtedness plus interest expense.

"Default" means an Event of Default or
the occurrence of an event or condition which with notice or lapse of time or
both would become an Event of Default.

"Default Interest Rate" has the meaning
assigned to it in the Notes.

"Disclosure Schedule" means the
schedule of the same name attached hereto.  Unless otherwise expressly stated
in this Agreement, any reference in any Section of this Agreement to the
Disclosure Schedule shall mean only reference to the particular part of the
Disclosure Schedule that refers to such Section.

"Dollars" and "$" mean
lawful money of the United States of America.

"EBIDA" means, for each period of
determination, an amount equal to Net Income plus the sum of interest,
depreciation and amortization.

"Environmental Laws" means any and all
federal, state, and local laws, regulations, judicial decisions, orders,
decrees, plans, rules, permits, licenses, and other governmental restrictions
and requirements pertaining to health, safety, or the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. § 9601 et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Occupational Safety and
Health Act, 29 U.S.C. § 651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et
seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., and the Toxic Substances
Control Act, 15 U.S.C. § 2601 et seq., as the same may be amended or
supplemented from time to time.

"Environmental Liabilities" means, as to
any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages,
costs, and expenses, (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand, by any Person, whether
based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, including any Environmental Law, permit, order or
agreement with any Governmental Authority or other Person, arising from
environmental, health or safety conditions or the Release or threatened Release
of a Hazardous Material into the environment, resulting from the past, present,
or future operations of such Person or its Affiliates.

"ERISA" means the Employee Retirement
Income Security Act of 1974, as amended from time to time, and the regulations
and published interpretations thereunder.

"ERISA Affiliate" means any corporation
or trade or business which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the Borrower
or is under common control (within the meaning of Section 414(c) of the Code)
with the Borrower.

"Event of Default" has the meaning
specified in Section 10.1.

"FERS" means Florida Environmental
Remediation Services, Inc.

LOAN AGREEMENT - Page 4

"Free Cash Flow" means, for any period
of determination, (a) EBIDA, less (b) distributions or dividends,
less (c) Aged Receivables,  in each case for the applicable period.

"GAAP" means generally accepted
accounting principles, applied on a consistent basis, as set forth in Opinions
of the Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting Standards
Board and/or 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.

"Governmental Authority" means any
nation or government, any state or political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.

"Guarantee" by any Person means any
obligation or liability, contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of any other Person as
well as any obligation or liability, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation or liability
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to operate
Property, to take-or-pay, or to maintain net worth or working capital or other
financial statement conditions or otherwise) or (b) entered into for the
purpose of indemnifying or assuring in any other manner the obligee of such
Debt or other obligation or liability of the payment thereof or to protect the
obligee against loss in respect thereof (in whole or in part), provided that
the term Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business.  The term "Guarantee" used as a verb
has a corresponding meaning.

"Guarantor" means any Person who from
time to time guarantees all or any part of the Obligations.  The term Guarantor
includes each Subsidiary other than Southern Stone Cabinets, Inc., a Florida
corporation.

"Guaranty"
means a written guaranty of each Guarantor in favor of the Lender, in
substantially the form of Exhibit D hereto, as the same may be
amended, modified, restated, renewed, replaced, extended, waived, supplemented
or otherwise changed from time to time in accordance with its terms.

"Hazardous Material" means any
substance, product, waste, pollutant, material, chemical, contaminant,
constituent, or other material which is or becomes listed, regulated, or
addressed under any  Environmental Law, including, without limitation,
asbestos, petroleum, and polychlorinated biphenyls.

"Intellectual Property means all copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses
and other types of intellectual property, in whatever form, now owned or
hereafter acquired.

"Lender" means the Person identified as
such in the introductory paragraph hereto, and includes its successors and
assigns.

LOAN AGREEMENT - Page 5

"Letter of Credit" means any letter of
credit issued by the Lender for the account of or at the direction of the
Borrower pursuant to Article II of this Agreement.

"Letter of Credit Liabilities" means, at
any time, the sum of (a) the aggregate face amount of all outstanding
Letters of Credit, plus (b) any amounts drawn under any Letters of Credit
for which the Lender has not been fully reimbursed by the Borrower (unless the
Lender, in its sole discretion, has cleared the drawn amount by means of an
Advance under the Revolving Credit Note, in which case the drawn amount would
not constitute a Letter of Credit Liability).

"Liabilities" means, in respect of a
Person and as of any applicable date of determination thereof, at any
particular time, all amounts which, in conformity with GAAP, would be included
as liabilities on a balance sheet of such Person.

"Lien" means any lien, mortgage,
security interest, tax lien, pledge, charge, hypothecation, assignment, preference,
priority, or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law, or otherwise.

"Loan" means any Revolving Loan made in
accordance with this Agreement.

"Loan Documents" means this Agreement,
the Security Documents, each Guaranty, the Notes and all other promissory
notes, security agreements, deeds of trust, assignments, letters of credit,
guaranties, and other instruments, documents, or agreements executed and
delivered pursuant to or in connection with this Agreement, as such
instruments, documents, and agreements may be amended, modified, restated,
renewed, replaced, extended, waived, supplemented, replaced, consolidated,
substituted, or otherwise changed from time to time in accordance with their
respective terms.

"Long-Term Indebtedness" means, in
respect of a Person and as of any applicable date of determination thereof, all
Debt (other than the aggregate outstanding principal balance of the Revolving
Credit Note) which should be classified as "funded indebtedness" or
"long‐term indebtedness" on a balance sheet of such Person as
of such date in accordance with GAAP and includes, without limitation Capital
Lease Obligations which should be so classified.

"Mars Debt" means the Debt owed by the
Borrower to Dale Mars pursuant to the acquisition transaction related to
Southern Exposure Unlimited of Florida, Inc.

"Maximum Lawful Rate" means, at all
times, the maximum rate of interest which may be charged, contracted for,
taken, received or reserved by the Lender in accordance with applicable Texas
law (or applicable United States federal law to the extent that such law
permits the Lender to charge, contract for, receive or reserve a greater amount
of interest than under Texas law).  The Maximum Lawful Rate shall be calculated
in a manner that takes into account any and all fees, payments, and other
charges in respect of the Loan Documents that constitute interest under applicable
law.  Each change in any interest rate provided for herein based upon the
Maximum Lawful Rate resulting from a change in the Maximum Lawful Rate shall
take effect without notice to the Borrower at the time of such change in the
Maximum Lawful Rate.

"Multiemployer Plan" means a
multiemployer plan defined as such in Section 3(37) of ERISA to which
contributions have been made by the Borrower or any ERISA Affiliate and which
is covered by Title IV of ERISA.

LOAN AGREEMENT - Page 6

"Net Income" means, for any period and
any entity, such entity's consolidated after tax Net Income (or loss)
determined in accordance with GAAP net of extraordinary transactions.

"Notes" means, collectively, all
promissory notes (and "Note" means any of such Notes) executed
at any time by the Borrower and payable to the order of the Lender, as the same
may be amended, modified, restated, renewed, replaced, extended, supplemented,
consolidated or otherwise changed and/or increased from time to time in
accordance with their respective terms.

"Obligated Party" means the Guarantors
or any other Person who is or becomes party to any agreement that guarantees or
secures payment and performance of the Obligations or any part thereof.

"Obligations"
means all obligations, indebtedness, and liabilities of the Borrower, each
Guarantor and any other Obligated Party to the Lender, any Affiliate of the
Lender, or both, 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,
indebtedness, and liabilities under this Agreement, any Swap Contract, the
other Loan Documents (including, without limitation, all Letter of Credit
Liabilities), any cash management or treasury services agreements and all
interest accruing thereon (whether a claim for post-filing or post-petition
interest is allowed in any bankruptcy, insolvency, reorganization or similar
proceeding) and all reasonable attorneys' fees and other expenses incurred in the
enforcement or collection thereof.

"OFAC" means the Office of Foreign
Assets Control.

"Operating Lease" means any lease (other
than a lease constituting a Capital Lease Obligation) of real or personal
Property.

"Patriot Act" means the Uniting and
Strengthening America By Providing Appropriate Tools to Intercept and Obstruct
Terrorism Act of 2001 (Title III of Pub. L. 107‐56, signed into law
October 26, 2001).

"PBGC" means the Pension Benefit
Guaranty Corporation or any entity succeeding to all or any of its functions
under ERISA.

"Person" means any individual,
corporation, limited liability company, business trust, association, company,
partnership, joint venture, Governmental Authority, or other entity, and shall
include such Person's heirs, administrators, personal representatives,
executors, successors and assigns.

"Plan" means any employee benefit or
other plan established or maintained by the Borrower or any ERISA Affiliate and
which is covered by Title IV of ERISA.

"Prime Rate" has the meaning assigned to
it in the Notes.

"Principal Office" means the principal
office of the Lender, presently located at 5910 N. Central Expressway, Suite
1000, Dallas, Texas 75206

"Prohibited Transaction" means any
transaction set forth in Section 406 of ERISA or Section 4975 of the Code.

LOAN AGREEMENT - Page 7

"Property" of a Person means any and all
property, whether real, personal, tangible, intangible or mixed, of such
Person, or any other assets owned, operated or leased by such Person.

"P.W. Stephens" means P.W. Stephens,
Inc, a California corporation.

"Related Indebtedness" has the meaning
set forth in Section 11.20 of this Agreement.

"Release" means, as to any Person, any
release, spill, emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into the indoor or
outdoor environment or into or out of property owned by such Person, including,
without limitation, the movement of Hazardous Materials through or in the air,
soil, surface water, ground water, or property.

"Remedial Action" means all actions
required to (a) clean up, remove, treat, or otherwise address Hazardous
Materials in the indoor or outdoor environment, (b) prevent the Release or
threat of Release or minimize the further Release of Hazardous Materials so
that they do not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, or (c) perform pre-remedial
studies and investigations and post-remedial monitoring and care.

"Reportable Event" means any of the
events set forth in Section 4043 of ERISA.

"Revolving Credit Advance" means any
Advance made by the Lender to the Borrower pursuant to Section 2.1(a) of this
Agreement in accordance with its terms.

"Revolving Credit Note" means the
promissory note of the Borrower payable to the order of the Lender, in
substantially the form of Exhibit C hereto, as the same may be amended,
modified, restated, renewed, replaced, extended, supplemented, consolidated, or
otherwise changed and/or increased from time to time.

"Security Agreement" means the Security
Agreement of the Borrower in favor of the Lender, in substantially the form of Exhibit E
hereto, as the same may be amended, modified, restated, renewed, replaced,
extended, waived, supplemented, or otherwise changed from time to time in
accordance with its terms.

"Security Documents" means each and
every Security Agreement, Guaranty, pledge, mortgage, deed of trust or other
collateral security agreement required by or delivered to the Lender from time
to time to secure the Obligations or any portion thereof.

"Subordinated Debt" means any Debt of
the Borrower (other than the Obligations) that has been subordinated to the
Obligations by written agreement, in form and content reasonably satisfactory
to the Lender, and which has been approved in writing by the Lender as
constituting "Subordinated Debt" for purposes of this Agreement.

"Subordinated Lenders" means the holders
of Subordinated Debt.

"Subsidiary" means (a) any corporation
of which at least a majority of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of the
Subsidiaries or by the Borrower and one or more of the Subsidiaries; and
(b) any other entity (i) of which at least a majority of the
ownership, equity or voting interest is at the time directly or indirectly
owned or controlled by one or more of the Borrower and the Subsidiaries and
(ii) which is treated as a subsidiary in accordance with GAAP.

LOAN AGREEMENT - Page 8

 

"Swap Contract" means any agreement
(including related confirmations and schedules) between the Borrower and the
Lender or any Affiliate of the Lender now existing or hereafter entered into
which is, or relates to, a rate swap, basis swap, forward rate transaction, cap
transaction, floor transaction, collar transaction or any other similar
transactions (including any option with respect to any of these transactions)
or any combination thereof.

"Termination Date" means 11:00 A.M.
Dallas, Texas time on September 1, 2007, or such earlier date on which the
Commitment terminates as provided in this Agreement.

"UCC" means the Chapters 1 through
11 of the Texas Business and Commerce Code, as amended from time to time.

"Unused Facility Fee" has the meaning
specified in Section 2.3.

Section 1.2             
Accounting Matters.  Any accounting term used in this Agreement
or any other Loan Document shall have, unless otherwise specifically provided
therein, the meaning customarily given such term in accordance with GAAP, and
all financial computations thereunder shall be computed, unless otherwise
specifically provided therein, in accordance with GAAP consistently applied;
provided, however, that all financial covenants and calculations in the Loan
Documents shall be made in accordance with GAAP as in effect on the date of
this Agreement unless the Borrower and the Lender shall otherwise specifically
agree in writing.  That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed
to limit the foregoing.

Section 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.  Unless otherwise specified, all Article and Section references
pertain to this Agreement.  Terms used herein that are defined in the UCC,
unless otherwise defined herein, shall have the meanings specified in the UCC.

ARTICLE
II

ADVANCES AND LETTERS OF CREDIT

Section 2.1             
Advances.  

(a)               
Revolving Credit Advances.  Subject to the terms and conditions
of this Agreement, the Lender agrees to make one or more Revolving Credit
Advances to the Borrower from time to time from the date hereof to and
including the Termination Date in an aggregate principal amount at any time
outstanding up to but not exceeding the amount of the Commitment, provided that
the aggregate amount of all Revolving Credit Advances at any time outstanding
shall not exceed the lesser of (i) the amount of the Commitment or (ii) the
Borrowing Base.  Subject to the foregoing limitations, and the other terms and
provisions of this Agreement, the Borrower may borrow, repay, and reborrow
hereunder.

LOAN AGREEMENT - Page 9

 

(i)                 
The Revolving Credit Note.  The obligation of the Borrower
to repay the Revolving Credit Advances and interest thereon shall be evidenced
by the Revolving Credit Note executed by the Borrower, payable to the order of
the Lender, in the principal amount of the Commitment as originally in effect,
and dated the date hereof.

(ii)               
Repayment of Revolving Credit Advances.  The Borrower
shall repay the unpaid principal amount of all Advances on the Termination
Date, unless sooner due by reason of acceleration by the Lender as provided in
this Agreement.

(iii)              
Interest.  The unpaid principal amount of the Revolving
Credit Advances shall, subject to the following sentence, bear interest at the
Base Rate minus 0.25 percentage points as provided in the Revolving Credit
Note.  If at any time the rate of interest specified in the Revolving Credit
Note would exceed the Maximum Lawful Rate but for the provisions thereof
limiting interest to the Maximum Lawful Rate, then any subsequent reduction
shall not reduce the rate of interest on the Revolving Credit Advances below
the Maximum Lawful Rate until the aggregate amount of interest accrued on the
Revolving Credit Advances equals the aggregate amount of interest which would
have accrued on the Revolving Credit Advances if the interest rate had not been
limited by the Maximum Lawful Rate.  Accrued and unpaid interest on the
Revolving Credit Advances shall be payable on the first day of each and every
calendar month, as provided in the Revolving Credit Note, and on the
Termination Date. 

(iv)             
Termination Date.  On the date of this Agreement, the
Termination Date is September 1, 2007.

(v)               
Borrowing Procedure.  The Borrower shall give the Lender
notice of each Revolving Credit Advance by means of an Advance Request Form
containing the information required therein and delivered (by hand or by
mechanically confirmed facsimile) to the Lender no later than 1:00 p.m. (Texas
time) on the day on which the Revolving Credit Advance is desired to be
funded.  Advances shall be in a minimum amount of $50,000.  The Lender at its
option may accept telephonic requests for such Advances, provided that such
acceptance shall not constitute a waiver of the Lender's right to require
delivery of an Advance Request Form in connection with subsequent Advances. 
Any telephonic request for a Revolving Credit Advance by the Borrower shall be
promptly confirmed by submission of a properly completed Advance Request Form
to the Lender, but failure to deliver an Advance Request Form shall not be a
defense to payment of the Advance.  The Lender shall have no liability to the
Borrower for any loss or damage suffered by the Borrower as a result of the
Lender's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically, by facsimile or electronically and purporting to have been sent
to the Lender by the Borrower and the Lender shall have no duty to verify the
origin of any such communication or the identity or authority of the Person
sending it.  Subject to the terms and conditions of this Agreement, each
Revolving Credit Advance shall be made available to the Borrower by depositing
the same, in immediately available funds, in an account of the Borrower
designated by the Borrower maintained with the Lender at the Principal Office.

LOAN AGREEMENT - Page 10

 

Section 2.2             
General Provisions Regarding Interest; Etc. 

(a)               
Default Interest Rate.  Any outstanding principal of any Advance
and (to the fullest extent permitted by law) any other amount payable by the
Borrower under this Agreement or any other Loan Document that is not paid in
full when due, whether at stated maturity, by acceleration, or otherwise, and
after taking into account any grace periods, shall bear interest at the Default
Interest Rate for the period from and including the due date thereof to but
excluding the date the same is paid in full.  Additionally, upon the occurrence
of an Event of Default (and from the date of such occurrence) and during the
continuance, all outstanding and unpaid principal amounts of all of the
Obligations shall, to the extent permitted by law, bear interest at the Default
Interest Rate unless and until such time as the Lender shall waive such Event
of Default or otherwise waive in writing the application of the Default
Interest Rate to such Event of Default situation.  Interest payable at the
Default Interest Rate shall be payable from time to time on demand.

(b)              
Computation of Interest.  Interest on the Advances and all other
amounts payable by the Borrower hereunder shall be computed on the basis of a
year of 360 days and the actual number of days elapsed (including the first day
but excluding the last day) unless such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.

Section 2.3             
Unused Facility Fee.  The Borrower agrees to pay to the Lender an
Unused Facility Fee (herein so called) on the daily average unused amount of
the Commitment for the period from and including the date of this Agreement to
and including the Termination Date, at the rate of one-half of one percent
(0.05%) per annum based on a 360 day year and the actual number of days
elapsed.  For the purpose of calculating the Unused Facility Fee for the period
in question, the Commitment shall be deemed utilized by the amount of all
outstanding Advances and Letter of Credit Liabilities.  The Unused Facility Fee
shall be payable calculated as of each quarter-end and shall be payable in
arrears quarterly and on the Termination Date.

Section 2.4             
Use of Proceeds.  The proceeds of the Revolving Credit Advances
shall be used by the Borrower for working capital and other lawful general
corporate purposes in the ordinary course of business.  

Section 2.5             
Letters of Credit.  Subject to the terms and conditions of this
Agreement, the Lender agrees to issue one or more letters of credit for the
account of the Borrower from time to time from the date hereof to and including
the Termination Date; provided, however, that the outstanding Letter of Credit
Liabilities shall not at any time exceed the least of (a) an amount equal
to the amount of the Commitment minus the outstanding Revolving Credit
Advances, (b) the Borrowing Base minus the outstanding Revolving Credit
Advances or (c) $2,000,000.  Each Letter of Credit shall have an expiration
date not to exceed 365 days, shall not have an expiration date beyond the
Termination Date, shall be payable in Dollars, shall have a minimum face amount
of $50,000, must support a transaction that is entered into in the ordinary
course of the Borrower's business, must be satisfactory in form and substance
to the Lender, will be subject to the payment of such Letter of Credit fees as
may be provided in Section 2.6 hereof, and shall be issued pursuant to
such documents and instruments executed by the Borrower (including, without
limitation, the Borrower's form of letter of credit application as then in
effect) as the Lender may require.

LOAN AGREEMENT - Page 11

 

Each payment by the Lender pursuant to a drawing under a
Letter of Credit is required to be reimbursed by the Borrower to the Lender and
payable ON DEMAND and, at the sole option of the Lender, can be charged by the
Lender as (and in such event will be deemed to be) a Revolving Credit Advance
by the Lender to the Borrower under the Revolving Credit Note and this Agreement
as of the day and time such payment is made by the Lender and in the amount of
such payment.  

Section 2.6             
Letter of Credit Fees.  The Borrower shall pay to the Lender a
fee with respect to each Letter of Credit on the date of issuance of such
Letter of Credit equal to one and one half percent of the face amount of such
Letter of Credit (but not less than $5,000).  In addition to the foregoing, the
Borrower shall also pay to the Lender fronting, amendment, transfer,
negotiations and other fees charged by the Lender in accordance with the
Lender's then current fee policy.

Section 2.7             
Commitment Fee.  The Borrower agrees to pay to the Lender the
Commitment Fee not later than the date of the first Advance or issuance of a
Letter of Credit.  Should the Lender elect, in its sole discretion and without
any obligation so to do, to extend the Termination Date beyond
September 1, 2007, it will not charge an additional upfront commitment or
origination fee for such extension.

ARTICLE
III

PAYMENTS

Section 3.1             
Method of Payment.  All payments of principal, interest, and
other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Lender at the Principal Office in Dollars
and immediately available funds, without setoff, deduction, or counterclaim,
and free and clear of all taxes at the time and in the manner provided in the
Notes.  The Borrower authorizes the Lender to automatically debit the
Borrower's account on each payment date for the amount of the payment .

Section 3.2             
Prepayments.  

(a)               
Voluntary Prepayments.  The Borrower may prepay all or any
portion of the Revolving Credit Notes as provided in the Revolving Credit Note
without penalty or premium.

LOAN AGREEMENT - Page 12

(b)              
Mandatory Prepayment.  The Borrower shall pay on DEMAND the
amount by which at any time the unpaid principal balance of the Revolving
Credit Note exceeds the Borrowing Base.

ARTICLE
IV

SECURITY

Section 4.1             
Collateral.  To secure full and complete payment and performance
of the Obligations, the Borrower shall, and shall cause the other Obligated
Parties and all other necessary Persons to, execute and deliver or cause to be
executed and delivered all of the Security Documents required by the Lender
covering substantially all of the Property and collateral described in such
Security Documents (which, together with any other Property and collateral
described in the Security Agreement, and any other property which may now or
hereafter secure the Obligations or any part thereof, is sometimes herein
called the "Collateral").  The Borrower shall execute and cause to be
executed such further documents and instruments, including without limitation,
Uniform Commercial Code financing statements, as the Lender deems necessary or
desirable to create, evidence, preserve, and perfect its liens and security
interests in the Collateral.

Section 4.2             
Setoff.  If an Event of Default shall have occurred and be
continuing, the Lender shall have the right to set off and apply against the
Obligations in such manner as the Lender may determine, at any time and without
notice to the Borrower, any and all deposits (general or special, time or demand,
provisional or final) or other sums at any time credited by or owing from the
Lender to the Borrower whether or not the Obligations are then due.  As further
security for the Obligations, the Borrower hereby grants to the Lender a
security interest in all money, instruments, and other Property of the Borrower
now or hereafter held by the Lender, including, without limitation, Property
held in safekeeping.  In addition to the Lender's right of setoff and as
further security for the Obligations, the Borrower hereby grants to the Lender
a security interest in all deposits (general or special, time or demand,
provisional or final) and other accounts of the Borrower now or hereafter on
deposit with or held by the Lender and all other sums at any time credited by
or owing from the Lender to the Borrower.  The rights and remedies of the
Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Lender may have.

Section 4.3             
Notice to Account Debtors.  Upon written notice to the Borrower
from the Lender while an Event of Default exists, the Borrower will advise all
of its account debtors to direct their payments to a lockbox, at the address
established by the lockbox arrangements.  All payments received into the
lockbox will be deposited into a collateral account maintained at the Lender.

ARTICLE
V

CONDITIONS PRECEDENT

Section 5.1             
Initial Extension of Credit.  The obligation of the Lender to
make the initial Advance under any Note or issue the initial Letter of Credit is
subject to the condition precedent that the Lender shall have received on or
before the day of such Advance or issuance all of the following, each dated
(unless otherwise indicated) the date hereof, in form and substance
satisfactory to the Lender:

 

LOAN AGREEMENT - Page 13

(a)               
Resolutions.  Resolutions of the Board of Directors (or other
governing body) of the Borrower and each other Obligated Party certified by the
Secretary or an Assistant Secretary (or other custodian of records) of such
Person which authorize the execution, delivery, and performance by such Person
of this Agreement and the other Loan Documents to which such Person is or is to
be a party;

(b)              
Incumbency Certificate.  A certificate of incumbency certified by
an authorized officer or representative certifying the names of the individuals
or other Persons authorized to sign this Agreement and each of the other Loan
Documents to which the Borrower and each other Obligated Party is or is to be a
party (including the certificates contemplated herein) on behalf of such Person
and each other Obligated Party, together with specimen signatures of such
individual Persons;

(c)               
Constituent Documents.  The Constituent Documents for the
Borrower and each other Obligated Party as of a date acceptable to the Lender;

(d)              
Governmental Certificates.  Certificates of the appropriate
government officials of the state of incorporation or organization of the
Borrower and each other Obligated Party as to the existence and good standing
of the Borrower, each dated within ten (10) days prior to the date of the initial
Advance or Letter of Credit;

(e)               
Note.  The Note executed by the Borrower;

(f)                
Security Documents.  The Security Documents executed by the
Borrower and other Obligated Parties;

(g)               
Financing Statements.  Uniform Commercial Code financing
statements executed by the Borrower and the other Obligated Parties and
necessary Persons required to grant a Lien that secures the Obligations and
covering such Collateral as the Lender may request;

(h)               
Guaranty.  The Guaranty executed by the Guarantors;

(i)                 Payoff of Debt.  Evidence satisfactory to the Lender that all
Subordinated Debt and other Debt of the Borrowers and the Guarantors, other
than the Mars Debt, has been paid in full;

(j)                
Mars Debt.  Evidence satisfactory to the Lender that the holder
of Mars Debt has consented to a restriction on payment thereof while a Default
exists;

(k)              
Insurance Matters.  Copies of insurance certificates describing
all insurance policies required by Section 7.5, together with loss
payable and lender endorsements in favor of the Lender with respect to all insurance
policies covering Collateral;

(l)                 
Lien Searches.  The results of UCC, tax lien and judgment lien
searches showing all financing statements and other documents or instruments on
file against the Borrower or any other Obligated Party in the office of the Secretary
of State of Delaware, such search to be as of a date no more than ten (10) days
prior to the date of the initial Advance or the Letter of Credit;

LOAN AGREEMENT - Page 14

(m)             
Opinion of Counsel.  A favorable opinion of Hallett &
Perrin, P.C., legal counsel to the Borrower and the Guarantors, as to such
other matters as the Lender may reasonably request; 

(n)               Attorneys' Fees and Expenses.  Evidence that the costs and
expenses (including reasonable attorneys' fees) referred to in Section 11.1,
to the extent incurred, shall have been paid in full by the Borrower;

(o)              
Additional Items.  The additional items set forth on Schedule
5.1(n); 

(p)              
Closing Fees.  Evidence that the Commitment Fee and any other fees
due at closing have been paid; and

(q)              
Lender's Due Diligence.  The Lender shall be satisfied with
(i) the results of an audit of the Collateral to be provided by FERS by
the Lender's field auditor and a meeting with the FERS's management,
(ii) the delinquent accounts receivable aging of Cornerstone and P.W.
Stephens; and

Section 5.2             
All Extensions of Credit.  The obligation of the Lender to make
any Advance (including the initial Advance and the initial Letter of Credit) is
subject to the following additional conditions precedent:

(a)               
Request for Advance.  The Lender shall have received in
accordance with this Agreement, as the case may be, an Advance Request Form or
Letter of Credit Request Form pursuant to the Lender's requirements dated the
date of such Advance or Letter of Credit and executed by an authorized officer
of the Borrower;

(b)              
No Default, Etc.  No Default or material adverse change or effect
shall have occurred and be continuing, or would result from or after giving
effect to such Advance or Letter of Credit;

(c)               
Representations and Warranties.  All of the representations and
warranties contained in Article VI hereof and in the other Loan Documents shall
be true and correct in all material respects on and as of the date of such
Advance or Letter of Credit with the same force and effect as if such
representations and warranties had been made on and as of such date; and

(d)              
Borrowing Base Report.  A current Borrowing Base Report and
accompanying materials specified in Section 7.1(e).

(e)               
Additional Documentation.  The Lender shall have received such
additional approvals, opinions, or documents as the Lender or its legal counsel
may reasonably request.

ARTICLE
VI

REPRESENTATIONS AND WARRANTIES

To induce the Lender to enter into this Agreement, and
except as set forth on the Disclosure Schedule, the Borrower represents and
warrants to the Lender that:

LOAN AGREEMENT - Page 15

Section 6.1             
Corporate Existence.  The Borrower and each of its Subsidiaries
(a) is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation; (b) has
all requisite power and authority to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do
business in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, condition (financial or otherwise), operations,
prospects, or properties. Each of the Borrower and the other Obligated Parties
has the power and authority to execute, deliver, and perform its obligations
under this Agreement and the other Loan Documents to which it is or may become
a party.

Section 6.2             
Financial Statements; Etc.  The Borrower has delivered to the
Lender audited consolidated financial statements of the Borrower and its
Subsidiaries as at and for the fiscal year ended December 31, 2004 and
unaudited consolidated and consolidating financial statements of the Borrower
and its Subsidiaries for the nine month period ended September 30, 2005
and the 12 month period December 31, 2005.  Such financial statements are
true and correct in all material respects, have been prepared in accordance
with GAAP, and fairly and accurately present, on a consolidated basis, the
financial condition of the Borrower and its Subsidiaries or
any Obligated Party (to the extent such Obligated Party is a Subsidiary) as
of the respective dates indicated therein and the results of operations for the
respective periods indicated therein.  Neither the Borrower nor any of its
Subsidiaries has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments except as referred to or reflected in such
financial statements.  There has been no material adverse change in the 
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any of its Subsidiaries or any Obligated Party since
the effective date of the most recent financial statements referred to in this
Section.  All projections delivered by the Borrower to the Lender have been
prepared in good faith, with care and diligence and use assumptions that are
reasonable under the circumstances at the time such projections were prepared
and delivered to the Lender and all such assumptions are disclosed in the
projections.

Section 6.3             
Action; No Breach.  The execution, delivery, and performance by
the Borrower of this Agreement and the other Loan Documents to which the
Borrower is or may become a party and compliance with the terms and provisions
hereof and thereof have been duly authorized by all requisite action on the
part of the Borrower and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) Constituent Documents
of the Borrower or any of its Subsidiaries, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any agreement or instrument to which the
Borrower or any of its Subsidiaries is a party or by which any of them or any
of their Properties is bound or subject, or (b) constitute a default under any
such agreement or instrument permitting the other party to terminate such
agreement or instrument, or suspend performance or accelerate the Borrower's or
any Subsidiary's obligations thereunder, or result in the creation or
imposition of any Lien upon any of the revenues or assets of the Borrower or
any Subsidiary.  With respect to clause (a)(ii) above, the Borrower's warranty
is absolute but its representation is to its knowledge.

Section 6.4             
Operation of Business.  The Borrower and each of its Subsidiaries
possess all licenses, permits, franchises, patents, copyrights, trademarks, and
trade names, or rights thereto, that are materially necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and the Borrower and each of its Subsidiaries are not in
material violation of any valid rights of others with respect to any of the
foregoing, except as noted on the Disclosure Schedule.

LOAN AGREEMENT - Page 16

 

Section 6.5             
Litigation and Judgments.  There is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries, that would, if adversely determined, have
a material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or Properties of the Borrower or any of its Subsidiaries
or the ability of the Borrower to pay and perform the Obligations.  There are
no outstanding judgments against the Borrower or any Subsidiary of the
Borrower.

Section 6.6             
Rights in Properties; Liens.  The Borrower and each of its
Subsidiaries have good and indefeasible title to or valid leasehold interests
in their respective Properties, including the Properties reflected in the
financial statements described in Section 6.2, and none of the
Properties of the Borrower or any Subsidiary is subject to any Lien, except as
permitted by Section 8.2.

Section 6.7             
Enforceability.  This Agreement constitutes, and the other Loan
Documents to which the Borrower or any other Obligated Party is party, when
delivered, shall constitute legal, valid, and binding obligations of such
Person, enforceable against it in accordance with their respective terms,
except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights.

Section 6.8             
Approvals.  No authorization, approval, or consent of, and no
filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower
or any other Obligated Party of this Agreement and the other Loan Documents to
which such Person is or may become a party or the validity or enforceability
thereof.

Section 6.9             
Debt.  Except for Loans and as specified on the Disclosure
Schedule, the Borrower and its Subsidiaries have no Debt.

Section 6.10         
Taxes.  The Borrower and each Subsidiary have filed all tax
returns (federal, state, and local) required to be filed, including all income,
franchise, employment, Property, and sales tax returns, and have paid all of
their respective liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable other than those taxes, assessments,
governmental charges and other levies that are being contested in good faith by
appropriate proceeding and for which adequate reserves have been set aside
under GAAP.  The Borrower knows of no pending investigation of the Borrower or
any Subsidiary by any taxing authority or of any pending but unassessed tax
liability of the Borrower or any Subsidiary.  

Section 6.11         
Use of Proceeds; Margin Securities.  Neither the Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying margin stock.

LOAN AGREEMENT - Page 17

Section 6.12         
ERISA.  Except as set forth on the Disclosure Schedule, the
Borrower and each Subsidiary are in compliance in all material respects with
all applicable provisions of ERISA.  Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to any
Plan.  No notice of intent to terminate a Plan has been filed, nor has any Plan
been terminated.  No circumstances exist which constitute grounds entitling the
PBGC to institute proceedings to terminate, or appoint a trustee to administer,
a Plan, nor has the PBGC instituted any such proceedings.  Neither the Borrower
nor any ERISA Affiliate has completely or partially withdrawn from a
Multiemployer Plan.  Each of the Borrower and ERISA Affiliates have met its
minimum funding requirements under ERISA with respect to all of their Plans,
and the present value of all vested benefits under each Plan do not exceed the
fair market value of all Plan assets allocable to such benefits, as determined
on the most recent valuation date of the Plan and in accordance with ERISA. 
Neither the Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC under ERISA.

Section 6.13         
Disclosure.  No statement, information, report, representation,
or warranty made by the Borrower or any other Obligated Party in this Agreement
or in any other Loan Document or furnished to the Lender in connection with
this Agreement or any of the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading.  There is no
fact known to the Borrower which has a material adverse effect, or which would
in the future be reasonably expected to have a material adverse effect, on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any Subsidiary that has not been disclosed in
writing to the Lender.

Section 6.14         
Subsidiaries, Ventures, Etc.  The Borrower has no Subsidiaries,
Affiliates or joint ventures or partnerships other than those listed on the
Disclosure Schedule and the Disclosure Schedule sets forth the jurisdiction of
incorporation or organization of each such Person and the percentage of the
Borrower's ownership interest in such Person.  All of the outstanding capital
stock or other ownership interest of each Person described in the Disclosure
Schedule has been validly issued, is fully paid, and is nonassessable.

Section 6.15         
Agreements.  Neither the Borrower nor any Subsidiary is a party
to any indenture, loan, or credit agreement, or to any lease or other agreement
or instrument, or subject to any charter or corporate or other organizational
restriction which could have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or Properties of the
Borrower or any Subsidiary, or the ability of the Borrower to pay and perform
its obligations under the Loan Documents to which it is a party.  Neither the
Borrower nor any Subsidiary is in default in any respect in the performance,
observance, or fulfillment of any of the  obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it
is a party.

Section 6.16         
Compliance with Laws.  To the Borrower's knowledge after such
inquiry as a reasonably prudent person would undertake, neither the Borrower
nor any Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.

Section 6.17         
Inventory.  All inventory of the Borrower has been and will
hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as
amended (29 U.S.C. §§ 201-219), and the regulations promulgated thereunder.

LOAN AGREEMENT - Page 18

Section 6.18         
Investment Company Act.  Neither the Borrower nor any Subsidiary
is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

Section 6.19         
Public Utility Holding Company Act.  Neither the Borrower nor any
Subsidiary is an "electric utility company" or an "associate
company" of an "electric utility company" or a "non-utility
associate company" of an "electric utility company" or an "electric
utility" within the meaning of the Public Utility Holding Company Act of 2005,
as amended.

Section 6.20         
Environmental Matters.  

(a)               
The Borrower, each Subsidiary, and all of their respective properties,
assets, and operations are in material compliance with all Environmental Laws. 
The Borrower is not aware of, nor has the Borrower received notice of, any
past, present, or future conditions, events, activities, practices, or
incidents which may interfere with or prevent the compliance or continued
compliance of the Borrower and the Subsidiaries with all Environmental Laws;

(b)              
The Borrower and each Subsidiary have obtained all permits, licenses,
and authorizations that are required under applicable Environmental Laws, and
all such permits are in good standing and the Borrower and its Subsidiaries are
in compliance with all of the terms and conditions of such permits;

(c)               
No Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any of the
Properties or assets of the Borrower or any Subsidiary other than in compliance
with Environmental Laws.  The use which the Borrower and the Subsidiaries make
and intend to make of their respective Properties and assets will not result in
the use, generation, storage, transportation, accumulation, disposal, or
Release of any Hazardous Material on, in, or from any of their Properties or
assets other than in compliance with Environmental Laws;

(d)              
Neither the Borrower nor any of its Subsidiaries nor any of their
respective currently or previously owned or leased Properties or operations is
subject to any outstanding or threatened order from or agreement with any
Governmental Authority or other Person or subject to any judicial or docketed
administrative proceeding with respect to (i) failure to comply with Environmental
Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities arising from
a Release or threatened Release;

(e)               
There are no conditions or circumstances associated with the currently
or previously owned or leased Properties or operations of the Borrower or any
of its Subsidiaries that could reasonably be expected to give rise to any
Environmental Liabilities;

(f)                
Neither the Borrower nor any of its Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901 et seq., regulations thereunder or any
comparable provision of state law.  The Borrower and its Subsidiaries are in
compliance with all applicable financial responsibility requirements of all
Environmental Laws;

(g)               
Neither the Borrower nor any of its Subsidiaries has filed or failed to
file any notice required under applicable Environmental Law reporting a
Release; and

LOAN AGREEMENT - Page 19

(h)               
No Lien arising under any Environmental Law has attached to any Property
or revenues of the Borrower or its Subsidiaries.

Section 6.21         
Intellectual Property.  All material Intellectual Property owned
or used by the Borrower, any Subsidiary or any Obligated Party is listed,
together with application or registration numbers, where applicable, in the
Disclosure Schedule.  Each Person identified on the Disclosure Schedule owns,
or is licensed to use, all Intellectual Property necessary to conduct its
business as currently conducted except for such Intellectual Property the
failure of which to own or license could not reasonably be expected to have a
material adverse effect.  Each Person identified on the Disclosure Schedule
will maintain the patenting and registration of all Intellectual Property with
the United States Patent and Trademark Office, the United States Copyright Office,
or other appropriate Governmental Authority and each Person identified on the
Disclosure Schedule will promptly patent or register, as the case may be, all
new Intellectual Property and notify the Lender in writing five (5) Business
Days prior to filing any such new patent or registration.

Section 6.22         
Depository Relationship.  The Borrower will, and will cause each
of its Subsidiaries to, (i) promptly establish the Lender as its principal
depository and disbursement bank and (ii) covenant and agree to maintain the
Lender as its principal depository and disbursement bank, including for the
maintenance of business, cash management, operating and administrative deposit
accounts.  Subsidiaries may maintain local collection accounts that are
swept to the Lender on a regular basis.

ARTICLE
VII

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that, as long as the
Obligations or any part thereof are outstanding or the Lender has any
Commitment hereunder, the Borrower will perform and observe the following affirmative
covenants, unless the Lender shall otherwise consent in writing:

Section 7.1             
Reporting Requirements.  The Borrower will furnish (or cause to
be furnished) to the Lender:

(a)               
Annual Financial Statements.  As soon as available, and in any
event within 120 days after the end of each fiscal year of the Borrower,
beginning with the fiscal year ending December 31, 2005, (i) a copy of the
annual audit report of the Borrower and its Subsidiaries for such fiscal year
containing, on a consolidated and consolidating basis, balance sheets
and statements of income, retained earnings, and cash flow as at the end of
such fiscal year and for the 12-month period then ended, in each case setting
forth in comparative form the figures for the preceding fiscal year, all in
reasonable detail and audited and certified by independent certified public
accountants of recognized standing reasonably acceptable to the Lender, to the
effect that such report has been prepared in accordance with GAAP and
containing no material qualifications or limitations on scope; 

(b)              
Quarterly Financial Statements.  As soon as available, and in any
event within 50 days after the end of each of the quarters of each fiscal year
of the Borrower, a copy of an unaudited financial report of the Borrower and
its Subsidiaries as of the end of such fiscal quarter and for the portion of
the fiscal year then ended, containing, on a consolidating basis, balance
sheets and statements of income, retained earnings, and cash flow, in each case
setting forth in comparative form the figures for the corresponding period of
the preceding fiscal year, all in reasonable detail certified by the chief
financial officer of the Borrower to have been prepared in accordance with GAAP
and to fairly and accurately present in all material respects (subject to year-end
audit adjustments) the financial condition and results of operations of the
Borrower and its Subsidiaries, on a consolidating basis, at the date and for
the periods indicated therein;

LOAN AGREEMENT - Page 20

 

(c)               
Form 10‐K.  As soon as available and in any event within 120 days
of the end of each fiscal year, the Borrower's annual Form 10‐K report
filed with the Securities and Exchange Commission;

(d)              
Form 10-Q.  As soon as available and in any event within 50 days
of the end of each fiscal quarter, the Borrower's quarterly Form 10-Q report
filed with the Securities and Exchange Commission;

(e)               
Borrowing Base Report.  As soon as available, and in any event
within 50 days after the end of each calendar quarter, a Borrowing Base Report,
certified by the chief financial officer of the Borrower, which Borrowing Base
Report shall be accompanied by the details of calculation thereof and by an
accounts receivable aging summary and detailed aging reports, in each case by
entity, and shall be based upon publicly available financial information contained
in the Borrower's Form 10-K and Form 10-Q reports, as applicable;

(f)                
Compliance Certificate.  As soon as available, and in any event
within 50 days after the end of each fiscal quarter, a certificate of the chief
financial officer of the Borrower (i) stating that to the best of such
officer's knowledge, no Default has occurred and is continuing, or if a Default
has occurred and is continuing, a statement as to the nature thereof and the
action which is proposed to be taken with respect thereto, and (ii) showing in
reasonable detail the calculations demonstrating compliance with Article IX;

(g)               
Management Letters.  Promptly upon receipt thereof, a copy of any
management letter or written report submitted to the Borrower or any Subsidiary
by independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects, or properties of the
Borrower or any Subsidiary;

(h)               
Notice of Litigation.  Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting the Borrower or any Subsidiary which, if determined
adversely to the Borrower or such Subsidiary, could have a material adverse
effect on the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower or such Subsidiary;

(i)                 
Notice of Default.  As soon as possible and in any event within
three business days after the occurrence of each Default or other event,
development or circumstance, financial or otherwise that might materially and
adversely affect the Borrower or the Collateral, a written notice setting forth
the details of such Default, event, development or circumstance and the action
that the Borrower has taken and proposes to take with respect thereto;

LOAN AGREEMENT - Page 21

(j)                
ERISA Reports.  Promptly after the filing or receipt thereof,
copies of all reports, including annual reports, and notices which the Borrower
or any Subsidiary files with or receives from the PBGC or the U.S. Department
of Labor under ERISA; and as soon as possible and in any event within five days
after the Borrower or any Subsidiary knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with respect to any
Plan or that the PBGC or the Borrower or any Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, a
certificate of the chief financial officer of the Borrower setting forth the
details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action that the Borrower proposes to take with respect
thereto;

(k)              
Reports to Other Creditors.  Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party
pursuant to the terms of any indenture, loan, or credit or similar agreement
and not otherwise required to be furnished to the Lender pursuant to any other
clause of this Section;

(l)                 
Notice of Material Adverse Change.  As soon as possible and in
any event within five days after the occurrence thereof, written notice of any
matter that could have a material adverse effect on the business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower
or any Subsidiary; and

(m)             
General Information.  Promptly, such other information concerning
the Borrower or any Subsidiary as the Lender may from time to time reasonably
request.

Section 7.2             
Maintenance of Existence; Conduct of Business.  The Borrower will
preserve and maintain, and will cause each Subsidiary to preserve and maintain,
its existence and all of its leases, privileges, licenses, permits, franchises,
qualifications, and rights that are necessary or desirable in the ordinary
conduct of its business.  The Borrower will conduct, and will cause each
Subsidiary to conduct, its business in an orderly and efficient manner in
accordance with good business practices.  Without limitation, the Borrower will
not make (and will not permit any of its Subsidiaries to make) any material
change in its credit collection policies if such change would materially impair
the collectibility of any Account, nor will it rescind, cancel or modify any
Account except in the ordinary course of business.

Section 7.3             
Maintenance of Properties.  The Borrower will maintain, keep, and
preserve, and cause each Subsidiary to maintain, keep, and preserve, all of its
Properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.

Section 7.4             
Taxes and Claims.  The Borrower will pay or discharge, and will
cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its Property, and (b)
all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its Property; provided, however, that neither the
Borrower nor any Subsidiary shall be required to pay or discharge any tax,
levy, assessment, or governmental charge which is being contested in good faith
by appropriate proceedings diligently pursued, and for which adequate reserves
have been established.

Section 7.5             
Insurance.  The Borrower will maintain, and will cause each of
the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
Properties in the same general areas in which the Borrower and the Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each
Subsidiary to maintain workmen's compensation insurance, property insurance,
comprehensive general liability insurance, products liability insurance,
and business interruption insurance reasonably satisfactory to the Lender. 
Each insurance policy covering Collateral shall name the Lender as loss payee
and shall provide that such policy will not be cancelled or reduced without
thirty (30) days prior written notice to the Lender.  

LOAN AGREEMENT - Page 22

 

Section 7.6             
Inspection Rights.  At any reasonable time and from time to time,
the Borrower will permit, and will cause each Subsidiary to permit,
representatives of the Lender to examine the Collateral and conduct Collateral
audits, to examine, copy, and make extracts from its books and records, to
visit and inspect its properties, and to discuss its business, operations, and
financial condition with its officers, employees, and independent certified
public accountants; provided, however, absent the existence of a
Default, the Lender shall have given the Borrower at least 15 days prior notice
of its desire to exercise inspection rights hereunder.

Section 7.7             
Keeping Books and Records.  The Borrower will maintain, and will
cause each Subsidiary to maintain, proper books of record and account in which
full, true, and correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and activities.  The
Borrower will maintain and complete accurate books and records with respect to
the Collateral as the Lender shall from time to time reasonably request.

Section 7.8             
Compliance with Laws.  The Borrower will comply, and will cause
each Subsidiary to comply, in all material respects with all applicable laws,
rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator.

Section 7.9             
Compliance with Agreements.  The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business.

Section 7.10         
Further Assurances.  The Borrower will, and will cause each
Subsidiary to, execute and deliver such further agreements and instruments and
take such further action as may be reasonably requested by the Lender to carry
out the provisions and purposes of this Agreement and the other Loan Documents
and to create, preserve, and perfect the Liens of the Lender in the Collateral.

Section 7.11         
ERISA.  The Borrower will comply, and will cause each Subsidiary
to comply, with all minimum funding requirements, and all other material
requirements, of ERISA, if applicable, so as not to give rise to any liability
thereunder.

Section 7.12         
Additional Guarantors.  The Borrower will notify the Lender at the
time that any Person becomes a Subsidiary, and promptly thereafter (and in any
event within ten (10) days) cause such Person to (a) become a Guarantor by
executing and delivering to the Lender a Guaranty, (b) execute and deliver
Security Documents pledging to the Lender all of its Property (subject to such
exceptions as the Lender may permit) and (c) deliver to the Lender such other
documents and instruments as the Lender may reasonably require, including
appropriate favorable opinions of counsel to such Person in form, content and
scope reasonably satisfactory to the Lender.

LOAN AGREEMENT - Page 23

ARTICLE
VIII

NEGATIVE COVENANTS

The Borrower covenants and agrees that, as long as the
Obligations or any part thereof are outstanding or the Lender has any
Commitment hereunder, the Borrower will perform and observe the following
covenants, unless the Lender shall otherwise consent in writing:

Section 8.1             
Debt.  The Borrower will not incur, create, assume, or permit to
exist, and will not permit any Subsidiary to incur, create, assume, or permit
to exist, any Debt, except:

(a)               
Debt to the Lender;

(b)              
Existing Debt described on the Disclosure Schedule hereto; 

(c)               
Mars Debt and other future permitted Subordinated Debt; and

(d)              
Purchase money Debt not to exceed $500,000 in the aggregate at any one
time outstanding.

Section 8.2             
Limitation on Liens.  The Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Lien upon any of its Property, assets,
or revenues, whether now owned or hereafter acquired, except:

(a)               
Liens disclosed on the Disclosure Schedule hereto; 

(b)              
Liens in favor of the Lender;

(c)               
Encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of the Borrower or the Subsidiaries to use such
assets in their respective businesses, and none of which is violated in any
material respect by existing or proposed structures or land use;

(d)              
Liens for taxes, assessments, or other governmental charges which are
not delinquent or which are being contested in good faith and for which
adequate reserves have been established;

(e)               
Liens of mechanics, materialmen, warehousemen, carriers, or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business;

(f)                
Liens resulting from good faith deposits to secure payments of workmen's
compensation or other social security programs or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, or contracts
(other than for payment of Debt), or leases made in the ordinary course of
business; and

(g)               
Purchase money Liens on specific property to secure Debt permitted in
Section 8.1(d) hereof.

LOAN AGREEMENT - Page 24

Section 8.3             
Mergers, Etc.  The Borrower will not, and will not permit any
Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or any part of the assets of any Person or any shares or
other evidence of beneficial ownership of any Person, or wind-up, dissolve, or
liquidate.

Section 8.4             
Restricted Payments.  The Borrower will not declare or pay any
dividends or make any other payment or distribution (in cash, property, or
obligations) on account of its equity interests, or redeem, purchase, retire,
call, or otherwise acquire any of its equity interests, or permit any of its
Subsidiaries to purchase or otherwise acquire any equity interest of the
Borrower or another Subsidiary, or set apart any money for a sinking or other
analogous fund for any dividend or other distribution on its equity interests
or for any redemption, purchase, retirement, or other acquisition of any of its
equity interests.

Section 8.5             
Loans and Investments.  The Borrower will not make, and will not
permit any Subsidiary to make, any advance, loan, extension of credit, or
capital contribution to or investment in, or purchase, or permit any Subsidiary
to purchase, any stock, bonds, notes, debentures, or other securities of, any
Person, except:

(a)               
readily marketable direct obligations of the United States of America or
any agency thereof with maturities of one year or less from the date of
acquisition;

(b)              
fully insured certificates of deposit with maturities of one year or
less from the date of acquisition issued by any commercial bank operating in
the United States of America having capital and surplus in excess of $50,000,000;

(c)               
commercial paper of a domestic issuer if at the time of purchase such
paper is rated in one of the two highest rating categories of Standard and
Poor's Corporation or Moody's Investors Service; and

(d)              
deferred payment terms reasonably satisfactory to the Lender for (ii)
accounts receivable, not to exceed $500,000 at any one time outstanding, owing
by any account debtor and (ii) accounts receivable owing by Home Depot.

Section 8.6             
Limitation on Issuance of Equity.  The Borrower will not, and
will not permit any of its Subsidiaries to, at any time issue, sell, assign, or
otherwise dispose of (a) any of its equity interests, (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its equity interests, or (c) any option, warrant, or other right to acquire any
of its equity interests, to the extent the aggregate value of the securities
described under the foregoing clauses (a), (b) and (c) exceeds $1,000,000.

Section 8.7             
Transactions With Affiliates.  The Borrower will not enter into,
and will not permit any Subsidiary to enter into, any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary.

LOAN AGREEMENT - Page 25

Section 8.8             
Disposition of Assets.  The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, or permit any
Subsidiary to do so with any of its assets, except (a) dispositions of
inventory in the ordinary course of business, (b) dispositions, for fair
value, of worn-out and obsolete equipment not necessary or useful to the
conduct of business, (c) disposition of the Borrower's existing Houston
real estate, and (d) other dispositions not to exceed $500,000 per year.

Section 8.9             
Sale and Leaseback.  The Borrower will not enter into, and will
not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.

Section 8.10         
Prepayment of Debt.  The Borrower will not prepay, and will not
permit any Subsidiary to prepay, any Debt, except (i) the Obligations and (ii)
the Mars Debt, provided there is no Default before or after giving effect to
payment of the Mars Debt.

Section 8.11         
Nature of Business.  The Borrower will not, and will not permit
any Subsidiary to, engage in any business other than the businesses in which
they are engaged as of the date hereof.

Section 8.12         
Environmental Protection.  The Borrower will not, and will not
permit any of its Subsidiaries to, (a) use (or permit any tenant to use) any of
their respective properties or assets for the handling, processing, storage,
transportation, or disposal of any Hazardous Material, (b) generate any
Hazardous Material in violation of Environmental Laws, (c) conduct any activity
that is likely to cause a Release or threatened Release of any Hazardous
Material in violation of Environmental Laws, or (d) otherwise conduct any
activity or use any of their respective properties or assets in any manner that
is likely to violate any Environmental Law or create any Environmental
Liabilities for which the Borrower or any of its Subsidiaries would be
responsible.

Section 8.13         
Accounting.  The Borrower will not, and will not permit any of
its Subsidiaries to, change its fiscal year or make any change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Lender, or (b) in tax reporting treatment, except as required
by law and disclosed to the Lender.

Section 8.14         
No Negative Pledge.  The Borrower will not, and will not permit
any Subsidiary to, enter into or permit to exist any arrangement or agreement,
other than pursuant to this Agreement or any Loan Document, which directly or
indirectly prohibits the Borrower or any Subsidiary from creating or incurring
a Lien on any of its assets.

Section 8.15         
Subsidiaries.  The Borrower will not form any Subsidiary unless
such Subsidiary complies with the requirements of Section 7.12.

ARTICLE
IX

FINANCIAL COVENANTS

The Borrower covenants and agrees that, as long as the
Obligations or any part thereof are outstanding or the Lender has any
Commitment hereunder, the Borrower will, at all times, observe and perform the
following financial covenants, unless the Lender shall otherwise consent in
writing.  Ratios shall be calculated on an Annualized basis.

LOAN AGREEMENT - Page 26

Section 9.1             
Current Ratio.   The Borrower
will at all times maintain on a consolidated basis a Current Ratio of not less
than 1.5 to 1.0.

Section 9.2             
Debt Service Coverage Ratio.  The Borrower will at all times
maintain on a consolidated basis a Debt Service Coverage Ratio of not less than
2.0 to 1.0.

ARTICLE
X

DEFAULT

Section 10.1         
Events of Default.  Each of the following shall be deemed an
"Event of Default":

(a)               
The Borrower shall fail to pay the Obligations or any part thereof shall
not be paid when due or if the Obligations shall be declared due prior to their
stated maturity unless such failure occurs solely because the Lender fails to
debit one of the Borrower's depository accounts or make an ACH request if such
account is not with the Lender, in which event such due date (other than the
Termination Date) shall be extended for three days provided that the Borrower
has sufficient collateral funds available on the due date for the Lender to
effect a debit.

(b)              
The Borrower shall fail to provide to the Lender timely any notice of
Default as required by Section 7.1.(i) of this Agreement or the Borrower
shall breach any provision of Sections 7.1(a), (b), (c) (d), (e), or (f),
Article VIII or Article IX of this Agreement.

(c)               
Any representation or warranty made or deemed made by the Borrower or
any other Obligated Party (or any of their respective officers) in any Loan
Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to have
been made.

(d)              
The Borrower or any other Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in this
Agreement or any other Loan Document (other than as covered by Section 10.1(a),(b),
or (c) of this Article), and such failure continues for more than 30 days
following the date such failure first began.

(e)               
The Borrower, any Subsidiary, or any other Obligated Party shall
commence a voluntary proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of it or a
substantial part of its Property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as they
become due or shall take any corporate action to authorize any of the
foregoing.

(f)                
The Borrower, any Subsidiary, or any other Obligated Party shall fail to
pay when due any principal of or interest on Debt having an aggregate principal
amount (including undrawn committed or available amounts) of more than $500,000
or the maturity of any such Debt shall have been accelerated, or any such Debt
shall have been required to be prepaid prior to the stated maturity thereof, or
any event shall have occurred that permits (or, with the giving of notice or
lapse of time or both, would permit) any holder or holders of such Debt or any
Person acting on behalf of such holder or holders to accelerate the maturity
thereof or require any such prepayment.

LOAN AGREEMENT - Page 27

 

(g)               
This Agreement or any other Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower, any
Subsidiary, any other Obligated Party or any of their respective shareholders,
or the Borrower, any Subsidiary or any other Obligated Party shall deny that it
has any further liability or obligation under any of the Loan Documents, or any
lien or security interest created by the Loan Documents shall for any reason
cease to be a valid, first priority perfected security interest in and lien
upon any of the Collateral purported to be covered thereby.

(h)               
Any of the following events shall occur or exist with respect to the
Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving any
Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing
under Section 4041 of ERISA of a notice of intent to terminate any Plan or the
termination of any Plan; (iv) any event or circumstance that might constitute
grounds entitling the PBGC to institute proceedings under Section 4042 of ERISA
for the termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v) complete
or partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer
Plan or the reorganization, insolvency, or termination of any Multiemployer
Plan; and in each case above, such event or condition, together with all other
events or conditions, if any, have subjected or could in the reasonable opinion
of the Lender subject the Borrower to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceed or could reasonably be expected to exceed $50,000.

(i)                 
The Guarantor or any other Obligated Party shall be the subject of a
bankruptcy or receivership proceeding or shall have dissolved, liquidated or
otherwise ceased doing business.

(j)                
The Borrower, any of its Subsidiaries, or any other Obligated Party, or
any of their properties, revenues, or assets, shall become subject to an order
of forfeiture, seizure, or divestiture (whether under RICO or otherwise) and
the same shall not have been discharged within thirty (30) days from the date
of entry thereof.

(k)              
A Change of Control of the Borrower shall have occurred, or the Borrower
shall cease to own all (or 50% in the case of Southern Stone Cabinets, Inc., a
Florida corporation) the equity interests in its Subsidiaries required by the
Loan Documents (excluding, however the effect of transactions specifically
permitted by the Loan Documents).

(l)                 
An involuntary proceeding shall be commenced against the Borrower, any
Subsidiary, or any other Obligated Party seeking liquidation, reorganization,
or other relief with respect to it or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian, or other similar
official for it or a substantial part of its property, and such involuntary
proceeding shall remain undismissed and unstayed for a period of 60 days.

(m)             
The Borrower, any Subsidiary or any other Obligated Party shall fail to
discharge within a period of 30 days after the commencement thereof any
attachment, sequestration, or similar proceeding or proceedings involving an
aggregate amount in excess of $500,000 against any of its assets or
Properties.

LOAN AGREEMENT - Page 28

 

(n)               
A final judgment or judgments for the payment of money in excess of $500,000
in the aggregate shall be rendered by a court or courts against the
Borrower, any of its Subsidiaries, or any other Obligated Party and the same
shall not be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within thirty days from the
date of entry thereof and the Borrower or the relevant Subsidiary or other
Obligated Party shall not, within said period of 30 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal.

Section 10.2         
Remedies Upon Default.  If any Event of Default shall occur and
be continuing, the Lender may without notice terminate the Commitment or
declare the Obligations or any part thereof to be immediately due and payable,
or both, and the same shall thereupon become immediately due and payable,
without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that upon the occurrence of an Event
of Default under Section 10.1(e) or Section 10.1(l),
the Commitment shall automatically terminate, and the Obligations shall become
immediately due and payable, in each case, without notice, demand, presentment,
notice of dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.  If any Event of Default
shall occur and be continuing, the Lender may exercise all rights and remedies
available to it in law or in equity, under the Loan Documents, or otherwise.

Section 10.3         
Performance by the Lender.  If the Borrower shall fail to perform
any covenant or agreement contained in any of the Loan Documents and such failure
shall constitute a default, the Lender may perform or attempt to perform such
covenant or agreement on behalf of the Borrower.  In such event, the Borrower
shall, at the request of the Lender, promptly pay any amount expended by the
Lender in connection with such performance or attempted performance to the
Lender, together with interest thereon at the Default Interest Rate from and
including the date of such expenditure to but excluding the date such
expenditure is paid in full.  Notwithstanding the foregoing, it is expressly
agreed that the Lender shall not have any liability or responsibility for the
performance of any obligation of the Borrower under this Agreement or any other
Loan Document.

ARTICLE
XI

MISCELLANEOUS

Section 11.1         
Expenses.  The Borrower hereby agrees to pay on demand: (a) all
costs and expenses of the Lender in connection with the preparation,
negotiation, execution, and delivery of this Agreement and the other Loan
Documents and any and all amendments, modifications, renewals, extensions, and
supplements thereof and thereto, including, without limitation, the reasonable
fees and expenses of legal counsel, advisors, consultants, and auditors for the
Lender, (b) all costs and expenses of the Lender in connection with any Default
and the enforcement of this Agreement or any other Loan Document, including,
without limitation, the fees and expenses of legal counsel, advisors,
consultants, and auditors for the Lender, (c) all transfer, stamp, documentary,
or other similar taxes, assessments, or charges levied by any Governmental
Authority in respect of this Agreement or any of the other Loan Documents, (d)
all costs, expenses, assessments, and other charges incurred in connection with
any filing, registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and (e) all other
costs and expenses incurred by the Lender in connection with this Agreement or
any other Loan Document, any litigation, dispute, suit, proceeding or action;
the enforcement of its rights and remedies, protection of its interests in
bankruptcy, insolvency or other legal proceedings, including, without
limitation, all costs, expenses, and other charges (including the Lender's
internal charges) incurred in connection with evaluating, observing,
collecting, examining, auditing, appraising, selling, liquidating, or otherwise
disposing of the Collateral or other assets of the Borrower.

LOAN AGREEMENT - Page 29

 

Section 11.2         
INDEMNIFICATION.  (a) THE BORROWER SHALL INDEMNIFY THE LENDER
AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM
MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE
NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT
OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE
LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE
PROPERTIES OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY OR ANY OTHER OBLIGATED
PARTY, (E) THE USE OR PROPOSED USE OF ANY LOAN OR LETTER OF CREDIT, (F) ANY AND
ALL TAXES, LEVIES, DEDUCTIONS, OR CHARGES IMPOSED ON THE LENDER OR ANY OF THE
LENDER'S CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (G) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY
OF THE FOREGOING.  WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY
OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT
EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
FEES) ARISING OUT OF OR RESULTING FROM THE SOLE CONTRIBUTORY OR ORDINARY
NEGLIGENCE OF SUCH PERSON EXCLUDING, HOWEVER, NEGLIGENCE IN THE PERFORMANCE OF,
OR ADMINISTRATION UNDER THE LOAN DOCUMENTS.  NOTWITHSTANDING THE FOREGOING, NO
PERSON SHALL BE INDEMNIFIED HEREUNDER FOR ACTS OR OMISSIONS ARISING OUT OF OR
RESULTING FROM SUCH PERSON'S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD.

(b)              
To the fullest extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any indemnitee under Section
11.2(a) above, 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 other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No indemnitee referred to in subsection (a) 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 the
other Loan Documents or the transactions contemplated hereby or thereby.

LOAN AGREEMENT - Page 30

 

Section 11.3         
Limitation of Liability.  Neither the Lender nor any Affiliate,
officer, director, employee, attorney, or agent of the Lender shall have any
liability with respect to, and the Borrower hereby waives, releases, and agrees
not to sue any of them upon, any claim for any special, indirect, incidental,
or consequential damages suffered or incurred by the Borrower in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or any of the other Loan Documents.  The Borrower hereby waives, releases, and
agrees not to sue the Lender or any of the Lender's Affiliates, officers,
directors, employees, attorneys, or agents for punitive damages in respect of
any claim in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents.

Section 11.4         
No Duty.  All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Lender except for gross
negligence, willful misconduct or fraud, shall have the right to act
exclusively in the interest of the person who hired them and shall have no duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation of
any type or nature whatsoever to any other Person.

Section 11.5         
Lender Not Fiduciary.  The relationship between the Borrower and
the Lender is solely that of debtor and creditor, and the Lender has no
fiduciary or other special relationship with the Borrower, and no term or condition
of any of the Loan Documents shall be construed so as to deem the relationship
between the Borrower and the Lender to be other than that of debtor and
creditor.

Section 11.6         
Equitable Relief.  The Borrower recognizes that in the event the
Borrower fails to pay, perform, observe, or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the
Lender.  The Borrower therefore agrees that the Lender, if the Lender so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.

Section 11.7         
No Waiver; Cumulative Remedies.  No failure on the part of the
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, remedy, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power, or
privilege. The rights and remedies provided for in this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights and remedies
provided by law.

Section 11.8         
Successors and Assigns.  This Agreement is binding upon and shall
inure to the benefit of the Lender and the Borrower and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights, duties or obligations under this Agreement or the other Loan
Documents without the prior written consent of the Lender.

LOAN AGREEMENT - Page 31

 

Section 11.9         
Survival.  All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Lender or any closing shall affect the representations and
warranties or the right of the Lender to rely upon them. Without prejudice to
the survival of any other obligation of the Borrower hereunder, the obligations
of the Borrower under Sections 11.1 and 11.2 shall survive repayment of the
Note and termination of the Commitment.

Section 11.10      ENTIRE
AGREEMENT; AMENDMENT.  THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO.  THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.  The
provisions of this Agreement and the other Loan Documents to which the Borrower
is a party may be amended or waived only by an instrument in writing signed by
the parties hereto.

Section 11.11      Notices. 
Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed or delivered, to the address,
facsimile number or subject to the last sentence hereof electronic mail address
specified for notices below the signatures hereon or to such other address as
shall be designated by such party in a notice to the other parties.  All such
other notices and other communications shall be deemed to have been given or
made upon the earliest to occur of (i) actual receipt by the intended
recipient or (ii) (A) if delivered by hand or courier, when signed
for by the designated recipient; (B) if delivered by mail, four business
days after deposit in the mail, postage prepaid; (C) if delivered by
facsimile when sent and receipt has been confirmed by telephone; and
(D) if delivered by electronic mail (which form of delivery is subject to
the provisions of the last sentence below) when delivered; provided, however,
that notices and other communications pursuant to Article II shall not
be effective until actually received by the Lender.  Electronic mail and
intranet websites may be used only to distribute only routine communications,
such as financial statements and other information, and to distribute Loan
Documents for execution by the parties thereto, and may not be used for any
other purpose.

Section 11.12     
Governing Law; Venue; Service of Process.  This Agreement shall
be governed by and construed in accordance with the laws of the State of Texas
and the applicable laws of the United States of America.  This Agreement has
been entered into in Dallas County, Texas, and it shall be performable for all
purposes in Dallas County, Texas.  Any action or proceeding against the
Borrower under or in connection with any of the Loan Documents may be brought
in any state or federal court in Dallas County, Texas.  The Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and
(b) waives any objection it may now or hereafter have as to the venue of any
such action or proceeding brought in any such court or that any such court is
an inconvenient forum.  The Borrower agrees that service of process upon it may
be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of Section 11.11. 
Nothing herein or in any of the other Loan Documents shall affect the right of
the Lender to serve process in any other manner permitted by law or shall limit
the right of the Lender to bring any action or proceeding against the Borrower
or with respect to any of its property in courts in other jurisdictions.  Any
action or proceeding by the Borrower against the Lender shall be brought only
in a court located in Dallas County, Texas.

LOAN AGREEMENT - Page 32

 

Section 11.13      Counterparts. 
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

Section 11.14      Severability. 
Any provision of this Agreement held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision held to be
invalid or illegal.

Section 11.15      Headings. 
The headings, captions, and arrangements used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.

Section 11.16      Conflicts. 
In the event of any conflict between this Agreement and any other Loan
Document, this Agreement will prevail.

Section 11.17      Participations;
Etc.  The Lender shall have the right at any time and from time to time to
grant participations in, and sell and transfer, the Obligations and any Loan
Documents.  Each actual or proposed participant or assignee, as the case may
be, shall be entitled to receive all information received by the Lender
regarding the Borrower and its Subsidiaries, including, without limitation,
information required to be disclosed to a participant or assignee pursuant to
Banking Circular 181 (Rev., August 2, 1984), issued by the Comptroller of the
Currency (whether the actual or proposed participant or assignee is subject to
the circular or not).

Section 11.18      Construction. 
The Borrower and the Lender acknowledge that each of them has had the benefit
of legal counsel of its own choice and has been afforded an opportunity to
review this Agreement and the other Loan Documents with its legal counsel and
that this Agreement and the other Loan Documents shall be construed as if
jointly drafted by the Borrower and the Lender.

Section 11.19      Independence
of Covenants.  All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or such condition exists.

Section 11.20      WAIVER
OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER
HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.

LOAN AGREEMENT - Page 33

Section 11.21     
Additional Interest Provision.  It is expressly stipulated and
agreed to be the intent of the Borrower and the Lender at all times to comply
strictly with the applicable Texas law governing the maximum rate or amount of
interest payable on the indebtedness evidenced by any Note, any Loan Document,
and the Related Indebtedness (or applicable United States federal law to the
extent that it permits the Lender to contract for, charge, take, reserve or
receive a greater amount of interest than under Texas law).  If the applicable
law is ever judicially interpreted so as to render usurious any amount
(a) contracted for, charged, taken, reserved or received pursuant to any
Note, any of the other Loan Documents or any other communication or writing by
or between the Borrower and the Lender related to the transaction or
transactions that are the subject matter of the Loan Documents,
(b) contracted for, charged, taken, reserved or received by reason of the
Lender's exercise of the option to accelerate the maturity of any Note and/or
any and all indebtedness paid or payable by the Borrower to the Lender pursuant
to any Loan Document other than any Note (such other indebtedness being
referred to in this Section as the "Related Indebtedness"), or
(c) the Borrower will have paid or the Lender will have received by reason
of any voluntary prepayment by the Borrower of any Note and/or the Related
Indebtedness, then it is the Borrower's and the Lender's express intent that
all amounts charged in excess of the Maximum Lawful Rate shall be automatically
canceled, ab initio, and all amounts in excess of the Maximum Lawful
Rate theretofore collected by the Lender shall be credited on the principal
balance of any Note and/or the Related Indebtedness (or, if any Note and all
Related Indebtedness have been or would thereby be paid in full, refunded to
the Borrower), and the provisions of any Note and the other Loan Documents
shall immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder;
provided, however, if any Note has been paid in full before the end of the
stated term of any such Note, then the Borrower and the Lender agree that the
Lender shall, with reasonable promptness after the Lender discovers or is
advised by the Borrower that interest was received in an amount in excess of
the Maximum Lawful Rate, either refund such excess interest to the Borrower
and/or credit such excess interest against such Note and/or any Related
Indebtedness then owing by the Borrower to the Lender.  The Borrower hereby
agrees that as a condition precedent to any claim seeking usury penalties
against the Lender, the Borrower will provide written notice to the Lender, advising
the Lender in reasonable detail of the nature and amount of the violation, and
the Lender shall have sixty (60) days after receipt of such notice in which to
correct such usury violation, if any, by either refunding such excess interest
to the Borrower or crediting such excess interest against the Note to which the
alleged violation relates and/or the Related Indebtedness then owing by the
Borrower to the Lender.  All sums contracted for, charged, taken, reserved or
received by the Lender for the use, forbearance or detention of any debt
evidenced by any Note and/or the Related Indebtedness shall, to the extent
permitted by applicable law, be amortized or spread, using the actuarial
method, throughout the stated term of such Note and/or the Related Indebtedness
(including any and all renewal and extension periods) until payment in full so
that the rate or amount of interest on account of any Note and/or the Related
Indebtedness does not exceed the Maximum Lawful Rate from time to time in
effect and applicable to such Note and/or the Related Indebtedness for so long
as debt is outstanding.  In no event shall the provisions of Chapter 346
of the Texas Finance Code (which regulates certain revolving credit loan
accounts and revolving triparty accounts) apply to this Note and/or any of the
Related Indebtedness.  Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not the intention of the
Lender to accelerate the maturity of any interest that has not accrued at the
time of such acceleration or to collect unearned interest at the time of such
acceleration.

LOAN AGREEMENT - Page 34

Section 11.22     
Ceiling Election.  To the extent that the Lender is relying on
Chapter 303 of the Texas Finance Code to determine the Maximum Lawful Rate
payable on any such Note and/or any other portion of the Indebtedness, the
Lender will utilize the weekly ceiling from time to time in effect as provided
in such Chapter 303, as amended.  To the extent United States federal law
permits the Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law, the Lender will rely on United States
federal law instead of such Chapter 303 for the purpose of determining the
Maximum Lawful Rate.  Additionally, to the extent permitted by applicable law
now or hereafter in effect, the Lender may, at its option and from time to
time, utilize any other method of establishing the Maximum Lawful Rate under
such Chapter 303 or under other applicable law by giving notice, if
required, to the Borrower as provided by applicable law now or hereafter in
effect.

Section 11.23      USA
Patriot Act Notice, Etc.  The Lender hereby notifies the Borrower that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Borrower and each other
Obligated Party, which information includes the name and address of the
Borrower and each other Obligated Party and other information that will allow
the Lender to identify the Borrower and each other Obligated Party in
accordance with the Patriot Act.  In addition, the Borrower agrees to
(a) ensure that no Person who owns a controlling interest in or otherwise
controls the Borrower or any Subsidiary of the Borrower is or shall be listed
on the Specially Designated Nationals and Blocked Person List or other similar
lists maintained by the OFAC, the Department of the Treasury or included in any
Executive Order, (b) not to use or permit the use of proceeds of the
Obligations to violate any of the foreign asset control regulations of the OFAC
or any enabling statute or Executive Order relating thereto, and (c) comply, or
cause its Subsidiaries to comply, with the applicable laws.

LOAN AGREEMENT - Page 35

IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the day and year first
above written.

BORROWER:

HOME SOLUTIONS OF AMERICA, INC.

By: ______________________________________

            Jeff Mattich

            Chief Financial Officer

Address for Notices:

Home Solutions of America, Inc.

1500 Dragon Street, Suite B

Dallas, TX  75207

Phone No.:  (214) 623-8446

Fax No.:  (214) 333-9435

Attention:  Rick O'Brien

e-mail:  Rick@homcorp.com

LENDER:

TEXAS CAPITAL BANK,

NATIONAL ASSOCIATION

By:                                                                               

            Ronald K. Baker

            Executive Vice President

Address for Notices:

2100 McKinney Avenue, Suite 900

Dallas, TX  75201

Phone No.:  (214) 932-6665

Fax No.:  (214) 932-6604

Attention:  Ronald K. Baker

e-mail:  ron.baker@texascapitalbank.com

 

 

LOAN AGREEMENT - Signature Page

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