Document:

Exhibit 10.1 

	
 

	

AMENDED AND RESTATED REVOLVING CREDIT AND
SECURITY AGREEMENT

By and Between

COMPASS BANK

and

UNIVERSAL POWER GROUP, INC.

JUNE 19, 2007

TABLE OF CONTENTS

	
 

	
 

	
 

	
 

	
SECTION 1.

	
Bank’s
  Agreement to Make Advances

	
1

	
 

	
 

	
 

	
 

	
1.1

	
 

	
Borrowing Base

	
1

	
1.2

	
 

	
Evidence of
  Advance Not Causing Excess of Borrowing Base

	
2

	
1.3

	
 

	
Borrower’s
  Loan Account

	
3

	
1.4

	
 

	
Exceeding
  Borrowing Base

	
3

	
1.5

	
 

	
Discretionary
  Advances

	
3

	
 

	
 

	
 

	
 

	
SECTION 2.

	
Borrower’s
  Representations and Warranties; Certain Covenants

	
4

	
 

	
 

	
 

	
 

	
2.1

	
 

	
Organization,
  Licenses, Qualifications, Etc

	
4

	
2.2

	
 

	
Power and
  Authority; Enforceability

	
4

	
2.3

	
 

	
Liens

	
4

	
2.4

	
 

	
Payment of
  Taxes, Charges, Etc

	
5

	
2.5

	
 

	
Restrictions
  on Transfer of Collateral

	
5

	
2.6

	
 

	
Reporting
  Requirements

	
5

	
2.7

	
 

	
Additional
  Representations Regarding Accounts

	
6

	
2.8

	
 

	
Additional
  Representations Regarding Instruments, Chattel Paper, Etc

	
7

	
2.9

	
 

	
Location of
  Collateral

	
7

	
2.10

	
 

	
Location of
  Records

	
7

	
2.11

	
 

	
Additional
  Representations Regarding Financial Statements

	
7

	
2.12

	
 

	
Possession
  of and Insurance on Equipment

	
7

	
2.13

	
 

	
Borrower’s
  Names and Offices

	
7

	
2.14

	
 

	
Additional
  Representations Regarding Absence of Defaults Under Other Agreements

	
8

	
2.15

	
 

	
Indemnification

	
8

	
2.16

	
 

	
Taxes,
  Charges and Expenses Incurred with Respect to Revolving Line

	
8

	
2.17

	
 

	
Patents,
  Copyrights, Trademarks and Licenses

	
8

	
2.18

	
 

	
Judgments/Actions

	
8

	
2.19

	
 

	
Margin Stock

	
9

	
2.20

	
 

	
No Untrue
  Statements or Omissions

	
9

	
2.21

	
 

	
Bankruptcy

	
9

	
2.22

	
 

	
Organizational
  Identification Number, Etc

	
9

	
 

	
 

	
 

	
 

	
SECTION 3.

	
Inspection
  of Records; Further Assurance

	
9

	
 

	
 

	
 

	
 

	
SECTION 4.

	
Security
  Interest of Bank in Collateral

	
10

	
 

	
 

	
 

	
 

	
4.1

	
 

	
Collateral

	
10

	
4.2

	
 

	
Security
  Interest in Collateral Created/Acquired Hereafter

	
11

	
4.3

	
 

	
Further
  Assurances

	
11

	
4.4

	
 

	
Additional
  Further Assurances

	
11

	
4.5

	
 

	
Restrictions
  on Pledging, Mortgaging Collateral

	
12

	
 

	
 

	
 

	
 

	
SECTION 5.

	
Collection
  of Accounts Receivable

	
12

i

	
 

	
 

	
 

	
 

	
5.1

	
 

	
Collection
  and Application of Proceeds; Notifying Account Debtors

	
12

	
5.2

	
 

	
Collection
  of Accounts

	
12

	
 

	
 

	
 

	
 

	
SECTION 6.

	
Additional
  Affirmative Covenants

	
13

	
 

	
 

	
 

	
 

	
6.1

	
 

	
Financial
  Statements

	
13

	
6.2

	
 

	
Insurance

	
13

	
6.3

	
 

	
Compliance
  with Laws

	
14

	
6.4

	
 

	
Fixed Charge
  Coverage Ratio

	
14

	
6.5

	
 

	
Funded Debt
  to EBITDA

	
15

	
6.6

	
 

	
Fees

	
15

	
6.7

	
 

	
Notification
  of Defaults, Suits, Etc

	
15

	
6.8

	
 

	
Deposit
  Account

	
16

	
 

	
 

	
 

	
 

	
SECTION 7.

	
Additional
  Negative Covenants

	
16

	
 

	
 

	
 

	
 

	
7.1

	
 

	
Liens

	
16

	
7.2

	
 

	
Borrowings;
  Permitted Indebtedness

	
16

	
7.3

	
 

	
Dividends

	
16

	
7.4

	
 

	
Capital
  Expenditures

	
16

	
7.5

	
 

	
Acquiring
  Assets, Etc. of Other Entities

	
16

	
7.6

	
 

	
Dissolution,
  Mergers, Change in Nature

	
17

	
7.7

	
 

	
Subordinated
  Debt

	
17

	
7.8

	
 

	
Loans to
  Related Parties and Affiliates

	
17

	
 

	
 

	
 

	
 

	
SECTION 8.

	
Conditions
  Precedent to Credit Extensions

	
17

	
 

	
 

	
 

	
 

	
8.1

	
 

	
Conditions
  of Initial Credit Extension

	
17

	
8.2

	
 

	
Conditions
  to all Credit Extensions

	
18

	
 

	
 

	
 

	
 

	
SECTION 9.

	
Events of Default;
  Acceleration

	
19

	
 

	
 

	
 

	
 

	
SECTION 10.

	
Power to Sell or Collect Collateral

	
21

	
 

	
 

	
 

	
 

	
SECTION 11.

	
Set Off

	
22

	
 

	
 

	
 

	
 

	
SECTION 12.

	
Waivers

	
22

	
 

	
 

	
 

	
 

	
SECTION 13.

	
Expenses; Proceeds of Collateral

	
23

	
 

	
 

	
 

	
 

	
SECTION 14.

	
Duration; Extension

	
23

	
 

	
 

	
 

	
 

	
SECTION 15.

	
General

	
24

	
 

	
 

	
 

	
 

	
SECTION 16.

	
 Miscellaneous

	
25

	
 

	
 

	
 

	
 

	
SECTION 17.

	
Compliance With Laws

	
26

ii

Addendum A –
Definitions 

Exhibit A –Reconciliation Report 

Exhibit B – Compliance Certificate 

iii

AMENDED AND RESTATED REVOLVING CREDIT AND
SECURITY AGREEMENT

          This
Amended and Restated Revolving Credit and Security Agreement (as may be
amended, this “Credit Agreement”) is executed and delivered effective as
of June 19, 2007 but executed as of this __ day of July, 2007, by and between UNIVERSAL POWER GROUP, INC., a Texas
corporation (“Borrower”), with its chief executive office and its
principal place of business at 1720 Hayden Drive, Carrollton, Texas 75006 and COMPASS BANK, an Alabama banking
corporation (“Bank”), with its principal place of business at 15 South
20th Street, Birmingham, Alabama 35233. Borrower has applied to Bank for a
revolving line of credit not to exceed an aggregate principal amount at any one
time outstanding the sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00)
(as may be amended, the “Revolving Line”) to be evidenced by a Master
Revolving Promissory Note (as may be amended, the “Note”) in such amount
and to be secured by a security interest in all of the Collateral (as defined
herein) on the terms hereinafter set forth. 

          Bank
is willing to extend the Revolving Line to Borrower up to an aggregate
principal amount not in excess of the amount set forth above upon the security
of the Collateral on the terms and subject to the conditions hereinafter set
forth to refinance some of Borrower’s existing indebtedness, provide Borrower
with ordinary working capital and provide financial support for capital
expenditures and acquisitions. 

          Accordingly,
Borrower and Bank, in consideration of the premises, the credit to be extended
hereunder, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, agree as follows: 

          Capitalized
terms not otherwise defined herein shall have the meaning attributed to the
same in Addendum A hereto incorporated herein by reference as if fully set
forth. 

SECTION 1. Bank’s Agreement to Make Advances.

          1.1 Borrowing Base. From the date hereof
until July 5, 2012 (the “Maturity Date”), or such future date to which the
Maturity Date of the Revolving Line may be extended (any such extension to be
at Bank’s sole discretion and evidenced by a writing executed by Bank), subject
to the terms and conditions of this Credit Agreement and Borrower’s and each
guarantor’s (as applicable) performance of and compliance with each of the Loan
Documents, and so long as no event of default (including, without limitation,
the breach of any warranty or representation) hereunder or under any of the
other Loan Documents shall have occurred, be continuing or would result, Bank
agrees to extend to Borrower an open-end credit line (also referred to as the
Revolving Line) on the basis of the following advance formula (such advance
formula being hereinafter referred to as the “Borrowing Base”): (a)
eighty-five percent (85.0%) of the outstanding value of Borrower’s Eligible
Accounts Receivable, plus (b) fifty percent (50.0%) of the value of Borrower’s
Eligible Inventory, (which amount permitted under subsection (b) shall not
exceed one and one-half times the amount of Borrower’s Eligible Accounts
Receivable); provided, however, that in no event shall the aggregate sum
of all principal advances made by Bank to Borrower at any one time outstanding
hereunder exceed the sum of $30,000,000. Within such limits and subject to the
terms of this Credit Agreement, Borrower may borrow,  

1

repay without
penalty or premium, and reborrow hereunder, from the date of this Credit
Agreement until the Maturity Date. It is expressly understood and agreed that
Bank shall have no obligation to make an advance under the Revolving Line if
the amount of such advance together with the amount outstanding under the
Revolving Line exceeds or would exceed the lesser of (i) the sum of $30,000,000
or (ii) the Borrowing Base. 

          The
value of all Eligible Inventory shall be determined on the basis of any and all
factors and criteria as Bank (in its sole discretion) shall deem appropriate,
including, without limitation, that unless Bank shall determine that some other
basis is more appropriate, such value shall be determined on the basis of the
lower of cost, book or market value, net of all handling charges, taxes,
assessments, insurance, warranty, interest, finance and other charges. 

          If
at any time Borrower is not entitled to any advances by the terms of this
Credit Agreement, Bank may, in its sole discretion, make requested advances;
however, it is expressly acknowledged and agreed that, in such event, Bank
shall have the right, in its sole discretion, to decline to make any requested
advance and to require any payment required under the terms of the Credit
Agreement without prior notice to Borrower and the making of any such advances
shall not be construed as a waiver of such right by Bank. 

          It
is understood that Borrower may from time to time request and apply for and
Bank may, in its sole discretion, issue letters of credit for the benefit of
such parties and on such terms and conditions as Borrower may request and apply
for in written application(s) for letter(s) of credit in form and substance
satisfactory to Bank, as delivered to Bank along with such other documentation
as Bank may require. In no event shall Bank be required to issue any requested
letter of credit, although otherwise acceptable in form and substance if (i)
Borrower has not executed and delivered one or more promissory notes in form
and substance acceptable to Bank further evidencing Borrower’s agreement to
reimburse Bank for any advances or payments made or which could be made under
such letter of credit; (ii) the sum of the debit balance of Borrower’s Loan
Account, plus (a) the aggregate dollar amount of all issued and unexpired
letters of credit; plus (b) the dollar amount of the requested letter of credit
plus all outstanding advances under the Revolving Line reflected through
Borrower’s Loan Account exceeds the lesser of (c) the Borrowing Base or (d)
$30,000,000.00; (iii) Borrower has not paid to Bank all required fees and
executed and delivered such associated documentation as Bank shall request in
form and substance acceptable to Bank; (iv) the requested letter of credit is
not acceptable to Bank and does not provide for an expiration date acceptable
to Bank; or (v) any default or event of default shall have occurred, be
continuing or would result hereunder or under any of the other Loan Documents.
Notwithstanding anything herein to the contrary, in no event shall Bank be
required to issue letters of credit hereunder in excess of $1,000,000.00 in the
aggregate for all letters of credit requested by Borrower to be issued by Bank
hereunder. 

          1.2 Evidence of Advance Not Causing Excess of
Borrowing Base. If requested by Bank, prior to any request for an
advance hereunder, Borrower shall submit to Bank such information and documents
as Bank shall reasonably request to establish to Bank’s satisfaction that, if
approved, the requested advance will not cause the amount of funds outstanding
to Borrower hereunder plus the aggregate dollar amount of all issued and
unexpired letters of credit to exceed the lesser of (i) the Borrowing Base or
(ii) $30,000,000.00. Bank shall have no 

2

obligation to
make any advance for which Borrower is unable to establish such to Bank’s
satisfaction. 

          1.3 Borrower’s Loan Account. All
borrowings/advances under the Revolving Line shall be evidenced by the Note and
by entering such borrowings/advances as debits to Borrower’s Loan Account. Bank
shall also record in Borrower’s Loan Account all other charges, expenses and
items properly chargeable to Borrower hereunder (which shall also be evidenced
by the Note), all payments made by Borrower on account of indebtedness under
the Revolving Line and other appropriate debits (including, without limitation,
debits for advances made to honor drafts presented under letters of credit
(which advances Borrower hereby expressly authorize) and credits. The debit
balance of Borrower’s Loan Account shall also be evidenced by the Note and
shall reflect the amount of Borrower’s indebtedness to Bank from time to time
hereunder. 

          1.4 Exceeding Borrowing Base. If at any
time the outstanding balance of Borrower’s Loan Account plus the aggregate
dollar amount of all issued and unexpired letters of credit exceeds the lesser
of (i) the Borrowing Base, or (ii) $30,000,000.00, then Borrower shall not be
entitled to any additional advances under the Revolving Line while such excess
exists and shall immediately remit to Bank immediately available funds
sufficient to eliminate such excess and, if Bank requests, deliver to Bank
additional collateral of a value and character satisfactory to Bank. If the
Reconciliation Report (as defined in Section 2.6) indicates that Borrower’s
Loan Account or advances made to Borrower hereunder plus the aggregate dollar
amount of all issued and unexpired letters of credit exceeds the lesser of (x)
the Borrowing Base or (y) $30,000,000.00, then Borrower shall not be entitled
to any additional advances under the Revolving Line while such excess exists
and shall immediately remit to Bank (with the relevant Reconciliation Report)
immediately available funds in the amount sufficient to eliminate such excess. 

          1.5 Discretionary Advances. In the event
that the availability of the Revolving Line hereunder expires by the terms of
this Credit Agreement, or by the terms of any agreement extending the Maturity
Date of the Revolving Line, Bank may, in its sole discretion, make requested
advances; however, it is expressly acknowledged and agreed that, in such event,
Bank shall have the right, in its sole discretion, to decline to make any
requested advance and may require payment in full of Borrower’s Loan Account at
any time without prior notice to Borrower and the making of any such advances
shall not be construed as a waiver of such right by Bank. With regard to
advances to honor drafts under letters of credit, if, for any reason, any such
advances are made after the termination or expiration of the Revolving Line or
the occurrence or continuation of any default or event of default hereunder, or
when Bank otherwise has no obligation to make advances hereunder, Borrower
shall reimburse Bank for such advances in full upon demand by Bank and until
the time of such reimbursement, such advance shall bear interest at the rate of
interest set forth in the Note (unless otherwise agreed by Bank and Borrower in
writing) and be secured by the Collateral. 

          Bank’s
right to demand reimbursement with interest under this Section shall be in
addition to and cumulative of and not in lieu of any and all other rights and
remedies available to Bank under the Loan Documents or under any document
executed in connection with any letters of credit. Any such reimbursement
obligation shall be evidenced by the Note, or, at Bank’s 

3

option, by the
Borrower’s executing and delivering additional promissory notes to Bank in form
and substance acceptable to Bank. 

          1.6 Capital Expenditure Term Notes. To the
extent that new advances are borrowed under the Revolving Line for capital
expenditures, which advances are subject to the conditions set forth in Section
8.2(b) hereof, once such advances reach an aggregate amount of $3,000,000,
such advances shall be converted into a term promissory note (each, a “Capital
Expenditure Term Note”). Each Capital Expenditure Term Note shall be
included as an amount issued under the Revolving Line, so that the aggregate
amount of all advances under this Credit Agreement shall not exceed the lesser
of (i) the Borrowing Base or (ii) $30,000,000. As Capital Expenditure Term
Notes are issued, the payment and amortization terms shall be determined on an
individual basis as the Borrower and the Bank shall agree. 

          Nothing
in this Section 1 shall be deemed to extend the availability of the Revolving
Line beyond the time noted in Section 13 hereof. 

SECTION 2. Borrower’s Representations and
Warranties; Certain Covenants. 

          To
induce Bank to enter into this Credit Agreement, Borrower represents, warrants
and covenants as follows: 

          2.1 Organization, Licenses, Qualifications, Etc.
Borrower (a) is a duly organized corporation, validly existing, and in good
standing under the laws of the State of Texas; (b) has all necessary licenses
and corporate power and authority to own its assets and conduct its business as
now conducted or presently proposed to be conducted; (c) has no subsidiaries
other than those specifically disclosed on Schedule 2.1 of this Credit
Agreement; and (d) is duly qualified and in good standing (and will remain so
qualified and in good standing) in every jurisdiction in which it is or shall
be doing business or in which the failure to so qualify and remain in good
standing would or could have an adverse effect on its business or properties,
the Collateral or Bank. 

          2.2 Power and Authority; Enforceability.
The execution, delivery and performance hereof are within Borrower’s corporate
powers, have been duly and validly authorized and are not in contravention of
the law or the terms of Borrower’s charter, by-laws or other incorporation
papers, or of any indenture, agreement, or undertaking or any law, regulation
or order to which Borrower is a party or by which it or any of its properties
is or may be bound. Upon execution and delivery hereof, this Credit Agreement
will be a valid and binding obligation of Borrower enforceable in accordance
with its terms. This Credit Agreement, the Note and all other Loan Documents
executed by Borrower have been validly executed and delivered by Borrower and
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws at the time in effect affecting the rights of creditors generally. 

          2.3 Liens. Except for the Permitted Liens
and the security interests granted to Bank hereby or by any of the other Loan
Documents in favor of Bank, Borrower is and, as to Accounts Receivable,
Inventory and other Collateral arising or to be acquired after the date hereof,
shall be 

4

the sole and
exclusive owner of the Accounts, the Inventory and each and every other item of
Collateral free from any lien, claim, charge, security interest, mortgage,
secondary financing or encumbrance, and Borrower shall defend the Accounts, the
Inventory and each and every other item of Collateral and all Proceeds and
products thereof against all claims and demands of all persons at any time
claiming the same or any interest therein adverse to the interests of Bank. 

          2.4 Payment of Taxes, Charges, Etc.
Borrower will promptly pay all taxes or charges levied on or with respect to,
and will at all times keep the Accounts, the Inventory and each and every other
item of Collateral, free and clear of all liens, claims, charges, security
interests, mortgages, secondary financing and encumbrances whatsoever, other
than the Permitted Liens and the security interests granted to Bank hereby or
by any of the other Loan Documents. Borrower agrees to take all actions that
Bank may request to establish and maintain a valid title and security interest
in the Accounts, the Inventory and each and every other item of Collateral,
free and clear of all other liens, claims, charges, security interests,
mortgages, secondary financing and encumbrances whatsoever (other than the
Permitted Liens), including, without limitation, the payment of any amounts,
taxes, assessments, fees and/or charges necessary to perfect and note Bank’s
interest in the same. If such amounts, taxes, assessments, fees and/or charges
remain unpaid after the date fixed for the payment of same, or if any lien,
claim, charge, security interest, mortgage, secondary financing or encumbrance
shall arise, or be claimed or asserted with respect to the Accounts, the
Inventory or any other item of Collateral, Bank may, without notice to
Borrower, pay such taxes, assessments, charges or claims, or take any and all
other actions (including the payment of money) deemed desirable by Bank to
remove any such lien, claim, charge, security interest, mortgage, secondary
financing or encumbrance, and Borrower agrees that the amounts thereof, along
with any amounts necessary to perfect and note Bank’s interest in any
Collateral, shall be charged to Borrower’s Loan Account described herein and
shall bear interest at the rate of interest borne by Borrower’s obligations
under the Note. 

          2.5 Restrictions on Transfer of Collateral.
Borrower will not (and will not allow or suffer any other person or entity to)
sell (except for the sale of Inventory in the normal and ordinary course of
Borrower’s business), transfer, lease, convey or otherwise dispose of the
Collateral, any portion thereof, or any interest therein (or any of the
Proceeds thereof, including, without limitation, money, checks, money orders,
drafts, notes, instruments, documents, chattel paper, Accounts, returns or
repossessions) in an amount that exceeds $50,000 during any fiscal year,
without Bank’s prior written consent. 

          2.6 Reporting Requirements. Borrower will
deliver to Bank, so long as any of the Liabilities shall remain outstanding,
the following: 

	
 

	
 

	
 

	
          (a)
  Quarterly, within fifteen (15) days after the end of each fiscal quarter or
  more often as Bank shall request, (i) detailed reports in form acceptable to
  Bank of all Borrower’s Accounts Receivable (including the aggregate balance
  of all Accounts) and accounts payable as of the last day of the immediately
  preceding fiscal quarter (or such shorter applicable period), and the period
  of time which has elapsed with respect to such Accounts Receivable and
  accounts payable since the invoice date with respect thereto (together with
  Borrower’s certification as to any counterclaims, offsets or contra-accounts
  with respect to any of Borrower’s Accounts); (ii) summaries of all of
  Borrower’s 

5

	
 

	
 

	
 

	
Inventory
  as of the last day of the immediately preceding fiscal quarter (or such
  shorter applicable period), and the value thereof, and also accompanied by a
  completed and executed Accounts Receivable and Inventory Reconciliation
  Report substantially in accordance with Exhibit A hereto (herein
  referred to as a “Reconciliation Report”); and (iii) if requested by Bank, a
  copy of Borrower’s sales journal or invoice register for the immediately
  preceding calendar month (or such shorter applicable period) and the dates,
  amounts and Account Debtors with respect to such billings; provided, however,
  that all of the reports described in Sections 2.6(a)(i)(ii) and (iii) above
  and Section 2.6(b) below shall be delivered by Borrower to Bank within
  fifteen (15) days of the last day of each calendar month if at any time the
  Borrower’s excess availability under the Borrowing Base is less than
  $5,000,000 as calculated under the report attached hereto as Exhibit A; 

	
 

	
 

	
 

	
          (b)
  within 15 days after the end of each fiscal quarter, a duly completed
  Borrowing Base Certificate in form and substance acceptable to the Bank for
  the immediately preceding quarter; 

	
 

	
 

	
 

	
          (c)
  if requested by Bank, when and as generated by Borrower, copies of all of
  Borrower’s invoices (or similar documents relating to the sales and leasing
  of Inventory or the provision of services), which such invoices (or similar
  documents) shall be in form satisfactory to Bank and shall specify the
  location at which the goods or services related thereto are to be delivered,
  installed and/or performed; 

	
 

	
 

	
 

	
          (d)
  if requested by Bank, promptly (within one business day) upon any reduction
  or diminution in the face value of any Account Receivable greater than
  $5,000.00, Borrower shall advise Bank thereof and, if Bank requests, Borrower
  shall provide Bank with a signed writing explaining the circumstances
  resulting in such reduction; 

	
 

	
 

	
 

	
          (e)
  if requested by Bank, daily sales and invoice registers or journals
  reflecting, on a daily basis, the information described above; 

	
 

	
 

	
 

	
          (f)
  if requested by Bank, contemporaneously with each and every remittance with
  respect to the Accounts Receivable and upon each deposit of funds to the
  remittances account maintained by and in the name of Bank (the “Remittances
  Account”), Borrower shall provide to Bank a report reflecting the amount of
  all such remittances and the Accounts with respect to which such remittances
  were made, together with copies of Borrower’s cash receipts journal
  reflecting such remittances; and 

	
 

	
 

	
 

	
          (g)
  such other documents, instruments, data or information of any type requested
  by Bank with respect to the Accounts Receivable, Inventory and any other
  Collateral. 

          2.7 Additional Representations Regarding Accounts.
At the time any Account becomes subject to a security interest in favor of
Bank, said Account shall be a good and valid Account representing an
undisputed, bona fide indebtedness incurred by the Account Debtor named
therein, for merchandise held subject to delivery instructions or theretofore
shipped or delivered pursuant to a contract of sale; or for services
theretofore performed by Borrower with 

6

or for said
Account Debtor; there shall be no set-offs, counterclaims, or disputes against
any such Account except as indicated in some written list, statement or invoice
furnished to Bank with reference thereto; and Borrower shall be the lawful
owner of all such Accounts and shall have good right to subject the same to a
security interest in favor of Bank. No such Account shall be sold, assigned, or
transferred to any person other than Bank or in any way encumbered except to
Bank, and Borrower shall defend the same against the lawful claims and demands
of all persons other than Bank. If any Account shall be in violation of (a) any
one or more of the warranties expressed in this section or (b) any of the
requirements to be an Eligible Account Receivable, it shall not be deemed an
Eligible Account Receivable for purposes of this Credit Agreement. 

          2.8 Additional Representations Regarding Instruments,
Chattel Paper, Etc. At the time Borrower pledges, sells, assigns or
transfers to Bank any instrument, document of title, security, chattel paper or
other property, or any interest therein, Borrower shall be the lawful owner
thereof and shall have good right to pledge, sell, assign or transfer the same;
none of such property shall have been pledged, sold, assigned or transferred to
any person other than Bank or in any way encumbered (except for the Permitted
Liens), and Borrower shall defend the same against the lawful claims and
demands of all persons other than Bank. 

          2.9 Location of Collateral. Except for
Inventory sold in the ordinary course of business, all Inventory and other
tangible Collateral have always been, are and shall continue to be kept at
Borrower’s locations as reflected in Schedule 2.9 of this Credit Agreement,
unless Borrower shall have provided written notice to Bank within 10 days
following the establishment of any new location. 

          2.10 Location of Records. All records of
Borrower pertaining to Accounts Receivable, general intangibles and contract
rights have always been, are and shall continue to be kept at Borrower’s chief
executive office as noted on the first page of this Credit Agreement. 

          2.11 Additional Representations Regarding Financial
Statements. Subject to any limitations stated therein or in
connection therewith, all balance sheets, earnings statements and other
financial data which have been or may hereafter be furnished to Bank to induce
it to enter into this Credit Agreement, to extend credit from time to time
hereunder, or otherwise furnished in connection herewith, do or shall fairly
represent in all material respects the financial condition of Borrower (or
other persons or entities, as applicable) as of the dates and results of
operations for the periods for which the same are furnished in accordance with
GAAP consistently applied, and all other information, reports and other papers
and data furnished to Bank shall be accurate, as of the relevant date, and
correct in all material respects and complete insofar as completeness may be
necessary to give Bank a true and accurate knowledge of the subject matter. 

          2.12 Possession of and Insurance on Equipment.
With respect to any and all equipment which may now or hereafter constitute
Collateral hereunder, Borrower shall maintain possession of same, keep the same
in good repair, and maintain casualty insurance on the same naming Bank as
additional insured and lender loss payee under a lender loss payee endorsement.

          2.13 Borrower’s Names and Offices.
Borrower’s name, chief executive office and principal place of business are as
set forth on the first page of this Credit Agreement, except as otherwise
disclosed in writing to Bank. Borrower will promptly advise Bank in writing
sixty 

7

(60) days
prior to any change in Borrower’s name, place of organization, organizational
identification number, chief executive office or principal place of business.

          2.14  Additional Representations Regarding Absence
of Defaults Under Other Agreements. Borrower is not
now and will not be in default under any agreement evidencing an obligation for
the payment of money, performance of a service or delivery of goods, demand for
performance under which, or acceleration of the maturity of which would render
Borrower insolvent or unable to meet its other debts as they become due or
conduct its business as usual.

          2.15  Indemnification. In
the event (a) any of Borrower’s warranties or representations shall prove
to be false or misleading; (b) any Account Debtor in judicial proceeding,
shall assert against Bank or any of its officers, employees, directors,
managers or agents a claim or defense arising out of any transaction between
the Account Debtor and Borrower; or (c) Borrower or any other person or
entity shall assert against Bank or any of its officers, employees, directors,
managers or agents a claim or defense arising out of or relating to any of the
Collateral, the Liabilities or any of the Loan Documents, Borrower agrees to
indemnify and hold Bank harmless from and against any liability, judgment,
cost, attorneys’ fees or other expense whatsoever arising therefrom.

          2.16  Taxes,
Charges and Expenses Incurred with Respect to Revolving Line.
Borrower will pay any and all taxes (with the exception of taxes measured by
income), charges and expenses of every kind or description paid or incurred by
Bank under or with respect to the Revolving Line, the Loan Documents, any
advances hereunder or any Collateral therefor or the collection of or
realization upon the same. Borrower hereby authorizes Bank to debit such and
all other taxes, charges and expenses provided for in this Credit Agreement
(including, without limitation, those taxes, charges and expenses for which
Borrower is liable under Section 12) to Borrower’s Loan Account.

          2.17  Patents,
Copyrights, Trademarks and Licenses. With
exception to such items as are specified in Schedule 2.17 attached hereto and
made a part hereof, none of the Collateral is patented, copyrighted, copyrightable,
licensed or trademarked by Borrower or incorporates or is subject, in whole or
part, to any copyright, license, patent or trademark in favor of Borrower or
any of its affiliates. Prior to the time any Collateral is copyrighted,
licensed, patented or trademarked or incorporates or is subjected, in whole or
in part, to any copyright, license, patent or trademark, Borrower shall notify
Bank and shall take (or cause to be taken) all actions necessary to preserve
the perfection and priority of Bank’s security interest in such Collateral.

          2.18  Judgments/Actions.
There are no judgments, actions, suits, claims, proceedings or investigations
existing, outstanding, pending, or to the best of Borrower’s knowledge after
due inquiry, threatened or in prospect, before any court, agency or tribunal,
or governmental authority against or involving Borrower or any guarantor which
do or could materially affect the business, properties, prospects, financial
condition, earnings, results of operations or earnings capacity of Borrower or
any guarantor or which question the validity of the Revolving Line or any of
the Loan Documents, or any action or instrument contemplated by any of them,
except as specified in Schedule 2.18 attached hereto and made a part hereof for
all purposes.

8

          2.19  Margin Stock.
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying “margin” stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 221), as
amended from time to time (“Regulation U”). No part of the proceeds of
any advance under the Revolving Line shall be used directly or indirectly for
the purpose of purchasing, acquiring, carrying, financing or refinancing the
purchase of any “margin stock” as defined in and contemplated by Regulation U
or for any other purpose which would constitute “purpose credit” under
Regulation U. Borrower is not an “investment company” or a company “controlled”
by an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

          2.20  No Untrue Statements or Omissions.
Neither this Credit Agreement, nor any document, certificate, or statement
furnished (or to be furnished) to Bank by or on behalf of Borrower pursuant to
or in connection with this Credit Agreement contains (or will contain) any
untrue statement of a material fact or omits (or will omit) to state a material
fact necessary to make the statements contained herein and therein not misleading.
There is no fact known to Borrower that materially and adversely affects, or
will materially and adversely affect, the assets, business, operations, or
condition of Borrower that has not been specifically set forth in this Credit
Agreement or otherwise disclosed by Borrower to Bank in writing.

          2.21  Bankruptcy.
Borrower is and at all times shall remain solvent as defined under applicable
Texas state law and the federal bankruptcy code and is not now and has not been
in the past three (3) years a debtor under any title of the United States
Bankruptcy Code, 11 U.S.C. §§ 101, et seq.

          2.22  Organizational Identification Number, Etc.
The number assigned by the State of Texas as Borrower’s organizational
identification number is 0024967800; and Borrower understands that the
organizational identification number above is not Borrower’s federal or state
tax or employer identification number. The Revolving Line is being obtained and
the Collateral is being used, held or acquired for business purposes.

Nothing in
this Section 2 shall be deemed to extend the availability of the Revolving Line
beyond the time noted in Section 13 hereof.

SECTION 3. Inspection of Records; Further
Assurance.

          Borrower
shall at reasonable times and from time to time allow Bank, by or through any
of its officers, managers, agents, employees, attorneys or accountants to
(i) examine, inspect and make extracts from Borrower’s books and records;
(ii) analyze Borrower’s financial statements; (iii) arrange for verification
of Borrower’s Accounts Receivable, Inventory, Eligible Accounts Receivable and
Eligible Inventory under reasonable procedures, directly with Account Debtors
or by other methods; and (iv) inspect, review and audit Borrower’s
Inventory and other Collateral at any time during normal business hours,
without prior notice to Borrower. Borrower shall allow, do, make, execute and
deliver all such additional and further acts, things, deeds, assurances,
agreements and instruments which Bank may require more completely to vest in
and assure to Bank its rights hereunder and in any Collateral and to assure
that Borrower’s Loan Account balance does not exceed Borrower’s availability
hereunder. 

9

Nothing in
this Section 3 shall be deemed to extend the availability of the Revolving Line
beyond the time noted in Section 13 hereof.

SECTION 4. Security Interest of Bank in
Collateral. 

          4.1  Collateral. As
security for the payment and performance of all Liabilities, Bank shall have
and Borrower hereby assigns to Bank and grants to Bank a continuing lien on,
security interest in and right of set-off against the following described
property and rights:

          All
of Borrower’s assets, including but not limited to:

	
 

	
 

	
 

	
 

	
          (a)
  Accounts and Accounts Receivable;

	
 

	
 

	
 

	
 

	
          (b)
  Inventory, equipment, machinery, furnishings and furniture, wheresoever the
  same may be located; 

	
 

	
 

	
 

	
 

	
          (c)
  contract rights, investment property, chattel paper, electronic chattel paper
  and software, commercial tort claims, deposit accounts, letter of credit
  rights, health-care-insurance receivables, documents, documents of title,
  warehouse receipts, bills of lading, notes, notes receivable, instruments,
  general intangibles and payment intangibles;

	
 

	
 

	
 

	
 

	
          (d)
  licenses, patents, tradenames, trademarks and copyrights and any and all
  licenses and other rights to use, incorporate, license, sell and/or assign
  any licenses, patents, tradenames, trademarks and copyrights and any property
  incorporating any of the foregoing, together with all applications for
  registration and registrations obtained for any of the foregoing, and all
  renewals and/or extensions thereof, rights to sue for infringements and all
  other rights corresponding thereto, and all related licenses and royalties,
  and all further or other property that pertains, incorporates or relates to
  or emanates or derives from any license, patent, tradename, trademark or
  copyright and/or the ownership, use, possession, transfer, or licensing
  thereof (whether as licensor or licensee) and any property which embodies or
  incorporates any of the foregoing, and all proceeds, products, rents, issues,
  royalties, profits and returns of and from any of the foregoing, and all
  related rights and property (collectively referred to as “Intellectual
  Property”);

	
 

	
 

	
 

	
 

	
          (e)
  goods, instruments, notes, notes receivable, documents, documents of title,
  warehouse receipts, bills of lading, certificates of title, policies and
  certificates of insurance, securities, investment property, chattel paper,
  deposits, cash and other property which are now or may hereafter be in the
  possession of or deposited with Bank, or which are otherwise assigned to
  Bank, or as to which Bank may now or hereafter control possession by
  documents of title or otherwise; and

	
 

	
 

	
 

	
 

	
          (f)
  substitutions, accessions, additions, parts, accessories, attachments,
  replacements, Proceeds and products of, for and to any and all of the
  foregoing, including, without limitation, any and all insurance and tort
  proceeds, and any and all such substitutions, accessions, additions, parts,
  accessories, attachments, replacements, Proceeds and products in the form of
  any of the property described or referenced in (a) through (e) above,

10

          whether
now or hereafter owned, existing, created, arising or acquired.

          4.2  Security Interest in Collateral
Created/Acquired Hereafter. No submission by Borrower
to Bank of any schedule or other particular identification of Collateral shall
be necessary to vest in Bank a security interest in each and every item of
Collateral now existing or hereafter created or acquired, but rather, such
security interest shall vest in Bank immediately upon the creation or
acquisition of any item of Collateral, without the necessity for any other or
further action by Borrower or Bank; provided, however, that Borrower shall
execute such other and additional documents, instruments and agreements as
requested by Bank to evidence the security interests contemplated hereby. In
addition to and without limiting any other rights and remedies of Bank arising
under this Credit Agreement and/or applicable law, Borrower hereby grants,
assigns and transfers to Bank a fully-paid, royalty-free, perpetual,
non-exclusive, unrestricted license to use, sell, assign, modify, reproduce,
distribute, license and sublicense any copyright, patent, tradename, trademark
or license and other Intellectual Property constituting Collateral and any
goods and other property incorporating any of the foregoing which Bank may
exercise at any time upon or after the occurrence of a default or event of
default under this Credit Agreement or any of the other Loan Documents without
further action, consent or approval of Borrower; unless the Borrower is not
permitted to assign such collateral under the terms and conditions governing
the Borrower’s use of such collateral.

          4.3  Further Assurances.
To the extent allowable under applicable law, the Uniform Commercial Code of
Texas shall govern the security interests provided for herein. In connection
therewith, Borrower (at Borrower’s expense) shall take such steps and execute,
deliver and file (as applicable) (or cause the execution, delivery and filing
(as applicable) of) such financing statements, continuation statements, agreements
(including, without limitation, security agreements and landlord, creditor and
mortgagee subordination agreements), documents, and papers (all in form and
substance acceptable to Bank) as Bank may from time to time request to perfect
or preserve the perfection and priority of Bank’s security interests granted
hereby or by any of the other Loan Documents. Borrower hereby appoints and
empowers Bank, or any employee of Bank which Bank may designate for the
purpose, as its attorney-in-fact, to execute and/or endorse (and file, as
appropriate) on its behalf any documents, agreements, papers, checks, financing
statements and other documents which, in Bank’s sole judgment, are necessary to
be executed, endorsed and/or filed in order to (i) perfect or preserve the
perfection and priority of Bank’s security interests granted hereby or by any
of the other Loan Documents and (ii) collect or realize upon the
Collateral or otherwise exercise its rights and remedies under any of the Loan
Documents or applicable law. Without limiting any of Bank’s rights and remedies
under law or any other provisions of this Credit Agreement or any of the other
Loan Documents, Borrower authorizes the filing by Bank of any and all financing
statements in any and all jurisdictions Bank deems necessary or appropriate to
perfect Bank’s security interest in the Collateral and/or any other property.

          4.4  Additional Further Assurances.
If, by reason of location of Borrower, the Collateral or otherwise, the
creation, validity, or perfection of security interests provided for herein are
governed by law other than the Uniform Commercial Code of Texas, Borrower shall
take such steps and execute and deliver such documents, agreements, papers and
financing statements as Bank may from time to time request to comply with the
Uniform Commercial Code, or other laws of Texas or other states or
jurisdictions, each as applicable. Borrower

11

hereby
appoints and empowers Bank, or any employee of Bank which Bank may designate
for the purpose, as its attorney-in-fact, to execute and/or endorse (and file,
as appropriate) on its behalf any documents, agreements, papers, checks,
financing statements and other documents which, in Bank’s sole judgment, are
necessary to be executed, endorsed and/or filed in order to (i) perfect or
preserve the perfection and priority of Bank’s security interests granted
hereby or by any of the other Loan Documents and (ii) collect or realize
upon the Collateral or otherwise exercise its rights and remedies under any of
the Loan Documents or applicable law.

          4.5
Restrictions on Pledging, Mortgaging Collateral.
Except for the Permitted Liens, Borrower shall not pledge, mortgage, or create
or suffer to exist a security interest in any of the Collateral or any Proceeds
or products thereof, or sell, assign, or create a security interest in any of
the Collateral or any Proceeds or products thereof in favor of any person other
than Bank unless such security interest is expressly subordinated to Bank’s
security interest therein and Bank has approved in writing the existence and
status of such security interest.

Nothing in this Section 4
shall be deemed to extend the availability of the Revolving Line beyond the
time noted in Section 13 hereof.

SECTION 5. Collection of Accounts Receivable.

          5.1
Collection and Application of Proceeds; Notifying Account Debtors.
Until Bank requests that Account Debtors on Accounts Receivable of Borrower be
notified of Bank’s security interest therein, Borrower shall continue to
collect such Accounts Receivable. Borrower shall notify Bank of any collections
received and shall hold the same in trust for Bank without commingling the same
with other funds of Borrower and shall turn the same over to Bank immediately
upon receipt in the identical form received. All Account payments and other
Proceeds transmitted to Bank via any lock-box, by Borrower or otherwise, will
be handled and administered in and through a remittance or special account; the
maintenance of any such account shall be solely for the convenience of Bank,
and Borrower shall not have any right, title, or interest in or to any such
account or in the amounts at any time appearing to the credit thereof. Bank may
apply and credit Account payments and other Proceeds transmitted to or
otherwise received by Bank via any lock-box, by Borrower or otherwise, against
the outstanding balance in Borrower’s Loan Account or any other Liabilities;
however, Bank shall not be required to credit Borrower’s Loan Account or any
other Liabilities with the amount of any check or other instrument constituting
provisional payment until Bank has received final payment thereof at its office
in cash or solvent credits accepted by Bank. In addition, Borrower shall notify
the Account Debtors of the security interest of Bank in any Account and shall
instruct Account Debtors to remit payments directly to Bank by way of a Compass
Bank lock-box (to be identified by Bank), and Bank may itself at any time so
notify and instruct Account Debtors. 

          5.2
Collection of Accounts. Borrower (i) shall
(a) deliver any instrument or chattel paper evidencing or constituting an
Account to Bank, and (b) use its best efforts to collect its Accounts in a
commercially reasonable manner; and (ii) agrees that no court action or
other legal proceeding or garnishment, attachment, repossession of property,
detinue, sequestration or any other attempt to repossess any merchandise covered
by an Account shall be attempted by Borrower except by or under the direction
of competent legal counsel. Borrower hereby agrees to indemnify and hold Bank
harmless for any loss or liability of any kind or character which may be
asserted against Bank by virtue of any suit filed, process issued, or any
repossession or

12

attempted
repossession done or attempted by Borrower or by virtue of any other actions or
endeavors which Borrower may make to collect any Accounts or repossess any such
merchandise, EXCEPT AS A RESULT OF BANK’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

Nothing in this Section 5
shall be deemed to extend the availability of the Revolving Line beyond the
time noted in Section 13 hereof.

SECTION 6. Additional Affirmative Covenants.

          Until
all indebtedness of Borrower to Bank has been paid in full and all Liabilities
have been satisfied:

          6.1
Financial Statements and Other Information. Borrower
shall submit or cause to be submitted to Bank (i) Borrower’s internally
prepared quarterly financial statements on a consolidated and consolidating
basis within forty-five (45) days after the close of each fiscal quarter in
each fiscal year, including a balance sheet as of the close of such period, an
income statement, and such other statements containing financial information
which Bank reasonably may require, prepared in accordance with GAAP and
attested to by an authorized officer of Borrower; (ii) Borrower’s audited
fiscal year-end financial statements (in form, preparation and substance
acceptable to Bank) on a consolidated and consolidating basis within ninety
(90) days after the close of each of its fiscal years, including a balance
sheet as of the close of such period, an income statement, a reconciliation of
stockholders’ equity, and a statement of cash flows, all certified by
an independent certified public accountant acceptable to Bank and analyzed in
accordance with GAAP; (iii) each guarantor’s annual financial statements
within ninety (90) days after the close of each of Borrower’s fiscal years;
(iv) together with each delivery of financial statements required above,
the compliance certificate of Borrower substantially in the form of Exhibit
B hereto signed by a Responsible Officer of Borrower stating, among other
things, that no event has occurred which constitutes an event of default or
would constitute an event of default but for the requirement that notice be
given, or time elapse or both, under any loans, notes, debentures, bonds,
leases, or other obligations of Borrower then outstanding, including, but not
limited to, this Credit Agreement (such certificate shall publish the
accounting calculations used to determine compliance or noncompliance with
Borrower’s financial obligations and financial covenants, including those
provided in this Credit Agreement), or, if any such event of default or
defaults exists, specifying the nature thereof; (v) if requested by Bank,
copies of Borrower’s consolidated annual tax returns (and all related
schedules, forms and attachments) within thirty (30) days following the filing
thereof with the Internal Revenue Service; (vi) an annual budget of
Borrower, in a monthly format (in form and content satisfactory to Bank in its
sole discretion), consisting of a balance sheet and related statements of
income, retained earnings, and cash flow, to be provided within thirty (30)
days prior to the year end for the upcoming year; (vii) an annual capital
expenditure budget; and (viii) such other financial and related
information when and as requested by Bank regarding Borrower, the Collateral
and any endorser, guarantor or surety of any of the Liabilities of Borrower to
Bank.

          6.2
Insurance. Borrower shall (i) maintain insurance
(written by insurance companies acceptable to Bank) in form, amount and
substance acceptable to Bank, including, without limitation, extended
multi-peril hazard, worker’s compensation, general liability insurance and
insurance upon Borrower’s property, all facets of its businesses and all the

13

Collateral;
(ii) furnish to Bank, upon request, a statement of the insurance coverage;
(iii) use its best efforts to protect and preserve the Collateral and
shall obtain other or additional insurance promptly, upon request of Bank, to
the extent that such insurance may be available; and (iv) cause Bank to be
named as an additional insured and a lender loss payee as to all insurance
covering Collateral, pursuant to endorsements in form and substance acceptable
to Bank. All insurance proceeds, payments and other amounts paid to or received
by Bank under or in connection with any and all such policies may be retained
by Bank in whole or part as additional Collateral for the Liabilities and/or,
at Bank’s option, be applied in whole or part to the payment of such of the
Liabilities as shall then be due and/or, at Bank’s option, be held (in a
remittance or other special account in which neither Borrower nor any guarantor
shall have an interest) for application to Liabilities not yet due and be
applied to such Liabilities as and when the same shall come due, in such order
as Bank may determine in its sole discretion. All insurance policies shall
provide for a minimum of ten (10) days’ written cancellation notice to Bank
and, at Bank’s request, all such policies shall be delivered to and held by
Bank. In the event of failure to provide and maintain insurance required by
this Credit Agreement, Bank may, at its option, provide such insurance and
charge the costs and expenses incurred to Borrower’s Loan Account. Bank is
hereby made attorney-in-fact for Borrower to (i) obtain, adjust, and
settle, in its sole discretion, such insurance, and (ii) endorse any
drafts or checks issued in connection with such insurance.

          6.3
Compliance with Laws. Borrower does and shall at all
times while any Liabilities remain unsatisfied comply with all applicable laws,
ordinances, rules and regulations of any governmental authority or entity
governing or affecting Borrower, any of its property, the Collateral or any
part thereof, and shall immediately notify Bank of any and all actual, alleged
or asserted violations of any such laws, ordinances, rules or regulations.
Without limitation to the generality of the foregoing, Borrower shall comply,
and cause to be complied, with all laws, governmental standards and regulations
applicable to Borrower or any Collateral in respect of occupational health and
safety, toxic and hazardous waste and substances and environmental matters.
Borrower promptly shall notify Bank of receipt of any notice of any actual,
alleged or asserted violation of any such law, standard or regulation. Borrower
hereby agrees to indemnify, defend and hold Bank harmless from all loss, cost,
damage, claim and expense incurred by Bank on account of Borrower’s breach of
any representation, warranty or requirement of this Section, Borrower’s failure
to perform the obligations of this Section, and/or Borrower’s or any
Collateral’s violating any applicable laws, ordinances, rules or regulations,
including, without limitation, any environmental or occupational health and
safety laws or regulations. This indemnification shall survive the closing of
the Revolving Line, payment of the Revolving Line and the exercise of any right
or remedy under any of the Loan Documents. Borrower represents that there are no
pending claims or threats of claims by private or governmental or
administrative authorities relating to environmental impairment, conditions, or
regulatory requirements involving Borrower or any Collateral.

          6.4
Fixed Charge Coverage Ratio. Borrower shall maintain a
minimum Fixed Charge Coverage Ratio of 1.25 to 1.00, which ratio shall be
measured on a quarterly basis at the end of each fiscal quarter, or more
frequently if financial statements are required more frequently under Section
6.1 hereof. Borrower’s Fixed Charge Coverage Ratio shall be defined as the
quotient of (i) for the twelve month period then ending, the sum of
(a) (1) Borrower’s earnings before interest, tax, depreciation and
amortization expenses (“EBITDA”), plus (2) all non-cash

14

charges and
expenses as provided by GAAP standards plus (3) Borrower’s rent expenses paid, plus
(4) management fees paid to Zunicom, Inc. (“Zunicom”) less
(b) the sum of (1) Borrower’s dividends paid, plus (2) Borrower’s
cash taxes and distributions to Zunicom or other related parties plus (3)
non-financed capital expenditures; divided by (ii) the sum of
(a) Borrower’s regularly scheduled payments of principal to be paid during
the next twelve month period, plus (b) Borrower’s capital lease
obligations to be paid over the next twelve month period, plus
(c) Borrower’s interest expense paid during the twelve month period then
ending, plus (d) Borrower’s rent expenses paid during the twelve month
period then ending, plus (e) Management Fees paid to Zunicom during
the twelve month period then ending. Borrower shall provide Bank with full
cooperation with respect to all tests hereunder.

          6.5
Funded Debt to EBITDA. Borrower shall maintain a
Funded Debt to EBITDA Ratio of no more than 3.50 to 1.00, which ratio shall be
measured on quarterly basis at the end of each fiscal quarter, or more
frequently if financial statements are required more frequently under Section
6.1 hereof. Borrower’s Funded Debt to EBITDA Ratio shall be defined as the
quotient of Funded Debt divided by EBITDA. Borrower shall provide Bank with
full cooperation with respect to all tests hereunder. 

          6.6
Fees. In consideration of Bank’s commitment to make
advances on the Revolving Line and Bank’s incurring certain administrative expenses,
Borrower agrees to and shall pay to Bank (i) a non-refundable credit
facility fee in the amount of $17,500.00 due and payable at closing; and
(ii) a letter of credit fee equal to one and one half percent (1.50%) of
the amount of any letters of credit requested to be issued by Bank for the
benefit of Borrower hereunder, such amount(s) to be paid annually; and
(iii) quarterly (or more often as may be required by the terms below), in
arrears, an unused line fee (calculated as set forth below on the basis of a
360-day year) beginning to accrue on the date hereof with the first payment due
on September 30, 2007, and payments thereafter due on the last day of each
succeeding calendar quarter (and on the Maturity Date (or on any other date
when advances under the Revolving Line are terminated and the amount
outstanding under the Revolving Line is paid in full)) equal to the product of
(a) 0.25% of the average Unused Availability under the Revolving Line for
the calendar quarter or portion thereof preceding such payment and (b) the
number of days elapsed since the latter of the date hereof or the date of the
last such payment under this Section (if any), divided by 360. For purposes of
this Section, “Unused Availability” shall mean and refer to the amount by which
$30,000,000.00 exceeds the average balance of Borrower’s Loan Account for such
period. Borrower further agrees to pay any fee imposed by Bank pursuant to the
Loan Documents including, but not limited to the fees set forth in Section 11
or Section 12 herein.

          6.7
Notification of Defaults, Suits, Etc. Promptly after
the same shall have become known to Borrower, Borrower shall notify Bank in
writing of (i) any default or event of default under any of the Loan
Documents, (ii) any material change in Borrower’s financial condition
and/or prospects and/or (iii) any action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or other agency which,
if adversely determined, might impair the ability of Borrower to perform its
obligations under the Loan Documents, impair the ability of Borrower to carry
on its business substantially as now conducted, or which might materially
affect the business, operations, properties, assets or condition, financial or
otherwise, of Borrower.

15

          6.8
Deposit Account. So long as any Liabilities are
outstanding, Borrower shall establish and maintain its primary deposit accounts
with Bank. 

          6.9
Lockbox Accounts. During the term of this Credit
Agreement, all of the Borrower’s Accounts Receivable shall continue to be
deposited into a lockbox account maintained with Bank.

Nothing in this Section 6
shall be deemed to extend the availability of the Revolving Line beyond the
time noted in Section 13 hereof.

SECTION 7. Additional Negative Covenants.

          Until all
indebtedness of Borrower to Bank has been paid in full and all Liabilities have
been satisfied:

          7.1
Liens. Borrower shall not create or permit the
creation of any lien upon any of the Collateral except for Permitted Liens and
the security interests granted to Bank under the Loan Documents.

          7.2
Borrowings; Permitted Indebtedness. Except for
borrowings under the Revolving Line, Borrower shall not borrow any money other
than (i) Subordinated Debt existing of this Credit Agreement (but only to
the extent such borrowings and loans shall be fully subordinated hereto) or
(ii) for trade credit in the ordinary course of business, without Bank’s
prior written consent. Except in favor of Bank, Borrower shall not guarantee,
endorse or assume, either directly or indirectly, any indebtedness of any other
corporation, person, or entity.

          7.3
Dividends. Borrower shall not pay, make or declare any
dividends, distributions, or other similar payments, or make any other advances
of any nature whatsoever, to Borrower’s directors, managers, officers,
employees, owners, parent, members, affiliates, subsidiaries or other related
persons or entities, without Bank’s prior written consent, except that the
Borrower shall be permitted to declare dividends to its shareholders in the
ordinary course of business. Unless dividends or distributions are made with
the Bank’s prior written consent and are made to all shareholders, no
additional dividends or distributions shall be made to Zunicom. Borrower shall
not redeem, purchase or in any manner acquire any of its outstanding shares
without Bank’s prior written consent.

          7.4
Capital Expenditures. Borrower and its subsidiaries,
on a consolidated basis, shall not make aggregate capital expenditures or
contracts for capital expenditures, unless financed under this Credit
Agreement.

          7.5
Acquiring Assets, Etc. of Other Entities. Borrower shall not
purchase or acquire, directly or indirectly, any shares of stock, any substantial
part of the assets of, any interest in, evidences of indebtedness, loans or
other securities of any person, corporation or other entity, without Bank’s
prior written consent; provided, however, that Borrower shall be permitted to
make acquisitions that do not exceed an amount of $7,500,000 for each
acquisition and an aggregate amount of $20,000,000 during the term of this
Credit Agreement. To the extent any such acquisitions are made, the acquired
entity’s EBITDA may be considered for purposes of calculating the financial
covenants contained in this Credit Agreement at the Bank’s 

16

discretion.
Both prior to and following any acquisition permitted by this Section 7.5, the
Borrower shall remain in compliance with this Credit Agreement, including all
financial covenants, and shall provide the Bank with pro forma information
demonstrating such compliance prior to any such acquisition.

          7.6
Dissolution, Mergers, Change in Nature. Borrower shall
not (i) liquidate, discontinue or materially reduce its normal operations
with intention to liquidate; (ii) cause, allow or suffer to occur
(a) the merger or consolidation of or involving Borrower with or into any
corporation, partnership, or other entity, or (b) the sale, lease,
transfer or other disposal of all or any substantial part of its assets, or any
of its Accounts Receivable; (iii) acquire any corporation, partnership or
other entity (or any interest therein), whether by stock or asset purchase or
acquisition or otherwise, without the prior written consent of Bank;
(iv) enter into any lease which could be characterized as a capitalized
lease; or (v) cause, allow, or suffer to occur any change in the
management, nature, control or corporate structure of Borrower without the
prior written consent of Bank.

          7.7 Subordinated Debt. Borrower shall not
(a) make any payment upon or (b) change any terms governing any Subordinated
Debt described in any subordination agreement delivered to Bank, except as
otherwise provided in such subordination agreement(s).

          7.8 Loans to Related Parties and Affiliates.
Except as otherwise specified herein or otherwise agreed and consented to by
Bank, Borrower shall not make, extend or allow to remain outstanding any loans
or advances to or investments in Borrower’s affiliates, parent, subsidiaries,
owners, directors, employees, members, officers, managers or other related
persons or entities that cause or would cause a violation or a further
violation of any of the covenants, terms or conditions of Section 6 or Section
7 of this Credit Agreement. No additional loans shall be made to Zunicom, and
the terms of all existing loans made to Zunicom shall not be changed without
the Bank’s prior written consent.

          7.9
Material Contract. Borrower shall not permit the
Brinks Home Security contract with Borrower to be cancelled or to fail to be
renewed, and shall not permit any modification of such contract without the
Bank’s prior written consent.

SECTION 8. Conditions Precedent to Credit
Extensions.

          8.1
Conditions of Initial Credit Extension. The obligation
of Bank to make its initial credit extension hereunder is subject to
satisfaction of the following conditions precedent:

	
 

	
 

	
 

	
          (a)
  Bank’s receipt of the following, each of which shall be originals or
  facsimiles (followed promptly by originals) unless otherwise specified, each
  properly executed by a Responsible Officer of the signing Loan Party, each
  dated the date hereof (or, in the case of certificates of governmental
  officials, a recent date before the date hereof) and each in form and
  substance satisfactory to Bank and its legal counsel:

	
 

	
 

	
 

	
          (i)
  executed counterparts of this Credit Agreement, sufficient in number for
  distribution to Bank and Borrower;

	
 

	
 

	
 

	
          (ii)
  the Note executed by Borrower;

17

	
 

	
 

	
 

	
          (iii)
  such certificates of resolutions or other action, incumbency certificates
  and/or other certificates of Responsible Officers of Borrower as Bank may
  require evidencing the identity, authority and capacity of each Responsible
  Officer thereof authorized to act as a Responsible Officer in connection with
  this Credit Agreement and the other Loan Documents to which Borrower is a
  party;

	
 

	
 

	
 

	
          (iv)
  such documents and certifications as Bank may reasonably require to evidence
  that Borrower is duly organized or formed, and that Borrower is validly existing,
  in good standing and qualified to engage in business in each jurisdiction
  where its ownership, lease or operation of properties or the conduct of its
  business requires such qualification;

	
 

	
 

	
 

	
          (v)
  a duly completed initial Reconciliation Report;

	
 

	
 

	
 

	
          (vi)
  evidence that all insurance required to be maintained pursuant to the Loan
  Documents has been obtained and is in effect;

	
 

	
 

	
 

	
          (vii)
  an executed Amended and Restated Creditors’ Subordination Agreement executed
  by Zunicom; and 

	
 

	
 

	
 

	
          (viii)
  such other assurances, certificates, documents, consents or opinions as Bank
  reasonably may require.

	
 

	
 

	
 

	
          (b)
  Any fees required to be paid on or before the closing date shall have been
  paid.

	
 

	
 

	
 

	
          (c)
  Borrower shall have paid all costs and expenses of Bank (including attorneys’
  fees) to the extent invoiced prior to or on the closing date, plus such
  additional amounts of costs and expenses as shall constitute its reasonable
  estimate of costs and expenses incurred or to be incurred by it through the
  closing proceedings (provided that such estimate shall not thereafter
  preclude a final settling of accounts between Borrower and Bank).

          8.2 Conditions to all Credit Extensions.
The obligation of Bank to make any credit extension is subject to the following
conditions precedent:

	
 

	
 

	
 

	
          (a)
  The representations and warranties of Borrower and each other Loan Party
  contained in Section 2 or any other Loan Document, or which are
  contained in any document furnished at any time under or in connection
  herewith or therewith, shall be true and correct on and as of the date of
  such credit extension, except to the extent that such representations and
  warranties specifically refer to an earlier date, in which case they shall be
  true and correct as of such earlier date, and except that for purposes of
  this Section 8.2, the representations and warranties contained in
  Section 2.11 shall be deemed to refer to the most recent statements
  furnished pursuant to Section 6.1.

	
 

	
 

	
 

	
          (b)
  For any advance that is an advance related to a capital expenditure,
  documentation regarding the use of such advance and the relevant capital
  expenditure shall have been provided to the Bank.

18

	
 

	
 

	
 

	
          (c)
  No Default shall exist, or would result from such proposed credit extension.

SECTION 9. Events of Default; Acceleration. 

          Any
or all of the obligations, indebtedness and liabilities of Borrower to Bank,
including, without limitation, the Liabilities, shall be, at the option of Bank
and notwithstanding any time or credit allowed by any of the Loan Documents or
any other document, agreement or instrument evidencing any of the Liabilities,
immediately due and payable without notice or demand, and the obligation of
Bank to make advances hereunder shall immediately cease and terminate upon and
after the occurrence of any of the following events of default:

	
 

	
 

	
 

	
          (a)
  default in the payment or performance, when due or payable, of any of the
  Liabilities of Borrower or any liability or obligation (whether now or
  hereafter existing, arising or incurred, direct or indirect, conditional or
  unconditional) of any endorser, guarantor, or surety for any of the
  Liabilities of Borrower to Bank;

	
 

	
 

	
 

	
          (b)
  failure by Borrower, any guarantor or any other person or entity, as
  applicable, to (i) pay or perform any act or obligation imposed hereby
  or by any of the other Loan Documents, or (ii) comply with any of the
  terms, conditions, warranties, covenants or requirements contained or
  referenced herein or in one or more of the other Loan Documents;

	
 

	
 

	
 

	
          (c)
  failure of Borrower or any other person or entity, as applicable, to pay when
  due (i) any tax or (ii) any premium on any (a) insurance
  policy assigned to Bank, or (b) any insurance covering any Collateral;

	
 

	
 

	
 

	
          (d)
  if any warranty or representation contained herein shall prove false or
  misleading or if Borrower or any endorser, guarantor or surety for any of the
  Liabilities of Borrower to Bank made or makes any other misrepresentation to
  Bank for the purpose of obtaining credit or any extension of credit;

	
 

	
 

	
 

	
          (e)
  failure of Borrower or any endorser, guarantor, or surety for any of the
  Liabilities of Borrower to Bank to furnish financial information or to permit
  the inspection of the books or records or Collateral of Borrower or of any
  endorser, guarantor or surety for any of the Liabilities of Borrower to Bank;

	
 

	
 

	
 

	
          (f)
  issuance of an injunction or attachment against property of, the general
  assignment by, judgment against or filing of a petition in bankruptcy by or
  against Borrower or any endorser, guarantor or surety for any of the
  Liabilities of Borrower to Bank; the filing of an application in any court
  for a receiver for Borrower or any endorser, guarantor or surety for any of
  the Liabilities of Borrower to Bank; or the death, dissolution, incapacity or
  liquidation of Borrower or of any endorser, guarantor or surety for any of
  the Liabilities of Borrower to Bank;

	
 

	
 

	
 

	
          (g)
  calling of a meeting of creditors, appointment of a committee of creditors or
  liquidation agents, or offering of a composition or extension to creditors
  by, for or of

19

          Borrower or by, for or of any
endorser, guarantor or surety for any of the Liabilities of Borrower to Bank;

	
 

	
 

	
 

	
          (h)
  bankruptcy or Insolvency of Borrower or of any of Borrower’s owners, or of
  any endorser, guarantor or surety for any of the Liabilities of Borrower to
  Bank;

	
 

	
 

	
 

	
          (i)
  any change in the management, nature, control or structure of Borrower
  without the prior written consent of Bank;

	
 

	
 

	
 

	
          (j)
  failure of Borrower or any other person or entity, as applicable, to maintain
  any insurance required hereunder and/or assigned or pledged to Bank in
  connection herewith;

	
 

	
 

	
 

	
          (k)
  occurrence or continuation of any default or event of default by or
  attributable to Borrower under or in connection with any mortgage, lease,
  security agreement, note, bond, indenture, loan agreement or similar
  instrument or agreement to which Borrower is now or may hereafter be a party
  or by which Borrower or any of its property (including, without limitation,
  the Collateral) is now or may hereafter be bound or affected;

	
 

	
 

	
 

	
          (l)
  fraud or misrepresentation by or on behalf of Borrower or any guarantor in
  its transactions with Bank;

	
 

	
 

	
 

	
          (m)
  such a change in the condition or affairs (financial or otherwise) of
  Borrower or of any endorser, guarantor or surety for any of the Liabilities
  of Borrower to Bank or of the Collateral or any other source of repayment of
  or security for any of the Liabilities which, in the opinion of Bank, impairs
  Bank’s security or increases its risk;

	
 

	
 

	
 

	
          (n)
  any breach or violation of or failure to abide by any warranty, covenant,
  term or provision of this Credit Agreement, the Note or any of the other Loan
  Documents; Bank’s not obtaining or maintaining a first perfected security
  interest in any of the Collateral; or the termination, cancellation or
  revocation of any of the Loan Documents without Bank’s consent or the
  determination by Bank that any of the Loan Documents is void, voidable or
  unenforceable; 

	
 

	
 

	
 

	
          (o)
  a judgment against Borrower remaining unpaid, unstayed or undismissed for a
  period of more than ten (10) days; 

	
 

	
 

	
 

	
          (p)
  Borrower discontinuing doing business for more than five (5) consecutive
  calendar days during any year for any reason, unless such discontinuation is
  caused by a force majeure or other significant disruption in the
  financial and business markets that is beyond the Borrower’s control; or

	
 

	
 

	
 

	
          (q)
  any default or event of default under the Note or any of the other Loan
  Documents.

	
 

	
 

          It
is expressly understood and agreed that neither (a) the provisions above
or any of the other terms of any of the Loan Documents nor (b) Borrower’s
or any other person’s compliance

20

or
non-compliance with this Credit Agreement or any of the other Loan Documents
shall abrogate or restrict Bank’s right to demand payment in full of the
Revolving Line and all other Liabilities at any time in Bank’s sole discretion.

SECTION 10. Power to Sell or Collect
Collateral. 

          Upon
the occurrence of any of the above events of default and at any time
thereafter, Bank shall have, in addition to all other rights and remedies, the
remedies of a secured party under the Uniform Commercial Code of Texas
(regardless of whether the Uniform Commercial Code has been enacted in the
jurisdiction where rights or remedies are asserted), including, without
limitation, the right to take possession and dispose of the Collateral, and for
that purpose Bank may, so far as Borrower can give authority therefor, enter
upon any premises on which the Collateral may be situated and remove the same
therefrom or take possession of same and/or store the same on such premises for
a reasonable time pending disposition under the terms of this Credit Agreement
or applicable law. Bank may require Borrower to assemble the Collateral and
make it available to Bank at a place designated by Bank which is reasonably
convenient to both parties. Unless the Collateral is perishable or is of a type
customarily sold on a recognized market, Bank shall give to Borrower at least
five (5) days’ prior written notice of the time and place of any public sale of
Collateral or of the time after which any private sale or any other intended
disposition is to be made. Bank may, at any time, in its discretion, transfer
any securities or other property constituting Collateral into its own name or
that of its nominee and receive the income therefrom and hold the same as
security for the Liabilities or apply it on principal, interest, charges or
expenses due on Liabilities in any manner deemed appropriate by Bank. Bank may
demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose or
realize upon Collateral as Bank may determine, whether or not Liabilities or
Collateral are then due, and Bank may receive, open and dispose of mail
addressed to Borrower and sign and endorse notes, checks, drafts, money orders,
certificates and documents of title and related forms or other evidences of
payment, shipment or storage or any form of Collateral on behalf of and in the
name of Borrower as Borrower’s attorney-in-fact for such purpose. Bank may
apply Collateral and the Proceeds from any Collateral against the Liabilities
secured hereby in any manner deemed appropriate by Bank. The enumeration of the
foregoing rights is not intended to be exhaustive, and the exercise of any
right shall not preclude the exercise of any other rights, all of which shall
be cumulative. As against the obligations secured hereby, Borrower hereby
expressly waives all claims and all rights to claim any exemptions, both as to
personal and real property, allowed or allowable under the Constitution or laws
of the United States, the State of Texas or any other jurisdiction. Any notice to
Borrower of sale, disposition or other intended action by Bank, required by law
to be given to Borrower, sent to Borrower at the address of Borrower shown on
the first page of this Credit Agreement or at such other address of Borrower as
may from time to time be shown on Bank’s records, at least five (5) days prior
to such action, shall constitute reasonable notice to Borrower. Bank may resort
to any security given by this Credit Agreement or to any other security now
existing or hereafter given to secure the payment of Borrower’s Liabilities, in
whole or in part, and in such portions and in such order as may seem best to
Bank in its sole discretion, and any such action shall not in any way be
considered as a waiver of any of the rights, benefits, or security interests
evidenced by this Credit Agreement or any of the other Loan Documents. Bank
may, at all times, proceed directly against Borrower to enforce payment of
Borrower’s Liabilities and shall not be required first to enforce its rights in
the Collateral or any other security granted to it. Bank shall not be required
to take any action of 

21

any kind to
preserve, collect, or protect Bank’s or Borrower’s rights in the Collateral or
any other security granted to Bank.

SECTION 11. Set Off.

          Bank
and any participant and any holder of all or any part of the Liabilities are
given hereby as additional security for all Liabilities a continuing lien and
security interest in and upon any and all moneys, securities and other property
of Borrower and the Proceeds thereof, now or hereafter held or received by or
in transit to Bank (or such participant or holder) from or for Borrower,
whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposit balances (general or special) and
credits of Borrower with, and any and all claims of Borrower against Bank (or
such participant or holder) at any time existing, and upon the occurrence of an
event of default hereunder, Bank (or such participant or holder) may apply or
set off the same against the Liabilities secured hereby or by any of the other
Loan Documents in any manner deemed appropriate by Bank (or such participant or
holder). Borrower agrees that any other person or entity purchasing a
participation from Bank may exercise all its rights of payment (including the
right of set-off) with respect to such participation as fully as if such person
or entity were the direct creditor of Borrower in the amount of such
participation.

SECTION 12. Waivers.

          Borrower
waives demand, presentment, protest, notice of protest, notice of intent to
accelerate, notice of acceleration, notice of acceptance of this Credit
Agreement, and notice of advances and loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect both to the Liabilities
and Collateral, Borrower assents to any extension or postponement of the time
of payment or any other indulgence, to any substitution, exchange or release of
any or all of the Collateral, to the addition or release of any party or person
primarily or secondarily liable, to the acceptance of partial payments thereon
and the settlement, compromising or adjusting of any thereof, all in such
manner and at such time or times as Bank may deem advisable. Bank shall have no
duty as to the collection or protection of any or all of the Collateral or any
income therefrom, nor as to the preservation of any rights against prior
parties, nor as to the preservation of any rights pertaining thereto beyond the
safe custody of Collateral in its possession. Bank may exercise its rights with
respect to Collateral without resorting or regard to other Collateral or
sources of reimbursement for the Liabilities. Bank shall not be deemed to have
waived any of its rights upon or under any of the Liabilities or Collateral
unless such waiver be in writing and signed by Bank. No course of dealing and
no delay or omission on the part of Bank in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion
shall not be construed as a bar to or waiver of any right on any future
occasion. All rights and remedies of Bank with respect to Liabilities or
Collateral, whether evidenced hereby, by any of the other Loan Documents or by
any other instrument or paper, shall be cumulative and may be exercised
singularly or concurrently. Bank reserves the right to assess and collect a fee
in connection with any agreement by Bank to waive the violation of any covenant
contained in the Loan Documents or to waive or forego its rights and remedies
upon the occurrence of an event of default. This section shall not in any
respect obligate Bank to waive the violation of any 

22

covenant or to
forego its rights and remedies upon the occurrence of an event of default,
which Bank may or may not do in its sole discretion.

SECTION 13. Expenses; Proceeds of Collateral.

          Irrespective
of whether the proceeds of the Revolving Line are disbursed, Borrower shall pay
all fees and expenses, including, without limitation, legal fees and expenses,
filing fees, insurance premiums and expenses, appraisal fees, recording costs
and taxes (except taxes measured by Bank’s income) incurred by Bank or Borrower
from time to time in connection with the preparation and closing, filing,
administration, amendment and modification of the Revolving Line, this Credit
Agreement, the Note, and the other Loan Documents and those documents and
instruments associated with the perfection and creation of the security
interests and other rights granted pursuant hereto or pursuant to any of the
other Loan Documents and Bank’s selling, negotiating, documenting and/or
enforcing participations in the Revolving Line and the Loan Documents. Borrower
shall pay to Bank on demand any and all such fees and expenses incurred or paid
by Bank, together with any and all fees, expenses and costs (a) of
collection or (b) otherwise incurred or paid by Bank in protecting, enforcing
or realizing its rights upon or with respect to any of the Liabilities, the
Loan Documents or the Collateral (including, without limitation, reasonable
counsel fees, including, without limitation, those incurred in connection with
any appeal or any bankruptcy proceedings). After deducting all of said fees and
expenses, the residue of any proceeds of collection or sale of Liabilities or
Collateral shall be applied to the Liabilities and interest, charges and
expenses constituting or related to the Liabilities in such order of preference
as Bank may determine, proper allowance for Liabilities not then due being
made, and, to the extent allowed by law, without limiting any of Borrower’s or
any guarantor’s obligations or any of Bank’s rights under the Loan Documents, Borrower
and guarantors shall remain liable for any deficiency. In addition and without
limiting the foregoing, Borrower shall pay and shall indemnify Bank for all
fees, losses, costs and expenses incurred by Bank in connection with the
letters of credit and/or the letters of credit documents, including, without
limitation, legal fees and expenses, arising from or related to the letters of
credit and/or the letters of credit documents.

SECTION 14. Duration; Extension. 

          The
Revolving Line shall terminate on the Maturity Date, at which time all
principal, interest, charges and expenses outstanding hereunder, under the Note
or under any of the other Loan Documents shall be due and payable in full
unless due sooner under the terms of the Note, this Credit Agreement or any of
the other Loan Documents. It is understood that any extension hereof may
require a revision of certain provisions of this Credit Agreement. No
modification or amendment of this Credit Agreement or extension of the Maturity
Date shall be effective unless placed in writing and duly executed by Bank and
Borrower. It is expressly agreed that this Credit Agreement shall survive the
maturity or termination of the Revolving Line in all respects necessary for
Bank to exercise its rights and remedies hereunder and with respect to the
Collateral. The maturity or termination of the Revolving Line shall in no way
affect any transactions entered into or rights created or obligations incurred
prior to such maturity or termination; rather, such rights and obligations
shall be fully operative until the same are fully disposed of, concluded and/or
liquidated. Without limitation to the generality of the foregoing, such
maturity or termination shall not release nor diminish any of (i) Borrower’s
obligations and

23

agreements, or
(ii) Bank’s rights and remedies arising hereunder or in connection
herewith until full and final payment and performance of all of the
Liabilities. This Credit Agreement shall be a continuing agreement in every
respect.

SECTION 15. General.

          Any
demand upon or notice to Borrower that Bank may elect to give shall be
effective (i) upon delivery if such notice is given personally, or
(ii) upon the third day following the date of dispatch if deposited in the
mails, addressed to Borrower at the address noted on the first page of this
Credit Agreement or, if Borrower has notified Bank in writing of a change of
address, to Borrower’s last address so notified, or (iii) upon receipt if
by facsimile, telecopy, or email. Demands or notices addressed to Borrower’s
address at which Bank customarily communicates with Borrower shall also be
effective. If at any time or times by assignment or otherwise Bank transfers
any of the Liabilities (either separately or together with the Collateral
therefor), such transfer shall carry with it Bank’s powers and rights under
this Credit Agreement and the other Loan Documents with respect to the
Liabilities and/or Collateral transferred, and the transferee shall become
vested with said powers and rights whether or not they are specifically
referred to in the transfer. If and to the extent Bank retains any of the
Liabilities or Collateral, Bank will continue to have the rights and powers
herein set forth with respect thereto. All notices provided to Bank by Borrower
under or related to any of the Loan Documents, the Liabilities or the
Collateral, including, without limitation, under any one or more Sections of
the Texas Uniform Commercial Code, shall be sent to the address of Bank noted
on the first page of this Credit Agreement, Attention: Structured Lending, with
a copy to Compass Bank, P.O. Box 11830, Birmingham, Alabama 35202; no notice
sent to Bank shall be effective until received by Bank. THE NOTE, THIS CREDIT
AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS, AND ALL RIGHTS AND OBLIGATIONS
HEREUNDER AND THEREUNDER, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICT OF LAWS RULE OF SUCH
JURISDICTION THAT WOULD REQUIRE REFERENCE TO THE LAWS OF SOME OTHER
JURISDICTION SHALL BE DISREGARDED. ANY SUITS, CLAIMS OR CAUSES OF ACTION
ARISING DIRECTLY OR INDIRECTLY FROM THIS CREDIT AGREEMENT, THE NOTE, THE OTHER
LOAN DOCUMENTS OR ANY OTHER AGREEMENTS OR INSTRUMENTS BETWEEN BANK AND BORROWER
RELATING TO SUCH DOCUMENTS MAY BE BROUGHT IN A COURT OF APPROPRIATE
JURISDICTION IN DALLAS COUNTY, TEXAS AND OBJECTIONS TO VENUE AND PERSONAL
JURISDICTION IN SUCH FORUM ARE HEREBY EXPRESSLY WAIVED. THIS CREDIT AGREEMENT
HAS BEEN NEGOTIATED AND IS BEING EXECUTED AND DELIVERED IN THE STATE OF TEXAS,
OR IF EXECUTED BY BORROWER ELSEWHERE, SHALL BECOME EFFECTIVE UPON BANK’S
RECEIPT AND ACCEPTANCE OF THE EXECUTED ORIGINAL OF THIS CREDIT AGREEMENT IN THE
STATE OF TEXAS; PROVIDED, HOWEVER, THAT BANK SHALL HAVE NO OBLIGATION TO GIVE,
NOR SHALL BORROWER BE ENTITLED TO RECEIVE ANY NOTICE OF SUCH RECEIPT AND
ACCEPTANCE FOR THIS CREDIT AGREEMENT TO BECOME A BINDING OBLIGATION OF
BORROWER. IT IS INTENDED, AND BORROWER AND BANK SPECIFICALLY AGREE, THAT THE
LAWS OF THE STATE OF TEXAS 

24

GOVERNING
INTEREST SHALL APPLY TO THIS TRANSACTION. BORROWER HEREBY ACKNOWLEDGES THAT (I)
THE NEGOTIATION, EXECUTION, AND DELIVERY OF THE LOAN DOCUMENTS CONSTITUTE THE
TRANSACTION OF BUSINESS WITHIN THE STATE OF TEXAS, (II) ANY CAUSE OF ACTION
ARISING UNDER ANY OF SAID LOAN DOCUMENTS WILL BE A CAUSE OF ACTION ARISING FROM
SUCH TRANSACTION OF BUSINESS, AND (III) BORROWER UNDERSTANDS, ANTICIPATES, AND
FORESEES THAT ANY ACTION FOR ENFORCEMENT OF PAYMENT OF THE REVOLVING LINE OR
THE LOAN DOCUMENTS MAY BE BROUGHT AGAINST IT IN THE STATE OF TEXAS. TO THE
EXTENT ALLOWED BY LAW, BORROWER HEREBY SUBMITS TO JURISDICTION IN THE STATE OF
TEXAS FOR ANY ACTION OR CAUSE OF ACTION ARISING OUT OF OR IN CONNECTION WITH
THE REVOLVING LINE OR THE LOAN DOCUMENTS AND WAIVES ANY AND ALL RIGHTS UNDER
THE LAWS OF ANY STATE OR JURISDICTION TO OBJECT TO JURISDICTION OR VENUE WITHIN
DALLAS COUNTY, TEXAS; NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN THIS
PARAGRAPH SHALL PREVENT BANK FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS
AGAINST BORROWER, ANY GUARANTOR, ANY SECURITY FOR THE REVOLVING LINE, OR ANY OF
BORROWER’S OR ANY GUARANTOR’S PROPERTIES IN ANY OTHER COUNTY, STATE, OR
JURISDICTION. INITIATING SUCH ACTION OR PROCEEDING OR TAKING ANY SUCH ACTION IN
ANY OTHER STATE OR JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER BY BANK
OF ANY OF THE FOREGOING. Nothing contained herein, or in any of the documents
contemplated hereby, shall be deemed to render Bank on the one hand, and
Borrower on the other hand, partners or venturers for any purpose. This Credit
Agreement is intended to take effect as a sealed instrument.

SECTION 16. Miscellaneous.

          In
the event of actual conflict in the terms and provisions of this Credit
Agreement and any of the other Loan Documents or any other document, instrument
or agreement executed in connection with this Credit Agreement or described or
referred to in this Credit Agreement, the terms and provisions most favorable to
Bank shall control. No modification, consent, amendment or waiver of any
provision of this Credit Agreement or any of the other Loan Documents, nor
consent to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by Bank, and then shall be effective only
in the specific instance and for the purpose for which given. This Credit
Agreement and each of the other Loan Documents are binding upon Borrower, its
successors and assigns, and inure to the benefit of Bank, its successors and
assigns. Borrower may not assign or delegate any of its rights or obligations
under the Revolving Line, this Credit Agreement or any of the other Loan
Documents. All representations and warranties of Borrower herein, and all covenants
and agreements of Borrower herein, in the other Loan Documents, or in any other
document delivered hereunder or in connection herewith, shall survive the
execution of this Credit Agreement and shall be deemed continuing
representations, warranties, covenants and agreements.

25

          This
Credit Agreement and each of the other Loan Documents shall be deemed to be
drafted by all parties hereto and shall not be construed against any party
hereto. In the event any one or more of the terms or provisions contained in
this Credit Agreement, in any of the other Loan Documents or in any other
instrument or agreement referred to herein or executed in connection with or as
security for the Liabilities, or any application thereof to any person or
circumstances, shall be declared prohibited, illegal, invalid or unenforceable
to any extent in any jurisdiction, as determined by a court of competent
jurisdiction, such term or provision, in that jurisdiction, shall be
ineffective only to the extent of such prohibition, illegality, invalidity or
unenforceability, or as applied to such persons or circumstances, without
invalidating or rendering unenforceable the remaining terms or provisions
hereof or thereof or affecting the validity or enforceability of such term or provision
in any other jurisdiction or as to other persons or circumstances in such
jurisdiction, unless such would effect a substantial deviation from the general
intent and purpose of the parties, make a significant change in the economic
effect of the transactions contemplated herein on Bank, or impair the validity
or perfection of Bank’s security interest in any Collateral or the validity of
any guaranty or other security for the Liabilities, in which event a substitute
provision shall be supplied by the court in order to provide Bank with the
benefits intended by such invalid term or provision. Borrower hereby expressly
acknowledges and agrees that Bank may share with and disclose to any
participant and any of Borrower’s other creditors information regarding
Borrower, the Liabilities and the Collateral as and when Bank determines is
necessary or convenient to establish and confirm to Bank’s and any
participant’s and any other creditor’s satisfaction Bank’s rights against
Borrower and rights and priority in the Collateral. The table of contents
hereto and the headings of the sections, paragraphs and subdivisions of this
Credit Agreement are for convenience of reference only, are not to be
considered a part hereof, and shall not limit or otherwise affect any of the
terms hereof.

SECTION 17. Compliance With Laws.

          It
is the intention of Bank and Borrower to conform strictly to any applicable
usury laws. Accordingly, if the transactions contemplated hereby would be
usurious under any applicable law, then, in that event, notwithstanding
anything to the contrary in this Credit Agreement, the other Loan Documents, or
any other agreement entered into in connection with or as security for or
guaranteeing the Revolving Line, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under applicable law that is
contracted for, taken, reserved, charged, or received by Bank under or in
connection with the Revolving Line shall under no circumstances exceed the
Highest Lawful Rate (as defined below), and any excess shall be canceled
automatically and, if theretofore paid, shall, at the option of Bank, be
credited by Bank on the principal amount of any indebtedness owed to Bank by
Borrower or refunded by Bank to Borrower, and (ii) in the event that the
payment of the Revolving Line is accelerated or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to Bank may never include more than the Highest Lawful Rate and excess
interest, if any, to Bank provided for in this Credit Agreement or the other
Loan Documents or otherwise with respect to the Revolving Line shall be
canceled automatically as of the date of such acceleration or prepayment and,
if theretofore paid, shall, at the option of Bank, be credited by Bank on the
principal amount of any indebtedness owed to Bank by Borrower or refunded by
Bank to Borrower.

26

          “Highest
Lawful Rate” means the maximum non-usurious interest rate that at any time or
from time to time may be contracted for, taken, reserved, charged, or received
on amounts due to Bank, under laws applicable to Bank with regard to the
Revolving Line that are presently in effect or, to the extent allowed by law,
under such applicable laws that allow a higher maximum non-usurious rate than
applicable laws now allow.

SECTION 18.       Amendment
and Restatement.

          This
Credit Agreement amends and restates that certain Revolving Credit and Security
Agreement dated as of December 14, 2004, as it may have been previously
amended, restated or modified.

          IN WITNESS WHEREOF, the parties hereto have
hereunder set their hands and seals on this ____ day of __________ , 2007.

[Remainder of Page Intentionally Omitted;
Signature Pages Follow]

27

	
 

	
 

	
 

	
 

	
BORROWER:

	
 

	
 

	
UNIVERSAL POWER GROUP, INC.,

	
 

	
a Texas corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
 

	
 

	

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
BANK:

	
 

	
 

	
Witness:

	
COMPASS BANK 

	
 

	
 

	
 

	

	
By:

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
 

	
 

	

	
 

	
Title:

	
 

	
 

	
 

	

28

CORPORATE ACKNOWLEDGMENT

STATE OF
______________

COUNTY OF
____________

          I,
the undersigned, Notary Public in and for said County in said State, hereby
certify that _______________, whose name as _________________ of UNIVERSAL
POWER GROUP, INC., a Texas corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, he, as such ___________ and
with full authority, executed the same voluntarily for and as the act of said
corporation.

          Given
under my hand this the _______day of __________, 2007.

	
 

	
 

	
 

	
 

	
___________________________________________

	
 

	
Notary
  Public

	
[NOTARIAL
  SEAL]

	
My
  commission

	
 

	
expires: _______________________

STATE OF
_______________

COUNTY OF
_____________

          I,
the undersigned, Notary Public in and for said County in said State, hereby
certify that _________________ whose name as _________________
of COMPASS
BANK, an Alabama
banking corporation, is signed to the foregoing instrument and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the instrument, ___he, as such officer and with full authority, executed the
same voluntarily for and as the act of said corporation.

          Given
under my hand this the ________ day of __________, 2007.

	
 

	
 

	
 

	
 

	
___________________________________________

	
 

	
Notary
  Public

	
[NOTARIAL
  SEAL]

	
My
  commission

	
 

	
expires: _______________________

ADDENDUM A

DEFINITIONS

          1.
“Account” and “Account Receivable” shall mean and
include all accounts, accounts receivable, notes, notes receivable, contracts,
contract rights, retail installment sales contracts, drafts, documents,
documents of title, warehouse receipts, bills of lading, title retention and
lien instruments, security agreements, acceptances, instruments, conditional
sales contracts, chattel mortgages, chattel paper, general intangibles, and
other forms of obligation and rights to payment and receivables whether or not
yet earned by performance, including, without limitation, state and federal tax
refunds.  

          2.
“Account Debtor” shall mean the party who is obligated
on or under any Account Receivable.

          3.
“Borrower’s Loan Account” shall mean the account on
the books of Bank in which Bank will record loans and other advances made by
Bank to or on behalf of Borrower pursuant to the Credit Agreement, payments
received on such loans and advances and other appropriate debits and credits as
provided by the Credit Agreement or any of the other Loan Documents.  

          4.
“Collateral” shall mean any and all property in which
Bank acquired, now has, by this Credit Agreement or any of the other Loan
Documents (as defined herein) acquires, or hereafter acquires a security
interest or other rights or interests as security for the Liabilities (as
defined herein) and without limiting the foregoing expressly includes the
property described in Section 4 of the Credit Agreement.

          5.
An “Eligible Account Receivable” shall mean an Account
Receivable of Borrower in which Bank holds a first perfected security interest
which meets each of the following requirements and is otherwise acceptable to
Bank:

	
 

	
 

	
 

	
          (a)
  it arises from the sale or lease of goods or from services rendered, such
  goods have been shipped or delivered to the Account Debtor under such Account
  Receivable and such services have been fully performed and have been accepted
  by the Account Debtor, and Borrower’s full right to payment for all sums due
  from such Account Debtor with respect to such Account Receivable shall have
  been earned and then be due and payable;

	
 

	
 

	
 

	
          (b)
  it is a valid and legally enforceable obligation of the Account Debtor
  thereunder according to its express terms, and is not subject to any offset,
  counterclaim, crossclaim, or other defense on the part of such Account Debtor
  denying liability thereunder in whole or in part;

	
 

	
 

	
 

	
          (c)
  it is not subject to any mortgage, lien, security interest, right of a surety
  under a performance bond or otherwise or similar adverse rights or interests
  whatsoever other than the security interests granted to Bank hereunder;

1

	
 

	
 

	
 

	
          (d)
  it is evidenced by an invoice, dated the date of shipment (in the case of
  goods sold or leased) (other than with respect to an Approved Bill and Hold)
  or the date of performance (in the case of services rendered) and having
  payment terms acceptable to Bank, rendered to such Account Debtor, and is not
  evidenced by an instrument, note, draft, title retention and lien instrument,
  security agreement, acceptance, conditional sales contract, chattel mortgage
  or chattel paper and further, if requested by Bank, a copy of such invoice
  shall have been delivered to and received by Bank;

	
 

	
 

	
 

	
          (e)
  it is not owing by an Account Debtor whose obligations with respect to which
  Bank, acting in its discretion, shall have notified Borrower in writing are
  not deemed to constitute an Eligible Account Receivable;

	
 

	
 

	
 

	
          (f)
  it is not due from an affiliated or related corporation or entity, subsidiary
  corporation or entity, parent corporation or entity, or any owner, officer,
  director, manager or employee of Borrower or of any such affiliated, related,
  subsidiary, or parent corporation or entity, or any individual who is a
  relative of any one or more of the foregoing by blood or marriage;

	
 

	
 

	
 

	
          (g)
  it does not constitute, require or provide for progress billings, retainages
  or deferred payments under a contract not fully performed;

	
 

	
 

	
 

	
          (h)
  it does not constitute, in whole or in part, interest or finance charges on
  outstanding balances, any amount received as a down payment or prepayment or
  other principal reduction or similar payment, any chargebacks or contra
  amounts or accounts;

	
 

	
 

	
 

	
          (i)
  it is an Account Receivable with respect to which no return, repossession,
  rejection, cancellation, or repudiation shall have occurred or have been
  threatened;

	
 

	
 

	
 

	
          (j)
  it is an Account Receivable with respect to which Borrower continues to be in
  full conformity with the representations, warranties and covenants of
  Borrower made with respect thereto;

	
 

	
 

	
 

	
          (k)
  it is not subject to any sales terms, trial terms, sales-or-return terms,
  consignment terms, guaranteed sales or performance terms, minimum sales
  terms, C.O.D. terms, cash terms, or similar terms or conditions;

	
 

	
 

	
 

	
          (l)
  it is not owed by an Account Debtor that is not an individual residing in the
  United States or Canada or a corporation or partnership organized and validly
  existing under the laws of a state within the United States unless
  the payment of such Account is supported by a letter of credit in form and
  substance and issued by an issuer acceptable to Bank;

	
 

	
 

	
 

	
          (m)
  it is not an Account Receivable subject, in whole or in part, to any “bill
  and hold” or similar arrangement pursuant to which the invoice is delivered
  prior to the actual delivery of the sold or leased goods or the performance
  of the services; 

2

	
 

	
 

	
 

	
 

	
 

	
          (n)
  it is not an Account Receivable which remains unpaid after the earlier of (i) the
  passage of ninety (90) days or more since the relevant invoice date, or (ii) the
  passage of sixty (60) days since the relevant due date;

	
 

	
 

	
 

	
          (o)
  it is not owed by any Account Debtor with respect to which ten percent (10%)
  or more of its total Accounts owing to Borrower remain unpaid after the
  earlier of (i) ninety (90) days from invoice or earlier due date, or (ii) sixty
  (60) days since the relevant due date;

	
 

	
 

	
 

	
          (p) it
  is not an Account owed by an Account Debtor whose aggregate Account balance
  with Borrower exceeds ten percent (10%) of the total value of Borrower’s
  total Accounts (the portion over ten percent [10%] to be considered
  ineligible); provided, however, that on a case-by-case basis throughout the
  term of the Revolving Line, exceptions to the ten percent (10%) threshold
  adjustments set forth herein to those Accounts set above ten percent (10%)
  shall be considered by Bank, in its sole and absolute discretion, based on
  credit worthiness, historical performance, and other factors deemed relevant
  to Bank in its sole discretion.  The
  following exceptions are hereby noted, but may be subject to revision and/or
  removal subsequent to the date hereof: (i) Brinks Home Security (45%),
  and (ii) Radio Shack, Inc. (20%); however, Brinks Home Security shall be
  reduced to 25% and Radio Shack, Inc. shall be reduced to 10% automatically
  upon the reduction by Standard & Poor’s or Moody’s ratings and investment
  services of the senior unstructured debt rating of the aforementioned
  companies to a rating below investment grade; and

	
 

	
 

	
 

	
          (q)
  it is not an Account owed by the United States Government or any other
  governmental body, agency, entity or authority unless such Account arises
  from a government contract that is a United States Government contract in
  form and substance acceptable to Bank (“Government Contract”) and
  Borrower and Bank have completed and executed a Notice of Assignment and an
  Assignment form and all other forms and documents necessary to assign  Borrower’s right, title and interest in
  such Government Contract and all Accounts and other rights arising thereunder
  to Bank and Borrower shall have provided to Bank a copy of the relevant
  Government Contract; and furthermore a Government Contract shall only be an
  Eligible Account to the extent Borrower has invoiced the United States
  Government for payment for amounts then due and owing thereunder and Bank has
  received the United States Government’s acknowledgment of the relevant Notice
  of Assignment.

          6.
“Eligible Inventory” shall mean Borrower’s
finished-goods Inventory in which Bank holds a first perfected security
interest, and which meets each of the following requirements and is otherwise
acceptable to Bank:

	
 

	
 

	
 

	
          (a)
  it is not private label or styled type or otherwise subject to special
  marketing conditions or marketability limitations judged by Bank, in its sole
  discretion, to be unacceptable;

	
 

	
 

	
 

	
          (b)
  it is not parts, supplies, raw materials, nor work in process, nor does it
  include any shipping or packaging materials;

3

	
 

	
 

	
 

	
          (c)
  it is not materials or supplies used or to be used, or consumed or to be
  consumed in the normal course of business of Borrower;

	
 

	
 

	
 

	
          (d)
  it is new and unused; 

	
 

	
 

	
 

	
          (e)
  it is owned by Borrower and is not subject to any lien or security interest
  whatsoever other than the security interest granted to Bank hereunder;

	
 

	
 

	
 

	
          (f)
  it is held for sale in the normal and ordinary course of Borrower’s business;

	
 

	
 

	
 

	
          (g)
  it is located at one of Borrower’s places of business in (i) Dallas,
  Texas, (ii) Oklahoma City, Oklahoma, (iii) Columbus, Georgia or
  (iv) Las Vegas, Nevada;

	
 

	
 

	
 

	
          (h)
  it is not of a type of inventory that is subject to any recall, class action
  litigation, governmental action, order, inquiry or investigation; 

	
 

	
 

	
 

	
          (i)
  it is not located on any leased premises unless Bank has a signed landlord
  subordination agreement from the relevant landlord in form and substance
  acceptable to Bank; 

	
 

	
 

	
 

	
          (j)
  it is not on consignment and no warehouse receipt or document of title is or
  shall have been issued in respect of such Inventory; 

	
 

	
 

	
 

	
          (k)
  it is not Inventory that Bank, in its reasonable discretion, has determined
  to be unmarketable or unacceptable; and

	
 

	
 

	
 

	
          (l)
  it is not an item, type, or class of inventory which turns less than once
  each 365 days.

          Notwithstanding
the foregoing, Borrower and Bank acknowledge and agree that, for purposes of
calculating the Borrower’s Borrowing Base hereunder, a ten percent (10%) slow
moving reserve will be withheld from the value of Eligible Inventory (the “SM
Reserve”).  The SM Reserve will be
re-evaluated during each field exam by the Bank.

          7.
“Funded Debt” shall mean the sum of (a) all
obligations for borrowed money that are required to be shown as a liability
under GAAP standards, plus (b) all of Borrower’s capital lease obligations as listed
on Borrower’s balance sheet as capitalized obligations; provided, however, that
with respect to subsection (a) of this definition, the calculation shall only
include the current portion of the obligations owed to Zunicom according to
GAAP standards rather than the entire loan balance owed to Zunicom.

          8.
“GAAP” means generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the
circumstances as of the date of determination, consistently applied.

4

          9.
“Insolvency” of Borrower or any other person or entity
shall mean that there shall have occurred with respect to Borrower or such
other person or entity one or more of the following events:  dissolution, termination of existence,
liquidation, insolvency, business failure, appointment of a receiver of any
part of the property of, assignment for the benefit of creditors by or against
Borrower or such other person or entity, or institution of any action or
proceeding with respect to Borrower or such other person or entity under or
pursuant to any insolvency laws relating to the relief of debtors by or against
Borrower or such other person or entity, institution of proceedings in
bankruptcy or with respect to the readjustment of indebtedness, reorganization,
composition or extension by or against Borrower or such other person or entity
(including, without limitation, under or pursuant to the United States
Bankruptcy Code, as amended, or under any similar law at any time enacted), or
if any action shall be taken for the purpose of effecting any of the foregoing.

          10.
“Inventory” shall mean all of Borrower’s (or any other
entity’s, as applicable) inventory (as defined in the Uniform Commercial Code
as enacted in the State of Texas, or in any other jurisdiction) and all
finished goods, other goods, merchandise and other personal property now owned
or hereafter acquired by Borrower which are held for sale, lease, or rental or
are furnished or to be furnished under a contract of service and all raw
materials, work in process, component parts, materials or supplies used or to
be used, or consumed or to be consumed, in Borrower’s business, and related
products and all goods represented thereby, wherever located, and all such
goods that may be reclaimed or repossessed from or returned by Borrower’s
customers, and all shipping and packaging materials relating to any of the
foregoing.  

          11.
“Liabilities” shall mean any and all obligations,
indebtedness and liabilities of Borrower to Bank or any affiliate of Bank of
every kind and description, whether direct or indirect, absolute or contingent,
joint or several, due or to become due, liquidated or unliquidated, now
existing or hereafter arising, and all extensions, modifications, renewals, and
refinancings thereof, regardless of how such Liabilities arise or by what
agreement or instrument (if any) they may be evidenced and include obligations
to perform acts and refrain from taking actions as well as obligations to pay
money.  Without limiting the foregoing,
Liabilities shall specifically include all liabilities and obligations of
Borrower hereunder and the obligation to repay the indebtedness evidenced by
the Note.  Without limiting the
foregoing, Liabilities also shall include all obligations heretofore, now or
hereafter incurred by Borrower under any agreement between Borrower and Bank or
any affiliate of Bank, whether now existing or hereafter entered into,
including, without limitation, any agreement which provides for an interest
rate, currency, equity, credit or commodity swap, cap, floor or collar, spot or
foreign currency exchange transaction, cross currency rate swap, currency
option, any combination of, or option with respect to, any of the foregoing or
similar transactions, for the purpose of hedging Borrower’s exposure to
fluctuations in interest rates, exchange rates, currency, stock, portfolio or
loan valuations or commodity prices.  Without limiting the foregoing, Liabilities
shall specifically include all liabilities and obligations of Borrower
evidenced by or arising under or in connection with (a) this Credit
Agreement; (b) the Note; and (c) any letters of credit heretofore,
now or hereafter issued by Bank at Borrower’s request (the “letters of
credit”) and any related promissory notes, documents, instruments and
agreements. 

          12.
“Loan Documents” shall mean and include the Note, the Credit
Agreement,
any letter of credit documents,
and any subordination agreements, intercreditor agreements and other

5

agreements,
documents and instruments now or hereafter evidencing, securing, guaranteeing
or relating to the Revolving Line or any of the other Liabilities, obligations
or indebtedness of Borrower to Bank, as the same may be amended.

          13.
“Loan Party” shall mean the Borrower and any
subsidiary or other Person executing a guaranty or a security agreement with
respect to the Liabilities.

          14.
“Permitted Liens” shall mean any of the following (but
only to the extent the same do not or could not, in Bank’s reasonable opinion,
jeopardize Bank’s rights or priority in or to any Collateral):

	
 

	
 

	
 

	
          (a)
  liens of carriers, warehousemen, landlords, mechanics, laborers and
  materialmen arising by law for sums which are (i) not yet due or (ii) being
  diligently contested in good faith and with respect to which Borrower has set
  aside sufficient reserves with Bank; 

	
 

	
 

	
 

	
          (b)
  liens for taxes which are (i) not yet due or (ii) being diligently
  contested in good faith by appropriate proceedings and with respect to which
  Borrower has set aside sufficient reserves with Bank;

	
 

	
 

	
 

	
          (c)
  security interests in Borrower’s equipment provided that they are limited to
  those securing a portion of the purchase price of said equipment.

          15.
“Proceeds” shall mean all cash proceeds, non-cash
proceeds and all forms of payment and other property received or due from the
sale, lease, rental, transfer, disposition, licensing, collection, use or
exchange of property constituting Collateral hereunder and any and all claims
against any third party for loss of or damage to any Collateral, including
insurance, contract and tort claims, and further, without limiting the
generality of the foregoing, Proceeds shall include all Accounts, checks, cash,
money orders, drafts, chattel paper, general intangibles, instruments, notes
and other documents evidencing payment and payment obligations to Borrower for
the sale, lease, rental, transfer, disposition, licensing, collection, use or
exchange of Collateral.

          16.
“Responsible Officer” means the chief executive
officer, president, chief financial officer, treasurer or assistant treasurer
of any Loan Party.  Any document
delivered hereunder that is signed by a Responsible Officer of each such Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

          17.
“Subordinated Debt” shall mean all such debts,
obligations or indebtedness owing from Borrower to others which have been and
remain subordinated to all Liabilities owing from Borrower to Bank pursuant to
an Amended and Restated Creditor’s Subordination Agreement(s) in form and
substance acceptable to Bank.

          18.
Any terms used to describe Bank’s security interest
under the Credit Agreement not specifically defined in the Credit Agreement
shall have the meanings and definitions given those terms under the Uniform
Commercial Code of Texas as may be amended. 

6

EXHIBIT A

ACCOUNTS RECEIVABLE AND INVENTORY
RECONCILIATION

Number:_____________

Borrower:___________________
Date:________________

ACCOUNTS
RECEIVABLE AND INVENTORY REPORT

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1.

	
Accounts Receivable

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
Balance Last Report

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
b.

	
Add: New Accounts Receivable

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Less: Sales Returns

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
d.

	
Other Adjustments

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
e.

	
Net New Receivables

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
f.

	
Less: Customer Remittances (No(s). _______)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
g.

	
Total Value of Accounts Receivable

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
h.

	
Less: Ineligible Receivables

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
i.

	
Net Eligible Accounts Receivable for this Period (not
  to exceed $__________)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
Inventory

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
Inventory Last Report (Line 2d)

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Add: Purchases

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Less: Outgoing Inventory

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
d.

	
Total Inventory

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
e.

	
Less: Ineligible Inventory

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
f.

	
Total Eligible Inventory for this
  Period

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
LOAN REQUEST

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
Loan Value of Above Collateral

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
Receivables    % of Line 1(i) above

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Inventory    % of Line 2(f) above

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Total Collateral Loan Value this Period (not to
  exceed $________)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
4.

	
Loan Balance

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
Loan Balance Last Report (line 4d)

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Add: Draws

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Less: Payments

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
d.

	
Loan Balance for this Period

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
5.

	
Excess (Deficit)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
6.

	
A Listing of Ineligible Accounts Receivable and
  Ineligible Inventory is attached hereto

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

- BORROWER CERTIFICATION -

The
undersigned hereby warrants that (i) the foregoing is a correct statement
regarding new accounts receivable, collection of accounts receivable and/or
certification of inventory and that the reconciliation figures are fully and
correctly set forth and (ii) there has been no change in Borrower’s state of
organization, chief executive office or organizational identification number.

Authorized

Signature ______________________________________ Title ________________________________________________

EXHIBIT B

COMPLIANCE CERTIFICATE

          Reference
is made to that certain Revolving Credit and Security Agreement (the “Credit
Agreement”) executed by UNIVERSAL POWER GROUP, INC., a Texas
corporation (“Borrower”) in favor of COMPASS BANK (“Bank”), dated as June 19, 2007 and
executed
as of July __, 2007. Capitalized terms used but not defined herein shall have
the meaning attributed to the same in the Credit Agreement. Borrower hereby
represents, warrants and covenants to and in favor of Bank as follows:

	
 

	
 

	
 

	
          (1)
  no default or event of default (or any event that would constitute an event
  of default but for the requirement that notice be given or time elapse or
  both) has occurred or is continuing under the Credit Agreement or any of the
  other Loan Documents or under any other loans, notes, debentures, bonds,
  leases or other obligations of Borrower now outstanding;

	
 

	
 

	
 

	
          (2)
  all representations, warranties and covenants contained in the Credit
  Agreement and the other Loan Documents are expressly reaffirmed and restated
  as of the date hereof;

	
 

	
 

	
 

	
          (3)
  neither Borrower nor, to the best of Borrower’s knowledge, any other party
  has any matured or unmatured claim, offset or cause of action against Bank or
  its officers, agents or affiliates arising under or in connection with the
  Loan Documents or the Liabilities;

	
 

	
 

	
 

	
          (4)
  all financial statements, reports and other documents delivered to Bank on or
  before the date hereof under or in connection with the Loan Documents are, as
  of the relevant date, complete and accurate and may be relied upon by Bank;
  and

	
 

	
 

	
 

	
          (5)
  the Borrower is in compliance with the financial covenants contained in
  Section 6 of the Credit Agreement as set forth on Annex A attached
  hereto.

	
 

	
 

	
 

	
 

	
UNIVERSAL POWER GROUP, INC.,

	
 

	
a Texas
  corporation

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
 

	
 

	

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
Date:

	
 

	
 

	
 

	

1

ACKNOWLEDGEMENT

STATE
OF______________

COUNTY
OF____________

          I,
the undersigned, Notary Public in and for said County in said State, hereby
certify that _____________________, whose name as __________________ of UNIVERSAL POWER GROUP, INC., a Texas
corporation, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such __________________ and with full authority, executed
the same voluntarily for and as the act of said corporation.

          Given
under my hand this the _____ day of _______________, ______.

	
 

	
 

	
 

	
 

	
___________________________________________________

	
 

	
Notary
  Public

	
[NOTARIAL
  SEAL]

	
 

	
 

	
My
  Commission Expires: _____________________________

2

Schedule 2.1

Subsidiaries

None

Schedule 2.9

Places of Business

	
 

	
Corporate Office

	
1720 Hayden Drive

	
Carrollton, TX 75006

	
 

	
Oklahoma Branch

	
11605-B N Santa Fe

	
Oklahoma City, OK 73114

	
 

	
Nevada Branch

	
5480 S Valley View Blvd

	
Las Vegas, NV 89118

	
 

	
Georgia Branch

	
5224 Miller
  Road, Ste 3B

	
Columbus, GA
  31909

Schedule
2.17

Patents,
Copyrights, Trademarks, and Licenses

	
 

	
Patents

	
 

	
None

	
 

	
Copyrights

	
 

	
None

	
 

	
Trademarks

	
 

	
Adventure
  Power 

	
Charge ‘n
  Start (3,146,881)

	
UB Scootin’

	
UNILOK
  (3,192,234)

	
 

	
Licenses

	
 

	
None

Schedule 2.18

Judgments and Actions

	
 

	
 

	
 

	
No Judgments

	
 

	
 

	
 

	
Lawsuits

	
 

	
 

	
 

	
 

	
1.

	
Energizer
  Holdings, Inc. and Eveready Battery Company, Inc. (collectively “Eveready”) see comments in
Universal Power Group, Inc. 2006 10K and 2007 1st Qtr 10Q filings

	
 

	
 

	
2.

	
A.J. Gilson
  see comments in Universal Power Group, Inc. 2006 10K and 2007 1st
  Qtr 10Q filings

AMENDED AND RESTATED MASTER REVOLVING
PROMISSORY

NOTE

	
 

	
 

	
 

	
$30,000,000.00

	
Dallas, Texas

	
June 19, 2007

FOR VALUE
RECEIVED, the undersigned, UNIVERSAL POWER
GROUP, INC., a Texas corporation (“Maker”),
promises to pay to the order of COMPASS BANK
(“Payee”), on July 5, 2012 (the “Maturity Date”), the principal
sum of THIRTY MILLION AND NO/100 DOLLARS
($30,000,000.00), or, if less than such amount, the aggregate unpaid
principal amount of all Advances (as defined below) made by Payee to Maker
hereunder, on the terms herein stated, with interest thereon from this date on
the unpaid principal amount hereof from time to time outstanding at the rate of
interest provided below, both principal and interest payable as provided below
in lawful money of the United States of America at the address of Payee set
forth below or at such other place within Dallas County, Texas, as from time to
time may be designated by the holder of this Amended and Restated Master
Revolving Promissory Note (this “Note”).

SECTION 19. terms.

The unpaid
principal of this Note from time to time outstanding shall bear interest prior
to maturity at the rate of interest per annum equal to the lesser of
(a) the Maximum Rate and (b) the LIBOR Index Rate (as hereinafter
defined) for such Interest Period plus the Applicable Margin (the sum
being, the “LIBOR Floating Rate”). The rate of interest on the unpaid
balance of principal of this Note prior to maturity shall be increased or
decreased as the case may be, from time to time as of the effective date of each
change in the LIBOR Index Rate, but at no time greater than the Maximum Rate.
If applicable law provides for a ceiling, that ceiling shall be the indicated
rate ceiling. All interest accruing under this Note shall be calculated on the
basis of a 360-day year applied to the actual number of days elapsed.

Payee may
disburse the principal of this Note to Maker in one or more Advances (herein so
called) from time to time, pursuant to the terms of this Note and the Credit
Agreement (defined below). Maker shall be entitled to receive disbursements of
Advances hereunder when Payee is delivered requests for advances by Maker in
accordance with and pursuant to, and otherwise in compliance with, the terms
and conditions of, that certain Amended and Restated Revolving Credit and
Security Agreement (the “Credit Agreement”), executed by and among Maker
and Payee, dated of even date herewith; provided, however, that at no time
shall the total principal amount outstanding hereunder exceed the face value of
this Note. Each guarantor and any other liable party with respect to the
indebtedness and obligations evidenced hereby are hereinafter referred to
collectively as, the “Guarantors.”

If Payee
determines in good faith (which determination shall be conclusive and binding upon
Maker) that by reason of circumstances affecting the relevant market or for any
other reason, adequate and reasonable means do not exist for ascertaining the
LIBOR Floating Rate for such Interest Period, such Advances shall be made at
the Compass Bank Prime Index Rate (as hereinafter defined)..

Maker shall be
entitled, and in certain instances may be required, to prepay the principal of
the Note from time to time. Maker may borrow, repay, and reborrow up to the 

principal face
amount of this Note. It is contemplated that by reason of prepayments hereon
there may be times when no indebtedness is owing hereunder; but notwithstanding
such occurrences, this Note shall remain valid and shall be in full force and
effect subsequent to each such occurrence until the Maturity Date.
Notwithstanding the foregoing, Maker acknowledges and agrees that, with respect
to letters of credit issued by Payee for the benefit of Maker, at no time
hereunder shall Payee be obligated to issue letters of credit or make advances
thereunder in excess of $1,000,000.00 in the aggregate at any given time
hereunder.

Accrued
interest on the outstanding principal balance that exists from time to time
shall be due and payable monthly in arrears commencing on the 1st day of
August, 2007and continue to
be payable on the same day of each successive calendar month thereafter until
Maturity Date, when all accrued but unpaid interest and all principal amounts
outstanding shall be due and payable in full. Any payment received later than
ten (10) days from the due date thereof must be accompanied by a late fee
payment in the amount of five percent (5%) of the amount of such monthly
payment. Maker shall be entitled to notice of, as well as any applicable grace
period with respect to, any default hereunder as provided in the Credit
Agreement.

SECTION 20. definitions.

“Applicable
Margin” shall mean, on any day, the applicable per annum percentage set
forth at the appropriate intersection in the table shown below, based on the
Funded Debt to EBITDA ratio on the most recent Determination Date:

	
 

	
 

	
 

	
Funded Debt to EBITDA ratio

	
Applicable

  Margin

	
 

	

	

	
 

	
Less than
  1.25 to 1.00

	
1.25%

	
 

	
Greater than
  or equal to 1.25 to 1.00 but less than 1.75 to 1.00

	
1.50%

	
 

	
Greater than
  or equal to 1.75 to 1.00 but less than 2.25 to 1.00

	
1.75%

	
 

	
Greater than
  or equal to 2.25 to 1.00 but less than 2.75 to 1.00

	
2.00%

	
 

	
Greater than
  or equal to 2.75 to 1.00 but less than 3.25 to 1.00

	
2.25%

	
 

	
Greater than
  or equal to 3.25 to 1.00

	
2.50%

	
 

The Applicable
Margin shall
be established as of the last day of each fiscal quarter (each, a “Determination
Date”), beginning on September 30, 2007 (the “Initial Determination
Date”). Any change in the Applicable Margin following each Determination
Date shall be determined based upon the information and computations set forth
in the financial statements and compliance certificate furnished to Payee
pursuant to the Credit Agreement, subject to review and approval of such
computations by the Payee. Each change in the Applicable Margin shall be
effective as of the first day of the fiscal quarter following each
Determination Date, and shall remain in effect until the date that is the first
day of the fiscal quarter following the next Determination Date for which a
change in the Applicable Margin occurs. Notwithstanding the foregoing, during
the period beginning on the date hereof and ending on the Initial Determination
Date, the Applicable Margin shall be 2.0%.

“Compass Bank Prime Index
Rate” shall equal the Compass Bank Index rate announced from time to time
and automatically fluctuating upward and downward with each announcement
without notice to Maker or any other person, which shall be a rate of 

interest per annum equal to
the highest prime rate (or base rate) reported in the Money Rates column or
section of The Wall Street Journal
(or another similar publication selected by Payee, in the event the Wall
Street Journal is no longer published) as announced from time to time by Payee, automatically fluctuating
upward and downward with each announcement without notice to Maker or any other
person, provided that notwithstanding anything contained herein to the
contrary, in no event shall any rate of interest which this Note bears ever
exceed the Maximum Rate.

“LIBOR
Index Rate” shall
mean the rate determined by Payee (rounded upward, if necessary, to the nearest
1/16th of 1%) to be equal to the offered rate (and not the bid rate) in the
London interbank market for deposits in U.S. dollars of amounts comparable to
the principal amount hereof for a period of one (1) month, as reported on the
Telerate Information System on the applicable determination date (or in the
event no such quotation is available on such date on the day most immediately
preceding the determination date on which such a quotation was available). In
the event the Telerate Information Service ceases to be available to Payee or
ceases to provide information sufficient to determine the London interbank
offered rate for periods of one (1) month, the“LIBOR Index Rate” shall mean the London Interbank Offered Rate for
a period of one (1) month as published in the “Money Rates” table of The
Wall Street Journal on the applicable determination date (or in the event
no such quotation is available on such date, as quoted on the day most
immediately preceding the determination date on which such a quotation was
available). In the event the London Interbank Offered Rate for a period of one
(1) month is no longer published in the “Money Rates” table, then Payee will
choose a substitute rate as the LIBOR Index Rate based on comparable
information, which may include quotations from such services as Reuters Monitor
Money Rates Service or Knight Ridder News Service. Each change in the rate
charged hereunder shall become effective without notice to Maker as of the first
(1st) day of each calendar month during the term hereof, but in no
event shall the rate charged hereunder exceed the Maximum Rate (as hereinafter
defined). Maker understands and acknowledges that Payee may from time to time
make various loans at rates of interest having no relationship to the LIBOR
Index Rate, and that the LIBOR Index Rate may not be the lowest interest rate
charged for loans by Payee.

“Maximum
Rate,” as used
herein, shall mean, with respect to each holder hereof (any holder of this Note
shall be referred to herein as a “holder”), the maximum nonusurious interest
rate, if any, that at any time, or from time to time, may under applicable law
be contracted for, taken, reserved, charged or received on the indebtedness
evidenced by this Note under the laws which are presently in effect of the
United States and the State of Texas applicable to such holder and such
indebtedness or, to the extent allowed by law under such applicable laws of the
United States of America and State of Texas which may hereafter be in effect,
which allow a higher maximum non-usurious interest rate than applicable laws
now allow; provided, that in determining the Maximum Rate, due regard shall be
given, to the extent required by applicable law, to any and all relevant payments,
fees, charges, deposits, balances, agreements and calculations which may
constitute or be deemed to constitute interest, or be deducted from principal
to calculate the interest rate or otherwise affect interest rate
determinations, so that in no event shall the Payee contract for, charge,
receive, take, collect, reserve or apply, on the Note, any amount in excess of
the maximum non-usurious rate of interest permitted by applicable law. To the 

extent that Texas law
determines the Maximum Rate, the Maximum Rate shall be determined by utilizing
the “indicated rate ceiling”
from time to time in effect pursuant to the Texas Finance Code (V.T.C.A.
Finance Code Section 303.001 et seq.) (the “Texas Finance Code”) or such successor statute, as then in
effect, governing usury. The Maximum Rate shall not be limited to the
applicable rate ceiling in the Texas Finance Code or such successor statute if
Federal laws or other state laws now or hereafter in effect and applicable to
this Note (and the interest contracted for, charged and collected hereunder)
shall permit a higher rate of interest.

SECTION 21. miscellaneous.

All principal
and interest under this Note which remains in arrears five (5) or more
consecutive days after their respective due dates shall bear interest at the
rate of interest per annum equal to Eighteen Percent (18%) (the “Default
Rate”); provided, however, that in no event shall such Default Rate exceed
the Maximum Rate. Further, in the event Maker shall be in default hereunder or
under the Credit Agreement beyond any applicable notice, grace, and/or cure
periods, Payee may, at its election, accelerate the indebtedness evidenced
hereby, and it shall at once become due and payable, as the holder may elect.
It is further agreed that if this Note is placed in the hands of an attorney
for collection or if collected by suit or through probate or bankruptcy
proceedings, Maker agrees to pay reasonable attorneys’ fees in addition to the
principal and interest then due hereon, together with all costs of collection.

This Note is
secured by the Credit Agreement, to which Credit Agreement reference is made
for a description of the properties covered thereby and the nature and extent
of the rights and powers of the holder of this Note in respect of such properties.
This Note, the Credit Agreement and any other documents or instruments securing
or evidencing this Note are sometimes referred to herein collectively as, the “Loan
Documents.”

Maker and any
other party who is or becomes liable to pay all or any part of this Note, or
who grants any lien or security interest to secure all or any part of this Note
(each called an “other liable party”
below), including but not limited to the Guarantors, and any drawer, acceptor,
endorser, guarantor, surety or accommodation party, severally waive presentment
for payment, demand, notice of demand and of dishonor and nonpayment of this
Note, notice of intention to accelerate the maturity of this Note, notice of
acceleration, protest and notice of protest, diligence in collecting, and the
bringing of suit against any other party.

Further, Maker and any other
liable party severally waive any notice of or defense based upon any agreement
or consent of the holder of this Note made or given from time to time, before
or after maturity, to any of the following: the acceleration, renewal or
extension of this Note; a change in the time or manner of payments required by
this Note; a change in the rates of interest specified in this Note; acceptance
or surrender of security; a substitution of security or subordination,
amendment or release of security; an addition or release of any other liable
party; changes of any sort whatever in the terms of payment of this Note or in
the manner of doing business with Maker; and any settlement or compromise with
Maker or any other liable party on such terms as the holder of this Note may
deem appropriate in its sole and absolute discretion; provided, however, that
the terms of this paragraph shall not apply to any written agreement or consent
of the holder of this Note that is in writing and signed by the holder of this
Note and Maker and/or the Guarantors, including, but not limited to, the Loan
Documents, any documents

on file as
public records, and compromise settlement agreements between the holder of this
Note and Maker and/or the Guarantors.

The holder of
this Note may apply all moneys received from Maker or others, or from any
security (whether held under a security instrument or not), in such manner upon
the indebtedness evidenced or secured by any Loan Documents (whether then due
or not) as such holder may determine to be in its best interest, without in any
way being required to marshal assets or to apply all or any part of such moneys
upon any particular part of such indebtedness. The holder of this Note is not
required to retain, hold, protect, exercise due care with respect to, perfect
security interests in or otherwise assure or safeguard any security for this Note,
and no failure by the holder of this Note to do any of the foregoing and no
exercise or failure to exercise by such holder of any other right or remedy
shall in any way affect any of Maker’s or any other liable party’s obligations
hereunder or under other Loan Documents or affect any security or give Maker or
any other liable party any recourse against the holder of this Note.

It is the
intent of Maker and Payee in the execution of this Note and all other Loan
Documents to contract in strict compliance with applicable usury law. In
furtherance thereof, Maker and Payee stipulate and agree that none of the terms
and provisions contained in this Note, or in any other instrument executed in
connection herewith, shall ever be construed to create a contract to pay for
the use, forbearance or detention of money, interest at a rate in excess of the
Maximum Rate. Neither Maker nor any guarantors, endorsers or other parties now
or hereafter becoming liable for payment of this Note shall ever be obligated
or required to pay interest on this Note at a rate in excess of the Maximum
Rate, and the provisions of this paragraph shall control over all other
provisions of this Note and any other Loan Documents now or hereafter executed
which may be in apparent conflict herewith. Payee expressly disavows any
intention to charge or collect excessive unearned interest or finance charges
in the event the maturity of this Note is accelerated. If the maturity of this
Note shall be accelerated for any reason or if the principal of this Note is
paid prior to the end of the term of this Note, and as a result thereof the
interest received for the actual period of existence of the loan evidenced by
this Note exceeds the applicable maximum lawful rate, the holder of this Note
shall credit the amount of such excess against the principal balance of this
Note then outstanding and thereby shall render inapplicable any and all
penalties of any kind provided by applicable law as a result of such excess
interest; provided, however, that if the principal hereof has been paid in
full, such excess shall be refunded to Maker. If the holder of this Note shall
receive money (or anything else) which is determined to constitute interest and
which would increase the effective interest rate on this Note or the other
indebtedness secured by the Loan Documents to a rate in excess of that
permitted by applicable law, the amount determined to constitute interest in
excess of the lawful rate shall be credited against the principal balance of
this Note then outstanding or, if the principal balance has been paid in full,
refunded to Maker, in which event any and all penalties of any kind under
applicable law as a result of such excess interest shall be inapplicable. If
the holder of this Note shall not actually receive, but shall contract for,
request or demand, a payment of money (or anything else) which is determined to
constitute interest and which would increase the effective interest rate
contracted for or charged on this Note or the other indebtedness evidenced or
secured by the Loan Documents to a rate in excess of that permitted by
applicable law, the holder of this Note shall be entitled, following such

determination,
to waive or rescind the contractual claim, request or demand for the amount
determined to constitute interest in excess of the lawful rate, in which event
any and all penalties of any kind under applicable law as a result of such
excess interest shall be inapplicable. By execution of this Note Maker
acknowledges that Maker believes the loan evidenced by this Note to be
non-usurious and agrees that if, at any time, Maker should have reason to
believe that such loan is in fact usurious, Maker will give the holder of this
Note notice of such condition and Maker agrees that the holder shall have sixty
(60) days after receipt of such notice in which to make appropriate refund or
other adjustment in order to correct such condition if in fact such exists.
Additionally, if, from any circumstance whatsoever, fulfillment of any
provision hereof or of the Credit Agreement or any other Loan Documents shall,
at the time fulfillment of such provision be due, involve transcending the
Maximum Rate then, ipso facto,
the obligation to be fulfilled shall be reduced to the Maximum Rate. The term “applicable law” as used in this
Note shall mean the laws of the State of Texas or the laws of the United
States, whichever laws allow the greater rate of interest, as such laws now
exist or may be changed or amended or come into effect in the future.

Should the
indebtedness represented by this Note or any part thereof be collected at law
or in equity or through any bankruptcy, receivership, probate or other court
proceedings or if this Note is placed in the hands of attorneys for collection
after default, Maker and all endorsers, guarantors and sureties of this Note
jointly and severally agree to pay to the holder of this Note in addition to
the principal and interest due and payable hereon all the costs and expenses of
the holder in enforcing this Note including, without limitation, reasonable
attorneys’ fees and legal expenses.

This Note and
the rights, duties and liabilities of the parties hereunder or arising from or
relating in any way to the indebtedness evidenced by this Note or the
transaction of which such indebtedness is a part shall be governed by and
construed in accordance with the law of the State of Texas and the law of the
United States applicable to transactions within such State.

No amendment
of this Note shall be binding unless expressed in a writing executed by Maker
and the holder of this Note.

This Note
amends, supersedes and restates the Master Revolving Promissory Note dated as
of December 14, 2004, as it has been previously amended, extended and modified. MAKER IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS
COUNTY, TEXAS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS, AND MAKER HEREBY AGREES AND CONSENTS THAT, IN
ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE
LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY TEXAS
OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO MAKER AT THE ADDRESS
INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE FIVE DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Dated
effective as of June 19, 2007 but executed as of this the __ day of July,
2007.

	
 

	
 

	
 

	
Maker’s Address:

	
MAKER:

	
 

	
 

	
1720 Hayden Drive

	
UNIVERSAL POWER GROUP, INC., a

	
Carrollton, Texas 75006

	
Texas corporation

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
 

	
 

	

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
Payee’s Address:

	
 

	
 

	
 

	
 

	
 

	
COMPASS BANK

	
 

	
 

	
8080 N. Central Expressway, Ste. 250

	
 

	
 

	
Dallas, Texas 75206

	
 

	
 

	
Attn: Key Coker

	
 

	
 

AMENDED AND RESTATED CREDITORS’

SUBORDINATION AGREEMENT

This Amended
and Restated Creditors’ Subordination Agreement (the “Agreement”) is
made and entered into by ZUNICOM, INC.,
a Texas corporation (the “Creditor”), for the benefit of COMPASS BANK
and its successors and assigns (“Bank”).

WHEREAS, Universal Power Group, Inc., a Texas
corporation (“Borrower”) has applied to Bank for an increased
revolving line of credit in the principal amount of $30,000,000.00 (the “Loan”);
and

WHEREAS, Creditor
has heretofore loaned Borrower sums of money, has agreed to forebear collection
of sums owed by Borrower to Creditor, and/or may hereafter grant further loans
or forbearances to Borrower; and

WHEREAS, Creditor
has previously executed that certain Creditors’ Subordination Agreement dated
as of December 14, 2004 in favor of Bank; and

WHEREAS, as a
condition to making the Loan, Bank has required that Creditor continue to
subordinate any and all loans and indebtedness heretofore, now or hereafter
owed or owing by Borrower to Creditor to any loan or indebtedness heretofore,
now or hereafter owed or owing from Borrower to Bank, including, without
limitation, any amounts now or hereafter owed or owing under or in connection
with the Loan, as well as execute, deliver and perform this Agreement.

NOW, THEREFORE, in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned
Borrower and Creditor do hereby covenant and agree with Bank as follows:

          SECTION 22. Certain
Definitions. Unless otherwise defined herein, the following terms
have the following meanings:

“Bank
Indebtedness” means the principal of all loans from time to time owing from
Borrower to Bank, all interest, whether now or hereafter accrued (including,
without limitation, interest accrued subsequent to the filing of any petition
under any bankruptcy, insolvency or similar law), on such principal amounts of
such loans and all other indebtedness, obligations and liabilities (including,
without limitation, principal, interest and fees), whether now existing or
hereafter incurred, of Borrower to Bank, including without limitation to the
generality of the foregoing, under or with respect to the Loan or any documents
or instruments executed or delivered in connection therewith.

“Bank Security Documents”
means each and all of the mortgages, loan and security agreements, revolving
credit and security agreements, pledges, assignments, security agreements and
other documents and instruments at any time securing any of the Bank
Indebtedness.

“Subordinated Obligations”
means all indebtedness, obligations and liabilities , whether now or hereafter
existing or incurred, owing from time to time by Borrower to Creditor (plus any
interest heretofore, now or hereafter included therein or accrued thereon,
including, without limitation, any interest accrued subsequent to the filing of
any petition under any bankruptcy, insolvency or similar law). The Subordinated
Obligations shall include the obligations represented by the promissory notes
referenced on the attached Schedule 1.

“Subordinated
Security Documents” means each and all of the mortgages, security
agreements, pledges, assignments and other documents and instruments at any
time securing any of the Subordinated Obligations, subject, however, to Bank’s
consent in accordance with Section 2(d) of this Agreement.

          SECTION
23. Subordination of Subordinated Obligations.

	
 

	
 

	
 

	
 

	
          23.1
  Creditor covenants and agrees that anything in any
  agreement or instrument creating, evidencing or relating to the Subordinated
  Obligations to the contrary notwithstanding, the Subordinated Obligations
  shall be subordinate and junior in right of payment, distribution and lien to
  the Bank Indebtedness, and without limiting the generality of the foregoing:

	
 

	
 

	
 

	
 

	
 

	
          (a)
  Upon payment or distribution of all or any of the assets or securities of
  Borrower of any kind or character, whether in cash, property or securities,
  upon any dissolution, winding up, or total or partial liquidation,
  reorganization, arrangement, adjustment, protection, relief or composition of
  Borrower or its debts, whether voluntary or involuntary or in bankruptcy,
  insolvency, receivership, arrangement, reorganization, relief or other
  proceeding or upon an assignment for the benefit of creditors or any other
  marshalling of the assets and liabilities of Borrower or otherwise, all Bank
  Indebtedness shall first be paid in full in cash before any payment or
  distribution may be made in respect of the Subordinated Obligations, subject
  to any applicable exceptions contained within the Bank Security Documents;
  and

	
 

	
 

	
 

	
 

	
 

	
          (b)
  Subject to any applicable exceptions contained within the Bank Security
  Documents, no direct or indirect payment shall be made in respect of the
  Subordinated Obligations if, at the time of such payment, any Bank
  Indebtedness is outstanding or unpaid or Bank has any obligation to advance
  funds to or for the account of Borrower under any instrument or document.

	
 

	
 

	
 

	
Notwithstanding
  anything to the contrary contained in the foregoing Section 2(a), the parties
  hereto agree that so long as no default exists under the Bank Indebtedness,
  the Creditor may receive all regularly scheduled payments, but not
  prepayments, of principal and interest under the Subordinated Indebtedness.

	
 

	
 

	
 

	
          23.2
  If, notwithstanding the foregoing provisions,
  Creditor shall receive any payment or distribution in respect of the
  Subordinated Obligations at a time when any Bank Indebtedness is outstanding
  or unpaid or Bank has any obligation to advance funds to or for the account
  of Borrower under any instrument or document, then such payment or
  distribution shall be received and held in trust by Creditor apart from
  Creditor’s assets and shall be promptly paid over or delivered to Bank for
  application (in the case of cash) or as collateral for (in the case of
  non-cash property or securities) the payment or prepayment of the Bank
  Indebtedness.

	
 

	
 

	
 

	
          23.3
  Without notice to or assent by Creditor:

	
 

	
 

	
 

	
 

	
 

	
          (a)
  the Bank Indebtedness and the obligations or liabilities of any other party
  or parties (including without limitation any guarantor, endorser or
  co-obligor) in respect of the Bank Indebtedness may, from time to time, in
  whole or in part, be renewed, extended, modified, accelerated, restated,
  compromised or released; and

	
 

	
 

	
 

	
 

	
 

	
          (b)
  any and all mortgages, pledges, assignments, encumbrances, liens or security
  interests (legal or equitable) at any time, present or future, held, given or
  intended to be given for the Bank Indebtedness, and any rights or remedies in
  respect thereof, may, from time to time, in whole or in part, be exchanged,
  sold, surrendered, released, modified, waived, restated or extended by Bank,
  and Bank may permit or consent to any such action or the result of any such
  action;

all as Bank may deem
advisable and all without impairing, abridging, diminishing, releasing or
affecting the subordination provided for herein to the Bank Indebtedness. All
rights and interests of Bank hereunder shall remain in full force and effect
irrespective of any circumstance that might constitute a defense available to,
or a discharge of, Borrower, or any lack of validity or enforceability of any
document or instrument.

	
 

	
 

	
 

	
          23.4
  Creditor hereby represents and warrants to Bank that
  none of the Subordinated Obligations or any other obligations of Borrower to
  Creditor are secured by any assets of Borrower or any other person or
  entity, and covenants and agrees that, unless otherwise consented to in
  writing by Bank, none of the Subordinated Obligations or any other
  obligations of Borrower to Creditor will be secured, directly or indirectly,
  by any of the assets of Borrower or any other person or entity. Without
  limitation to the generality of the foregoing, or any of the other provisions
  hereof, in the event at any time any of the Subordinated Obligations or any
  other obligations of Borrower to Creditor are secured, it is further hereby
  agreed and acknowledged that all rights, titles, liens, estates, interest and
  remedies accruing to Creditor or its successors, assigns, designees,
  transferees, purchasers at foreclosure and/or other purchasers, whether as
  mortgagee, secured party, landlord, owner or otherwise, and whether consensual
  or arising by operation of law or in equity or otherwise, are and shall be
  subject and subordinate in all respects to all mortgages, security
  agreements, security interests, assignments, pledges, rights, titles,
  interests, estates and remedies of Bank and its successors, assigns,
  designees, transferees, purchasers at foreclosure and/or other purchasers,
  arising in connection with any of the Bank Indebtedness, whether consensual
  or arising by operation of law or in equity or otherwise. For so long as any
  of the Bank Security Documents and any modifications, consolidations,
  replacements or extensions thereof shall remain in effect, the mortgages,
  security agreements, security interests, rights, titles, interests, estates
  and remedies arising under any Subordinated Security Documents shall be
  superior to any mortgages, security agreements, security interests, rights,
  titles, liens, interest and estate in favor of any person or entity other
  than Bank, its successors or assigns, with respect to any collateral under
  the Bank Security Documents, and Creditor agrees that it shall not
  voluntarily subordinate any Subordinated Security Document or other lien or
  interest to any mortgage, lease,

	
 

	
 

	
 

	
security
  agreement, indenture, agreement, contract or encumbrance in favor of any
  person or entity other than Bank, its successors or assigns, respecting any
  such collateral under the Bank Security Documents.

Creditor
further agrees that, for so long as any Bank Indebtedness remains outstanding,
Creditor shall take no action to enforce collection of the Subordinated
Obligations (or any other obligations of Borrower to Creditor) against
Borrower or any guarantor of such Subordinated Obligations; nor shall the
Creditor take any action to foreclose or enforce its rights as a secured
creditor or lienholder or to establish its status as a lienholder under any
Subordinated Security Documents or otherwise against any assets of Borrower or
any guarantor of such Subordinated Obligations, except in accord with Section 4
below. In addition, so long as the Bank Indebtedness remains outstanding,
neither the Creditor nor the Borrower shall amend, modify, restate the terms of
the Subordinated Indebtedness without the Bank’s prior written consent.

          SECTION
24. Subordination Absolute. Neither the subordination provided for herein
nor the rights of Bank hereunder shall be affected, modified or impaired by (a)
any extension, renewal, modification, restatement, forbearance or waiver of any
terms of any Bank Security Documents or any other instrument or document
executed in connection herewith nor (b) any release, modification or
substitution of any collateral therefor.

          SECTION
25. Further Assurances. Creditor agrees to take promptly such actions as
Bank may reasonably request to (i) collect the Subordinated Obligations for
account of Bank and to file appropriate claims or proofs of claim in respect of
the Subordinated Obligations, (ii) execute and deliver to Bank such powers of
attorney, assignments or other instruments as Bank may reasonably request in
order to enable it to enforce any and all claims with respect to, and any
security interests and other liens securing payment of, the Subordinated
Obligations, and (iii) collect and receive any and all payments or distributions
that may be payable or deliverable upon or with respect to the Subordinated
Obligations.

          SECTION
26. Reinstatement. The provisions of this Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Bank Indebtedness is rescinded or must otherwise be returned by Bank
upon the insolvency, bankruptcy or reorganization of Borrower or otherwise, all
as though such payment had not been made.

          SECTION
27. Enforcement. Creditor agrees to pay to Bank on demand all costs and
expenses of any kind, including, without limitation, attorneys’ fees, expenses
and disbursements which Bank may incur in enforcing any of its rights under
this Agreement.

          SECTION 28. Cumulative Rights; No Waiver;
Modification. Nothing herein contained or arising shall limit or restrict
any of the obligations or agreements of Creditor or Borrower under any other
document or instrument with or in favor of Bank. Each and every right granted
to Bank hereunder or in

connection herewith, or allowed by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of Bank to exercise, and no delay in exercising, any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise by Bank of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. No amendment or modification of any provision of this Agreement or
any waiver thereof shall in any event be effective unless made by an instrument
in writing signed by Bank and the party to be charged therewith.

          SECTION
29. Legends. Any instrument evidencing any of the Subordinated
Obligations, or any portion thereof, shall be inscribed with a legend, or
otherwise include a reference, conspicuously indicating that payment thereof is
subordinated pursuant to the terms of this Agreement, and a copy thereof shall
be delivered to Bank. Any such instrument shall also provide in substance that
any transferee thereof shall, by acceptance thereof, assume, agree to and
accept the terms of this Agreement.

          SECTION
30. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of Texas.

          SECTION
31. Termination. This Agreement is a continuing agreement and shall
remain in full force and effect until the final indefeasible payment in full of
all of the Bank Indebtedness, expiration of all commitments by Bank to make
advances to Borrower under any document or instrument and the termination of
all documents and instruments evidencing and/or securing any Bank Indebtedness.

          SECTION
32. Descriptive Headings. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.

          SECTION
33. Binding Effect. Wherever in this Agreement one of the parties hereto
is named or referred to, the heirs, administrators, executors, successors,
assigns, distributees and legal and personal representatives of such party
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Creditor and/or Borrower or by or on behalf of Bank shall
bind and inure to the benefit of their respective heirs, administrators,
executors, successors, assigns, distributees, and legal and personal
representatives, whether so expressed or not. Notwithstanding the foregoing,
neither Creditor nor Borrower shall be entitled to assign any of their
respective rights, titles, and interest hereunder, delegate any of their
respective obligations, liabilities, duties, or responsibilities hereunder, or
permit any such assignment or delegation to occur (voluntarily or
involuntarily, or directly or indirectly), without the prior written consent of
Bank.

          SECTION
34. Severability. If any provision of this Agreement shall be held or
deemed to be or shall, in fact, be inoperative or unenforceable as applied in
any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatever.

          SECTION
35. Amendment and Restatement. This Agreement amends and restates that
certain Creditors’ Subordination Agreement executed by the parties hereto dated
as of _____, 200__.

IN WITNESS WHEREOF,
the undersigned have caused this Agreement to be executed as of the 19th
day of June, 2007.

	
 

	
 

	
 

	
 

	
 

	
BORROWER:

	
 

	
 

	
 

	
 

	
UNIVERSAL POWER GROUP, INC.,
  a Texas corporation

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Its:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
CREDITOR:

	
 

	
 

	
 

	
 

	
 

	
ZUNICOM, INC., a
  Texas corporation

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Its:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
BANK:

	
 

	
 

	
 

	
 

	
COMPASS BANK

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Its:

	
 

	
 

	
 

	

STATE OF TEXAS

COUNTY OF
DALLAS

I, the
undersigned, Notary Public in and for said County in said State, hereby certify
that _________________, whose name as _________________ of Universal Power Group, Inc.,
a Texas corporation, is signed to the foregoing instrument and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the instrument, _ he, as such and with full authority, executed the same
voluntarily for and as the act of said corporation.

Given under my hand this the ________ day of _______________, 2007.

	
 

	
 

	
 

	
______________________________________

	
 

	
Notary
  Public

	
[NOTARIAL
  SEAL]

	
My
  Commission Expires:_________________

	
 

	
 

STATE OF TEXAS

COUNTY OF
DALLAS

I, the
undersigned, Notary Public in and for said County in said State, hereby certify
that _______________________, whose name as ________________ of Zunicom, Inc., a Texas corporation, is
signed to the foregoing instrument and who is known to me, acknowledged before
me on this day that, being informed of the contents of the instrument, _he, as
such and with full authority, executed the same voluntarily for and as the act
of said corporation.

Given under my
hand this the ________ day of _______________, 2007.

	
 

	
 

	
 

	
______________________________________

	
 

	
Notary Public

	
[NOTARIAL
  SEAL]

	
My
  Commission Expires:_________________

STATE OF TEXAS

COUNTY OF
DALLAS

I, the
undersigned, Notary Public in and for said County in said State, hereby certify
that _____________________, whose name as _______________ of COMPASS BANK, an Alabama banking
corporation, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, _he, as such and with full authority, executed the same voluntarily
for and as the act of said corporation.

Given under my hand this the ________ day of _______________, 2007.

	
 

	
 

	
 

	
______________________________________

	
 

	
Notary
  Public

	
[NOTARIAL
  SEAL]

	
My
  Commission Expires:_________________

Schedule 1

Subordinated Indebtedness

Payee is
Zunicom, Inc. on two Unsecured notes 

	
 

	
 

	
 

	
 

	
1.

	
Note in the
  amount of $2,850,000 originated on December 20, 2006 and due June 20, 2012

	
 

	
 

	
 

	
 

	
2.

	
Note in the
  amount of $3,000,000 originated on December 20, 2006 and due June 20, 2012

Copies of both
notes payable to Zunicom, Inc. attached.

Dated as of June 19, 2007

	
 

	
 

	
SECTION
  36.

	
NOTICE OF
  FINAL AGREEMENT

	
 

	
 

	
To:

	
Borrower and
  All Other Obligors with Respect to the Loan Which is Identified below:

	
 

	
 

	
1.

	
THE WRITTEN
  LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
  BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
  AGREEMENTS OF THE PARTIES.

	
 

	
 

	
 

	
THERE ARE NO
  UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

	
 

	
 

	
2.

	
As used in this Notice:

	
 

	
 

	
 

	
“Borrower” means the Borrower identified in the signature blocks below in this
  Notice.

	
 

	
 

	
 

	
“Lender” means Compass Bank.

	
 

	
 

	
 

	
“Loan” means the prospective loan by Lender to be evidenced by the
  promissory note or other evidence of indebtedness dated as of June 19, 2007
  executed by Borrower, payable to the order of Lender, in the original
  principal face amount of $30,000,000.

	
 

	
 

	
 

	
“Loan Agreement” means one or more promises, promissory
  notes, agreements, guarantees, undertakings, security agreements, pledge
  agreements, deeds of trust or other documents, or commitments, or any
  combination of those actions or documents, relating to the Loan.

	
 

	
 

	
3.

	
This Notice is given by
  Lender with respect to the Loan, pursuant to Section 26.02 of the Texas
  Business and Commerce Code. Borrower and each other obligor with respect to
  the Loan who signs below acknowledges, represents and warrants to Lender that
  Lender has given and such party has received and retained a copy of this
  Notice on the Date of this Notice stated above.

	
 

	
 

	
4.

	
This Notice may be
  executed in one or more counterparts, each of which will be deemed to be an
  original copy of this Notice and all of which, when taken together, will be
  deemed to constitute one and the same Notice.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
LENDER

	
BORROWER

	
 

	
 

	
COMPASS BANK

	
UNIVERSAL POWER GROUP, INC.

	
 

	
 

	
By: 

	
 

	
By:

	
 

	
 

	

	
 

	

	
 

	
Name:

	
 

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	
 

	
Title:

	
 

	
 

	
 

	
Title:

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	

	

Current as of 8/4/2007c49691_ex10-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit (10.1) 

PITNEY BOWES INC. 2007 STOCK PLAN 

Section 1. Purpose.  

	 	The purposes of the Pitney Bowes
        Inc. Stock Plan, effective as of May 1, 2007, (the “Plan”)
        are (1) to make available to key employees, certain compensatory arrangements
        related to the growth in value of the common stock of the Company so
        as to generate an increased incentive to contribute to the Company’s
        future financial success and prosperity, (2) to enhance the ability of
        the Company and its Affiliates to attract and retain exceptionally qualified
        individuals whose efforts can affect the financial growth and profitability
        of the Company, and (3) to align generally the interests of key employees
        of the Company and its Affiliates with the interests of Pitney Bowes
    shareholders.

Section 2. Definitions.

As used in the Plan, the following terms shall have the meanings set forth below:

	 	
(a)        	
“Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company or (ii) any entity in which the Company has a significant equity
interest, as determined by the Committee. Aggregation rules set forth in Code Sections 409A and 414(b) and (c) will be used in determining Affiliate status, except that a 50% test, instead of an 80% test, shall be used to determine controlled group
status, to the extent not inconsistent with rules of Code Section 409A.

  
	 
	 	
(b)        	
“Award” shall mean any Option, Restricted Stock, Restricted Stock Unit, Dividend Equivalent, Stock Appreciation Right, Other Stock-Based Award, Performance Award or Substitute Award, granted
under the Plan.

  
	 
	 	
(c)        	
“Award Agreement” shall mean any written agreement, contract, or other instrument or document (including electronic communication) specifying the terms and conditions of an Award granted under
the Plan, as may from time to time be approved by the Company, to evidence an Award granted under the Plan.

  
	 
	 	
(d)        	
“Board of Directors” shall mean the Board of Directors of the Company as it may be composed from time to time.

  
	 
	 	
(e)        	
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor code thereto.

  
	 
	 	
(f)        	
“Committee” shall mean the committee designated by the Board of Directors to administer the Plan pursuant to Section 3. The Board of Directors and the Committee shall each have the authority to
delegate its duties under the Plan to the fullest extent permitted by Delaware law.

  
	 
	 	
(g)        	
“Company” shall mean Pitney Bowes Inc., or any successor thereto.

  
	 
	 	
(h)        	
“Covered Award” means an Award, other than an Option, Stock Appreciation Right or other Award with an exercise price per Share not less than the Fair Market Value of a Share on the date of grant
of such Award, to a Covered Employee, if it is designated as such by the Committee at the time it is granted. Covered Awards are subject to the provisions of Section 14 of this Plan.

  
	 
	 	
(i)        	
“Covered Employee” means any Participant who is, or who the Committee has determined may be at the time taxable income is realized with respect to an Award, a “covered employee” within
the meaning of Section 162(m).

  
	 
	 	
(j)        	
“Disability” shall have the meaning established by the Committee or, in the absence of Committee determination, shall mean a Participant who is “disabled” for two years under the
provisions and procedures of the Pitney Bowes Long Term Disability (LTD) Plan, irrespective of whether the Participant is eligible to receive benefits under the LTD Plan, or a Participant entitled to receive benefits for two years under state
worker’s compensation laws.

  
	 
	 	
(k)        	
“Dividend Equivalent” shall mean any right granted under Section 6(c) of the Plan.

  
	 
	 	
(l)        	
“Dividend Equivalent Shares” shall be Shares issued pursuant to the deemed reinvestment of dividends under Restricted Stock, Restricted Stock Units or other Awards, provided that such Shares
shall be subject to the same vesting, risk of forfeiture, deferral or other conditions or restrictions as apply to the Restricted Stock, Restricted Stock Units or other Awards as to which they accrue, and to such further conditions or restrictions
as the Committee may determine.

  
	 
	 	
(m)        	
“Employee” shall mean any employee of the Company or of any Affiliate.

  
	 
	 	
(n)        	
“Fair Market Value” shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee. The Fair Market Value of a Share of Company common stock on the date of grant shall be the closing price of a Share of the Company’s common stock on the date of grant as
reported in the New York Stock Exchange Composite Transactions Table published in the Wall Street Journal. If the New York Stock Exchange (NYSE) is closed on the date of grant, then Fair Market Value shall be the closing price on the first trading
day of the NYSE immediately following the grant date.

  
	 

	 	
(o)        	
“Incentive Stock Option” or “ISO” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code, or any successor
provision thereto.

  
	 
	 	
(p)        	
“Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.

  
	 
	 	
(q)        	
“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

  
	 
	 	
(r)        	
“Other Stock-Based Award” shall mean any Award granted under Section 6(d) of the Plan.

  
	 
	 	
(s)        	
“Participant” shall mean an Employee who is granted an Award under the Plan.

  
	 
	 	
(t)        	
“Performance Award” shall mean any Award granted hereunder that complies with Section 6(e)(ii) of the Plan.

  
	 
	 	
(u)        	
“Performance Goals” means any Qualifying Performance Criteria or such other performance goals based on such corporate (including any subsidiary, division, department or unit), individual or
other performance measure as the Committee may from time to time establish.

  
	 
	 	
(v)        	
“Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof.

  
	 
	 	
(w)        	
“Prior Plan” shall mean the Pitney Bowes Stock Plan, as amended and restated as of January 1, 2002.

  
	 
	 	
(x)        	
“Qualifying Performance Criteria” means one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or
to a business unit, subsidiary, division or department, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to
previous year’s results or to a designated comparison group, in each case established by the Committee: operating income, revenues, organic revenue growth, net income, return on operating assets, gross profit, operating profit, earnings before
interest and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA), return on investment, economic value added, earnings per share, return on stockholder equity, total stockholder return, total earnings, income from
continuing operations, growth of book or market value of capital stock, stock price, free cash flow, adjusted free cash flow, or achievement of cost control. Performance Goals shall be set by the Committee within the time period prescribed by
Section 162(m).

  
	 
	 	
(y)        	
“Released Securities” shall mean Shares issued or issuable under any Restricted Stock, Restricted Stock Unit or other Award as to which all conditions for the vesting and issuance of such Shares
have expired, lapsed, or been waived.

  
	 
	 	
(z)        	
“Restricted Stock” shall mean any Share granted under Section 6(b) of the Plan.

  
	 
	 	
(aa)        	
“Restricted Stock Unit” or “RSU” shall mean any right granted under Section 6(b) of the Plan that is denominated in Shares.

  
	 
	 	
(bb)        	
“Retirement” shall mean a Participant who has terminated employment on or after attainment of age 55 with at least 10 years of service with the Company or Affiliate as determined under the
Pitney Bowes Pension Plan. In certain jurisdictions outside the United States, as noted in the Award Agreement, “Retirement” shall mean eligibility to retire under the local pension plan or state retirement program with at least 10 years
of service with the Company or Affiliate.

  
	 
	 	
(cc)        	
“Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 as amended, or any successor rule and the regulation
thereto.

  
	 
	 	
(dd)        	
“Section 162(m)” means Section 162(m) of the Code or any successor thereto, and the Treasury Regulations thereunder.

  
	 
	 	
(ee)        	
“Share” or “Shares” shall mean share(s) of the common stock of the Company, $1 par value, and such other securities or property as may become the subject of Awards pursuant to the
adjustment provisions of Section 4(c).

  
	 
	 	
(ff)        	
“Stock Appreciation Rights” or “SARs” shall mean a right granted under Section 6(a) of the Plan that entitles the Participant to receive, in cash or Shares or a combination thereof, as
determined by the Committee, value equal to or otherwise based on the excess of (A) the Fair Market Value of a specified number of Shares at the time of exercise over (B) the exercise price of the right, as established pursuant to Section
6(a)(i).

  
	 
	 	
(gg)        	
“Substitute Award” shall mean an Award granted in assumption of, or in substitution for, an outstanding Award previously granted by a company acquired by the Company or with which the Company
combines.

  
	 

Section 3. Administration.

	 	
(a)        	
The Plan shall be administered by
    the Committee. Any power of the Committee may also be exercised by the Board
    of Directors, except to the extent that the grant or exercise of such authority
    would cause  any Award or transaction to become subject to (or lose an exemption
    under) the short-swing profit recovery provisions of Section 16 of the Securities
    Exchange Act of 1934, as amended or cause an Award designated as a Covered
    Award not to qualify for  treatment as performance-based compensation under
    Section 162(m). To the extent that any permitted action taken by the Board
    of Directors conflicts with action taken by the Committee, the Board of Directors’ action
    shall control. Subject to the terms of the Plan and applicable law, the Committee
    shall have full power and authority to:

  
	 
	 	 	
 

  
	 

	 	 	
(i)        	
designate Participants;

  
	 
	 	 	
(ii)        	
determine the type or types of Awards to be granted to each Participant under the Plan;

  
	 
	 	 	
(iii)        	
determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards;

  
	 
	 	 	
(iv)        	
determine the terms and conditions of any Award;

  
	 
	 	 	
(v)        	
determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards, or other property, or to what extent, and under what
circumstances Awards may be canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended;

  
	 
	 	 	
(vi)        	
determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award under the Plan shall be
deferred either automatically or at the election of the holder thereof or of the Committee;

  
	 
	 	 	
(vii)        	
interpret and administer the Plan and any instrument or agreement relating to the Plan, or any Award made under the Plan, including any Award Agreement;

  
	 
	 	 	
(viii)        	
correct any defect or error, supply any omission, or reconcile any inconsistency in the administration of the Plan or in any Award Agreement in the manner and to the extent it shall deem desirable to
effectuate the purposes of the Plan and the related Award;

  
	 
	 	 	
(ix)        	
establish, amend, suspend, or reconcile such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and

  
	 
	 	 	
(x)        	
make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

  
	 

	 	
(b)        	
Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan, any Award, or any Award Agreement, shall be
within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any
Employee.

  
	 
	 	
(c)        	
The Committee may, from time to time, authorize one or more officers of the Company to perform any or all things that the Committee is authorized and empowered to do or perform under the Plan, and for all
purposes under this Plan, such officer or officers shall be treated as the Committee; provided, however, that the resolution so authorizing such officer or officers shall specify the total number of Awards (if any) such officer or officers may award
pursuant to such delegated authority and any such Award shall be subject to the form of Award Agreement theretofore approved by the Committee. No such officer shall designate himself or herself as a recipient of any Awards granted under authority
delegated to such officer. In addition, the Committee may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any subsidiary, and/or to one or more agents.

  
	 

Section 4. Shares Available for Awards.  

	 	
(a)        	
Maximum Shares Available. The maximum number of Shares that may be issued to Participants pursuant to Awards under the Plan shall be fifteen million (15,000,000) Shares plus any Shares subject to
outstanding Awards under the Prior Plan as of April 30, 2007 that on or after such date cease for any reason to be subject to such Awards (other than by reason of exercise or settlement of the Awards to the extent they are exercised for or settled
in vested and nonforfeitable Shares) (collectively, the “Plan Maximum”), subject to adjustment as provided in Section 4(c) below.

  
	 
	 	 	
Only 7,500,000 Shares may be issued for Awards that are not Options or Stock Appreciation Rights. Pursuant to any Awards, the Company may in its discretion issue treasury Shares or authorized but
previously unissued Shares pursuant to Awards hereunder. For the purpose of accounting for Shares available for Awards under the Plan, the following shall apply:

  
	 
	 	 	
(i)        	
Only Shares relating to Awards actually issued or granted hereunder shall be counted against the Plan Maximum. Shares corresponding to Awards that by their terms expired, or that are forfeited, canceled
or surrendered to the Company without consideration paid therefore and Shares subject to Awards, that are settled in cash shall not be counted against the Plan Maximum.

  
	 
	 	 	
(ii)        	
Shares that are forfeited by a Participant after issuance, or that are reacquired by the Company after issuance without consideration paid therefore, shall be deemed to have never been issued under the
Plan and accordingly shall not be counted against the Plan Maximum.

  
	 
	 	 	
(iii)        	
Substitute Awards and Dividend Equivalent Shares shall be counted against the Plan Maximum, and clauses (i) and (ii) of this Section shall not apply to such Awards.

  
	 
	 	 	
(iv)        	
Notwithstanding anything herein to the contrary, Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (A) Shares that were subject to
an Option or a

  
	 

 

	 	 	 	stock-settled Stock Appreciation Right
      and were not issued upon the net settlement or net exercise of such Option
      or Stock Appreciation Right, (B) Shares delivered to or withheld by the
      Company to pay the exercise price of an Option or the withholding taxes
      related to an Option or Stock Appreciation Right, or (C) Shares repurchased
    on the open market with the proceeds of an Option exercise.
	 	 	 
	 	
(b)        	
Code Limitations. Subject to adjustment as provided in Section 4(c) below, the maximum number of Shares for which ISOs may be granted under the Plan shall not exceed the Plan Maximum as defined in Section
4(a) above, and the maximum number of Shares that may be the subject of Awards made to a single Participant in any one calendar year shall not exceed 600,000.

  
	 
	 	
(c)        	
Adjustments to Avoid Dilution. Notwithstanding paragraphs (a) and (b) above, in the event of a stock dividend, extraordinary cash dividend, split-up or combination of Shares, merger, consolidation,
reorganization, recapitalization, spin-off or other change in the corporate structure or capitalization affecting the outstanding common stock of the Company, the Committee shall make equitable adjustments to (i) the number or kind of Shares subject
to the Plan Maximum that remain subject to outstanding Awards or available for issuance under the Plan, subject to the Plan Maximum as adjusted pursuant to Section 4, (ii) the number and type of Shares subject to the limitations set forth in Section
4(b), (iii) the number and type of Shares subject to outstanding Awards, and (iv) the grant, purchase, or exercise price with respect to any Award. Such adjustment may include provision for cash payment to the holder of an outstanding Award. Any
adjustment to the limitations set forth in Section 4(b) shall be made in such manner as to preserve the ability to grant ISOs and Awards that qualify for deductibility under Section 162(m) and any other such adjustment may be designed to comply with
applicable provisions of the Code, including without limitation Section 409A, may be designed to treat the Shares available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or may
be designed to increase the number of such Shares available under the Plan and subject to Awards to reflect a deemed reinvestment in Shares of the amount distributed to the Company’s security holders in connection with such event or
transaction. The determination of the Committee as to the adjustments or payments, if any, to be made shall be conclusive.

  
	 

Section 5. Eligibility.  

Any Employee of the Company or of any Affiliate shall be eligible to be designated a Participant. 

Section 6. Awards.  

	 	
(a)        	
Options and Stock Appreciation Rights. The Committee is hereby authorized to grant Options and Stock Appreciation Rights to Participants with the following terms and conditions and with such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine:

  
	 
	 	 	
(i)        	
Exercise Price. The exercise price per Share under an Option shall be determined by the Committee; provided, however, that except in the case of Substitute Awards or tandem SARs, no Option or Stock
Appreciation Right granted hereunder may have an exercise price of less than 100% of Fair Market Value of a Share on the date of grant.

  
	 
	 	 	
(ii)        	
Times and Method of Exercise. The Committee shall determine the time or times at which an Option or Stock Appreciation Right may be exercised in whole or in part; in no event, however, shall the period
for exercising an Option or a Stock Appreciation Right extend more than 10 years from the date of grant. The Committee shall also determine the method or methods by which Options and/or Stock Appreciation Rights may be exercised, and the form or
forms (including without limitation, cash, Shares previously acquired and Shares otherwise issuable under the Option, other Awards, or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant
exercise price) in which payment of the exercise price of an Option may be made or deemed to have been made. The Committee may also allow cash and cashless exercise of an Option through a registered broker.

  
	 
	 	 	
(iii)        	
Incentive Stock Options. Notwithstanding anything to the contrary in this Section 6(a), in the case of the grant of an Option intending to qualify as an Incentive Stock Option: (A) if the Participant owns
stock possessing more than 10 percent of the combined voting power of all classes of stock of the Company (a “10% Stockholder”), the exercise price of such Incentive Stock Option must be at least 110 percent of the Market Value of the
Shares on the date of grant and the Option must expire within a period of not more than five (5) years from the date of grant, and (B) “termination of employment” will occur when the person to whom an Award was granted ceases to be an
employee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company and its subsidiaries. Notwithstanding anything in this Section 6(a) to the contrary, Options designated as Incentive
Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Non-Qualified Stock Options) to the extent that either (1) the aggregate Fair Market Value of Shares (determined as of the time of
grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any subsidiary) exceeds $100,000, taking Options into account in the order in which they
were granted, or (2)

  
	 

	 	 	
such Options otherwise remain exercisable but are not exercised within three (3) months of termination of employment (or such other period of time provided in Section 422 of the Code).

  
	 
	 	 	
(iv)        	
Stock Appreciation Rights (SARs). Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of other Awards granted under the Plan (“tandem
SARs”) or not in conjunction with other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted under this Section 6(a). Any Stock Appreciation Right granted in tandem with an Award may be granted at
the same time such Award is granted or at any time thereafter before exercise or expiration of such Award. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in this Section 6(a) and
all tandem SARs shall have the same exercise price, vesting, exercisability, forfeiture and termination provisions as the Award to which they relate. Stock Appreciation Rights may be settled in cash or stock at the discretion of the
Committee.

  
	 
	 	
(b)        	
Restricted Stock and Restricted Stock Units. Subject to Section 4 hereof, the Committee is authorized to grant Awards of Restricted Stock and/or Restricted Stock Units to Participants with the following
terms and conditions:

  
	 
	 	 	
(i)        	
Restrictions. Restricted Stock and Restricted Stock Units may be granted at any time and from time to time prior to the termination of the Plan to Participants selected by the Committee. Restricted Stock
is an Award or issuance of Shares of common stock the grant, issuance, retention, vesting and/or transferability of which is subject to such conditions (including, without limitation, continued employment over a specified period or the attainment of
specified performance criteria (including, but not limited to, one or more Qualifying Performance Criteria in accordance with Section 14)), and terms as the Committee deems appropriate, which conditions may lapse separately or concurrently at such
time or times, in such installments or otherwise, as the Committee may deem appropriate. Restricted Stock Units are Awards denominated in units of common stock under which the issuance of Shares of common stock is subject to such conditions
(including, without limitation, continued employment over a specified period or the attainment of specified performance criteria (including, but not limited to, one or more Qualifying Performance Criteria in accordance with Section 14)) and terms as
the Committee deems appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement. Notwithstanding the foregoing, (A) any Awards of Restricted Stock or Restricted Stock Units as to which the sole
restriction relates to the passage of time and continued employment must have a restriction period of not less than three years, except that such Award may allow pro-rata vesting during the restriction period and (B) any Award not described in
Clause (A) must provide for the lapse of restrictions based on performance criteria and level of achievement versus such criteria over a performance period of not less than one year, except, in the case of both (A) and (B) the Committee may provide
for the satisfaction and/or lapse of all restrictions under any such Award in the event of the Participant’s death, Disability or Retirement or a Change of Control. A Restricted Stock Unit may be settled in cash or Shares as the Committee may
determine from time to time.

  
	 
	 	
(c)        	
Dividend Equivalents. The Committee may (either alone or as a component of any other Award granted under the Plan) grant to Participants Dividend Equivalents under which the holders thereof shall be
entitled to receive payments equivalent to dividends with respect to a number of Shares determined by the

  
	 
	 	 	
Committee, and the Committee may provide that such amounts shall be deemed to have been reinvested in Dividend Equivalent Shares or otherwise reinvested.

  
	 
	 	
(d)        	
Other Stock-Based Awards. The Committee is hereby authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based
on or related to Shares (including without limitation securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Plan.

  
	 
	 	 	
(i)        	
If applicable, Shares or other securities delivered pursuant to a purchase right granted under this Section 6(d) shall be purchased for such consideration, which may be paid by such method or methods and
in such form or forms, including without limitation cash, Shares, other securities, other Awards or other property, or any combination thereof, as the Committee shall determine.

  
	 
	 	 	
(ii)        	
In granting any Other Stock-Based Award pursuant to this Section 6(d) the Committee shall also determine what effect the termination of employment of the Participant holding such Award shall have on the
rights of the Participant pursuant to the Award.

  
	 
	 	
(e)        	
General. The following general provisions shall apply to all Awards granted hereunder, subject to the terms of the Plan or any Award Agreement.

  
	 
	 	 	
(i)        	
Award Agreements. Each Award granted under this Plan shall be evidenced by an Award Agreement which shall specify the relevant material terms and conditions of the Award and which shall be signed by the
Participant receiving such Award (including, if the Committee so permits or requires, through an electronic signature), if so indicated by the Award. The Plan shall govern over any discrepancies between the Plan and the Award Agreement.

  
	 

	 	 	
(ii)        	
Performance Awards. Subject to the other terms of this Plan, the grant, retention, issuance, payment, release, vesting or exercisability of any Award, in whole or in part, may be conditioned upon the
achievement of such performance criteria during such performance periods as are specified by the Committee, which performance criteria may include Qualifying Performance Criteria or other standards of financial performance and/or personal
performance.

  
	 
	 	 	 	
(A)        	
Terms. The Committee shall establish the terms and conditions of any Performance Award including the performance criteria to be achieved during any performance period, the length of any performance
period, any event the occurrence of which will entitle the holder to be deemed to have satisfied the applicable performance criteria, and the amount of any Performance Award granted.

  
	 
	 	 	 	
(B)        	
Fulfillment of Conditions and Payment. The Committee shall determine in a timely manner whether all or part of the conditions to payment of a Performance Award have been fulfilled and, if so, the amount,
if any, of the payment to which the Participant is entitled.

  
	 
	 	 	
(iii)        	
Limits on Transfer of Awards. Unless determined otherwise by the Committee, no unexercised Stock Option or SAR and no unvested or unearned Restricted Stock, Restricted Stock Unit or Other Stock- Based
Award, and no right under any such Award shall be assignable, alienable, pledgeable, attachable, encumberable, saleable, or transferable by a Participant other than by will or by the laws of descent and distribution (or, in the case of Awards that
are forfeited or canceled, to the Company); and any purported assignment, sale or transfer thereof shall be void and unenforceable against the Company or Affiliate. If the Committee so indicates in writing to a Participant, he or she may designate
one or more beneficiaries who may exercise the rights of the Participant and receive any property distributable with respect to any Award upon the death of the Participant.

  
	 
	 	 	 	
Each Award, and each right under any Award, shall be exercisable, during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s guardian
or legal representative.

  
	 
	 	 	
(iv)        	
Gift and Estate Transfers.

  
	 
	 	 	 	
(A)        	
Gift. Notwithstanding Section 6(e)(iii) herein to the contrary, the Committee may permit, subject to establishment of appropriate administrative procedures, a Participant to transfer by gift an
unexercised Stock option or SAR and/or an unvested or unearned Restricted Stock, Restricted Stock Unit or Other Stock-Based Award, provided that the following conditions are met:

  
	 
	 	 	 	 	
(1)        	
The donees of the gift transfer are limited to Family Members and Family Entities.

  
	 
	 	 	 	 	
(2)        	
The Option or Stock Appreciation Right is not further transferable by gift or otherwise by such Family Member or Family Entity.

  
	 
	 	 	 	 	
(3)        	
All rights appurtenant to the Option or Stock Appreciation Right, including exercise rights, are irrevocably and unconditionally assigned to the donee.

  
	 
	 	 	 	 	
(4)        	
Transfers under this Section 6(e)(iv) must meet all of the requirements under applicable provisions of the Code to be considered “gift” transfers.

  
	 
	 	 	 	 	
(5)        	
The donor and the donee have executed such form of agreement as the Committee may require pursuant to which each agree to be subject to such terms and conditions with respect to the transferred Award as
the Committee may specify.

  
	 
	 	 	 	 	
(6)        	
Except to the extent specified otherwise in the agreement the Committee provides for the Participant and transferee to execute, all vesting, exercisability and forfeiture provisions that are conditioned
on the Participant’s continued employment or service shall continue to be determined with reference to the Participant’s employment or service (and not to the status of the transferee) after any transfer of an Award pursuant to this
Section 6(e)(iv), and the responsibility to pay any taxes in connection with an Award shall remain with the Participant notwithstanding any transfer other than by will or intestate succession.

  
	 	 	 	 	 	 
	 	 	 	 	For purposes of the Plan,
    the following definitions shall apply:
	 	 	 	 	 	 
	 	 	 	 	(i)  	Family Member means the Participant’s natural
      or adopted child, stepchild, grandchild, parent, stepparent, grandparent,
      spouse, former spouse, sibling, mother-in-law, father- in-law, son-in-law,
      daughter-in-law, brother-in-law, sister-in-law, nephew, niece and any person
      sharing the Participant’s household (other than a tenant or employee);
    and
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 

 

	 	 	 	 	
(ii)        	
Family Entity means any trust in which the Participant has more than a 50% beneficial interest and any entity in which the Participant and/or a Family Member owns more than 50% of the voting
interests.

  
	 
	 	 	 	
(B)        	
Estate. In the case of death, Awards made hereunder may be transferred to the executor or personal representative of the Participant’s estate or the Participant’s heirs by will or the laws of
descent and distribution.

  
	 

	 	 	
(v)        	
No Cash Consideration for Awards. Awards may be granted for no cash consideration, or for such minimal cash consideration as the Committee may specify, or as may be required by applicable law.

  
	 
	 	 	
(vi)        	
Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or, subject to Section 8(a), in substitution for
any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Company or any
Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. Performance Awards and Awards which are not Performance Awards may be granted to the same Participant.

  
	 
	 	 	
(vii)        	
Forms of Payment Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, and may be made in a single payment or
transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments. Notwithstanding the foregoing, unless the Committee expressly provides otherwise, with specific reference
to this provision, the payment terms for any Award shall be implemented in a manner consistent with the requirements of Section 409A of the Code, to the extent applicable.

  
	 
	 	 	
(viii)        	
Term of Awards. Except as provided in Sections 6(a)(ii) or 7(b), the term of each Award shall be for such period as may be determined by the Committee.

  
	 
	 	 	
(ix)        	
Share Certificates. All certificates for Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any
applicable Federal or state securities laws, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.

  
	 
	 	 	 	
Unrestricted certificates representing Shares, evidenced in such manner as the Committee shall deem appropriate, which may include recording Shares on the stock records of the Company or by crediting
Shares in an account established on the Participant’s behalf with a brokerage firm or other custodian, in each case as determined by the Company, shall be delivered to the holder of Restricted Stock, Restricted Stock Units or any other relevant
Award after such restricted Shares shall become Released Securities, subject to any delay in order to provide the Company such time as it determined appropriate to address tax withholding and other administrative matters.

  
	 

Section 7. Vesting and Exercising.

	 	
(a)        	
Generally. Subject to the terms of the Plan, the Award Agreement shall designate the terms under which the Award vests and/or is exercisable according to terms and conditions authorized by the Committee.
For purposes of the Plan, any reference to the “vesting” of an Option shall mean any events or conditions which, if satisfied, entitle a Participant to exercise an Option or a SAR with respect to all or a portion of the Shares covered by the Option or SAR. Vesting of a Restricted Stock Award or a Restricted Stock Unit shall mean any events or conditions which, if satisfied, entitle the Participant to the underlying stock certificate without restrictions (or cash as the case may be). Notwithstanding anything to the contrary herein, the Company reserves the right
to make Awards representing up to 5% of the total Shares issued under the Plan that are fully vested upon the making of the Award. Moreover the Committee may in its sole discretion accelerate vesting of an Award made hereunder on account of a
Termination with Conditions Imposed as described under Section 7(b)(iii) or following a Change of Control as discussed in Section 9 herein. Except as otherwise permitted by Section 409A of the Code, an Award constituting nonqualified deferred
compensation subject to the provisions of Section 409A of the Code shall not be accelerated.

  
	 

	 	
(b)        	
Termination of Employment. Unless the Committee specifies otherwise, either at the time of grant or thereafter, the following rules govern Awards upon a Participant’s termination of
employment:

  
	 
	 	 	
(i)        	
Death, Disability and Retirement. The Committee may in its discretion provide for an additional exercise period beyond the Participant’s death, Disability or Retirement (but in any case, not longer
than the original term of the Award) and may establish such vesting requirement relating to the Participant’s death, Disability or Retirement as the Committee in its discretion may determine.

  
	 
	 	 	 	
(A)        	
Options and SARs. In the event that a Participant terminates employment on account of death, Disability or Retirement, Options and SARs granted hereunder shall be exercisable only as specified
below:

  
	 
	 	 	 	 	
(1)        	
Options and SARs Granted On or After January 1, 2002 through April 30, 2007. On or after January 1, 2002 through April 30, 2007, at the time of making the Award, the Committee may in its discretion
provide for an additional exercise period beyond the Participant’s death, Disability or Retirement (but in any case not longer than the original term of the Award) and may establish such vesting requirements relating to the Participant’s
death, Disability, and Retirement as the Committee in its discretion may determine. Any additional exercise period beyond the Participant’s death, Disability or Retirement (as contemplated by this paragraph) shall be set forth in the
Participant’s Award Agreement.

  
	 
	 	 	 	 	
(2)        	
Options Granted On or After October 1, 2000 through December 31, 2001. On or after October 1, 2000 through December 31, 2001, the Committee may in its discretion grant Options with such terms and
conditions as it may determine pursuant to the Plan; provided, however, that such terms and conditions are not required to be consistent with Section 7(b)(i)(A) as in effect prior to October 1, 2000 or Section 7(b)(iv).

  
	 
	 	 	 	 	
(3)        	
Options Granted On or After January 1, 1999 through September 30, 2000. If a Participant dies, becomes disabled or retires, any outstanding Option granted to such a Participant on or after January 1, 1999
through September 30, 2000, whether or not full or partial vesting has occurred with respect to such Option at the time of the death, Disability or Retirement, shall be exercisable during the ten (10) year period beginning on the date of grant (or
during such shorter period if the original term is less than ten (10) years) even though death, Disability or Retirement occurs prior to the last day of such option term. Any vesting requirements under the Option shall be deemed to be satisfied as
of the date of death, Disability, or Retirement.

  
	 
	 	 	 	 	
(4)        	
Options Granted Prior to January 1, 1999. If a Participant dies, becomes disabled or retires, any outstanding Option granted to such Participant prior to January 1, 1999, whether or not full or partial
vesting has occurred with respect to such Option at the time of death, Disability or Retirement, shall be exercisable for four (4) years (or during such shorter period if the remaining term of the Option is less than four (4) years) following the
death, Disability, or Retirement unless the Committee has, in its sole discretion, established a special exercise period following the occurrence of such events. Any vesting requirements under the Option shall remain in effect during the exercise
period following the Participant’s death, Disability, or Retirement.

  
	 

	 	 	 	(B)	 Restricted Stock and RSUs.
        The Award Agreement shall set forth vesting provisions applicable to
        Restricted Stock and RSU Awards upon the Participant’s death, Disability or Retirement. The
        Committee may waive in whole or in part any or all remaining restrictions
        with respect to Restricted Stock or Restricted Stock Units and vest the
    Awards upon the Participant’s death, Disability or Retirement.

	 	 	 	 	 
	 	 	 	
(C)        	
Dividend Equivalents and Other Awards. In the event the Participant’s employment terminates because of death, Disability or Retirement, the Committee may determine that the Participant’s rights
to Dividend Equivalents and Other Stock-Based Awards terminate at a later date. The Committee, in its sole discretion at the time of making such Awards, may set forth special vesting rules with respect to Dividend Equivalents and Other Stock-Based
Awards on account of the death, Disability or Retirement of a Participant.

  
	 
	 	 	
(ii)        	
Sale of Business, Spin off Transactions. In the case of a sale of business or a spin off transaction the Committee shall determine the treatment of all outstanding Awards, including without limitation,
determining the vesting terms, conversion of Shares and continued exercisability. Unless otherwise provided for by the Committee, in the event the “business unit” (defined as a division, subsidiary, unit or other delineation that the
Committee in its sole discretion may determine) for which the Participant performs substantially all of his or her services is spun off by the Company or an Affiliate in a transaction that qualifies as a tax-free distribution of stock under Section
355 of the Code, or is assigned, sold,

  
	 

	 	 	 	outsourced or otherwise transferred,
          including an asset, stock or joint venture transaction, to an unrelated
          third party, such that after such transaction the Company owns or controls
          directly or indirectly less than 51% of the business unit, the affected
          Participant shall become: 100% vested in all outstanding Awards as of
          the date of the closing of such transaction, whether or not fully or
          partially vested, and such Participant shall be entitled to exercise
          such Options and Stock Appreciation Rights during the three (3) months
          following the closing of such transaction, unless the Committee has established
          an additional exercise period (but in any case not longer than the original
          option term). All Options and Stock Appreciation Rights which are unexercised
          at the end of such three (3) months or such additional exercise period
    shall be automatically forfeited.

	 	 	 	

	 	 	(iii)	Terminations
          with Conditions Imposed. Notwithstanding the foregoing provisions describing
          the additional exercise and vesting periods for Awards upon termination
          of employment, the Committee may, in its sole discretion, condition
          the right of a Participant to vest or exercise any portion of a partially
          vested or exercisable Award for which the Committee has established
          at the time of making the Award an additional vesting or exercise period
          on the Participant’s agreement
          to adhere to such conditions and stipulations which the Committee may
          impose, including, but not limited to, restrictions on the solicitation
          of employees or independent contractors, disclosure of confidential
          information, covenants not to compete, refraining from denigrating
          through adverse or disparaging communication, written or oral, whether
          or not true, the operations, business, management, products or services
          of the Company or its current or former employees and directors, including
          without limitation, the expression of personal views, opinions or judgments.
          The unvested Awards of any Participant for whom the Committee at the
          time of making the Award has given an additional vesting and exercise
          period subject to such conditions subsequent as set forth in this Section
    7(b)(iii) shall be forfeited immediately upon a breach of such conditions.

	 	 	 	 
	 	 	(iv)  	Termination for Other Reasons. If a Participant
          terminates employment for reasons other than those enumerated above,
    the following rules shall apply.

	 	 	 	

	 	 	 	(A) 
	Options and SARs. Any vested, unexercised portion
          of an Option or SAR at the time of the termination shall be forfeited
          in its entirety if not exercised by the Participant within three (3)
          months of the date of termination of employment, unless the Committee
          has in its sole discretion at the time of making the Award established
          an additional exercise period (but in any case not longer than the original
          option term). Any portion of such partially vested Option or SAR that
          is not vested at the time of termination shall be forfeited unless the
          Committee has in its sole discretion at the time of making the Award
          established that a Participant may continue to satisfy the vesting requirements
          beyond the date of his or her termination of employment. Any outstanding
          Option or SAR granted to a Participant terminating employment other than
          for death, Disability or Retirement, for which no vesting has occurred
          at the time of the termination shall be forfeited on the date of termination
          and the Committee shall have no discretion to extend the exercise period
    of such Option or SAR.

	 	 	 	
	

	 	 	 	(B) 
	Restricted Stock and RSUs. All unvested Restricted
            Stock and Restricted Stock Units, or any unvested portion thereof, still
            subject to restrictions shall be forfeited upon termination of employment
    and reacquired by the Company.

	 	 	 	
	

	 	 	 	(C)
	 Dividend Equivalents and Other Stock-Based
          Awards. Any Dividend Equivalents or unvested portion of Other Stock-Based
    Awards made hereunder shall be forfeited upon termination of employment.

	 	 	 	
	

	 	(c) 	Forfeiture of Awards
	 	 	 	 
	

	 	 	(i)	Notwithstanding
          anything to the contrary herein, if at any time (including after a
          notice of exercise has been delivered) the Committee, including any
          subcommittee or administrator authorized pursuant to Section 3(c) (any
          such person, an “Authorized
          Officer”), reasonably believes that a Participant has engaged in
          Gross Misconduct as defined in this Section, the Authorized Officer may
          suspend the Participant’s right to exercise any Stock Option or
          SAR or receive Shares under any other Award pending a determination of
          whether the Participant has engaged in Gross Misconduct. If the Committee
          or an Authorized Officer determines a Participant has engaged in Gross
          Misconduct, as defined herein, (including any Participant who may otherwise
          qualify for Disability or Retirement status), the Participant shall forfeit
          all outstanding Awards, whether vested or unvested, as of the date such
          Gross Misconduct occurs. In addition, the Committee may specify in an
          Award Agreement that the Participant’s rights, payments, and benefits
          with respect to an Award shall be subject to recoupment upon the occurrence
          of Gross Misconduct. For purposes of the Plan, Gross Misconduct shall
          be defined to mean (1) the Participant’s conviction of a felony
          (or crime of similar magnitude in non-U.S. jurisdictions) in connection
          with the performance or nonperformance of the Participant’s duties
          or (2) the Participant’s willful act or failure to act in a way
    that results in material injury to the business or reputation of the

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

	 	 	
 

  	Company or employees of the
      Company. “Material
      injury” for this purpose means substantial and not inconsequential as
      determined by the Committee, or its delagee. For this purpose there is no
      intended similarity between “Material Injury” and the accounting
    or securities standard of “materiality.”

	 
	 	 	
(ii)        	
The Committee in its sole discretion may forfeit any outstanding Award on account of a Participant’s violation of the terms of the Proprietary Interest Protection Agreement or similar agreement
signed by the Participant which prohibits the Participant’s assignment of intellectual property, transmission of confidential information, competition or solicitation of employees or business.

  
	 
	 	 	
(iii)        	
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities
laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or through gross negligence failed to prevent the misconduct, or if the Participant is one of the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment earned or realized under an Award during the twelve (12) month period following the first public issuance or filing with the United
States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.

  
	 
	 	(d) 	
Withholding. To the extent required by applicable Federal, state, local or foreign law, a Participant (including the Participant to whom an Award that has been transferred was originally granted) or in
the case of the Participant’s death, the Participant’s estate or beneficiary, shall be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of an Option or Stock Appreciation
Right exercise, disposition of Shares issued under an Incentive Stock Option, the vesting of or settlement of an Award, an election pursuant to Section 83(b) of the Code or otherwise with respect to an Award. The Company and its Affiliates shall not
be required to issue Shares, make any payment or to recognize the transfer or disposition of Shares until such obligations are satisfied. The Company or any Affiliate may withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other Awards, or other property) of withholding Federal, state or local taxes due in respect of an Award, but no more than the minimum tax withholding required to comply with
such law, its exercise, or any payment or transfer under such Award or under the Plan and to take such other action as may be necessary in the opinion of the Company or Affiliate to satisfy all obligations for the payment of such taxes.

  
	 
	 	(e) 	
Registration, Repricing and Reload.

  
	 
	 	 	
(i)        	
Registration. Any Restricted Stock granted under the Plan may be evidenced in such manner, as the Committee may deem appropriate, including without limitation, book-entry registration or issuance of a
stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

  
	 
	 	 	
(ii)        	
No Repricing. Other than in connection with a change in the Company’s capitalization (as described in Section 4(c) of the Plan), the exercise price of an Option or Stock Appreciation Right may not be
reduced without stockholder approval.

  
	 	 	 	 
	 	 	(iii)	 No Reload Grants. Options shall not be granted
      under the Plan in consideration for and shall not be conditioned upon the
      delivery of Shares to the Company in payment of the exercise price and/or
    tax withholding obligation under any other employee stock option.
	 	 	 	 

Section 8. Amendment and Termination of Awards.

Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan, the following shall apply to all Awards.

	 	
(a)        	
Amendments to Awards. Subject to Section 7, the Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, cancel or terminate, any Award heretofore
granted without the consent of any relevant Participant or holder or beneficiary of an Award. No such amendment, alteration, suspension, discontinuance, cancellation or termination may be made that would be adverse to the holder of such Award may be
made without such holder’s consent, provided that no such consent shall be required with respect to any amendment, alteration, suspension, discontinuance, cancellation or termination if the Committee determines in its sole discretion that such
amendment, alteration, suspension, discontinuance, cancellation or termination either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy or conform to any law or regulation or to meet the requirements of any
accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately

  
	 

	 	 	
compensated. Subject to the foregoing, the Committee shall not waive any condition or rights under, amend any terms or alter, suspend, discontinue, cancel or terminate any Award if such action would
result in the imposition on the Award of the additional tax provided for under Section 409A of the Code.

  
	 
	 	
(b)        	
Adjustments of Awards Upon Certain Acquisitions. In the event the Company or an Affiliate shall issue Substitute Awards, the Committee may make such adjustments, not inconsistent with the terms of the
Plan, in the terms of Awards as it shall deem appropriate in order to achieve reasonable comparability or other equitable relationship between the assumed Awards and the Substitute Awards granted under the Plan.

  
	 
	 	
(c)        	
No amendment, modification or termination shall accelerate the payment date of any Award constituting nonqualified deferred compensation subject to the provisions of Section 409A of the Code, except to
the extent permitted under Section 409A of the Code without the imposition of the additional tax provided for under Section 409A of the Code.

  
	 

Section 9. Acceleration Upon a Change of Control.

In the event of a Change of Control (as defined in Section 9(b) below), the following shall apply:

	 	
(a)        	
Effect on Awards. If a Participant incurs a Termination of Employment (as defined in the Pitney Bowes Senior Executive Severance Policy (as amended from time to time)), whether or not the Participant is
then covered by the Pitney Bowes Senior Executive Severance Policy (as amended from time to time) within two years after a Change of Control, or if a Participant is terminated before a Change of Control at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control and a Change of Control subsequently occurs, then upon the later to occur of such Termination of Employment or Change of Control (such later event, the “Triggering
Event”):

  
	 
	 	 	
(i)        	
Options and SARs. All Options and SARs outstanding on the date of such Triggering Event shall become immediately and fully exercisable without regard to any vesting
schedule provided for in the Option or SAR.

  
	 
	 	 	
(ii)        	
Restricted Stock and Restricted Stock Units. On the date of such Triggering Event, all restrictions applicable to any Restricted Stock or Restricted Stock Unit
shall terminate and be deemed to be fully satisfied for the entire stated restricted period of any such Award, and the total number of underlying Shares shall become Released Securities.

  
	 
	 	 	
(iii)        	
Dividend Equivalents. On the date of such Triggering Event, the holder of any outstanding Dividend Equivalent shall be entitled to surrender such Award to the
Company and to receive payment of an amount equal to the amount that would have been paid over the remaining term of the Dividend Equivalent, as determined by the Committee.

  
	 
	 	 	
(iv)        	
Other Stock-Based Awards. On the date of such Triggering Event, all outstanding Other Stock-Based Awards of whatever type shall become immediately vested and
payable in an amount that assumes that the Awards were outstanding for the entire period stated therein, as determined by the Committee.

  
	 
	 	 	
(v)        	
Performance Awards. On the date of such Triggering Event, Performance Awards for all performance periods, including those not yet completed, shall immediately
become fully vested and payable in accordance with the following:

  
	 	 	 	 
	 	 	
	(A)
	 The total amount of Performance Awards conditioned
        on nonfinancial Performance Goals shall be immediately payable (or exercisable
        or released, as the case may be) as if the Performance Goals had been fully
    achieved for the entire performance period.

	 	 	
	
	

	 	 	
	(B)
	For Performance Awards conditioned on financial
        Performance Goals and payable in cash, the amount payable under such Award
        shall be the higher of (i) target performance and (ii) performance achieved
        through the end of the last fiscal quarter prior to the Triggering event
    as if satisfied for the entire performance period.

	 	 	
	
	

	 	 	(vi) 
	The Committee’s
        determination of amounts payable under this Section 9(a) shall be final.
        Except as otherwise provided in Section 9(a)(i), any amounts due under
        this Section 9(a) shall be paid to Participants within 30 days after
    such Triggering Event.

	 	 	
	

	 	 	(vii) 
	The provisions
        of this Section 9(a) shall not be applicable to any Award granted to
        a Participant if the Change of Control results from such Participant’s beneficial ownership (within
        the meaning of Rule 13d-3 under the Securities and Exchange Act of 1934,
        as amended (the “Exchange Act”)) of Shares or other Company
        common stock or Company voting securities as a Participant in a transaction
    described in (b) below.

	 	 	
	

	 	(b)   	Change of Control
          Defined. Unless the Committee specifies otherwise, a “Change of Control” shall
          be deemed to have occurred under the terms and conditions outlined
    in the Pitney Bowes Senior Executive Severance Policy (as amended

	 	 	 	 
	 	 	 	 
	 

 

	 	 	from time
          to time). However, that, as to any Award under the Plan that consists
          of deferred compensation subject to Section 409A, the definition of “Change of Control” shall
    be deemed modified to the extent necessary to comply with Section 409A.

Section 10. Amendment or Termination of the Plan.

Except to the extent limited under Section 14 herein, prohibited by applicable law or otherwise expressly provided in an Award Agreement or in the Plan, the Board of Directors may amend, alter, suspend, discontinue, or
terminate the Plan, including without limitation any such action to correct any defect, supply any omission or reconcile any inconsistency in the Plan, without the consent of any stockholder, Participant, other holder or beneficiary of an Award, or
Person; provided that any such amendment, alteration, suspension, discontinuation, or termination that would impair the rights of any Participant, or any other holder or beneficiary of any Award heretofore granted shall not be effective without the
approval of the affected Participant(s); and provided further, that, notwithstanding any other provision of the Plan or any Award Agreement, without the approval of the stockholders of the Company no such amendment, alteration, suspension,
discontinuation or termination shall be made that would:

	 	
(a)        	
increase the total number of Shares available for Awards under the Plan, except as provided in Section 4 hereof;

  
	 
	 	
(b)        	
reduce the price at which Options or Stock Appreciation Rights may be granted below the price provided for in Section 6(a)(i);

  
	 
	 	
(c)        	
reduce the exercise price of outstanding Options or Stock Appreciation Rights;

  
	 
	 	
(d)        	
extend the term of this Plan;

  
	 
	 	
(e)        	
change the class of persons eligible to be Participants;

  
	 
	 	
(f)        	
otherwise amend the Plan in any manner requiring stockholder approval by law or under the New York Stock Exchange listing requirements; or

  
	 
	 	
(g)        	
increase the individual maximum limits in Section 4.

  
	 

Section 11. General Provisions

	 	
(a)        	
Conditions and Restrictions Upon Securities Subject to Awards. The Committee may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued
under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement
of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Shares issued upon exercise, vesting or settlement of such Award (including the actual or
constructive surrender of Shares already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or
other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the
timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (iv) provisions requiring Shares to be
sold on the open market or to the Company in order to satisfy tax withholding or other obligations.

  
	 	 	 
	 	(b)	 Compliance with Laws and
        Regulations. This Plan, the grant, issuance, vesting, exercise and settlement
        of Awards thereunder, and the obligation of the Company to sell, issue
        or deliver Shares under such Awards, shall be subject to all applicable
        foreign, Federal, state and local laws, rules and regulations, stock
        exchange rules and regulations, and to such approvals by any governmental
        or regulatory agency as may be required. The Company shall not be required
        to register in a Participant’s
        name or deliver any Shares prior to the completion of any registration
        or qualification of such shares under any foreign, Federal, state or local
        law or any ruling or regulation of any government body which the Committee
        shall determine to be necessary or advisable. To the extent the Company
        is unable to or the Committee deems it not appropriate or infeasible to
        obtain authorization from any regulatory body having jurisdiction, which
        authorization is deemed by the Company’s counsel to be necessary
        to the lawful issuance and sale of any Shares hereunder, or otherwise
        to satisfy the legal requirements in an applicable jurisdiction in a
        manner consistent with the intention of the Plan or any Award under the
        Plan, the Company and its Subsidiaries shall be relieved of any liability
        with respect to the failure to issue or sell such Shares as to which
        such requisite authority shall not have been obtained. No Option or stock-settled
        Stock Appreciation Rights shall be exercisable and no Shares shall be
        issued and/or transferable under any other Award unless a registration
        statement with respect to the Shares underlying such Option or Stock
        Appreciation Rights is effective and current or the Company has determined
    that such registration is unnecessary.

	 	 	 
	 	(c) 	No Rights to Awards. No Employee, Participant
        or other Person shall have any claim to be granted any Award under the
        Plan, and there is no obligation for uniformity of treatment of Employees,
        Participants, or holders or beneficiaries of Awards under the Plan. The
        terms and conditions of Awards need not be the same with respect to each
    Participant.

	 	 	

	 	(d) 	No Limit on Other Compensation Agreements. Nothing
        contained in the Plan shall prevent the Company or any Affiliate from adopting
        or continuing in effect other or additional compensation arrangements and
        such arrangements may be either generally applicable or applicable only
    in specific cases.

	 

 

	       	
 

  
	 
	       	
 

  
	 

	 	
(e)        	
No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate
may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

  
	 
	 	
(f)        	
Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable
Federal law.

  
	 
	 	
(g)        	
Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan
or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

  
	 
	 	
(h)        	
No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

  
	 
	 	
(i)        	
No Fractional Shares. No fractional Share shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid
or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

  
	 
	 	
(j)        	
Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.

  
	 

Section 12. Effective Date of the Plan.

The Plan was approved by the Board of Directors on February 12, 2007 and shall have an effective date of May 1, 2007, subject to approval of the Plan by the stockholders of the Company at the May 2007 stockholders’
meeting. Notwithstanding the foregoing, Plan provisions that contain an effective date other than May 1, 2007 shall be governed by such other effective date.

Section 13. Term of the Plan.

No Award shall be granted under the Plan after December 31, 2014. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and
the authority of the Committee hereunder to amend, alter, adjust, suspend, discontinue, or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board of Directors of the Company to amend the
Plan, shall extend beyond such date. 

Section 14. Participants Subject to Sections 162(m) and 409A.

	 	
(a)        	
The provisions of this Section 14 shall be applicable to all Covered Awards. Covered Awards shall be made subject to the achievement of one or more preestablished Performance Goals, in accordance with
procedures to be established by the Committee from time to time. Notwithstanding any provision of the Plan to the contrary, the Committee shall not have discretion to waive or amend such Performance Goals or to increase the number of Shares subject
to Covered Awards or the amount payable pursuant to Covered Awards after the Performance Goals have been established; provided, however, that the Committee may, in its sole discretion, reduce the number of Shares subject to Covered Awards or the
amount which would otherwise be payable pursuant to Covered Awards; and provided, further, that the provisions of Section 8 shall override any contrary provision of this Section 14.

  
	 
	 	
(b)        	
No Shares shall be delivered and no payment shall be made pursuant to a Covered Award unless and until the Committee shall have certified in writing that the applicable Performance Goals have been
attained.

  
	 
	 	
(c)        	
To the extent consistent with Section 162(m), the Committee (A) shall appropriately adjust any evaluation of performance under a Performance Goal to eliminate the effects of charges for restructurings,
discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the disposal of a segment or a business or related to a change in accounting principle all as
determined in accordance with standards established by opinion No. 30 of the Accounting Principles Board (APB Opinion No. 30) or other applicable or successor accounting provisions, as well as the cumulative effect of accounting changes, in each
case as determined in accordance with generally accepted accounting principles or identified in the Company’s

  
	 

	 	 	
financial statements, including the notes thereto, and (B) may appropriately adjust any evaluation of performance under a Performance Goal to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax law or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring
programs and (v) accruals of any amounts for payment under this Plan or any other compensation arrangement maintained by the Company.

  
	 
	 	
(d)        	
Section 409A Compliance. Awards under the Plan are intended to comply with Section 409A of the Code and all Awards shall be interpreted in accordance with such section and Department of Treasury
regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of the Plan. Notwithstanding any provision of the Plan or any Award
Agreement to the contrary, in the event that the Committee determines that any Award may or does not comply with Section 409A of the Code, the Company may adopt such amendments to the Plan and the affected Award (without Participant consent) or
adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (i) exempt any Award from the application of
Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to such Award, or (ii) comply with the requirements of Section 409A of the Code. The Committee may from time to time establish procedures
pursuant to which Covered Employees will be permitted or required to defer receipt of amounts payable under Awards made under the Plan; provided, however, that any such deferral shall be implemented in a manner consistent with the requirements of
Section 409A of the Code, to the extent applicable.

  
	 
	 	
(e)        	
Notwithstanding any other provision of the Plan, for all purposes involving Covered Awards, the Committee shall consist of at least two members of the Board of Directors, each of whom is an “outside
director” within the meaning of Section 162(m).

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