Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.21

CHROMCRAFT REVINGTON,
INC.,

CR CHROMCRAFT, INC.,

CR HOME OCCASIONAL, INC, AND

CR
HOME, INC.

as Borrowers

LOAN AND SECURITY
AGREEMENT

Dated as of June 22, 2007

$35,000,000

CERTAIN FINANCIAL
INSTITUTIONS,

as Lenders

and

BANK OF AMERICA,
N.A.,

as Agent

1

 

TABLE OF CONTENTS

Page

	 	 	 	 	 	 	 	 	 
	
SECTION 1. 

	 	DEFINITIONS; RULES OF CONSTRUCTION
	 	 	1	 
	
1.1.

	 	Definitions	 	 	1	 
	
1.2.

	 	Accounting Terms	 	 	25	 
	
1.3.

	 	Certain Matters of Construction	 	 	25	 
	
SECTION 2.

	 	CREDIT FACILITIES	 	 	26	 
	
2.1.

	 	Revolver Commitment	 	 	26	 
	
2.1.1.

	 	Revolver Loans	 	 	26	 
	
2.1.2.

	 	Revolver Notes	 	 	26	 
	
2.1.3.

	 	Use of Proceeds	 	 	26	 
	
2.1.4.

	 	Voluntary Reduction or Termination
of Revolver Commitments	 	 	26	 
	
2.1.5.

	 	Overadvances	 	 	26	 
	
2.1.6.

	 	Protective Advances	 	 	27	 
	
2.2.

	 	Intentionally Omitted	 	 	27	 
	
2.3.

	 	Letter of Credit Facility	 	 	27	 
	
2.3.1.

	 	Issuance of Letters of Credit	 	 	27	 
	
2.3.2.

	 	Reimbursement; Participations	 	 	28	 
	
2.3.3.

	 	Cash Collateral	 	 	30	 
	
SECTION 3.

	 	INTEREST, FEES AND CHARGES	 	 	30	 
	
3.1.

	 	Interest	 	 	30	 
	
3.1.1.

	 	Rates and Payment of Interest	 	 	30	 
	
3.1.2.

	 	Application of Adjusted LIBOR to
Outstanding Loans	 	 	31	 
	
3.1.3.

	 	Interest Periods	 	 	31	 
	
3.1.4.

	 	Interest Rate Not Ascertainable	 	 	31	 
	
3.2.

	 	Fees	 	 	31	 
	
3.2.1.

	 	Unused Line Fee	 	 	31	 
	
3.2.2.

	 	LC Facility Fees	 	 	32	 
	
3.2.3.

	 	Closing Fee	 	 	32	 
	
3.2.4.

	 	Agent Fees	 	 	32	 
	
3.3.

	 	Computation of Interest, Fees, Yield
Protection	 	 	32	 
	
3.4.

	 	Reimbursement Obligations	 	 	32	 

i

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TABLE OF
CONTENTS

(continued)

Page

	 	 	 	 	 	 	 	 	 
	
3.5.

	 	Illegality	 	 	33	 
	
3.6.

	 	Increased Costs	 	 	33	 
	
3.7.

	 	Capital Adequacy	 	 	34	 
	
3.8.

	 	Mitigation	 	 	34	 
	
3.9.

	 	Funding Losses	 	 	34	 
	
3.10.

	 	Maximum Interest	 	 	34	 
	
SECTION 4.

	 	LOAN ADMINISTRATION	 	 	35	 
	
4.1.

	 	Manner of Borrowing and Funding
Revolver Loans	 	 	35	 
	
4.1.1.

	 	Notice of Borrowing	 	 	35	 
	
4.1.2.

	 	Fundings by Lenders	 	 	36	 
	
4.1.3.

	 	Settlement	 	 	36	 
	
4.1.4.

	 	Notices	 	 	36	 
	
4.2.

	 	Defaulting Lender	 	 	37	 
	
4.3.

	 	Number and Amount of LIBOR Loans;
Determination of Rate	 	 	37	 
	
4.4.

	 	Borrower Agent	 	 	37	 
	
4.5.

	 	One Obligation	 	 	37	 
	
4.6.

	 	Effect of Termination	 	 	38	 
	
SECTION 5.

	 	PAYMENTS	 	 	38	 
	
5.1.

	 	General Payment Provisions	 	 	38	 
	
5.2.

	 	Repayment of Revolver Loans	 	 	38	 
	
5.2.1.

	 	Payments on Revolver Termination
Date and From Proceeds of Accounts and Inventory	 	 	38	 
	
5.2.2.

	 	Mandatory Prepayments	 	 	39	 
	
5.3.

	 	Payment of Other Obligations	 	 	39	 
	
5.4.

	 	Marshaling; Payments Set Aside	 	 	39	 
	
5.5.

	 	Post-Default Allocation of
Payments	 	 	39	 
	
5.5.1.

	 	Allocation	 	 	39	 
	
5.5.2.

	 	Erroneous Application	 	 	40	 
	
5.6.

	 	Application of Payments	 	 	40	 
	
5.7.

	 	Loan Account; Account Stated	 	 	40	 
	
5.7.1.

	 	Loan Account	 	 	40	 

ii

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TABLE OF
CONTENTS

(continued)

Page

	 	 	 	 	 	 	 	 	 
	
5.7.2.

	 	Entries Binding	 	 	40	 
	
5.8.

	 	Taxes	 	 	41	 
	
5.9.

	 	Withholding Tax Exemption	 	 	41	 
	
5.10.

	 	Nature and Extent of Each
Borrower’s Liability	 	 	41	 
	
5.10.1.

	 	Joint and Several Liability	 	 	41	 
	
5.10.2.

	 	Waivers	 	 	42	 
	
5.10.3.

	 	Extent of Liability;
Contribution	 	 	43	 
	
5.10.4.

	 	Joint Enterprise	 	 	43	 
	
5.10.5.

	 	Subordination	 	 	44	 
	
SECTION 6.

	 	CONDITIONS PRECEDENT	 	 	44	 
	
6.1.

	 	Conditions Precedent to Initial
Loans	 	 	44	 
	
6.2.

	 	Conditions Precedent to All Credit
Extensions	 	 	45	 
	
6.3.

	 	Limited Waiver of Conditions
Precedent	 	 	46	 
	
SECTION 7.

	 	COLLATERAL	 	 	46	 
	
7.1.

	 	Grant of Security Interest	 	 	46	 
	
7.2.

	 	Lien on Deposit Accounts; Cash
Collateral	 	 	47	 
	
7.2.1.

	 	Deposit Accounts	 	 	47	 
	
7.2.2.

	 	Cash Collateral	 	 	47	 
	
7.3.

	 	Other Collateral	 	 	48	 
	
7.3.1.

	 	Commercial Tort Claims	 	 	48	 
	
7.3.2.

	 	Certain After-Acquired
Collateral	 	 	48	 
	
7.4.

	 	No Assumption of Liability	 	 	48	 
	
7.5.

	 	Further Assurances	 	 	48	 
	
7.6.

	 	Foreign Subsidiary Stock	 	 	48	 
	
SECTION 8.

	 	COLLATERAL ADMINISTRATION	 	 	48	 
	
8.1.

	 	Borrowing Base Certificates	 	 	48	 
	
8.2.

	 	Administration of Accounts	 	 	49	 
	
8.2.1.

	 	Records and Schedules of
Accounts	 	 	49	 
	
8.2.2.

	 	Taxes	 	 	49	 
	
8.2.3.

	 	Account Verification	 	 	49	 

iii

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TABLE OF
CONTENTS

(continued)

Page

	 	 	 	 	 	 	 	 	 
	
8.2.4.

	 	Maintenance of Dominion Account	 	 	49	 
	
8.2.5.

	 	Proceeds of Collateral	 	 	50	 
	
8.3.

	 	Administration of Inventory	 	 	50	 
	
8.3.1.

	 	Records and Reports of Inventory	 	 	50	 
	
8.3.2.

	 	Returns of Inventory	 	 	50	 
	
8.3.3.

	 	Acquisition, Sale and
Maintenance	 	 	50	 
	
8.4.

	 	Administration of Equipment	 	 	50	 
	
8.4.1.

	 	Records and Schedules of
Equipment	 	 	50	 
	
8.4.2.

	 	Dispositions of Equipment	 	 	51	 
	
8.4.3.

	 	Condition of Equipment	 	 	51	 
	
8.5.

	 	Administration of Deposit
Accounts	 	 	51	 
	
8.6.

	 	General Provisions	 	 	51	 
	
8.6.1.

	 	Location of Collateral	 	 	51	 
	
8.6.2.

	 	Insurance of Collateral;
Condemnation Proceeds	 	 	51	 
	
8.6.3.

	 	Protection of Collateral	 	 	52	 
	
8.6.4.

	 	Defense of Title to Collateral	 	 	53	 
	
8.7.

	 	Power of Attorney	 	 	53	 
	
SECTION 9.

	 	REPRESENTATIONS AND WARRANTIES	 	 	53	 
	
9.1.

	 	General Representations and
Warranties	 	 	53	 
	
9.1.1.

	 	Organization and Qualification	 	 	54	 
	
9.1.2.

	 	Power and Authority	 	 	54	 
	
9.1.3.

	 	Enforceability	 	 	54	 
	
9.1.4.

	 	Capital Structure	 	 	54	 
	
9.1.5.

	 	Corporate Names; Locations	 	 	54	 
	
9.1.6.

	 	Title to Properties; Priority of
Liens	 	 	54	 
	
9.1.7.

	 	Accounts	 	 	54	 
	
9.1.8.

	 	Financial Statements	 	 	55	 
	
9.1.9.

	 	Surety Obligations	 	 	56	 
	
9.1.10.

	 	Taxes	 	 	56	 
	
9.1.11.

	 	Brokers	 	 	56	 

iv

5

 

TABLE OF
CONTENTS

(continued)

Page

	 	 	 	 	 	 	 	 	 
	
9.1.12.

	 	Intellectual Property	 	 	56	 
	
9.1.13.

	 	Governmental Approvals	 	 	56	 
	
9.1.14.

	 	Compliance with Laws	 	 	56	 
	
9.1.15.

	 	Compliance with Environmental
Laws	 	 	57	 
	
9.1.16.

	 	Burdensome Contracts	 	 	57	 
	
9.1.17.

	 	Litigation	 	 	57	 
	
9.1.18.

	 	No Defaults	 	 	57	 
	
9.1.19.

	 	ERISA	 	 	57	 
	
9.1.20.

	 	Trade Relations	 	 	58	 
	
9.1.21.

	 	Labor Relations	 	 	58	 
	
9.1.22.

	 	Payable Practices	 	 	58	 
	
9.1.23.

	 	Not a Regulated Entity	 	 	58	 
	
9.1.24.

	 	Margin Stock	 	 	58	 
	
9.1.25.

	 	Plan Assets	 	 	58	 
	
9.2.

	 	Complete Disclosure	 	 	58	 
	
SECTION 10.

	 	COVENANTS AND CONTINUING
AGREEMENTS	 	 	59	 
	
10.1.

	 	Affirmative Covenants	 	 	59	 
	
10.1.1.

	 	Inspections; Appraisals	 	 	59	 
	
10.1.2.

	 	Financial and Other Information	 	 	59	 
	
10.1.3.

	 	Notices	 	 	61	 
	
10.1.4.

	 	Landlord and Storage Agreements	 	 	61	 
	
10.1.5.

	 	Compliance with Laws	 	 	62	 
	
10.1.6.

	 	Taxes	 	 	62	 
	
10.1.7.

	 	Insurance	 	 	62	 
	
10.1.8.

	 	Licenses	 	 	62	 
	
10.1.9.

	 	Future Subsidiaries	 	 	62	 
	
10.1.10.

	 	Cash Management Services	 	 	62	 
	
10.2.

	 	Negative Covenants	 	 	62	 
	
10.2.1.

	 	Permitted Debt	 	 	63	 
	
10.2.2.

	 	Permitted Liens	 	 	63	 

v

6

 

TABLE OF
CONTENTS

(continued)

Page

	 	 	 	 	 	 	 	 	 
	
10.2.3.

	 	Reserved	 	 	64	 
	
10.2.4.

	 	Distributions; Upstream Payments	 	 	64	 
	
10.2.5.

	 	Restricted Investments	 	 	64	 
	
10.2.6.

	 	Disposition of Assets	 	 	64	 
	
10.2.7.

	 	Loans	 	 	64	 
	
10.2.8.

	 	Restrictions on Payment of Certain
Debt	 	 	65	 
	
10.2.9.

	 	Fundamental Changes	 	 	65	 
	
10.2.10.

	 	Subsidiaries	 	 	65	 
	
10.2.11.

	 	Organic Documents	 	 	65	 
	
10.2.12.

	 	Tax Consolidation	 	 	65	 
	
10.2.13.

	 	Accounting Changes	 	 	65	 
	
10.2.14.

	 	Restrictive Agreements	 	 	65	 
	
10.2.15.

	 	Hedging Agreements	 	 	65	 
	
10.2.16.

	 	Conduct of Business	 	 	65	 
	
10.2.17.

	 	Affiliate Transactions	 	 	65	 
	
10.2.18.

	 	Plans	 	 	66	 
	
10.2.19.

	 	Amendments to Subordinated Debt	 	 	66	 
	
10.2.20.

	 	Trade Accounts Payable and Accrued
Expenses	 	 	66	 
	
10.3.

	 	Financial Covenants	 	 	66	 
	
10.3.1.

	 	Fixed Charge Coverage Ratio	 	 	66	 
	
SECTION 11.

	 	EVENTS OF DEFAULT; REMEDIES ON
DEFAULT	 	 	66	 
	
11.1.

	 	Events of Default	 	 	66	 
	
11.2.

	 	Remedies upon Default	 	 	68	 
	
11.3.

	 	License	 	 	69	 
	
11.4.

	 	Setoff	 	 	69	 
	
11.5.

	 	Remedies Cumulative; No Waiver	 	 	69	 
	
11.5.1.

	 	Cumulative Rights	 	 	69	 
	
11.5.2.

	 	Waivers	 	 	69	 
	
SECTION 12.

	 	AGENT	 	 	70	 
	
12.1.

	 	Appointment, Authority and Duties of
Agent	 	 	70	 

vi

7

 

TABLE OF
CONTENTS

(continued)

Page

	 	 	 	 	 	 	 	 	 
	
12.1.1.

	 	Appointment and Authority	 	 	70	 
	
12.1.2.

	 	Duties	 	 	70	 
	
12.1.3.

	 	Agent Professionals	 	 	71	 
	
12.1.4.

	 	Instructions of Required Lenders	 	 	71	 
	
12.2.

	 	Agreements Regarding Collateral and
Field Examination Reports	 	 	71	 
	
12.2.1.

	 	Lien Releases; Care of
Collateral	 	 	71	 
	
12.2.2.

	 	Possession of Collateral	 	 	71	 
	
12.2.3.

	 	Reports	 	 	72	 
	
12.3.

	 	Reliance By Agent	 	 	72	 
	
12.4.

	 	Action Upon Default	 	 	72	 
	
12.5.

	 	Ratable Sharing	 	 	72	 
	
12.6.

	 	Indemnification of Agent
Indemnitees	 	 	73	 
	
12.6.1.

	 	Indemnification	 	 	73	 
	
12.6.2.

	 	Proceedings	 	 	73	 
	
12.7.

	 	Limitation on Responsibilities of
Agent	 	 	73	 
	
12.8.

	 	Successor Agent and Co-Agents	 	 	74	 
	
12.8.1.

	 	Resignation; Successor Agent	 	 	74	 
	
12.8.2.

	 	Separate Collateral Agent	 	 	74	 
	
12.9.

	 	Due Diligence and Non-Reliance	 	 	74	 
	
12.10.

	 	Replacement of Certain Lenders	 	 	75	 
	
12.11.

	 	Remittance of Payments and
Collections	 	 	75	 
	
12.11.1.

	 	Remittances Generally	 	 	75	 
	
12.11.2.

	 	Failure to Pay	 	 	75	 
	
12.11.3.

	 	Recovery of Payments	 	 	75	 
	
12.12.

	 	Agent in its Individual Capacity	 	 	76	 
	
12.13.

	 	Agent Titles	 	 	76	 
	
12.14.

	 	No Third Party Beneficiaries	 	 	76	 
	
SECTION 13.

	 	BENEFIT OF AGREEMENT; ASSIGNMENTS
AND PARTICIPATIONS	 	 	76	 
	
13.1.

	 	Successors and Assigns	 	 	76	 
	
13.2.

	 	Participations	 	 	76	 

vii

8

 

TABLE OF
CONTENTS

(continued)

Page

	 	 	 	 	 	 	 	 	 
	
13.2.1.

	 	Permitted Participants; Effect	 	 	76	 
	
13.2.2.

	 	Voting Rights	 	 	77	 
	
13.2.3.

	 	Benefit of Set-Off	 	 	77	 
	
13.3.

	 	Assignments	 	 	77	 
	
13.3.1.

	 	Permitted Assignments	 	 	77	 
	
13.3.2.

	 	Effect; Effective Date	 	 	78	 
	
13.4.

	 	Tax Treatment	 	 	78	 
	
13.5.

	 	Representation of Lenders	 	 	78	 
	
SECTION 14.

	 	MISCELLANEOUS	 	 	78	 
	
14.1.

	 	Consents, Amendments and Waivers	 	 	78	 
	
14.1.1.

	 	Amendment	 	 	78	 
	
14.1.2.

	 	Limitations	 	 	79	 
	
14.1.3.

	 	Payment for Consents	 	 	79	 
	
14.2.

	 	Indemnity	 	 	79	 
	
14.3.

	 	Notices and Communications	 	 	79	 
	
14.3.1.

	 	Notice Address	 	 	79	 
	
14.3.2.

	 	Electronic Communications; Voice
Mail	 	 	80	 
	
14.3.3.

	 	Non-Conforming Communications	 	 	80	 
	
14.4.

	 	Performance of Borrowers’
Obligations	 	 	80	 
	
14.5.

	 	Credit Inquiries	 	 	80	 
	
14.6.

	 	Severability	 	 	80	 
	
14.7.

	 	Cumulative Effect; Conflict of
Terms	 	 	80	 
	
14.8.

	 	Counterparts; Facsimile
Signatures	 	 	81	 
	
14.9.

	 	Entire Agreement	 	 	81	 
	
14.10.

	 	Obligations of Lenders	 	 	81	 
	
14.11.

	 	Confidentiality	 	 	81	 
	
14.12.

	 	GOVERNING LAW	 	 	82	 
	
14.13.

	 	CONSENT TO FORUM	 	 	82	 
	
14.14.

	 	Waivers by Borrowers	 	 	82	 
	
14.15.

	 	Patriot Act Notice	 	 	83	 

 

viii

9

 

TABLE OF
CONTENTS

(continued)

Page

LIST OF EXHIBITS AND SCHEDULES

	 	 	 	 	 
	
Exhibit A 

	 	— 	 	Revolver Note
	
Exhibit B 

	 	— 	 	Assignment and Acceptance
	
Exhibit C 

	 	— 	 	Assignment Notice
	
Schedule 1.1 

	 	— 	 	Commitments of Lenders
	
Schedule 8.3.3 

	 	 	 	Consignments
	
Schedule 8.5 

	 	— 	 	Deposit Accounts
	
Schedule 8.6.1 

	 	— 	 	Business Locations
	
Schedule 9.1.4 

	 	— 	 	Names and Capital Structure
	
Schedule 9.1.5 

	 	— 	 	Former Names and Companies
	
Schedule 9.1.12 

	 	— 	 	Patents, Trademarks, Copyrights and
Licenses
	
Schedule 9.1.15 

	 	— 	 	Environmental Matters
	
Schedule 9.1.16 

	 	— 	 	Restrictive Agreements
	
Schedule 9.1.17 

	 	— 	 	Litigation
	
Schedule 9.1.19 

	 	— 	 	Pension Plans
	
Schedule 9.1.21 

	 	— 	 	Labor Contracts
	
Schedule 10.2.2 

	 	— 	 	Existing Liens
	
Schedule 10.2.17 

	 	— 	 	Existing Affiliate Transactions

 

ix

10

 

LOAN AND SECURITY
AGREEMENT

THIS LOAN AND
SECURITY AGREEMENT is dated as of June 22, 2007, among CHROMCRAFT
REVINGTON, INC., a Delaware corporation (“Chromcraft” or
“Borrower Representative”), CR CHROMCRAFT,
INC., a Delaware corporation (“CR
Chromcraft”), CR HOME OCCASIONAL, INC, a Tennessee corporation
(“CR Home Occasional”), and CR HOME, INC, a South
Carolina corporation (“CR Home” and together with
Chromcraft, CR Chromcraft and CR Home Occasional, individually, a
“Borrower” and collectively,
“Borrowers”), the financial institutions party to this
Agreement from time to time as lenders (collectively,
“Lenders”), and BANK OF AMERICA, N.A., a national
banking association, as agent for the Lenders (“Agent”).

R E C I T A L S:

Borrowers have
requested that Lenders make available a credit facility, to be used by
Borrowers to finance their mutual and collective business enterprise. Lenders
are willing to provide such credit facility on the terms and conditions set
forth in this Agreement.

NOW,
THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

SECTION 1.

DEFINITIONS; RULES OF
CONSTRUCTION

1.1.
Definitions. As used herein, the following terms have the
meanings set forth below:

Account — as defined in the UCC, including
all rights to payment for goods sold or leased, or for services rendered.

Account
Debtor — a Person who is obligated under an Account, Chattel
Paper or General Intangible.

Accounts
Formula Amount — 85% of the Value of Eligible Accounts (other
than Dated Eligible Accounts) plus the lesser of (i) $3,000,000 and
(ii) 85% of the Value of Dated Eligible Accounts.

Adjusted
LIBOR — for any Interest Period, with respect to LIBOR Loans, the
per annum rate of interest (rounded upward, if necessary, to the nearest 1/8th
of 1%) appearing on Telerate Page 3750, or if such page is
unavailable, the Reuters Screen LIBO Page (or any successor page of
either, as applicable), as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if the Reuters Screen LIBO
Page is used and more than one rate is shown on such page, the applicable
rate shall be the arithmetic mean thereof. If for any reason none of the
foregoing rates is available, the Offshore Base Rate shall be the rate per
annum determined by Agent as the rate of interest at which Dollar deposits in
the approximate amount of the applicable LIBOR Loan would be offered to major

11

 

banks in the offshore Dollar market
at or about 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period. If
the Board of Governors shall impose a Reserve Percentage with respect to LIBOR
deposits, then Adjusted LIBOR shall equal the amount determined above, divided
by 1 minus the Reserve Percentage.

Affiliate — with respect to any Person,
another Person (a) who directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with such
first Person; (b) who beneficially owns 10% or more of the voting
securities or any class of Equity Interests of such first Person; (c) at
least 10% of whose voting securities or any class of Equity Interests is
beneficially owned, directly or indirectly, by such first Person; or
(d) who is an officer, director, partner or managing member of such first
Person. “Control” means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through ownership of Equity Interests, by
contract or otherwise.

Agent
Indemnitees — Agent and its officers, directors, employees,
Affiliates, agents and attorneys.

Agent
Professionals — attorneys, accountants, appraisers, auditors,
business valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

Allocable
Amount — as defined in Section 5.10.3.

Anti-
Terrorism Laws — any laws relating to terrorism or money
laundering, including the Patriot Act.

Applicable
Law — all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in
question, including all applicable statutory law, common law and equitable
principles, and all provisions of constitutions, treaties, statutes, rules,
regulations, orders and decrees of Governmental Authorities.

Applicable
Margin — with respect to any Type of Loan, the margin set forth
below, as determined by the average Availability for the last Fiscal Quarter:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Base Rate	 	LIBOR
	 	 	 	 	 	 	Revolver	 	Revolver
	Level	 	Average Availability	 	Loans	 	Loans
	
I

	 	 	> $15,000,000	 	 	 	0.00	%	 	 	1.50	%
	
 

	 	 	 	 	 	 	 	 	 	 	 	 
	
II

	 	 	> $10,000,000 < $15,000,000	 	 	 	0.25	%	 	 	1.75	%
	
III

	 	 	< $10,000,000	 	 	 	0.50	%	 	 	2.00	%

2

12

 

Until December 31, 2007,
margins shall be determined as if Level II were applicable. Thereafter, the
margins shall be subject to increase or decrease upon receipt by Agent pursuant
to Section 8.1 of the Borrowing Base Certificate for the last month
of the most recently ended Fiscal Quarter (commencing with the Fiscal Quarter
ending December 31, 2007), which change shall be effective on the first
Business Day of the calendar month following receipt. If, by the first Business
Day of a month, Borrowing Base Certificate due in the preceding month have not
been received, then the margins shall be determined as if Level III were
applicable, from such day until the first Business Day of the calendar month
following actual receipt.

Approved
Fund — any Person (other than a natural person) that is engaged
in making, holding or investing in extensions of credit in its ordinary course
of business and is administered or managed by a Lender, an entity that
administers or manages a Lender, or an Affiliate of either.

Asset
Disposition — a sale, lease, license, consignment, transfer or
other disposition of Property of an Obligor, including a disposition of
Property in connection with a sale-leaseback transaction or synthetic lease.

Assignment
and Acceptance — an assignment agreement between a Lender and
Eligible Assignee, in the form of Exhibit B.

Availability — determined as of any date,
the amount that Borrowers are entitled to borrow as Revolver Loans, being the
Borrowing Base minus the principal balance of all Revolver Loans.

Availability
Reserve — the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) the LC Reserve;
(d) the Bank Product Reserve; (e) the aggregate amount of liabilities
secured by Liens upon Collateral that are senior to Agent’s Liens (but
imposition of any such reserve shall not waive an Event of Default arising
therefrom); (f) the Availability Block; and (g) such additional
reserves, in such amounts and with respect to such matters, as Agent in its
credit judgment may elect to impose from time to time.

Bank of
America — Bank of America, N.A., a national banking association,
and its successors and assigns.

Bank of
America Indemnitees — Bank of America and its officers,
directors, employees, Affiliates, agents and attorneys.

Bank
Product — any of the following products, services or facilities
extended to any Borrower or Subsidiary by Bank of America or any of its
Affiliates: (a) Cash Management Services; (b) products under Hedging
Agreements; (c) commercial credit card and merchant card services; and
(d) leases and other banking products or services as may be requested by
any Borrower or Subsidiary, other than Letters of Credit.

Bank Product
Debt — Debt and other obligations of an Obligor relating to Bank
Products.

Bank Product
Reserve — the aggregate amount of reserves established by Agent
from time to time in its discretion in respect of Bank Product Debt.

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Bankruptcy
Code — Title 11 of the United States Code.

Base
Rate — the rate of interest announced by Bank of America from
time to time as its prime rate. Such rate is a reference rate only and Bank of
America may make loans or other extensions of credit at, above or below it. Any
change in the prime rate announced by Bank of America shall take effect at the
opening of business on the effective date specified in the public announcement
of the change.

Base Rate
Loan — any Loan that bears interest based on the Base Rate.

Base Rate
Revolver Loan — a Revolver Loan that bears interest based on the
Base Rate.

Board of
Governors — the Board of Governors of the Federal Reserve System.

Borrowed
Money — with respect to any Obligor, without duplication, its
(a) Debt that (i) arises from the lending of money by any Person to
such Obligor, (ii) is evidenced by notes, drafts, bonds, debentures,
credit documents or similar instruments, (iii) accrues interest or is a
type upon which interest charges are customarily paid (excluding trade payables
owing in the Ordinary Course of Business), or (iv) was issued or assumed
as full or partial payment for Property; (b) Capital Leases;
(c) reimbursement obligations with respect to letters of credit; and
(d) guaranties of any Debt of the foregoing types owing by another Person.

Borrower
Agent — as defined in Section 4.4.

Borrowing — a group of Loans of one Type
that are made on the same day or are converted into Loans of one Type on the
same day.

Borrowing
Base — on any date of determination, an amount equal to the
lesser of (a) the aggregate amount of Revolver Commitments, minus
the LC Reserve; or (b) the sum of the Accounts Formula Amount, plus
the Inventory Formula Amount, minus the Availability Reserve.

Borrowing
Base Certificate — a certificate, in form and substance
satisfactory to Agent, by which Borrowers certify calculation of the Borrowing
Base.

Business
Day — any day (a) excluding Saturday, Sunday and any other
day on which banks are permitted to be closed under the laws of the States of
Illinois and Wisconsin; and (b) when used with reference to a LIBOR Loan,
also excluding any day on which banks do not conduct dealings in Dollar
deposits on the London interbank market.

Capital
Adequacy Regulation — any law, rule, regulation, guideline,
request or directive of any central bank or other Governmental Authority,
whether or not having the force of law, regarding capital adequacy of a bank or
any Person controlling a bank.

Capital
Expenditures — all liabilities incurred, expenditures made or
payments due (whether or not made) by a Borrower or Subsidiary for the
acquisition of any fixed assets, or any improvements, replacements,
substitutions or additions thereto with a useful life of more than one year,
including the principal portion of Capital Leases.

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Capital
Lease — any lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

Cash
Collateral — cash, and any interest or other income earned
thereon, that is delivered to Agent to Cash Collateralize any Obligations.

Cash
Collateral Account — a demand deposit, money market or other
account established by Agent at such financial institution as Agent may select
in its discretion, which account shall be subject to Agent’s Liens for
the benefit of Secured Parties.

Cash
Collateralize — the delivery of cash to Agent, as security for
the payment of Obligations, in an amount equal to (a) with respect to LC
Obligations, 105% of the aggregate LC Obligations, and (b) with respect to
any inchoate or contingent Obligations (including Obligations arising under
Bank Products), Agent’s good faith estimate of the amount due or to
become due, including all fees and other amounts relating to such Obligations.
“Cash Collateralization” has a correlative meaning.

Cash
Equivalents — (a) marketable obligations issued or
unconditionally guaranteed by, and backed by the full faith and credit of, the
United States government, maturing within 12 months of the date of
acquisition; (b) certificates of deposit, time deposits and bankers’
acceptances maturing within 12 months of the date of acquisition, and
overnight bank deposits, in each case which are issued by a commercial bank
organized under the laws of the United States or any state or district thereof,
rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the
time of acquisition, and (unless issued by a Lender) not subject to offset
rights; (c) repurchase obligations with a term of not more than
30 days for underlying investments of the types described in clauses
(a) and (b) entered into with any bank meeting the qualifications
specified in clause (b); (d) commercial paper rated A-1 (or better) by
S&P or P-1 (or better) by Moody’s, and maturing within nine months of
the date of acquisition; and (e) shares of any money market fund that has
substantially all of its assets invested continuously in the types of
investments referred to above, has net assets of at least $500,000,000 and has
the highest rating obtainable from either Moody’s or S&P.

Cash
Management Services — any services provided from time to time by
Bank of America or any of its Affiliates to any Borrower or Subsidiary in
connection with operating, collections, payroll, trust, or other depository or
disbursement accounts, including automatic clearinghouse, controlled
disbursement, depository, electronic funds transfer, information reporting,
lockbox, stop payment, overdraft and/or wire transfer services.

CERCLA — the Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. § 9601 et seq.).

Change of
Control — an event or series of events by which:

(a) any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
other than any such “person” or “group” existing as of
the Closing Date, becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, provided that a
person shall be deemed to have “beneficial ownership” of all
securities that such person has the right to acquire, whether such right is

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exercisable
immediately or only after the passage of time), directly or indirectly, of
forty percent (40%) or more of the combined voting power of Chromcraft’s
outstanding Equity Interests ordinarily having the right to vote at an election
of directors; or

(b) the majority of the board of directors of Chromcraft
fails to consist of Continuing Directors; of

(c) Chromcraft consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of its
property to any Person, or any corporation consolidates with or merges into
Chromcraft, in either event pursuant to a transaction in which the outstanding
Equity Interests of Chromcraft are reclassified or changed into or exchanged
for cash, securities (not constituting Equity Interests) or other property; or

(d) Chromcraft shall cease to own and control all of the
economic and voting rights associated with all of the outstanding Equity
Interests of its existing Subsidiaries so owned and controlled as of the
Closing Date as of the Closing Date.

Chattel
Paper — as defined in the UCC.

Claims — all liabilities, obligations,
losses, damages, penalties, judgments, proceedings, costs and expenses of any
kind (including remedial response costs, reasonable attorneys’ fees and
Extraordinary Expenses) at any time (including after Full Payment of the
Obligations, resignation or replacement of Agent, or replacement of any Lender)
incurred by or asserted against any Indemnitee in any way relating to
(a) any Loan Documents or transactions relating thereto, (b) any
action taken or omitted to be taken by any Indemnitee in connection with any
Loan Documents, (c) the existence or perfection of any Liens, or
realization upon any Collateral, (d) exercise of any rights or remedies
under any Loan Documents or Applicable Law, or (e) failure by any Obligor
to perform or observe any terms of any Loan Document, in each case including
all costs and expenses relating to any investigation, litigation, arbitration
or other proceeding (including an Insolvency Proceeding or appellate
proceedings), whether or not the applicable Indemnitee is a party thereto.

Closing
Date — as defined in Section 6.1.

Collateral — all Property described in
Section 7.1, all Property described in any Security Documents as
security for any Obligations, and all other Property that now or hereafter
secures (or is intended to secure) any Obligations.

Commercial
Tort Claim — as defined in the UCC.

Commitment — for any Lender, the aggregate
amount of such Lender’s Revolver Commitment.
“Commitments” means the aggregate amount of all Revolver
Commitments.

Commitment
Termination Date — the earliest to occur of (a) the Revolver
Termination Date; (b) the date on which Borrowers terminate the Revolver
Commitments pursuant to Section 2.1.4; or (c) the date on
which the Revolver Commitments are terminated pursuant to
Section 11.2.

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Compliance
Certificate — a certificate, in form and substance satisfactory
to Agent, by which Borrowers certify compliance with Section 10.3
and calculate the applicable Level for the Applicable Margin.

Compliance
Letter – as defined in an Imported Goods Agreement to be entered
into by Agent, Borrowers (or the applicable Borrower) and a Customs Brokers in
connection with the importation of any Inventory into the United States of
America.

Contingent
Obligation — any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of
another obligor (“primary obligor”) in any manner, whether
directly or indirectly, including any obligation of such Person under any
(a) guaranty, endorsement, co-making or sale with recourse of an
obligation of a primary obligor; (b) obligation to make take-or-pay or
similar payments regardless of nonperformance by any other party to an
agreement; and (c) arrangement (i) to purchase any primary obligation
or security therefor, (ii) to supply funds for the purchase or payment of
any primary obligation, (iii) to maintain or assure working capital,
equity capital, net worth or solvency of the primary obligor, (iv) to
purchase Property or services for the purpose of assuring the ability of the
primary obligor to perform a primary obligation, or (v) otherwise to
assure or hold harmless the holder of any primary obligation against loss in
respect thereof. The amount of any Contingent Obligation shall be deemed to be
the stated or determinable amount of the primary obligation (or, if less, the
maximum amount for which such Person may be liable under the instrument
evidencing the Contingent Obligation) or, if not stated or determinable, the
maximum reasonably anticipated liability with respect thereto.

Continuing
Director – means, with respect to any Person as of any date of
determination, any member of the board of directors of such Person who
(a) was a member of such board of directors on the date of this Agreement,
or (b) was nominated for election or elected to such board of directors with
the approval of the Continuing Directors who were members of such board at the
time of such nomination or election.

CWA
— the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Dated
Eligible Accounts — Eligible Accounts that remain unpaid more
than 90 days after the original invoice date.

Debt
— as applied to any Person, without duplication, (a) all items that
would be included as liabilities on a balance sheet in accordance with GAAP,
including Capital Leases, but excluding trade payables incurred and being paid
in the Ordinary Course of Business; (b) all Contingent Obligations;
(c) all reimbursement obligations in connection with letters of credit
issued for the account of such Person; and (d) in the case of a Borrower,
the Obligations. The Debt of a Person shall include any recourse Debt of any
partnership in which such Person is a general partner or joint venturer.

Default — an event or condition that, with
the lapse of time or giving of notice, would constitute an Event of Default.

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Default
Rate — for any Obligation (including, to the extent permitted by
law, interest not paid when due), 2% plus the interest rate otherwise
applicable thereto.

Deposit
Account — as defined in the UCC.

Deposit
Account Control Agreements — the Deposit Account control
agreements to be executed by each institution maintaining a Deposit Account for
a Borrower, in favor of Agent, for the benefit of Secured Parties, as security
for the Obligations.

Distribution — any declaration or payment
of a distribution, interest or dividend on any Equity Interest (other than
payment-in-kind); any distribution, advance or repayment of Debt to a holder of
Equity Interests; or any purchase, redemption, or other acquisition or
retirement for value of any Equity Interest.

Document — as defined in the UCC.

Dollars — lawful money of the United States.

Dominion
Account — a special account established by Borrowers at Bank of
America or another bank acceptable to Agent, over which Agent has exclusive
control for withdrawal purposes.

EBITDA — determined on a consolidated basis
for Borrowers and Subsidiaries, net income, calculated before interest expense,
provision for income taxes, non-cash ESOP expenses, depreciation and
amortization expense, gains or losses arising from the sale of capital assets,
gains arising from the write-up of assets, non-cash restructuring charges,
other cash restructuring charges consented to by Agent in its sole discretion,
and any extraordinary gains (in each case, to the extent included in
determining net income).

Eligible
Account — an Account owing to a Borrower that arises in the
Ordinary Course of Business from the sale of goods or rendition of services, is
payable in Dollars and is deemed by Agent, in its credit judgment, to be an
Eligible Account. Without limiting the foregoing, no Account shall be an
Eligible Account if (a) it is unpaid for more than 60 days after the
original due date, or more than 90 days (120 days for invoices with
greater than 30 day terms) after the original invoice date; (b) 50%
or more of the Accounts owing by the Account Debtor are not Eligible Accounts
under the foregoing clause; (c) when aggregated with other Accounts owing
by the Account Debtor, it exceeds 25% of the aggregate Eligible Accounts (or
such higher percentage as Agent may establish for the Account Debtor from time
to time); (d) it does not conform with a covenant or representation
herein; (e) it is owing by a creditor or supplier, or is otherwise subject
to a potential offset, counterclaim, dispute, deduction, discount, recoupment,
reserve, defense, chargeback, credit or allowance (but ineligibility shall be
limited to the amount thereof); (f) an Insolvency Proceeding has been
commenced by or against the Account Debtor; or the Account Debtor has failed,
has suspended or ceased doing business, is liquidating, dissolving or winding
up its affairs, or is not Solvent; (g) the Account Debtor is organized or
has its principal offices or assets outside the United States or any province
of Canada in which the Personal Property Security Act has not been adopted in
substantially the same form as in Ontario; (h) it is owing by a Government
Authority, unless the Account Debtor is the United States, any state of the
United States or any department, agency or instrumentality thereof and

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the Account has been assigned to
Agent in compliance with the Assignment of Claims Act (or the applicable state
equivalent thereof); (i) it is not subject to a duly perfected, first
priority Lien in favor of Agent, or is subject to any other Lien; (j) the
goods giving rise to it have not been delivered to and accepted by the Account
Debtor, the services giving rise to it have not been accepted by the Account
Debtor, or it otherwise does not represent a final sale; (k) it is
evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to
judgment; (l) its payment has been extended, the Account Debtor has made a
partial payment, or it arises from a sale on a cash-on-delivery basis;
(m) it arises from a sale to an Affiliate, or from a sale on a bill-and-
hold, guaranteed sale, sale or return, sale on approval, consignment, or other
repurchase or return basis; (n) it represents a progress billing or
retainage; (o) it includes a billing for interest, fees or late charges,
but ineligibility shall be limited to the extent thereof; or (p) it arises
from a retail sale to a Person who is purchasing for personal, family or
household purposes. In calculating delinquent portions of Accounts under clause
(c), credit balances more than 90 (120 days, if applicable) days old will be
excluded.

Eligible
Assignee — a Person that is (a) a Lender, U.S.-based
Affiliate of a Lender or Approved Fund; (b) any other financial
institution approved by Agent and Borrower Agent (which approval by Borrower
Agent shall not be unreasonably withheld or delayed, and shall be deemed given
if no objection is made within two Business Days after notice of the proposed
assignment), that is organized under the laws of the United States or any state
or district thereof, has total assets in excess of $5 billion, extends
asset-based lending facilities in its ordinary course of business and whose
becoming an assignee would not constitute a prohibited transaction under
Section 4975 of ERISA or any other Applicable Law; and (c) during any
Event of Default, any Person acceptable to Agent in its discretion.

Eligible
Inventory — Inventory owned by a Borrower that Agent, in its
credit judgment, deems to be Eligible Inventory. Without limiting the
foregoing, no Inventory shall be Eligible Inventory unless it (a) is
finished goods or raw materials, and not work-in-process, packaging or shipping
materials, labels, samples, display items, bags, replacement parts or
manufacturing supplies; (b) is not held on consignment, nor subject to any
deposit or downpayment; (c) is in new and saleable condition and is not
damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-
moving, obsolete or unmerchantable, and does not constitute returned or
repossessed goods; (e) meets all standards imposed by any Governmental
Authority, and does not constitute hazardous materials under any Environmental
Law; (f) conforms with the covenants and representations herein;
(g) is subject to Agent’s duly perfected, first priority Lien, and
no other Lien; (h) except for Eligible In-Transit Inventory, is within the
continental United States or Canada, is not in-transit other than between
locations of Borrowers, and is not consigned to any Person; (i) is not
subject to any warehouse receipt or negotiable Document; (j) is not
subject to any License or other arrangement that restricts such
Borrower’s or Agent’s right to dispose of such Inventory, unless
Agent has received an appropriate Lien Waiver; (k) is not located on
leased premises or in the possession of a warehouseman, processor, repairman,
mechanic, shipper, freight forwarder or other Person, unless the lessor or such
Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve
has been established; and (l) is reflected in the details of a current
perpetual inventory report or other reports acceptable to Agent.

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Eligible In-
Transit Inventory – Inventory of a Borrower that satisfies all of
the criteria for being Eligible Inventory and is in transit to a location of
such Borrower which is inside the United States and is the legal property of
such Borrower at the time of its delivery to the common carrier (or legal title
passes to such Borrower upon such delivery in a manner which results in its
becoming the consignee of such property) for delivery from a location outside
the United States, provided in each case that:

(a) for open
account transactions, such Inventory has been paid for in full by a Borrower or
Agent has satisfied itself that a final sale of such Inventory to a Borrower
has occurred;

(b) for
documentary letter of credit transactions, such Inventory has been paid for in
full by Bank and reimbursed by a Borrower under sight documentary Letters of
Credit issued by Bank and have been accepted by Bank creating bankers
acceptances;

(c) such
Inventory is evidenced by a full set of clean, original, negotiable ocean bills
of lading consigned to the order of Agent with all such original bills of
lading required to be (i) sent by courier to Agent and received by Agent,
in the event the Compliance Letter is required to be used by Agent for open
account transactions, (ii) sent by courier to the United States based
Customs Broker, in the event the Compliance Letter is not required to be used
by the Agent for open account transactions or (iii) presented under each
documentary Letter of Credit;

(d) each such
bill of lading with respect to such Inventory includes a clause stating that
one original bill of lading must be surrendered in order to obtain goods at the
port of disembarkation in the United States;

(e) an
agreement with respect to such Inventory with each Customs Broker used by a
Borrower in form and substance acceptable to Agent is in full force and effect;

(f) such
Inventory is subject to a first priority perfected security interest in favor
of Agent;

(g) such
Inventory is covered by insurance satisfactory to Agent; and

(h) the vendor
of any such Inventory has no right to reclaim, repossess or divert shipment of
any such Inventory;

(i) such
Inventory is subject to purchase orders and other sale documents satisfactory
to Agent;

(j) such
Inventory is being shipped by a non-affiliated common carrier acceptable to
Agent; and

(k) the Agent
has received a landlord’s agreement, bailee letter or warehouse agreement
which is acceptable to it in respect of the location at which such Inventory is
to be received which is not owned in fee by such Borrower.

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Enforcement
Action — any action to enforce any Obligations or Loan Documents
or to realize upon any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, or
otherwise).

Environmental
Laws — all Applicable Laws (including all programs, permits and
guidance promulgated by regulatory agencies), relating to public health (but
excluding occupational safety and health, to the extent regulated by OSHA) or
the protection or pollution of the environment, including CERCLA, RCRA and CWA.

Environmental
Notice — a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of
a possible violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,
summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

Environmental
Release — a release as defined in CERCLA or under any other
Environmental Law.

Equipment — as defined in the UCC,
including all machinery, apparatus, equipment, fittings, furniture, fixtures,
motor vehicles and other tangible personal Property (other than Inventory), and
all parts, accessories and special tools therefor, and accessions thereto.

Equity
Interest — the interest of any (a) shareholder in a
corporation, (b) partner in a partnership (whether general, limited,
limited liability or joint venture), (c) member in a limited liability
company, or (d) other Person having any other form of equity security or
ownership interest.

ERISA
— the Employee Retirement Income Security Act of 1974.

Event of
Default — as defined in Section 11.

Exchange
Act – the Securities and Exchange Act of 1934, as amended from
time to time.

Excluded
Tax — Tax on the overall net income or gross receipts of a Lender
imposed by the jurisdiction in which such Lender’s principal executive
office is located.

Extraordinary
Expenses — all costs, expenses or advances that Agent may incur
during a Default or Event of Default, or during the pendency of an Insolvency
Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor,
any representative of creditors of an Obligor or any other Person) in any
way relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan
Documents or Obligations, including any lender liability or other Claims;
(c) the exercise, protection or enforcement of any rights or remedies of
Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement
or satisfaction of any taxes, charges or Liens with respect

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to any Collateral; (e) any
Enforcement Action; (f) negotiation and documentation of any modification,
waiver, workout, restructuring or forbearance with respect to any Loan
Documents or Obligations; or (g) Protective Advances. Such costs, expenses
and advances include transfer fees, taxes, storage fees, insurance costs,
permit fees, utility reservation and standby fees, reasonable legal fees,
appraisal fees, brokers’ fees and commissions, auctioneers’ fees
and commissions, accountants’ fees, environmental study fees, wages and
salaries paid to employees of any Obligor or independent contractors in
liquidating any Collateral, and travel expenses.

Fee
Letter — the fee letter agreement between Agent and Borrowers.

Fiscal
Quarter — each period of thirteen weeks ending on a Saturday,
commencing on the first day of a Fiscal Year, except that the last Fiscal
Quarter of each Fiscal Year shall end on December 31.

Fiscal
Year — the fiscal year of Borrowers and Subsidiaries for
accounting and tax purposes, ending on December 31 of each year.

Fixed Charge
Coverage Ratio — the ratio, determined on a consolidated basis
for Borrowers and Subsidiaries the most recent trailing twelve months, of
(a) EBITDA minus Capital Expenditures (except those financed with
Borrowed Money other than Revolver Loans) and cash taxes paid, to
(b) Fixed Charges.

Fixed
Charges — the sum of interest expense (other than payment-in-
kind), principal payments made on Borrowed Money, and Distributions (other than
Upstream Payments) made.

FLSA
— the Fair Labor Standards Act of 1938.

Foreign
Lender — any Lender that is organized under the laws of a
jurisdiction other than the laws of the United States, or any state or district
thereof.

Foreign
Plan — any employee benefit plan or arrangement maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States, or any employee benefit plan or arrangement mandated by a
government other than the United States for employees of any Obligor or
Subsidiary.

Foreign
Subsidiary — a Subsidiary that is a “controlled foreign
corporation” under Section 957 of the Internal Revenue Code, such
that a guaranty by such Subsidiary of the Obligations or a Lien on the assets
of such Subsidiary to secure the Obligations would result in material tax
liability to Borrowers.

Full
Payment — with respect to any Obligations, (a) the full and
indefeasible cash payment thereof, including any interest, fees and other
charges accruing during an Insolvency Proceeding (whether or not allowed in the
proceeding); (b) if such Obligations are LC Obligations or inchoate or
contingent in nature, Cash Collateralization thereof (or delivery of a standby
letter of credit acceptable to Agent in its discretion, in the amount of
required Cash Collateral); and (c) a release of any Claims of Obligors
against Agent, Lenders and Issuing Bank arising on or before the payment date.
No Loans shall be deemed to have been paid in full until all Commitments
related to such Loans have expired or been terminated.

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GAAP
— generally accepted accounting principles in the United States in effect
from time to time.

General
Intangibles — as defined in the UCC, including choses in action,
causes of action, company or other business records, inventions, blueprints,
designs, patents, patent applications, trademarks, trademark applications,
trade names, trade secrets, service marks, goodwill, brand names, copyrights,
registrations, licenses, franchises, customer lists, permits, tax refund
claims, computer programs, operational manuals, internet addresses and domain
names, insurance refunds and premium rebates, all rights to indemnification,
and all other intangible Property of any kind.

Goods
— as defined in the UCC.

Governmental
Approvals — all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental
Authority — any federal, state, municipal, foreign or other
governmental department, agency, commission, board, bureau, court, tribunal,
instrumentality, political subdivision, or other entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions for or
pertaining to any government or court, in each case whether associated with the
United States, a state, district or territory thereof, or a foreign entity or
government.

Guarantor
Payment — as defined in Section 5.11.3.

Guarantors — each Person who in the future
guarantees payment or performance of any Obligations.

Guaranty — each guaranty agreement executed
by a Guarantor in favor of Agent.

Hedging
Agreement — an agreement relating to any swap, cap, floor,
collar, option, forward, cross right or obligation, or combination thereof or
similar transaction, with respect to interest rate, foreign exchange, currency,
commodity, credit or equity risk.

Indemnitees — Agent Indemnitees, Lender
Indemnitees, Issuing Bank Indemnitees and Bank of America Indemnitees.

Insolvency
Proceeding — any case or proceeding commenced by or against a
Person under any state, federal or foreign law for, or any agreement of such
Person to, (a) the entry of an order for relief under the Bankruptcy Code,
or any other insolvency, debtor relief or debt adjustment law; (b) the
appointment of a receiver, trustee, liquidator, administrator, conservator or
other custodian for such Person or any part of its Property; or (c) an
assignment or trust mortgage for the benefit of creditors.

Instrument — as defined in the UCC.

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Intellectual
Property — all intellectual and similar Property of a Person,
including inventions, designs, patents, patent applications, copyrights,
trademarks, service marks, trade names, trade secrets, confidential or
proprietary information, customer lists, know-how, software and databases; all
embodiments or fixations thereof and all related documentation, registrations
and franchises; all books and records describing or used in connection with the
foregoing; and all licenses or other rights to use any of the foregoing.

Intellectual
Property Claim — any claim or assertion (whether in writing, by
suit or otherwise) that a Borrower’s or Subsidiary’s ownership,
use, marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other Property violates another Person’s Intellectual
Property.

Interest
Period — as defined in Section 3.1.3.

Interest Rate
Contract — any interest rate swap, collar or cap agreement, or
other agreement or arrangement by any Borrower or Subsidiary with Bank of
America that is designed to protect against fluctuations in interest rates.

In-Transit
Eligible Inventory – all Eligible Inventory consisting of
Inventory in-transit from a location outside the United States to a location in
the United States.

Inventory — as defined in the UCC,
including all goods intended for sale, lease, display or demonstration; all
work in process; and all raw materials, and other materials and supplies of any
kind that are or could be used in connection with the manufacture, printing,
packing, shipping, advertising, sale, lease or furnishing of such goods, or
otherwise used or consumed in a Borrower’s business (but excluding
Equipment).

Inventory
Formula Amount — the sum of (x) the lesser of (a) 65%
of the Value of Eligible Inventory (other than Eligible Inventory consisting of
Eligible In-Transit Inventory) or (b) 85% of the NOLV Percentage of the
Value of Eligible Inventory (other than Eligible In-Transit Inventory)
plus (y) the least of (a) $5,000,000, or (b) 65% of the Value
of Eligible In-Transit Inventory, or (c) 85% of the NOLV Percentage of the
Value of Eligible In-Transit Inventory.

Inventory
Reserve — reserves established by Agent to reflect factors that
may negatively impact the Value of Inventory, including change in salability,
obsolescence, seasonality, theft, shrinkage, imbalance, change in composition
or mix, markdowns and vendor chargebacks.

Investment — any acquisition of all or
substantially all assets of a Person; any acquisition of record or beneficial
ownership of any Equity Interests of a Person; or any advance or capital
contribution to or other investment in a Person.

Investment
Property — as defined in the UCC.

Issuing
Bank — Bank of America or an Affiliate of Bank of America.

Issuing Bank
Indemnitees — Issuing Bank and its officers, directors,
employees, Affiliates, agents and attorneys.

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LC
Application — an application by Borrower Agent to Issuing Bank
for issuance of a Letter of Credit, in form and substance satisfactory to
Issuing Bank.

LC
Conditions — the following conditions necessary for issuance of a
Letter of Credit: (a) each of the conditions set forth in
Section 6; (b) after giving effect to such issuance, total LC
Obligations do not exceed the Letter of Credit Subline, no Overadvance exists
and, if no Revolver Loans are outstanding, the LC Obligations do not exceed the
Borrowing Base (without giving effect to the LC Reserve for purposes of this
calculation); (c) the expiration date of such Letter of Credit is
(i) no more than 365 days from issuance, in the case of standby
Letters of Credit, (ii) no more than 120 days from issuance, in the
case of documentary Letters of Credit, and (iii) at least 20 Business Days
prior to the Revolver Termination Date; (d) the Letter of Credit and
payments thereunder are denominated in Dollars; and (e) the form of the
proposed Letter of Credit is satisfactory to Agent and Issuing Bank in their
discretion.

LC
Documents — all documents, instruments and agreements (including
LC Requests and LC Applications) delivered by Borrowers or any other Person to
Issuing Bank or Agent in connection with issuance, amendment or renewal of, or
payment under, any Letter of Credit.

LC
Obligations — the sum (without duplication) of (a) all
amounts owing by Borrowers for any drawings under Letters of Credit;
(b) the aggregate undrawn amount of all outstanding Letters of Credit; and
(c) all fees and other amounts owing with respect to Letters of Credit.

LC
Request — a request for issuance of a Letter of Credit, to be
provided by Borrower Agent to Issuing Bank, in form satisfactory to Agent and
Issuing Bank.

LC
Reserve — the aggregate of all LC Obligations, other than
(a) those that have been Cash Collateralized, and (b) if no Default
or Event of Default exists, those constituting charges owing to the Issuing
Bank.

Lender
Indemnitees — Lenders and their officers, directors, employees,
Affiliates, agents and attorneys.

Lenders — as defined in the preamble to
this Agreement, and any other Person who hereafter becomes a
“Lender” pursuant to an Assignment and Acceptance.

Letter of
Credit — any standby or documentary letter of credit issued by
Issuing Bank for the account of a Borrower, or any indemnity, guarantee,
exposure transmittal memorandum or similar form of credit support issued by
Agent or Issuing Bank for the benefit of a Borrower.

Letter-of-
Credit Right — as defined in the UCC.

Letter of
Credit Subline — $7,500,000.

LIBOR
Loan – any Loan that bears interest based on Adjusted LIBOR.

LIBOR
Revolver Loan — a Revolver Loan that bears interest based on
Adjusted LIBOR.

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License — any license or agreement under
which an Obligor is authorized to use Intellectual Property in connection with
any manufacture, marketing, distribution or disposition of Collateral, any use
of Property or any other conduct of its business.

Licensor — any Person from whom an Obligor
obtains the right to use any Intellectual Property.

Lien
— any Person’s interest in Property securing an obligation owed to,
or a claim by, such Person, whether such interest is based on common law,
statute or contract, including liens, security interests, pledges,
hypothecations, statutory trusts, reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and
other title exceptions and encumbrances affecting Property.

Lien
Waiver — an agreement, in form and substance reasonably
satisfactory to Agent, by which (a) for any material Collateral located on
leased premises, the lessor waives or subordinates any Lien it may have on the
Collateral, and agrees to permit Agent to enter upon the premises and remove
the Collateral or to use the premises to store or dispose of the Collateral;
(b) for any Collateral held by a warehouseman, processor, shipper or
freight forwarder, such Person waives or subordinates any Lien it may have on
the Collateral, agrees to hold any Documents in its possession relating to the
Collateral as agent for Agent, and agrees to deliver the Collateral to Agent
upon request; (c) for any Collateral held by a repairman, mechanic or
bailee, such Person acknowledges Agent’s Lien, waives or subordinates any
Lien it may have on the Collateral, and agrees to deliver the Collateral to
Agent upon request; and (d) for any Collateral subject to a
Licensor’s Intellectual Property rights, the Licensor grants to Agent the
right, vis-à-vis such Licensor, to enforce Agent’s Liens with
respect to the Collateral, including the right to dispose of it with the
benefit of the Intellectual Property, whether or not a default exists under any
applicable License.

Loan
— a Revolver Loan.

Loan
Account — the loan account established by each Lender on its
books pursuant to Section 5.8.

Loan
Documents — this Agreement, Other Agreements and Security
Documents.

Loan
Year — each calendar year commencing on the Closing Date and on
each anniversary of the Closing Date.

Margin
Stock — as defined in Regulation U of the Board of Governors.

Material
Adverse Effect — the effect of any event or circumstance that,
taken alone or in conjunction with other events or circumstances, (a) has
or could be reasonably expected to have a material adverse effect on the
business, operations, Properties, prospects or condition (financial or
otherwise) of any Obligor, on the value of any material Collateral, on the
enforceability of any Loan Documents, or on the validity or priority of
Agent’s Liens on any Collateral; (b) impairs the ability of any
Obligor to perform any obligations under the Loan Documents, including
repayment of any Obligations; or (c) otherwise impairs the ability of
Agent or any Lender to enforce or collect any Obligations or to realize upon
any Collateral.

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Material
Contract — any agreement or arrangement to which a Borrower or
Subsidiary is party (other than the Loan Documents) (a) that is deemed to
be a material contract under any securities law applicable to such Obligor,
including the Securities Act of 1933, (b) for which breach, termination,
nonperformance or failure to renew could reasonably be expected to have a
Material Adverse Effect, or (c) that relates to Subordinated Debt, or Debt
in an aggregate amount of $250,000 or more.

Moody’s — Moody’s Investors
Service, Inc., and its successors.

Multiemployer
Plan — any employee benefit plan or arrangement described in
Section 4001(a)(3) of ERISA that is maintained or contributed to by any
Obligor or Subsidiary.

Net
Proceeds — with respect to an Asset Disposition, proceeds
(including, when received, any deferred or escrowed payments) received by a
Borrower or Subsidiary in cash from such disposition, net of
(a) reasonable and customary costs and expenses actually incurred in
connection therewith, including legal fees and sales commissions;
(b) amounts applied to repayment of Debt secured by a Permitted Lien
senior to Agent’s Liens on Collateral sold; (c) transfer or similar
taxes; and (d) reserves for indemnities, until such reserves are no longer
needed.

NOLV
Percentage — the net orderly liquidation value of Inventory,
expressed as a percentage, expected to be realized at an orderly, negotiated
sale held within a reasonable period of time, net of all liquidation expenses,
as determined from the most recent appraisal of Borrowers’ Inventory
performed by an appraiser and on terms satisfactory to Agent.

Notes
— each Revolver Note or other promissory note executed by a Borrower to
evidence any Obligations.

Notice of
Borrowing — a Notice of Borrowing to be provided by Borrower
Agent to request the funding of a Borrowing of Revolver Loans, in form
satisfactory to Agent.

Notice of
Conversion/Continuation — a Notice of Conversion/Continuation to
be provided by Borrower Agent to request a conversion or continuation of any
Loans as LIBOR Loans, in form satisfactory to Agent.

Obligations — all (a) principal of and
premium, if any, on the Loans, (b) LC Obligations and other obligations of
Obligors with respect to Letters of Credit, (c) interest, expenses, fees
and other sums payable by Obligors under Loan Documents, (d) obligations
of Obligors under any indemnity for Claims, (e) Extraordinary Expenses,
(f) Bank Product Debt, and (g) other Debts, obligations and
liabilities of any kind owing by Obligors pursuant to the Loan Documents,
whether now existing or hereafter arising, whether evidenced by a note or other
writing, whether allowed in any Insolvency Proceeding, whether arising from an
extension of credit, issuance of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, and whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or joint or
several.

Obligor — each Borrower, Guarantor, or
other Person that is liable for payment of any Obligations or that has granted
a Lien in favor of Agent on its assets to secure any Obligations.

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Ordinary
Course of Business — the ordinary course of business of any
Borrower or Subsidiary, consistent with past practices and undertaken in good
faith.

Organic
Documents — with respect to any Person, its charter, certificate
or articles of incorporation, bylaws, articles of organization, limited
liability agreement, operating agreement, members agreement, shareholders
agreement, partnership agreement, certificate of partnership, certificate of
formation, voting trust agreement, or similar agreement or instrument governing
the formation or operation of such Person.

OSHA
— the Occupational Safety and Hazard Act of 1970.

Other
Agreement — each Note; LC Document; Fee Letter; Lien Waiver; Real
Estate Related Document; Borrowing Base Certificate, Compliance Certificate,
financial statement or report delivered hereunder; or other document,
instrument or agreement (other than this Agreement or a Security Document) now
or hereafter delivered by an Obligor or other Person to Agent or a Lender in
connection with any transactions relating hereto.

Overadvance — as defined in
Section 2.1.5.

Overadvance
Loan — a Base Rate Revolver Loan made when an Overadvance exists
or is caused by the funding thereof.

Participant — as defined in
Section 13.2.

Patent
Assignment — each patent collateral assignment agreement pursuant
to which an Obligor assigns to Agent, for the benefit of Secured Parties, such
Obligor’s interests in its patents, as security for the Obligations.

Patriot
Act — the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Pub. L. No. 107-56, 115 Stat. 272 (2001).

Payment
Intangible — as defined in the UCC.

Payment
Item — each check, draft or other item of payment payable to a
Borrower, including those constituting proceeds of any Collateral.

Permitted
Acquisitions - an acquisition of the assets or capital stock or
other equity interest in a Person (including by means of a merger or
consolidation of such Person with or into a newly formed Subsidiary) if such
acquisition satisfies all of the following terms and conditions:

(i) such
Person is a domestic corporation, limited liability company, or partnership;

(ii) such
acquisition and all transactions related thereto shall be consummated in
accordance with applicable law;

(iii) such
Permitted Acquisition shall be structured as (i) an asset acquisition by a
Subsidiary of a Borrower; (ii) a merger of the acquired Person with and
into a Subsidiary of a

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Borrower with such Subsidiary as the
surviving corporation in such merger, or (iii) a merger of a Subsidiary of
a Borrower with and into the acquired Person with the acquired Person as the
surviving corporation in such merger and as a Subsidiary of a Borrower, or
(iv) a purchase of one-hundred percent (100%) of the capital stock of the
acquired Person by a Borrower or a Subsidiary of a Borrower;

(iv) if a
Borrower forms a Subsidiary to effect such acquisition, such Subsidiary either
shall become a Borrower hereunder or, at Agent’s option, shall guaranty
all of the Obligations and execute a guaranty acceptable to the Lenders, grant
a security interest in all of its assts to Agent for the benefit of the Lenders
to secure the Obligations, and execute such documents as may be required by the
Agent to evidence such security interest; and in either case the applicable
Borrower shall pledge the stock of such Subsidiary to Agent for the benefit of
the Lenders to secure payment of the Obligations;

(v) no capital
stock or other equity interest or assets acquired in connection with such
acquisition shall be subject to any material Lien other than Permitted Liens;

(vi) no
Borrower and no Subsidiary shall assume or incur, directly or indirectly, any
Indebtedness in connection with such acquisition other than as permitted in
accordance with subsection 10.2.1 of the Agreement;

(vii) no
Default or Event of Default shall exist either before or after giving effect to
such acquisition or as a result thereof;

(viii) the
acquired Person must be engaged in substantially the same type of business as
Borrowers and their Subsidiaries immediately prior to such Permitted
Acquisition;

(ix) unless
waived by Agent, Agent shall receive, not less than ten (10) Business
Days’ prior to the consummation of such Permitted Acquisition, a due
diligence package, reasonably satisfactory to it, which package shall include,
without limitation, a general description of the acquired Person’s
business, a detailed schedule of pending material litigation with respect to
such acquired Person or its business, a description of the method of financing
of the Permitted Acquisition (including sources and uses), the locations of all
material personal and real property of the Person being acquired (including the
location of its chief executive office), a reasonably detailed description of
the proposed terms of such Permitted Acquisition (identifying the anticipated
closing date thereof), pro forma projections (“Projections”) in
reasonable detail, giving effect to the proposed Permitted Acquisition, for
Borrowers for the twelve months after the consummation of the proposed
Permitted Acquisition and, if reasonably requested by Agent, environmental
reports and related information regarding any property owned, leased or
otherwise used by the acquired Person.

(x) such
Projections shall demonstrate to Agent’s reasonable satisfaction,
Borrower’s Fixed Charge Coverage Ratio for the twelve months after the
consummation of the proposed Permitted Acquisition shall equal or exceed 1.00
to 1.

(xi) such
Permitted Acquisition shall be consensual and, if applicable, shall have been
approved by the board of directors or similar governing body of the Person
being acquired;

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(xii) all
consents necessary for such Permitted Acquisition (including such consents as
the Agent deems reasonably necessary) have been acquired; and

(xiii) Availability on an average pro forma basis after
giving effect to the acquisition in question immediately following the closing
of such acquisition for the sixty (60) days immediately prior to the
closing date of such acquisition and on an actual basis, after giving effect to
the closing of such acquisition, equals or exceeds $10,000,000.

No Account or
Inventory acquired in a Permitted Acquisition shall be included within Eligible
Accounts or Eligible Inventory until Agent has conducted an audit of such
Accounts or Inventory and the results of such audit are satisfactory to Agent
in its reasonable discretion.

Permitted
Asset Disposition — as long as no Default or Event of Default
exists and all Net Proceeds are remitted to Agent, an Asset Disposition that is
(a) a sale of Inventory in the Ordinary Course of Business; (b) a
disposition of Equipment that, in the aggregate during any 12 month
period, has a fair market or book value (whichever is more) of $500,000 or
less; (c) a disposition of Inventory that is obsolete, unmerchantable or
otherwise unsalable in the Ordinary Course of Business; (d) termination of
a lease of real or personal Property that is not necessary for the Ordinary
Course of Business, could not reasonably be expected to have a Material Adverse
Effect and does not result from an Obligor’s default; or
(e) approved in writing by Agent and Required Lenders.

Permitted
Contingent Obligations — Contingent Obligations (a) arising
from endorsements of Payment Items for collection or deposit in the Ordinary
Course of Business; (b) arising from Hedging Agreements permitted
hereunder; (c) existing on the Closing Date, and any extension or renewal
thereof that does not increase the amount of such Contingent Obligation when
extended or renewed; (d) incurred in the Ordinary Course of Business with
respect to surety, appeal or performance bonds, or other similar obligations;
(e) arising from customary indemnification obligations in favor of
purchasers in connection with dispositions of Equipment permitted hereunder; or
(f) arising under the Loan Documents.

Permitted
Lien — as defined in Section 10.2.2.

Permitted
Purchase Money Debt — Purchase Money Debt of Borrowers and
Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as
long as the aggregate amount does not exceed $1,000,000 at any time and its
incurrence does not violate Section 10.2.3.

Person — any individual, corporation,
limited liability company, partnership, joint venture, joint stock company,
land trust, business trust, unincorporated organization, Governmental Authority
or other entity.

Plan
— an employee pension benefit plan that is covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and that is either (a) maintained by a Borrower or
Subsidiary for employees or (b) maintained pursuant to a collective
bargaining agreement, or other arrangement under which more than one employer
makes contributions and to which a Borrower or Subsidiary is making or accruing
an obligation to make contributions or has within the preceding five years made
or accrued such contributions.

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Pledge
Agreement – each Stock Pledge Agreement pursuant to which an
Obligor grants Agent, for the benefit of Secured Parties, a Lien on such
Obligor’s interest in the Equity Interests of any Person.

Pro
Rata — with respect to any Lender, a percentage (expressed as a
decimal, rounded to the ninth decimal place) determined (a) while Revolver
Commitments are outstanding, by dividing the amount of such Lender’s
Revolver Commitment by the aggregate amount of all Revolver Commitments; and
(b) at any other time, by dividing the amount of such Lender’s Loans
and LC Obligations by the aggregate amount of all outstanding Loans and LC
Obligations.

Properly
Contested — with respect to any obligation of an Obligor,
(a) the obligation is subject to a bona fide dispute regarding amount or
the Obligor’s liability to pay; (b) the obligation is being properly
contested in good faith by appropriate proceedings promptly instituted and
diligently pursued; (c) appropriate reserves have been established in
accordance with GAAP; (d) non-payment could not have a Material Adverse
Effect, nor result in forfeiture or sale of any assets of the Obligor;
(e) no Lien is imposed on assets of the Obligor, unless bonded and stayed
to the satisfaction of Agent; and (f) if the obligation results from entry
of a judgment or other order, such judgment or order is stayed pending appeal
or other judicial review.

Property — any interest in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.

Protective
Advances — as defined in Section 2.1.6.

Purchase
Money Debt — (a) Debt (other than the Obligations) for
payment of any of the purchase price of fixed assets; (b) Debt (other than
the Obligations) incurred within 10 days before or after acquisition of
any fixed assets, for the purpose of financing any of the purchase price
thereof; and (c) any renewals, extensions or refinancings (but not
increases) thereof.

Purchase
Money Lien — a Lien that secures Purchase Money Debt, encumbering
only the fixed assets acquired with such Debt and constituting a Capital Lease
or a purchase money security interest under the UCC.

RCRA
— the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-
6991i).

Real
Estate — all right, title and interest (whether as owner, lessor
or lessee) in any real Property or any buildings, structures, parking areas or
other improvements thereon.

Refinancing
Conditions — the following conditions for Refinancing Debt:
(a) it is in an aggregate principal amount that does not exceed the
principal amount of the Debt being extended, renewed or refinanced; (b) it
has a final maturity no sooner than, a weighted average life no less than, and
an interest rate no greater than, the Debt being extended, renewed or
refinanced; (c) it is subordinated to the Obligations at least to the same
extent as the Debt being extended, renewed or refinanced; (d) the
representations, covenants and defaults applicable to it are no less favorable
to Borrowers than those applicable to the Debt being extended, renewed or

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refinanced; (e) no additional
Lien is granted to secure it; (f) no additional Person is obligated on
such Debt; and (g) upon giving effect to it, no Default or Event of
Default exists.

Refinancing
Debt — Borrowed Money that is the result of an extension, renewal
or refinancing of Debt permitted under Section 10.2.1(b),
(d) or (f).

Reimbursement
Date — as defined in Section 2.3.2.

Rent and
Charges Reserve — the aggregate of (a) all past due rent and
other amounts owing by an Obligor to any landlord, warehouseman, processor,
repairman, mechanic, shipper, freight forwarder or other Person who possesses
any Collateral or could assert a Lien on any Collateral; and (b) a reserve
at least equal to three months rent and other charges that could be payable to
any such Person, unless it has executed a Lien Waiver.

Report — as defined in
Section 12.2.3.

Reportable
Event — any event set forth in Section 4043(b) of ERISA.

Required
Lenders — Lenders (subject to Section 4.2) having
(a) Revolver Commitments in excess of 50% of the aggregate Revolver
Commitments; and (b) if the Revolver Commitments have terminated, Loans in
excess of 50% of all outstanding Loans.

Reserve
Percentage — the reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/8th of 1%) applicable to member banks under
regulations issued from time to time by the Board of Governors for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as “Eurocurrency liabilities”).

Restricted
Investment — any Investment by a Borrower or Subsidiary, other
than (a) Investments in Subsidiaries to the extent existing on the Closing
Date; (b) Cash Equivalents that are subject to Agent’s Lien and
control, pursuant to documentation in form and substance satisfactory to Agent;
and (c) loans and advances permitted under Section 10.2.7.

Restrictive
Agreement — an agreement (other than a Loan Document) that
conditions or restricts the right of any Borrower, Subsidiary or other Obligor
to incur or repay Borrowed Money, to grant Liens on any assets, to declare or
make Distributions, to modify, extend or renew any agreement evidencing
Borrowed Money, or to repay any intercompany Debt.

Revolver
Commitment — for any Lender, its obligation to make Revolver
Loans and to participate in LC Obligations up to the maximum principal amount
shown on Schedule 1.1, or as specified hereafter in the most recent
Assignment and Acceptance to which it is a party. “Revolver
Commitments” means the aggregate amount of such commitments of all
Lenders.

Revolver
Loan — a loan made pursuant to Section 2.1, and any
Overadvance Loan or Protective Advance.

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Revolver
Note — a promissory note to be executed by Borrowers in favor of
a Lender in the form of Exhibit A, which shall be in the amount of
such Lender’s Revolver Commitment and shall evidence the Revolver Loans
made by such Lender.

Revolver
Termination Date — June 22, 2012.

Royalties — all royalties, fees, expense
reimbursement and other amounts payable by a Borrower under a License.

S&P — Standard & Poor’s
Ratings Services, a division of The McGraw-Hill Companies, Inc., and its
successors.

Secured
Parties — Agent, Issuing Bank, Lenders and providers of Bank
Products.

Security
Documents — the Guaranties, Patent Assignments, Trademark
Security Agreements, Pledge Agreements, Deposit Account Control Agreements, and
all other documents, instruments and agreements now or hereafter securing (or
given with the intent to secure) any Obligations.

Senior
Officer — the chairman of the board, president, chief executive
officer or chief financial officer of a Borrower or, if the context requires,
an Obligor.

Settlement
Report — a report delivered by Agent to Lenders summarizing the
Revolver Loans and participations in LC Obligations outstanding as of a given
settlement date, allocated to Lenders on a Pro Rata basis in accordance with
their Revolver Commitments.

Software — as defined in the UCC.

Solvent — as to any Person, such Person
(a) owns Property whose fair salable value is greater than the amount
required to pay all of its debts (including contingent, subordinated, unmatured
and unliquidated liabilities); (b) owns Property whose present fair
salable value (as defined below) is greater than the probable total liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities) of
such Person as they become absolute and matured; (c) is able to pay all of
its debts as they mature; (d) has capital that is not unreasonably small
for its business and is sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage; (e) is
not “insolvent” within the meaning of Section 101(32) of the
Bankruptcy Code; and (f) has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise) under any
Loan Documents, or made any conveyance in connection therewith, with actual
intent to hinder, delay or defraud either present or future creditors of such
Person or any of its Affiliates. “Fair salable value” means
the amount that could be obtained for assets within a reasonable time, either
through collection or through sale under ordinary selling conditions by a
capable and diligent seller to an interested buyer who is willing (but under no
compulsion) to purchase.

Statutory
Reserves — the percentage (expressed as a decimal) established by
the Board of Governors as the then stated maximum rate for all reserves
(including those imposed by Regulation D of the Board of Governors, all
basic, emergency, supplemental or other marginal reserve requirements, and any
transitional adjustments or other scheduled changes in reserve

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requirements) applicable to any
member bank of the Federal Reserve System in respect of Eurocurrency
Liabilities (or any successor category of liabilities under Regulation D).

Subordinated
Debt — Debt incurred by a Borrower that is expressly subordinate
and junior in right of payment to Full Payment of all Obligations, and is on
terms (including maturity, interest, fees, repayment, covenants and
subordination) satisfactory to Agent.

Subsidiary — any entity at least 50% of
whose voting securities or Equity Interests is owned by a Borrower or any
combination of Borrowers (including indirect ownership by a Borrower through
other entities in which the Borrower directly or indirectly owns 50% of the
voting securities or Equity Interests).

Supporting
Obligation — as defined in the UCC.

Taxes
— any taxes, levies, imposts, duties, fees, assessments, deductions,
withholdings or other charges of whatever nature, including income, receipts,
excise, property, sales, use, transfer, license, payroll, withholding, social
security, franchise, intangibles, stamp or recording taxes imposed by any
Governmental Authority, and all interest, penalties and similar liabilities
relating thereto.

Trademark
Security Agreement — each trademark security agreement pursuant
to which an Obligor grants to Agent, for the benefit of Secured Parties, a Lien
on such Obligor’s interests in trademarks, as security for the
Obligations.

Transferee — any actual or potential
Eligible Assignee, Participant or other Person acquiring an interest in any
Obligations.

Trigger
Period – the period (a) commencing on the day that an Event
of Default occurs, or Availability is less than $10,000,000 at any time; and
(b) continuing until, during the preceding sixty (60) consecutive
days, no Event of Default has existed and Availability has been greater than
$10,000,000 at all times.

Type
— any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the
same interest option and, in the case of LIBOR Loans, the same Interest Period.

UCC
— the Uniform Commercial Code as in effect in the State of Illinois or,
when the laws of any other jurisdiction govern the perfection or enforcement of
any Lien, the Uniform Commercial Code of such jurisdiction.

Upstream
Payment — a Distribution, or management or similar fee paid, by a
Subsidiary of a Borrower to such Borrower.

Value
— (a) for Inventory, its value determined on the basis of the lower
of cost or market, calculated on a first-in, first out basis; and (b) for
an Account, its face amount, net of any returns, rebates, discounts (calculated
on the shortest terms), credits, allowances or Taxes (including sales, excise
or other taxes) that have been or could be claimed by the Account Debtor or any
other Person.

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1.2.
Accounting Terms. Under the Loan Documents (except as
otherwise specified herein), all accounting terms shall be interpreted, all
accounting determinations shall be made, and all financial statements shall be
prepared, in accordance with GAAP applied on a basis consistent with the most
recent audited financial statements of Borrowers delivered to Agent before the
Closing Date and using the same inventory valuation method as used in such
financial statements, except for any change required or permitted by GAAP if
Borrowers’ certified public accountants concur in such change, the change
is disclosed to Agent, and Section 10.3 is amended in a manner
satisfactory to Required Lenders to take into account the effects of the change.

1.3.
Certain Matters of Construction. The terms
“herein,” “hereof,” “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. Any pronoun used shall be deemed
to cover all genders. In the computation of periods of time from a specified
date to a later specified date, “from” means “from and
including,” and “to” and “until” each mean
“to but excluding.” The terms “including” and
“include” shall mean “including, without limitation”
and, for purposes of each Loan Document, the parties agree that the rule of
ejusdem generis shall not be applicable to limit any provision.
Section titles appear as a matter of convenience only and shall not affect
the interpretation of any Loan Document. All references to (a) laws or
statutes include all related rules, regulations, interpretations, amendments
and successor provisions; (b) any document, instrument or agreement
include any amendments, waivers and other modifications, extensions or renewals
(to the extent permitted by the Loan Documents); (c) any section mean,
unless the context otherwise requires, a section of this Agreement;
(d) any exhibits or schedules mean, unless the context otherwise requires,
exhibits and schedules attached hereto, which are hereby incorporated by
reference; (e) any Person include successors and assigns; (f) time of
day mean time of day at Agent’s notice address under
Section 14.3.1; or (g) discretion of Agent, Issuing Bank or
any Lender mean the sole and absolute discretion of such Person. All
calculations of Value, fundings of Loans, issuances of Letters of Credit and
payments of Obligations shall be in Dollars and, unless the context otherwise
requires, all determinations (including calculations of Borrowing Base and
financial covenants) made from time to time under the Loan Documents shall be
made in light of the circumstances existing at such time. Borrowing Base
calculations shall be consistent with historical methods of valuation and
calculation, and otherwise satisfactory to Agent (and not necessarily
calculated in accordance with GAAP). Borrowers shall have the burden of
establishing any alleged negligence, misconduct or lack of good faith by Agent,
Issuing Bank or any Lender under any Loan Documents. No provision of any Loan
Documents shall be construed against any party by reason of such party having,
or being deemed to have, drafted the provision. Whenever the phrase “to
the best of Borrowers’ knowledge” or words of similar import are
used in any Loan Documents, it means actual knowledge of a Senior Officer, or
knowledge that a Senior Officer would have obtained if he or she had engaged in
good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter to which such phrase relates. All references to any time of day
shall be deemed to mean Chicago time, unless otherwise specified.

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SECTION 2.

CREDIT FACILITIES

2.1.
Revolver Commitment.

2.1.1. Revolver
Loans. Each Lender agrees, severally on a Pro Rata basis up to its Revolver
Commitment, on the terms set forth herein, to make Revolver Loans to Borrowers
from time to time through the Commitment Termination Date. The Revolver Loans
may be repaid and reborrowed as provided herein. In no event shall Lenders have
any obligation to honor a request for a Revolver Loan if the unpaid balance of
Revolver Loans outstanding at such time (including the requested Loan) would
exceed the Borrowing Base.

2.1.2. Revolver
Notes. The Revolver Loans made by each Lender and interest accruing thereon
shall be evidenced by the records of Agent and such Lender. At the request of
any Lender, Borrowers shall deliver a Revolver Note to such Lender.

2.1.3. Use of
Proceeds. The proceeds of Revolver Loans shall be used by Borrowers solely
(a) to satisfy existing Debt; (b) to pay fees and transaction
expenses associated with the closing of this credit facility; (c) to pay
Obligations in accordance with this Agreement; (d) to fund Permitted
Acquisitions; and (e) for working capital and other lawful corporate
purposes of Borrowers.

2.1.4. Voluntary
Reduction or Termination of Revolver Commitments.

(a) The Revolver Commitments shall terminate on the
Revolver Termination Date, unless sooner terminated in accordance with this
Agreement. Upon at least 90 days prior written notice to Agent at any time
after the first Loan Year, Borrowers may, at their option, terminate the
Revolver Commitments and this credit facility. Any notice of termination given
by Borrowers shall be irrevocable. On the termination date, Borrowers shall
make Full Payment of all Obligations.

(b) Borrowers may permanently reduce the Revolver
Commitments, on a Pro Rata basis for each Lender, from time to time upon
written notice to Agent after the First Loan Year, which notice shall specify
the amount of the reduction, shall be irrevocable once given, shall be given at
least five Business Days prior to the end of a month and shall be effective as
of the first day of the next month. Each reduction shall be in a minimum amount
of $3,000,000, or an increment of $1,000,000 in excess thereof.

2.1.5.
Overadvances. If the aggregate Revolver Loans exceed the Borrowing Base
(“Overadvance”) or the aggregate Revolver Commitments at any
time, the excess amount shall be payable by Borrowers on demand
by Agent, but all such Revolver Loans shall nevertheless constitute Obligations
secured by the Collateral and entitled to all benefits of the Loan Documents.
Unless its authority has been revoked in writing by Required Lenders, Agent may
require Lenders to honor requests for Overadvance Loans and to forbear from
requiring Borrowers to cure an Overadvance, (a) when no other Event of
Default is known to Agent, as long as (i) the Overadvance does not
continue for more than 30 consecutive days (and no Overadvance may exist for at
least five consecutive days thereafter before further Overadvance

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Loans are required), and
(ii) the Overadvance is not known by Agent to exceed $3,500,000; and
(b) regardless of whether an Event of Default exists, if Agent discovers
an Overadvance not previously known by it to exist, as long as from the date of
such discovery the Overadvance (i) is not increased to an aggregate
Overadvance Amount of more than $3,500,000, and (ii) does not continue for
more than 30 consecutive days. In no event shall Overadvance Loans be required
that would cause the outstanding Revolver Loans and LC Obligations to exceed
the aggregate Revolver Commitments. Any funding of an Overadvance Loan or
sufferance of an Overadvance shall not constitute a waiver by Agent or Lenders
of the Event of Default caused thereby. In no event shall any Borrower or other
Obligor be deemed a beneficiary of this Section nor authorized to enforce
any of its terms.

2.1.6.
Protective Advances. Agent shall be authorized, in its discretion, at
any time that a Default or Event of Default exists or any conditions in
Section 6 are not satisfied, and without regard to the aggregate
Commitments, to make Base Rate Revolver Loans (“Protective
Advances”) (a) up to an aggregate amount of $3,500,000
outstanding at any time, if Agent deems such Loans necessary or desirable to
preserve or protect any Collateral, or to enhance the collectibility or
repayment of Obligations; or (b) to pay any other amounts chargeable to
Obligors under any Loan Documents, including costs, fees and expenses. All
Protective Advances shall be Obligations, secured by the Collateral, and shall
be treated for all purposes as Extraordinary Expenses. Each Lender shall
participate in each Protective Advance on a Pro Rata basis. Required Lenders
may at any time revoke Agent’s authorization to make further Protective
Advances by written notice to Agent. Absent such revocation, Agent’s
determination that funding of a Protective Advance is appropriate shall be
conclusive.

2.2.
Intentionally Omitted.

2.3.
Letter of Credit Facility.

2.3.1. Issuance
of Letters of Credit. Issuing Bank agrees to issue Letters of Credit from
time to time until 30 days prior to the Revolver Termination Date (or
until the Commitment Termination Date, if earlier), on the terms set forth
herein, including the following:

(a) Each Borrower acknowledges that Issuing Bank’s
willingness to issue any Letter of Credit is conditioned upon Issuing
Bank’s receipt of a LC Application with respect to the requested Letter
of Credit, as well as such other instruments and agreements as Issuing Bank may
customarily require for issuance of a letter of credit of similar type and
amount. Issuing Bank shall have no obligation to issue any Letter of Credit
unless (i) Issuing Bank receives a LC Request and LC Application at least
three Business Days prior to the requested date of issuance; and (ii) each
LC Condition is satisfied. If Issuing Bank receives written notice from a
Lender at least one Business Day before issuance of a Letter of Credit that any
LC Condition has not been satisfied, Issuing Bank shall have no obligation to
issue the requested Letter of Credit (or any other) until such notice is
withdrawn in writing by that Lender or until Required Lenders have waived such
condition in accordance with this Agreement. Prior to receipt of any such
notice, Issuing Bank shall not be deemed to have knowledge of any failure of LC
Conditions.

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(b) Letters of Credit may be requested by a Borrower only
(i) to support obligations of such Borrower incurred in the Ordinary
Course of Business; or (ii) for other purposes as Agent and Lenders may
approve from time to time in writing. The renewal or extension of any Letter of
Credit shall be treated as the issuance of a new Letter of Credit, except that
delivery of a new LC Application shall be required at the discretion of Issuing
Bank.

(c) Borrowers assume all risks of the acts, omissions or
misuses of any Letter of Credit by the beneficiary. In connection with issuance
of any Letter of Credit, none of Agent, Issuing Bank or any Lender shall be
responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any
Documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of any goods from that expressed in any
Documents; the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Documents or of any endorsements thereon; the time, place, manner
or order in which shipment of goods is made; partial or incomplete shipment of,
or failure to ship, any goods referred to in a Letter of Credit or Documents;
any deviation from instructions, delay, default or fraud by any shipper or
other Person in connection with any goods, shipment or delivery; any breach of
contract between a shipper or vendor and a Borrower; errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any
Letter of Credit or the proceeds thereof; or any consequences arising from
causes beyond the control of Issuing Bank, Agent or any Lender, including any
act or omission of a Governmental Authority. The rights and remedies of Issuing
Bank under the Loan Documents shall be cumulative. Issuing Bank shall be fully
subrogated to the rights and remedies of each beneficiary whose claims against
Borrowers are discharged with proceeds of any Letter of Credit.

(d) In connection with its administration of and
enforcement of rights or remedies under any Letters of Credit or LC Documents,
Issuing Bank shall be entitled to act, and shall be fully protected in acting,
upon any certification, notice or other communication in whatever form believed
by Issuing Bank, in good faith, to be genuine and correct and to have been
signed, sent or made by a proper Person. Issuing Bank may consult with and
employ legal counsel, accountants and other experts to advise it concerning its
obligations, rights and remedies, and shall be entitled to act upon, and shall
be fully protected in any action taken in good faith reliance upon, any advice
given by such experts. Issuing Bank may employ agents and attorneys-in-fact in
connection with any matter relating to Letters of Credit or LC Documents, and
shall not be liable for the negligence or misconduct of any such agents or
attorneys-in-fact selected with reasonable care.

2.3.2.
Reimbursement; Participations.

(a) If Issuing Bank honors any request for payment under a
Letter of Credit, Borrowers shall pay to Issuing Bank, on the same day
(“Reimbursement Date”), the amount paid by Issuing Bank
under such Letter of Credit, together with interest at the

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interest rate for
Base Rate Revolver Loans from the Reimbursement Date until payment by
Borrowers. The obligation of Borrowers to reimburse Issuing Bank for any
payment made under a Letter of Credit shall be absolute, unconditional,
irrevocable, and joint and several, and shall be paid without regard to any
lack of validity or enforceability of any Letter of Credit or the existence of
any claim, setoff, defense or other right that Borrowers may have at any time
against the beneficiary. Whether or not Borrower Agent submits a Notice of
Borrowing, Borrowers shall be deemed to have requested a Borrowing of Base Rate
Revolver Loans in an amount necessary to pay all amounts due Issuing Bank on
any Reimbursement Date and each Lender agrees to fund its Pro Rata share of
such Borrowing whether or not the Commitments have terminated, an Overadvance
exists or is created thereby, or the conditions in Section 6 are
satisfied.

(b) Upon issuance of a Letter of Credit, each Lender shall
be deemed to have irrevocably and unconditionally purchased from Issuing Bank,
without recourse or warranty, an undivided Pro Rata interest and participation
in all LC Obligations relating to the Letter of Credit. If Issuing Bank makes
any payment under a Letter of Credit and Borrowers do not reimburse such
payment on the Reimbursement Date, Agent shall promptly notify Lenders and each
Lender shall promptly (within one Business Day) and unconditionally pay to
Agent, for the benefit of Issuing Bank, the Lender’s Pro Rata share of
such payment. Upon request by a Lender, Issuing Bank shall furnish copies of
any Letters of Credit and LC Documents in its possession at such time.

(c) The obligation of each Lender to make payments to
Agent for the account of Issuing Bank in connection with Issuing Bank’s
payment under a Letter of Credit shall be absolute, unconditional and
irrevocable, not subject to any counterclaim, setoff, qualification or
exception whatsoever, and shall be made in accordance with this Agreement under
all circumstances, irrespective of any lack of validity or unenforceability of
any Loan Documents; any draft, certificate or other document presented under a
Letter of Credit having been determined to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; or the existence of any setoff or defense that any Obligor may
have with respect to any Obligations. Issuing Bank does not assume any
responsibility for any failure or delay in performance or any breach by any
Borrower or other Person of any obligations under any LC Documents. Issuing
Bank does not make to Lenders any express or implied warranty, representation
or guaranty with respect to the Collateral, LC Documents or any Obligor.
Issuing Bank shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties contained in, or for the
execution, validity, genuineness, effectiveness or enforceability of any LC
Documents; the validity, genuineness, enforceability, collectibility, value or
sufficiency of any Collateral or the perfection of any Lien therein; or the
assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor.

(d) No Issuing Bank Indemnitee shall be liable to any
Lender or other Person for any action taken or omitted to be taken in
connection with any LC Documents except as a result of its actual gross
negligence or willful misconduct. Issuing Bank shall not have any liability to
any Lender if Issuing Bank refrains from any action under any

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Letter of Credit or
LC Documents until it receives written instructions from Required Lenders.

2.3.3. Cash
Collateral. If any LC Obligations, whether or not then due or payable,
shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that Availability is less than zero, (c) after
the Commitment Termination Date, or (d) within 20 Business Days prior to
the Revolver Termination Date, then Borrowers shall, at Issuing Bank’s or
Agent’s request, pay to Issuing Bank the amount of all outstanding LC
Obligations and Cash Collateralize all outstanding Letters of Credit. If
Borrowers fail to Cash Collateralize outstanding Letters of Credit as required
herein, Lenders may (and shall upon direction of Agent) advance, as Revolver
Loans, the amount of the Cash Collateral required (whether or not the
Commitments have terminated, an Overadvance exists, or the conditions in
Section 6 are satisfied).

SECTION 3.

INTEREST, FEES AND
CHARGES

3.1.
Interest.

3.1.1.
Rates and Payment of Interest.

(a) The Obligations shall bear interest (i) if a Base
Rate Loan, at the Base Rate in effect from time to time, plus the
Applicable Margin; (ii) if a LIBOR Loan, at Adjusted LIBOR for the
applicable Interest Period, plus the Applicable Margin; and
(iii) if any other Obligation (including, to the extent permitted by law,
interest not paid when due), at the Base Rate in effect from time to time,
plus the Applicable Margin for Base Rate Revolver Loans. Interest shall
accrue from the date the Loan is advanced or the Obligation is incurred or
payable, until paid by Borrowers. If a Loan is repaid on the same day made, one
day’s interest shall accrue.

(b) During an Insolvency Proceeding with respect to any
Borrower, or during any other Event of Default if Agent or Required Lenders in
their discretion so elect, Obligations shall bear interest at the Default Rate.
Each Borrower acknowledges that the cost and expense to Agent and each Lender
due to an Event of Default are difficult to ascertain and that the Default Rate
is a fair and reasonable estimate to compensate Agent and Lenders for such
added cost and expense.

(c) Interest accrued on the Loans shall be due and payable
in arrears, (i) on the first day of each month and, for any LIBOR Loan,
the last day of its Interest Period; (ii) on any date of prepayment, with
respect to the principal amount of Loans being prepaid; and (iii) on the
Commitment Termination Date. Interest accrued on any other Obligations shall be
due and payable as provided in the Loan Documents and, if no payment date is
specified, shall be due and payable on demand. Notwithstanding
the foregoing, interest accrued at the Default Rate shall be due and payable
on demand.

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3.1.2.
Application of Adjusted LIBOR to Outstanding Loans.

(a) Borrowers may on any Business Day, subject to delivery
of a Notice of Conversion/Continuation, elect to convert any portion of the
Base Rate Loans to, or to continue any LIBOR Loan at the end of its Interest
Period as, a LIBOR Loan. During any Default or Event of Default, Agent may (and
shall at the direction of Required Lenders) declare that no Loan may be made,
converted or continued as a LIBOR Loan.

(b) Whenever Borrowers desire to convert or continue Loans
as LIBOR Loans, Borrower Agent shall give Agent a Notice of
Conversion/Continuation, no later than 11:00 a.m. (Chicago time) at least
three Business Days before the requested conversion or continuation date.
Promptly after receiving any such notice, Agent shall notify each Lender
thereof. Each Notice of Conversion/Continuation shall be irrevocable, and shall
specify the aggregate principal amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be one month if not
specified). If, upon the expiration of any Interest Period in respect of any
LIBOR Loans, Borrowers shall have failed to deliver a Notice of
Conversion/Continuation, they shall be deemed to have elected to convert such
Loans into Base Rate Loans.

3.1.3. Interest
Periods. In connection with the making, conversion or continuation of any
LIBOR Loans, Borrowers shall select an interest period (“Interest
Period”) to apply, which interest period shall be one, two, or three
months; provided, however, that:

(a) the Interest Period shall commence on the date the
Loan is made or continued as, or converted into, a LIBOR Loan, and shall expire
on the numerically corresponding day in the calendar month at its end; and

(b) if any Interest Period commences on a day for which
there is no corresponding day in the calendar month at its end or if such
corresponding day falls after the last Business Day of such month, then the
Interest Period shall expire on the last Business Day of such month; and if any
Interest Period would expire on a day that is not a Business Day, the period
shall expire on the next Business Day.

3.1.4. Interest
Rate Not Ascertainable. If Agent shall determine that on any date for
determining Adjusted LIBOR, due to any circumstance affecting the London
interbank market, adequate and fair means do not exist for ascertaining such
rate on the basis provided herein, then Agent shall immediately notify
Borrowers of such determination. Until Agent notifies Borrowers that such
circumstance no longer exists, the obligation of Lenders to make LIBOR Loans
shall be suspended, and no further Loans may be converted into or continued as
LIBOR Loans.

3.2.
Fees.

3.2.1. Unused
Line Fee. Borrowers shall pay to Agent, for the Pro Rata benefit of
Lenders, a fee equal to the “Unused Line Fee Percentage” (as
defined below) per annum times the amount by which the Revolver Commitments
exceed the average daily balance of Revolver

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Loans and stated amount of Letters
of Credit during any month. Such fee shall be payable in arrears, on the first
day of each month and on the Commitment Termination Date. From the Closing Date
until December 31, 2007, the Unused Line Fee Percentage shall equal
0.375%. Thereafter, the Unused Line Fee Percentage shall equal 0.25%, for each
calendar month during which the average amount of the principal balance of
Revolver Loans plus the LC Obligations equals or exceeds $10,000,000 and
0.30% for any other Fiscal Quarter.

3.2.2. LC
Facility Fees. Borrowers shall pay (a) to Agent, for the Pro Rata
benefit of Lenders, a fee equal to the Applicable Margin in effect for LIBOR
Revolver Loans times the average daily stated amount of Letters of Credit,
which fee shall be payable monthly in arrears, on the first day of each month;
(b) to Agent, for its own account, a per annum fronting fee equal to 1/8%
per annum on the stated amount of each Letter of Credit, which fee shall be
payable monthly in arrears, on the first day of each month; and (c) to
Issuing Bank, for its own account, all customary charges associated with the
issuance, amending, negotiating, payment, processing, transfer and
administration of Letters of Credit, which charges shall be paid as and when
incurred. During an Event of Default, the fee payable under clause
(a) shall be increased by 2% per annum.

3.2.3. Closing
Fee. Borrowers shall pay to Agent, for the Pro Rata benefit of the Lenders,
the closing fee described in the fee letter, which shall be paid concurrently
with the funding of the initial Loans hereunder.

3.2.4. Agent
Fees. In consideration of Agent’s syndication of the Commitments and
service as Agent hereunder, Borrowers shall pay to Agent, for its own account,
the fees described in the Fee Letter.

3.3.
Computation of Interest, Fees, Yield Protection. All
interest, as well as fees and other charges calculated on a per annum basis,
shall be computed for the actual days elapsed, based on a year of
360 days. Each determination by Agent of any interest, fees or interest
rate hereunder shall be final, conclusive and binding for all purposes, absent
manifest error. All fees shall be fully earned when due and shall not be
subject to rebate or refund, nor subject to proration except as specifically
provided herein. All fees payable under Section 3.2 are
compensation for services and are not, and shall not be deemed to be, interest
or any other charge for the use, forbearance or detention of money. A
certificate as to amounts payable by Borrowers under Section 3.4,
3.6, 3.7, 3.9 or 5.9, submitted to Borrowers by
Agent or the affected Lender, as applicable, shall be final, conclusive and
binding for all purposes, absent manifest error.

3.4.
Reimbursement Obligations. Borrowers shall reimburse Agent
for all Extraordinary Expenses. Borrowers shall also reimburse Agent for all
reasonable legal, accounting, appraisal, consulting, and other fees, costs and
expenses incurred by it in connection with (a) negotiation and preparation
of any Loan Documents, including any amendment or other modification thereof;
(b) administration of and actions relating to any Collateral, Loan
Documents and transactions contemplated thereby, including any actions taken to
perfect or maintain priority of Agent’s Liens on any Collateral, to
maintain any insurance required hereunder or to verify Collateral; and
(c) subject to the limits of Section 10.1.1(b), each
inspection, audit or appraisal with respect to any Obligor or Collateral,
whether prepared by

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Agent’s personnel or a third
party. All amounts reimbursable by Borrowers under this Section shall
constitute Obligations secured by the Collateral and shall be payable on
demand.

3.5.
Illegality. Notwithstanding anything to the contrary herein,
if (a) any change in any law or interpretation thereof by any Governmental
Authority makes it unlawful for a Lender to make or maintain a LIBOR Loan or to
maintain any Commitment with respect to LIBOR Loans or (b) a Lender
determines that the making or continuance of a LIBOR Loan has become
impracticable as a result of a circumstance that adversely affects the London
interbank market or the position of such Lender in such market, then such
Lender shall give notice thereof to Agent and Borrowers and may
(i) declare that LIBOR Loans will not thereafter be made by such Lender,
whereupon any request for a LIBOR Loan from such Lender shall be deemed to be a
request for a Base Rate Loan unless such Lender’s declaration has been
withdrawn (and it shall be withdrawn promptly upon cessation of the
circumstances described in clause (a) or (b) above); and/or
(ii) require that all outstanding LIBOR Loans made by such Lender be
converted to Base Rate Loans immediately, in which event all outstanding LIBOR
Loans of such Lender shall be immediately converted to Base Rate Loans.

3.6.
Increased Costs. If, by reason of (a) the introduction
of or any change (including any change by way of imposition or increase of
Statutory Reserves or other reserve requirements) in any law or interpretation
thereof, or (b) the compliance with any guideline or request from any
Governmental Authority or other Person exercising control over banks or
financial institutions generally (whether or not having the force of law):

(i) a Lender
shall be subject to any Tax with respect to any LIBOR Loan or Letter of Credit
or its obligation to make LIBOR Loans, issue Letters of Credit or participate
in LC Obligations, or a change shall result in the basis of taxation of any
payment to a Lender with respect to its LIBOR Loans or its obligation to make
LIBOR Loans, issue Letters of Credit or participate in LC Obligations (except
for Excluded Taxes); or

(ii) any
reserve (including any imposed by the Board of Governors), special deposits or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, a Lender shall be imposed or deemed applicable, or any
other condition affecting a Lender’s LIBOR Loans or obligation to make
LIBOR Loans, issue Letters of Credit or participate in LC Obligations shall be
imposed on such Lender or the London interbank market;

and as a result there shall be an
increase in the cost to such Lender of agreeing to make or making, funding or
maintaining LIBOR Loans, Letters of Credit or participations in LC Obligations
(except to the extent already included in determination of Adjusted LIBOR), or
there shall be a reduction in the amount receivable by such Lender, then the
Lender shall promptly notify Borrowers and Agent of such event, and Borrowers
shall, within five days following demand therefor, pay such Lender the amount
of such increased costs or reduced amounts.

If a Lender
determines that, because of circumstances described above or any other
circumstances arising hereafter affecting such Lender, the London interbank
market or the Lender’s position in such market, Adjusted LIBOR or its
Applicable Margin, as applicable, will not adequately and fairly reflect the
cost to such Lender of funding LIBOR Loans, issuing Letters of Credit or
participating in LC Obligations, then (A) the Lender shall promptly notify

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Borrowers and Agent of such event;
(B) such Lender’s obligation to make LIBOR Loans, issue Letters of
Credit or participate in LC Obligations shall be immediately suspended, until
each condition giving rise to such suspension no longer exists; and
(C) such Lender shall make a Base Rate Loan as part of any requested
Borrowing of LIBOR Loans, which Base Rate Loan shall, for all purposes, be
considered part of such Borrowing.

3.7.
Capital Adequacy. If a Lender determines that any
introduction of or any change in a Capital Adequacy Regulation, any change in
the interpretation or administration of a Capital Adequacy Regulation by a
Governmental Authority charged with interpretation or administration thereof,
or any compliance by such Lender or any Person controlling such Lender with a
Capital Adequacy Regulation, increases the amount of capital required or
expected to be maintained by such Lender or Person (taking into consideration
its capital adequacy policies and desired return on capital) as a consequence
of such Lender’s Commitments, Loans, participations in LC Obligations or
other obligations under the Loan Documents, then Borrowers shall, within five
days following demand therefor, pay such Lender an amount sufficient to
compensate for such increase. A Lender’s demand for payment shall set
forth the nature of the occurrence giving rise to such compensation and a
calculation of the amount to be paid. In determining such amount, the Lender
may use any reasonable averaging and attribution method.

3.8.
Mitigation. Each Lender agrees that, upon becoming aware that
it is subject to Section 3.5, 3.6, 3.7 or 5.9,
it will take reasonable measures to reduce Borrowers’ obligations under
such Sections, including funding or maintaining its Commitments or Loans
through another office, as long as use of such measures would not adversely
affect the Lender’s Commitments, Loans, business or interests, and would
not be inconsistent with any internal policy or applicable legal or regulatory
restriction.

3.9.
Funding Losses. If for any reason (other than default by a
Lender) (a) any Borrowing of, or conversion to or continuation of, a LIBOR
Loan does not occur on the date specified therefor in a Notice of Borrowing or
Notice of Conversion/Continuation (whether or not withdrawn), (b) any
repayment or conversion of a LIBOR Loan occurs on a day other than the end of
its Interest Period, or (c) Borrowers fail to repay a LIBOR Loan when
required hereunder, then Borrowers shall pay to Agent its customary
administrative charge and to each Lender all losses and expenses that it
sustains as a consequence thereof, including any loss or expense arising from
liquidation or redeployment of funds or from fees payable to terminate deposits
of matching funds. Lenders shall not be required to purchase Dollar deposits in
the London interbank market or any other offshore Dollar market to fund any
LIBOR Loan, but the provisions hereof shall be deemed to apply as if each
Lender had purchased such deposits to fund its LIBOR Loans.

3.10.
Maximum Interest. In no event shall interest, charges or
other amounts that are contracted for, charged or received by Agent and Lenders
pursuant to any Loan Documents and that are deemed interest under Applicable
Law (“interest”) exceed the highest rate permissible under
Applicable Law (“maximum rate”). If, in any month, any
interest rate, absent the foregoing limitation, would have exceeded the maximum
rate, then the interest rate for that month shall be the maximum rate and, if
in a future month, that interest rate would otherwise be less than the maximum
rate, then the rate shall remain at the maximum rate until the amount of
interest actually paid equals the amount of interest which would have accrued
if it had not been

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limited by the maximum rate. If,
upon Full Payment of the Obligations, the total amount of interest actually
paid under the Loan Documents is less than the total amount of interest that
would, but for this Section, have accrued under the Loan Documents, then
Borrowers shall, to the extent permitted by Applicable Law, pay to Agent, for
the account of Lenders, (a) the lesser of (i) the amount of interest
that would have been charged if the maximum rate had been in effect at all
times, or (ii) the amount of interest that would have accrued had the
interest rate otherwise set forth in the Loan Documents been in effect, minus
(b) the amount of interest actually paid under the Loan Documents. If a
court of competent jurisdiction determines that Agent or any Lender has
received interest in excess of the maximum amount allowed under Applicable Law,
such excess shall be deemed received on account of, and shall automatically be
applied to reduce, Obligations other than interest (regardless of any erroneous
application thereof by Agent or any Lender), and upon Full Payment of the
Obligations, any balance shall be refunded to Borrowers. In determining whether
any excess interest has been charged or received by Agent or any Lender, all
interest at any time charged or received from Borrowers in connection with the
Loan Documents shall, to the extent permitted by Applicable Law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Obligations.

SECTION 4.

LOAN ADMINISTRATION

4.1. Manner of Borrowing and
Funding Revolver Loans.

4.1.1. Notice of Borrowing.

(a) Whenever Borrowers desire funding of a Borrowing of
Revolver Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such
notice must be received by Agent no later than 11:00 a.m. (Chicago time)
(i) on the Business Day of the requested funding date, in the case of Base
Rate Loans, and (ii) at least three Business Days prior to the requested
funding date, in the case of LIBOR Loans. Notices received after
11:00 a.m. (Chicago time) shall be deemed received on the next Business
Day. Each Notice of Borrowing shall be irrevocable and shall specify
(A) the principal amount of the Borrowing, (B) the requested funding
date (which must be a Business Day), (C) whether the Borrowing is to be
made as Base Rate Loans or LIBOR Loans, and (D) in the case of LIBOR
Loans, the duration of the applicable Interest Period (which shall be deemed to
be one month if not specified).

(b) Unless payment is otherwise timely made by Borrowers,
the becoming due of any Obligations (whether principal, interest, fees or other
charges, including Extraordinary Expenses, LC Obligations, Cash Collateral and
Bank Product Debt) shall be deemed to be a request for Base Rate Revolver Loans
on the due date, in the amount of such Obligations. The proceeds of such
Revolver Loans shall be disbursed as direct payment of the relevant Obligation.

(c) If Borrowers establish a controlled disbursement
account with Agent or any Affiliate of Agent, then the presentation for payment
of any check or other item of payment drawn on such account at a time when
there are insufficient funds to

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cover it shall be
deemed to be a request for Base Rate Revolver Loans on the date of such
presentation, in the amount of the check and items presented for payment. The
proceeds of such Revolver Loans may be disbursed directly to the controlled
disbursement account or other appropriate account.

4.1.2. Fundings
by Lenders. Each Lender shall timely honor its Revolver Commitment by
funding its Pro Rata share of each Borrowing of Revolver Loans that is properly
requested hereunder. Agent shall endeavor to notify Lenders of each Notice of
Borrowing (or deemed request for a Borrowing) by 12:00 noon on the proposed
funding date for Base Rate Loans or by 3:00 p.m. at least two Business
Days before any proposed funding of LIBOR Loans. Each Lender shall fund to
Agent such Lender’s Pro Rata share of the Borrowing to the account
specified by Agent in immediately available funds not later than 2:00 p.m.
on the requested funding date, unless Agent’s notice is received after
the times provided above, in which event Lender shall fund its Pro Rata share
by 11:00 a.m. (Chicago time) on the next Business Day. Subject to its
receipt of such amounts from Lenders, Agent shall disburse the proceeds of the
Revolver Loans as directed by Borrower Agent. Unless Agent shall have received
(in sufficient time to act) written notice from a Lender that it does not
intend to fund its Pro Rata share of a Borrowing, Agent may assume that such
Lender has deposited or promptly will deposit its share with Agent, and Agent
may disburse a corresponding amount to Borrowers. If a Lender’s share of
any Borrowing is not in fact received by Agent, then Borrowers agree to repay
to Agent on demand the amount of such share, together with
interest thereon from the date disbursed until repaid, at the rate applicable
to such Borrowing.

4.1.3.
Settlement. To facilitate administration of the Revolver Loans, Agent,
in its sole discretion, may from its own funds make a Revolver Loan on behalf
of any Lender. Lenders and Agent agree (which agreement is solely among them,
and not for the benefit of or enforceable by any Borrower) that settlement
among them with respect to Revolver Loans may take place periodically on a date
determined from time to time by Agent, which shall occur at least once every
five Business Days. On each settlement date, settlement shall be made with each
Lender in accordance with the Settlement Report delivered by Agent to Lenders.
Between settlement dates, Agent may in its discretion apply payments on
Revolver Loans to Revolver Loans it has advanced on behalf of other Lenders,
regardless of any designation by Borrower or any provision herein to the
contrary. Each Lender’s obligation to make settlements with Agent is
absolute and unconditional, without offset, counterclaim or other defense, and
whether or not the Commitments have terminated, an Overadvance exists, or the
conditions in Section 6 are satisfied. If, due to an Insolvency
Proceeding with respect to a Borrower or otherwise, any Revolver Loan that
Agent has advanced on behalf of another Lender may not be settled among Lenders
hereunder, then each Lender shall be deemed to have purchased from Agent a Pro
Rata participation in each such unpaid Revolver Loan and shall transfer the
amount of such participation to Agent, in immediately available funds, within
one Business Day after Agent’s request therefor.

4.1.4.
Notices. Each Borrower authorizes Agent and Lenders to extend, convert
or continue Loans, effect selections of interest rates, and transfer funds to
or on behalf of Borrowers based on telephonic or e-mailed instructions.
Borrowers shall confirm each such request by prompt delivery to Agent of a
Notice of Borrowing or Notice of Conversion/Continuation, if applicable, but if
it differs in any material respect from the action

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taken by Agent or Lenders, the
records of Agent and Lenders shall govern. Neither Agent nor any Lender shall
have any liability for any loss suffered by a Borrower as a result of Agent or
any Lender acting upon its understanding of telephonic or e-mailed instructions
from a person believed in good faith by Agent or any Lender to be a person
authorized to give such instructions on a Borrower’s behalf.

4.2.
Defaulting Lender. If a Lender fails to make any payment to
Agent that is required hereunder, Agent may (but shall not be required to), in
its discretion, retain payments that would otherwise be made to such defaulting
Lender hereunder, apply the payments to such Lender’s defaulted
obligations or readvance the funds to Borrowers in accordance with this
Agreement. The failure of any Lender to fund a Loan or to make a payment in
respect of a LC Obligation shall not relieve any other Lender of its
obligations hereunder, and no Lender shall be responsible for default by
another Lender. Lenders and Agent agree (which agreement is solely among them,
and not for the benefit of or enforceable by any Borrower) that, solely for
purposes of determining a defaulting Lender’s right to vote on matters
relating to the Loan Documents and to share in payments, fees and Collateral
proceeds thereunder, a defaulting Lender shall not be deemed to be a
“Lender” until all its defaulted obligations have been cured.

4.3.
Number and Amount of LIBOR Loans; Determination of Rate. For
ease of administration, all LIBOR Revolver Loans having the same length and
beginning date of their Interest Periods shall be aggregated together, and such
Loans shall be allocated among Lenders on a Pro Rata basis. No more than seven
(7) aggregated LIBOR Loans may be outstanding at any time, and each
aggregate LIBOR Loan when made, continued or converted shall be in a minimum
amount of $1,000,000, or an increment of $500,000 in excess thereof. Upon
determining Adjusted LIBOR for any Interest Period requested by Borrowers,
Agent shall promptly notify Borrowers thereof by telephone or electronically
and, if requested by Borrowers, shall confirm any telephonic notice in writing.

4.4.
Borrower Agent. Each Borrower hereby designates Chromcraft
(“Borrower Agent”) as its representative and agent for all
purposes under the Loan Documents, including requests for Loans and Letters of
Credit, designation of interest rates, delivery or receipt of communications
with Agent, Issuing Bank or any Lender, preparation and delivery of Borrowing
Base and financial reports, receipt and payment of Obligations, requests for
waivers, amendments or other accommodations, actions under the Loan Documents
(including in respect of compliance with covenants), and all other dealings
with Agent, Issuing Bank or any Lender. Borrower Agent hereby accepts such
appointment. Agent and Lenders shall be entitled to rely upon, and shall be
fully protected in relying upon, any notice or communication (including any
notice of borrowing) delivered by Borrower Agent on behalf of any Borrower.
Agent and Lenders may give any notice or communication with a Borrower
hereunder to Borrower Agent on behalf of such Borrower. Agent shall have the
right, in its discretion, to deal exclusively with Borrower Agent for any or
all purposes under the Loan Documents. Each Borrower agrees that any notice,
election, communication, representation, agreement or undertaking made on its
behalf by Borrower Agent shall be binding upon and enforceable against it.

4.5.
One Obligation. The Loans, LC Obligations and other
Obligations shall constitute one general obligation of Borrowers and (unless
otherwise expressly provided in any Loan Document) shall be secured by
Agent’s Lien upon all Collateral; provided, however, that

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Agent and each Lender shall be
deemed to be a creditor of, and the holder of a separate claim against, each
Borrower to the extent of any Obligations jointly or severally owed by such
Borrower.

4.6.
Effect of Termination. On the effective date of any
termination of the Commitments, all Obligations shall be immediately due and
payable, and any Lender may terminate its and its Affiliates’ Bank
Products (including, with the consent of Agent, any Cash Management Services).
All undertakings of Borrowers contained in the Loan Documents shall survive any
termination, and Agent shall retain its Liens in the Collateral and all of its
rights and remedies under the Loan Documents until Full Payment of the
Obligations. Notwithstanding Full Payment of the Obligations, Agent shall not
be required to terminate its Liens in any Collateral unless, with respect to
any damages Agent may incur as a result of the dishonor or return of Payment
Items applied to Obligations, Agent receives (a) a written agreement,
executed by Borrowers and any Person whose advances are used in whole or in
part to satisfy the Obligations, indemnifying Agent and Lenders from any such
damages; or (b) such Cash Collateral as Agent, in its discretion, deems
necessary to protect against any such damages. The provisions of
Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9,
12, 14.2 and this Section, and the obligation of each Obligor and Lender
with respect to each indemnity given by it in any Loan Document, shall survive
Full Payment of the Obligations and any release relating to this credit
facility.

SECTION 5.

PAYMENTS

5.1.
General Payment Provisions. All payments of Obligations shall
be made in Dollars, without offset, counterclaim or defense of any kind, free
of (and without deduction for) any Taxes, and in immediately available funds,
not later than 12:00 noon (Chicago time) on the due date. Any payment after
such time shall be deemed made on the next Business Day. If any payment under
the Loan Documents shall be stated to be due on a day other than a Business
Day, the due date shall be extended to the next Business Day and such extension
of time shall be included in any computation of interest and fees. Any payment
of a LIBOR Loan prior to the end of its Interest Period shall be accompanied by
all amounts due under Section 3.9. Any prepayment of Loans shall be
applied first to Base Rate Loans and then to LIBOR Loans.

5.2.
Repayment of Revolver Loans.

5.2.1. Payments
on Revolver Termination Date and From Proceeds of Accounts and Inventory.
Revolver Loans shall be due and payable in full on the Revolver Termination
Date, unless payment is sooner required hereunder. Revolver Loans may be
prepaid from time to time, without penalty or premium. If any Asset Disposition
includes the disposition of Accounts or Inventory, then Net Proceeds equal to
the greater of (a) the net book value of such Accounts and Inventory, or
(b) the reduction in the Borrowing Base upon giving effect to such
disposition, shall be applied to the Revolver Loans. Notwithstanding anything
herein to the contrary, if an Overadvance exists, Borrowers shall, on the
sooner of Agent’s demand or the first Business Day after any Borrower has
knowledge thereof, repay the outstanding Revolver Loans in an amount sufficient
to reduce the principal balance of Revolver Loans to the Borrowing Base.

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5.2.2. Mandatory
Prepayments.

(a) Concurrently with any Permitted Asset Disposition of
Equipment, Borrowers shall prepay Revolver Loans in an amount equal to the Net
Proceeds of such disposition;

(b) Concurrently with the receipt of any proceeds of
insurance or condemnation awards paid in respect of any Equipment, Borrowers
shall prepay Revolver Loans in an amount equal to such proceeds, subject to
Section 8.6.2; and

(c) Concurrently with any issuance of any Debt or Equity
Interests (other than Debt which is permitted by this Agreement or proceeds
from the exercise of employee stock options or Upstream Payments) by a
Borrower, Borrowers shall prepay Revolver Loans in an amount equal to the net
proceeds of such issuance.

Subject to the
provisions of Section 6, Revolver Loans prepaid pursuant to this
Section 5.2.2 may be reborrowed.

5.3.
Payment of Other Obligations. Obligations other than Loans,
including LC Obligations and Extraordinary Expenses, shall be paid by Borrowers
as provided in the Loan Documents or, if no payment date is specified,
on demand.

5.4.
Marshaling; Payments Set Aside. None of Agent or Lenders
shall be under any obligation to marshal any assets in favor of any Obligor or
against any Obligations. If any Obligor makes a payment to Agent or Lenders, or
if Agent or any Lender receives payment from the proceeds of Collateral,
exercise of setoff or otherwise, and such payment is subsequently invalidated
or required to be repaid to a trustee, receiver or any other Person, then the
Obligations originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as
if such payment had not been received and any enforcement or setoff had not
occurred.

5.5.
Post-Default Allocation of Payments.

5.5.1.
Allocation. Notwithstanding anything herein to the contrary, during an
Event of Default, monies to be applied to the Obligations, whether arising from
payments by Obligors, realization on Collateral, setoff or otherwise, shall be
allocated as follows:

(a) first, to all costs and expenses, including
Extraordinary Expenses, owing to Agent;

(b) second, to all amounts owing to Agent on Revolver
Loans it has advanced on behalf of other Lenders or Protective Advances;

(c) third, to all amounts owing to Issuing Bank on LC
Obligations;

(d) fourth, to all Obligations constituting fees
(excluding amounts relating to Bank Products);

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(e) fifth, to all Obligations constituting interest
(excluding amounts relating to Bank Products);

(f) sixth, to provide Cash Collateral for outstanding
Letters of Credit;

(g) seventh, to all other Obligations, other than Bank
Product Debt; and

(h) last, to Bank Product Debt.

Amounts shall be applied to each
category of Obligations set forth above until Full Payment thereof and then to
the next category. If amounts are insufficient to satisfy a category, they
shall be applied on a pro rata basis among the Obligations in the category. The
allocations set forth in this Section are solely to determine the rights
and priorities of Agent and Lenders as among themselves, and may be changed by
agreement among them without the consent of any Obligor. This Section is
not for the benefit of or enforceable by any Borrower.

5.5.2. Erroneous
Application. Agent shall not be liable for any application of amounts made
by it in good faith and, if any such application is subsequently determined to
have been made in error, the sole recourse of any Lender or other Person to
which such amount should have been made shall be to recover the amount from the
Person that actually received it (and, if such amount was received by any
Lender, such Lender hereby agrees to return it).

5.6.
Application of Payments. The ledger balance in the main
Dominion Account as of the end of a Business Day shall be applied to the
Obligations at the beginning of the next Business Day, during any Trigger
Period. If, as a result of such application, a credit balance exists, the
balance shall not accrue interest in favor of Borrowers and shall be made
available to Borrowers as long as no Default or Event of Default exists. Each
Borrower irrevocably waives the right to direct the application of any payments
or Collateral proceeds, and agrees that Agent shall have the continuing,
exclusive right to apply and reapply same against the Obligations, in such
manner as Agent deems advisable, notwithstanding any entry by Agent in its
records.

5.7.
Loan Account; Account Stated.

5.7.1. Loan
Account. Agent shall maintain in accordance with its usual and customary
practices an account or accounts (“Loan Account”) evidencing
the Debt of Borrowers resulting from each Loan or issuance of a Letter of
Credit from time to time. Any failure of Agent to record anything in the Loan
Account, or any error in doing so, shall not limit or otherwise affect the
obligation of Borrowers to pay any amount owing hereunder. Agent may maintain a
single Loan Account in the name of Borrower Agent, and each Borrower confirms
that such arrangement shall have no effect on the joint and several character
of its liability for the Obligations.

5.7.2. Entries
Binding. Entries made in the Loan Account shall constitute presumptive
evidence of the information contained therein. If any information contained in
the Loan Account is provided to or inspected by any Person, then such
information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the

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extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific
information is subject to dispute.

5.8.
Taxes. If any Taxes (except Excluded Taxes) shall be payable
by any party due to the execution, delivery, issuance or recording of any Loan
Documents, or the creation or repayment of any Obligations, Borrowers shall pay
(and shall promptly reimburse Agent and Lenders for their payment of) all such
Taxes, including any interest and penalties thereon, and will indemnify and
hold harmless Indemnitees against all liability in connection therewith. If
Borrowers shall be required by Applicable Law to withhold or deduct any Taxes
(except Excluded Taxes) with respect to any sum payable under any Loan
Documents, (a) the sum payable to Agent or such Lender shall be increased
as may be necessary so that, after making all required withholding or
deductions, Agent or such Lender (as the case may be) receives an amount equal
to the sum it would have received had no such withholding or deductions been
made; (b) Borrowers shall make such withholding or deductions; and
(c) Borrowers shall pay the full amount withheld or deducted to the
relevant taxing or other authority in accordance with Applicable Law.

5.9.
Withholding Tax Exemption. At least five Business Days prior
to the first date for payment of interest or fees hereunder to a Foreign
Lender, the Foreign Lender shall deliver to Borrowers and Agent two duly
completed copies of IRS Form W-8BEN or W-8ECI (or any subsequent replacement or
substitute form therefor), certifying that such Lender can receive payment of
Obligations without deduction or withholding of any United States federal
income taxes. Each Foreign Lender shall deliver to Borrowers and Agent two
additional copies of such form before the preceding form expires or becomes
obsolete or after the occurrence of any event requiring a change in the form,
as well as any amendments, extensions or renewals thereof as may be reasonably
requested by Borrowers or Agent, in each case, certifying that the Foreign
Lender can receive payment of Obligations without deduction or withholding of
any such taxes, unless an event (including any change in treaty or law) has
occurred that renders such forms inapplicable or prevents the Foreign Lender
from certifying that it can receive payments without deduction or withholding
of such taxes. During any period that a Foreign Lender does not or is unable to
establish that it can receive payments without deduction or withholding of such
taxes, other than by reason of an event (including any change in treaty or law)
that occurs after it becomes a Lender, Agent may withhold taxes from payments
to such Foreign Lender at the applicable statutory and treaty rates, and
Borrowers shall not be required to pay any additional amounts under this
Section as a result of such withholding.

5.10.
Nature and Extent of Each Borrower’s Liability.

5.10.1. Joint
and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Agent
and Lenders the prompt payment and performance of, all Obligations and all
agreements under the Loan Documents. Each Borrower agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and not of
collection, that such obligations shall not be discharged until Full Payment of
the Obligations, and that such obligations are absolute and unconditional,
irrespective of (a) the genuineness, validity, regularity, enforceability,
subordination or any future modification of, or change in, any Obligations or
Loan Document, or any other document, instrument or agreement to which any
Obligor is or may become a party or

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be bound; (b) the absence of
any action to enforce this Agreement (including this Section) or any other Loan
Document, or any waiver, consent or indulgence of any kind by Agent or any
Lender with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or
guaranty for the Obligations or any action, or the absence of any action, by
Agent or any Lender in respect thereof (including the release of any security
or guaranty); (d) the insolvency of any Obligor; (e) any election by
Agent or any Lender in an Insolvency Proceeding for the application of
Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant
of a Lien by any other Borrower, as debtor-in-possession under Section 364
of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of
Agent or any Lender against any Obligor for the repayment of any Obligations
under Section 502 of the Bankruptcy Code or otherwise; or (h) any
other action or circumstances that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, except Full Payment of
all Obligations.

5.10.2.
Waivers.

(a) Each Borrower expressly waives all rights that it may
have now or in the future under any statute, at common law, in equity or
otherwise, to compel Agent or Lenders to marshal assets or to proceed against
any Obligor, other Person or security for the payment or performance of any
Obligations before, or as a condition to, proceeding against such Borrower.
Each Borrower waives all defenses available to a surety, guarantor or
accommodation co-obligor other than Full Payment of all Obligations. It is
agreed among each Borrower, Agent and Lenders that the provisions of this
Section are of the essence of the transaction contemplated by the Loan
Documents and that, but for such provisions, Agent and Lenders would decline to
make Loans and issue Letters of Credit. Each Borrower acknowledges that its
guaranty pursuant to this Section is necessary to the conduct and
promotion of its business, and can be expected to benefit such business.

(b) Agent and Lenders may, in their discretion, pursue
such rights and remedies as they deem appropriate and as permitted by
applicable law, including realization upon Collateral or any Real Estate by
judicial foreclosure or non judicial sale or enforcement, without affecting any
rights and remedies under this Section 5.10. If, in the exercise of
any rights or remedies, Agent or any Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to “election of remedies” or otherwise, each Borrower consents to
such action by Agent or such Lender and waives any claim based upon such
action, even if the action may result in loss of any rights of subrogation that
any Borrower might otherwise have had but for such action. Any election of
remedies that results in denial or impairment of the right of Agent or any
Lender to seek a deficiency judgment against any Borrower shall not impair any
other Borrower’s obligation to pay the full amount of the Obligations.
Each Borrower waives all rights and defenses arising out of an election of
remedies, such as nonjudicial foreclosure with respect to any security for the
Obligations, even though that election of remedies destroys such
Borrower’s rights of subrogation against any other Person. If Agent bids
at any foreclosure or trustee’s sale or at any private sale, Agent may
bid all or a portion of the Obligations and the amount of such bid need not be
paid by Agent but

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shall be credited
against the Obligations. The amount of the successful bid at any such sale,
whether Agent or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 5.10, notwithstanding that any present or future
law or court decision may have the effect of reducing the amount of any
deficiency claim to which Agent or any Lender might otherwise be entitled but
for such bidding at any such sale.

5.10.3. Extent
of Liability; Contribution.

(a) Notwithstanding anything herein to the contrary, each
Borrower’s liability under this Section 5.10 shall be limited
to the greater of (i) all amounts for which such Borrower is primarily
liable, as described below, and (ii) such Borrower’s Allocable
Amount.

(b) If any Borrower makes a payment under this
Section 5.10 of any Obligations (other than amounts for which such
Borrower is primarily liable) (a “Guarantor Payment”) that,
taking into account all other Guarantor Payments previously or concurrently
made by any other Borrower, exceeds the amount that such Borrower would
otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such
Borrower’s Allocable Amount bore to the total Allocable Amounts of all
Borrowers, then such Borrower shall be entitled to receive contribution and
indemnification payments from, and to be reimbursed by, each other Borrower for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment. The
“Allocable Amount” for any Borrower shall be the maximum
amount that could then be recovered from such Borrower under this
Section 5.10 without rendering such payment voidable or avoidable
under Section 548 of the Bankruptcy Code or under any applicable state
fraudulent transfer or conveyance act, or similar statute or common law.

(c) Nothing contained in this Section 5.10
shall limit the liability of any Borrower to pay Loans made directly or
indirectly to that Borrower (including Loans advanced to any other Borrower and
then re-loaned or otherwise transferred to, or for the benefit of, such
Borrower), LC Obligations relating to Letters of Credit issued to support such
Borrower’s business, and all accrued interest, fees, expenses and other
related Obligations with respect thereto, for which such Borrower shall be
primarily liable for all purposes hereunder. Agent and Lenders shall have the
right, at any time in their discretion, to condition Loans and Letters of
Credit upon a separate calculation of borrowing availability for each Borrower
and to restrict the disbursement and use of such Loans and Letters of Credit to
such Borrower.

5.10.4. Joint
Enterprise. Each Borrower has requested that Agent and Lenders make this
credit facility available to Borrowers on a combined basis, in order to finance
Borrowers’ business most efficiently and economically. Borrowers’
business is a mutual and collective enterprise, and Borrowers believe that
consolidation of their credit facility will

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enhance the borrowing power of each
Borrower and ease the administration of their relationship with Lenders, all to
the mutual advantage of Borrowers. Borrowers acknowledge and agree that
Agent’s and Lenders’ willingness to extend credit to Borrowers and
to administer the Collateral on a combined basis, as set forth herein, is done
solely as an accommodation to Borrowers and at Borrowers’ request.

5.10.5.
Subordination. Each Borrower hereby subordinates any claims, including
any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution, indemnification or set off, that it may have at any
time against any other Obligor, howsoever arising, to the Full Payment of all
Obligations.

SECTION 6.

CONDITIONS PRECEDENT

6.1.
Conditions Precedent to Initial Loans. In addition to the
conditions set forth in Section 6.2, Lenders shall not be required
to fund any requested Loan, issue any Letter of Credit, or otherwise extend
credit to Borrowers hereunder, until the date (“Closing
Date”) that each of the following conditions has been satisfied:

(a) Notes shall have been executed by Borrowers and
delivered to each Lender that requests issuance of a Note. Each other Loan
Document shall have been duly executed and delivered to Agent by each of the
signatories thereto, and each Obligor shall be in compliance with all terms
thereof.

(b) Agent shall have received acknowledgments of all
filings or recordations necessary to perfect its Liens in the Collateral, as
well as UCC and Lien searches and other evidence satisfactory to Agent that
such Liens are the only Liens upon the Collateral, except Permitted Liens.

(c) Agent shall have received duly executed agreements
establishing each Dominion Account and related lockbox, in form and substance,
and with financial institutions, satisfactory to Agent.

(d) By executing this Agreement each Borrower certifies
that, after giving effect to the initial Loans and transactions hereunder,
(i) such Borrower is Solvent; (ii) no Default or Event of Default
exists; (iii) the representations and warranties set forth in
Section 9 are true and correct; and (iv) such Borrower has
complied with all agreements and conditions to be satisfied by it under the
Loan Documents.

(e) Agent shall have received a certificate of a duly
authorized officer of each Obligor, certifying (i) that attached copies of
such Obligor’s Organic Documents are true and complete, and in full force
and effect, without amendment except as shown, (ii) that an attached copy
of resolutions authorizing execution and delivery of the Loan Documents is true
and complete, and that such resolutions are in full force and effect, were duly
adopted, have not been amended, modified or revoked, and constitute all
resolutions adopted with respect to this credit facility, and (iii) to the
title, name and signature of each Person authorized to sign the Loan Documents.
Agent may

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conclusively rely
on this certificate until it is otherwise notified by the applicable Obligor in
writing.

(f) Agent shall have received a written opinion of Krieg
DeVault LLP, in form and substance satisfactory to Agent.

(g) Agent shall have received copies of the charter
documents of each Obligor, certified as appropriate by the Secretary of State
or another official of such Obligor’s jurisdiction of organization. Agent
shall have received good standing certificates for each Obligor, issued by the
Secretary of State or other appropriate official of such Obligor’s
jurisdiction of organization and each jurisdiction where such Obligor’s
conduct of business or ownership of Property necessitates qualification.

(h) Agent shall have received copies of policies or
certificates of insurance for the insurance policies carried by Borrowers, all
in compliance with the Loan Documents.

(i) Agent shall have completed its business, financial and
legal due diligence of Obligors, including a roll-forward of its previous field
examination, with results satisfactory to Agent. No material adverse change in
the financial condition (other than May losses disclosed to Agent) of any
Obligor or in the quality, quantity or value of any Collateral shall have
occurred since April 28, 2007.

(j) Borrowers shall have paid all fees and expenses to be
paid to Agent and Lenders on the Closing Date.

(k) Agent shall have received a Borrowing Base Certificate
prepared as of May 31, 2007. Upon giving effect to the initial funding of
Loans and issuance of Letters of Credit, and the payment by Borrowers of all
fees and expenses incurred in connection herewith as well as any payables
stretched beyond their customary payment practices, Availability shall be at
least $10,000,000.

(l) Agent shall have received (i) interim financial
statements for the monthly period ending closest to the Closing Date, on an
unconsolidated and, if available, consolidating and consolidated basis,
(ii) internally prepared Projections on a quarterly basis for the reminder
of Fiscal Year 2007, and on an annual basis thereafter for such periods as
Agent may require, and (iii) such other financial information with respect
to the Borrowers as Agent may require.

6.2.
Conditions Precedent to All Credit Extensions. Agent, Issuing
Bank and Lenders shall not be required to fund any Loans, arrange for issuance
of any Letters of Credit or grant any other accommodation to or for the benefit
of Borrowers, unless the following conditions are satisfied:

(a) No Default or Event of Default shall exist at the time
of, or result from, such funding, issuance or grant;

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(b) The representations and warranties of each Obligor in
the Loan Documents shall be true and correct on the date of, and upon giving
effect to, such funding, issuance or grant (except for representations and
warranties that expressly relate to an earlier date);

(c) All conditions precedent in any other Loan Document
shall be satisfied;

(d) No event shall have occurred or circumstance exist
that has or could reasonably be expected to have a Material Adverse Effect; and

(e) With respect to issuance of a Letter of Credit, the LC
Conditions shall be satisfied.

Each request (or deemed request) by
Borrowers for funding of a Loan, issuance of a Letter of Credit or grant of an
accommodation shall constitute a representation by Borrowers that the foregoing
conditions are satisfied on the date of such request and on the date of such
funding, issuance or grant. As an additional condition to any funding, issuance
or grant, Agent shall have received such other information, documents,
instruments and agreements as it deems appropriate in connection therewith.

6.3.
Limited Waiver of Conditions Precedent. If Agent, Issuing
Bank or Lenders fund any Loans, arrange for issuance of any Letters of Credit
or grant any other accommodation when any conditions precedent are not
satisfied (regardless of whether the lack of satisfaction was known or unknown
at the time), it shall not operate as a waiver of (a) the right of Agent,
Issuing Bank and Lenders to insist upon satisfaction of all conditions
precedent with respect to any subsequent funding, issuance or grant; nor
(b) any Default or Event of Default due to such failure of conditions or
otherwise.

SECTION 7.

COLLATERAL

7.1.
Grant of Security Interest. To secure the prompt payment and
performance of all Obligations, each Borrower hereby grants to Agent, for the
benefit of Secured Parties, a continuing security interest in and Lien upon all
Property of such Borrower, including all of the following Property, whether now
owned or hereafter acquired, and wherever located:

(a) all Accounts;

(b) all Chattel Paper, including electronic chattel paper;

(c) all Commercial Tort Claims;

(d) all Deposit Accounts;

(e) all Documents;

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(f) all General Intangibles, including Payment
Intangibles, Software and Intellectual Property;

(g) all Goods, including Inventory, Equipment and fixtures;

(h) all Instruments;

(i) all Investment Property;

(j) all Letter-of-Credit Rights;

(k) all Supporting Obligations;

(l) all monies, whether or not in the possession or under
the control of Agent, a Lender, or a bailee or Affiliate of Agent or a Lender,
including any Cash Collateral;

(m) all accessions to, substitutions for, and all
replacements, products, and cash and non-cash proceeds of the foregoing,
including proceeds of and unearned premiums with respect to insurance policies,
and claims against any Person for loss, damage or destruction of any
Collateral; and

(n) all books and records (including customer lists,
files, correspondence, tapes, computer programs, print-outs and computer
records) pertaining to the foregoing.

7.2.
Lien on Deposit Accounts; Cash Collateral.

7.2.1. Deposit
Accounts. To further secure the prompt payment and performance of all
Obligations, each Borrower hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all of such
Borrower’s right, title and interest in and to each Deposit Account of
such Borrower and any deposits or other sums at any time credited to any such
Deposit Account, including any sums in any blocked or lockbox accounts or in
any accounts into which such sums are swept. Each Borrower authorizes and
directs each bank or other depository to deliver to Agent, on a daily basis,
all balances in each Deposit Account maintained by such Borrower with such
depository for application to the Obligations then outstanding. Each Borrower
irrevocably appoints Agent as such Borrower’s attorney-in-fact to collect
such balances to the extent any such delivery is not so made.

7.2.2. Cash
Collateral. Any Cash Collateral may be invested, in Agent’s
discretion, in Cash Equivalents, but Agent shall have no duty to do so,
regardless of any agreement, understanding or course of dealing with any
Borrower, and shall have no responsibility for any investment or loss. Each
Borrower hereby grants to Agent, for the benefit of Secured Parties, a security
interest in all Cash Collateral held from time to time and all proceeds
thereof, as security for the Obligations, whether such Cash Collateral is held
in the Cash Collateral Account or elsewhere. Agent may apply Cash Collateral to
the payment of any Obligations, in such order as Agent may elect, as they
become due and payable. The Cash Collateral Account and all Cash Collateral
shall be under the sole dominion and control of

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Agent. No Borrower or other Person
claiming through or on behalf of any Borrower shall have any right to any Cash
Collateral, until Full Payment of all Obligations.

7.3.
Other Collateral.

7.3.1.
Commercial Tort Claims. Borrowers shall promptly notify Agent in writing
if any Borrower has a Commercial Tort Claim (other than, as long as no Default
or Event of Default exists, a Commercial Tort Claim for less than $100,000)
and, upon Agent’s request, shall promptly execute such documents and take
such actions as Agent deems appropriate to confer upon Agent (for the benefit
of Secured Parties) a duly perfected, first priority Lien upon such claim.

7.3.2. Certain
After-Acquired Collateral. Borrowers shall promptly notify Agent in writing
if, after the Closing Date, any Borrower obtains any interest in any Collateral
consisting of Deposit Accounts, Chattel Paper, Documents, Instruments,
Intellectual Property, Investment Property or Letter-of-Credit Rights and, upon
Agent’s request, shall promptly execute such documents and take such
actions as Agent deems appropriate to effect Agent’s duly perfected,
first priority Lien upon such Collateral, including obtaining any appropriate
possession, control agreement or Lien Waiver. If any Collateral is in the
possession of a third party, at Agent’s request, Borrowers shall obtain
an acknowledgment that such third party holds the Collateral for the benefit of
Agent.

7.4.
No Assumption of Liability. The Lien on Collateral granted
hereunder is given as security only and shall not subject Agent or any Lender
to, or in any way modify, any obligation or liability of Borrowers relating to
any Collateral.

7.5.
Further Assurances. Promptly upon request, Borrowers shall
deliver such instruments, assignments, title certificates, or other documents
or agreements, and shall take such actions, as Agent deems appropriate under
Applicable Law to evidence or perfect its Lien on any Collateral, or otherwise
to give effect to the intent of this Agreement. Each Borrower authorizes Agent
to file any financing statement that indicates the Collateral as “all
assets” or “all personal property” of such Borrower, or words
to similar effect, and ratifies any action taken by Agent before the Closing
Date to effect or perfect its Lien on any Collateral.

7.6.
Foreign Subsidiary Stock. Notwithstanding
Section 7.1, the Collateral shall include only 65% of the voting
stock of any Foreign Subsidiary.

SECTION 8.

COLLATERAL
ADMINISTRATION

8.1.
Borrowing Base Certificates. By the 20th day of each month,
Borrowers shall deliver to Agent (and Agent shall promptly deliver same to
Lenders) a Borrowing Base Certificate prepared as of the close of business of
the previous month, and at such other times as Agent may request. All
calculations of Availability in any Borrowing Base Certificate shall originally
be made by Borrowers and certified by a Senior Officer, provided that Agent may
from time to time review and adjust any such calculation (a) to reflect
its reasonable estimate of declines in value of any Collateral, due to
collections received in the Dominion Account or

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otherwise; (b) to adjust
advance rates to reflect changes in dilution, quality, mix and other factors
affecting Collateral; and (c) to the extent the calculation is not made in
accordance with this Agreement or does not accurately reflect the Availability
Reserve. On or before the 20th day of each calendar month from and after the
date hereof, Borrowers shall deliver to Agent, in the form reasonably
acceptable to Agent, (i) reconciliations of Borrowers’ Accounts as
shown on the month-end Borrowing Base Certificate for the immediately preceding
Fiscal Month to Borrowers’ accounts receivable agings, to
Borrowers’ general ledger and to Borrowers’ most recent financial
statements and (ii) reconciliations of Borrowers’ Inventory as shown on
Borrowers’ perpetual inventory, to Borrowers’ general ledger and to
Borrowers’ financial statements, all with supporting materials as Agent
shall reasonably request.

8.2.
Administration of Accounts.

8.2.1. Records
and Schedules of Accounts. Each Borrower shall keep accurate and complete
records of its Accounts, including all payments and collections thereon, and
shall submit to Agent, on such periodic basis as Agent may request, a sales and
collections report, in form satisfactory to Agent. Each Borrower shall also
provide to Agent, on or before the 20th day of each month, a detailed aged
trial balance of all Accounts as of the end of the preceding month, specifying
each Account’s Account Debtor name and address, amount, invoice date and
due date, showing any discount, allowance, credit, authorized return or
dispute, and including such proof of delivery, copies of invoices and invoice
registers, copies of related documents, repayment histories, status reports and
other information as Agent may reasonably request. If Accounts in an aggregate
face amount of $100,000 or more cease to be Eligible Accounts, Borrowers shall
notify Agent of such occurrence promptly (and in any event within three
(3) Business Days) after any Borrower has knowledge thereof.

8.2.2.
Taxes. If an Account of any Borrower includes a charge for any Taxes,
Agent is authorized, in its discretion, to pay the amount thereof to the proper
taxing authority for the account of such Borrower and to charge Borrowers
therefor; provided, however, that neither Agent nor Lenders shall
be liable for any Taxes that may be due from Borrowers or with respect to any
Collateral.

8.2.3. Account
Verification. Whether or not a Default or Event of Default exists, Agent
shall have the right at any time, in the name of Agent, any designee of Agent
or any Borrower to verify the validity, amount or any other matter relating to
any Accounts of Borrowers by mail, telephone or otherwise. Borrowers shall
cooperate fully with Agent in an effort to facilitate and promptly conclude any
such verification process.

8.2.4.
Maintenance of Dominion Account. Borrowers shall maintain Dominion
Accounts pursuant to lockbox or other arrangements acceptable to Agent.
Borrowers shall obtain an agreement (in form and substance satisfactory to
Agent) from each lockbox servicer and Dominion Account bank, establishing
Agent’s control over and Lien in the lockbox or Dominion Account, which
may be exercised by Agent during any Trigger Period, requiring immediate
deposit of all remittances received in the lockbox to a Dominion Account and
waiving offset rights of such servicer or bank, except for customary
administrative charges. If a Dominion Account is not maintained with Bank of
America, Agent may, during any Trigger Period require immediate transfer of all
funds in such account to a Dominion Account

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maintained with Bank of America.
Neither Agent nor Lenders assume any responsibility to Borrowers for any
lockbox arrangement or Dominion Account, including any claim of accord and
satisfaction or release with respect to any Payment Items accepted by any bank.

8.2.5. Proceeds
of Collateral. Borrowers shall request in writing and otherwise take all
reasonable steps to ensure that all payments on Accounts or otherwise relating
to Collateral are made directly to a Dominion Account (or a lockbox relating to
a Dominion Account). If any Borrower or Subsidiary receives cash or Payment
Items with respect to any Collateral, it shall hold same in trust for Agent and
promptly (not later than the next Business Day) deposit same into a Dominion
Account.

8.3.
Administration of Inventory.

8.3.1. Records
and Reports of Inventory. Each Borrower shall keep accurate and complete
records of its Inventory, including costs and daily withdrawals and additions,
and shall submit to Agent inventory reports in form satisfactory to Agent, on
such periodic basis as Agent may request. Each Borrower shall conduct a
physical inventory at least once per calendar year (and on a more frequent
basis if requested by Agent when an Event of Default exists) and periodic cycle
counts consistent with historical practices, and shall provide to Agent a
report based on each such inventory and count promptly upon completion thereof,
together with such supporting information as Agent may request. Agent may
participate in and observe each inventory or physical count.

8.3.2. Returns
of Inventory. No Borrower shall return any Inventory to a supplier, vendor
or other Person, whether for cash, credit or otherwise, unless (a) such
return is in the Ordinary Course of Business; (b) no Default, Event of
Default or Overadvance exists or would result therefrom; (c) Agent is
promptly notified if the aggregate Value of all Inventory returned in any month
exceeds $100,000; and (d) any payment received by a Borrower for a return
is promptly remitted to Agent for application to the Obligations.

8.3.3.
Acquisition, Sale and Maintenance. Except as set forth in
Schedule 8.3.3, no Borrower shall acquire or accept any Inventory
on consignment or approval, and shall take all steps to assure that all
Inventory is produced in accordance with Applicable Law, including the FLSA. No
Borrower shall sell any Inventory on consignment or approval or any other basis
under which the customer may return or require a Borrower to repurchase such
Inventory. Borrowers shall use, store and maintain all Inventory with
reasonable care and caution, in accordance with applicable standards of any
insurance and in conformity with all Applicable Law, and shall make current
rent payments (within applicable grace periods provided for in leases) at all
locations where any Collateral is located.

8.4.
Administration of Equipment.

8.4.1. Records
and Schedules of Equipment. Each Borrower shall keep accurate and complete
records of its Equipment, including kind, quality, quantity, cost, acquisitions
and dispositions thereof, and shall submit to Agent, on such periodic basis as
Agent may reasonably request, a current schedule thereof, in form reasonably
satisfactory to Agent. Promptly upon

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request, Borrowers shall deliver to
Agent evidence of their ownership or interests in any Equipment.

8.4.2.
Dispositions of Equipment. No Borrower shall sell, lease or otherwise
dispose of any Equipment, without the prior written consent of Agent (which
consent shall not be unreasonably withheld or delayed), other than (a) a
Permitted Asset Disposition; and (b) replacement of Equipment that is
worn, damaged or obsolete with Equipment of like function and value, if the
replacement Equipment is acquired substantially contemporaneously with such
disposition and is free of Liens (or if the disposed Equipment was subject to a
Lien securing Permitted Purchase Money Debt, other than a Lien securing
Permitted Purchase Money Debt).

8.4.3. Condition
of Equipment. The Equipment is in good operating condition and repair, and
all necessary replacements and repairs have been made so that the value and
operating efficiency of the Equipment is preserved at all times, reasonable
wear and tear excepted. Each Borrower shall ensure that the Equipment is
mechanically and structurally sound, and capable of performing the functions
for which it was designed, in accordance with the manufacturer’s
published and recommended specifications. No Borrower shall permit any
Equipment to become affixed to real Property unless any landlord or mortgagee
delivers a Lien Waiver or similar instrument.

8.5.
Administration of Deposit Accounts. Schedule 8.5
sets forth all Deposit Accounts maintained by Borrowers, including all Dominion
Accounts. Each Borrower shall take all actions necessary to establish
Agent’s control of each such Deposit Account (other than an account
exclusively used for payroll, payroll taxes or employee benefits, or an account
containing not more that $10,000 at any time). Each Borrower shall be the sole
account holder of each Deposit Account and shall not allow any other Person
(other than Agent) to have control over a Deposit Account or any Property
deposited therein. Each Borrower shall promptly notify Agent of any opening or
closing of a Deposit Account and, with the consent of Agent, will amend
Schedule 8.5 to reflect same. With respect to any Deposit Account
that is a disbursement account, investment account or other account not
utilized for the collection of Accounts, Agent agrees not to exercise its
rights to sweep funds in such Depository Account and apply such funds to the
Obligations unless an Event of Default has occurred and is continuing and the
Obligations have been declared immediately due and payable.

8.6.
General Provisions.

8.6.1. Location
of Collateral. All tangible items of Collateral, other than Inventory in
transit, shall at all times be kept by Borrowers at the business locations set
forth in Schedule 8.6.1, except that Borrowers may (a) make
sales or other dispositions of Collateral in accordance with
Section 10.2.6; and (b) move Collateral to another location in
the United States, upon 30 Business Days prior written notice to Agent.

8.6.2. Insurance
of Collateral; Condemnation Proceeds.

(a) Each Borrower shall maintain insurance with respect to
the Collateral (other than from self insured in-transit Inventory), covering
casualty, hazard, public liability, theft, malicious mischief, and such other
risks, in such amounts, with

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such endorsements,
and with such insurers (rated A7 or better by A.M. Best Rating Guide) as are
satisfactory to Agent. All proceeds under each policy shall be payable to
Agent. From time to time upon request, Borrowers shall deliver to Agent the
originals or certified copies of its insurance policies and updated flood plain
searches. Unless Agent shall agree otherwise, each policy shall include
satisfactory endorsements (i) showing Agent as sole loss payee or
additional insured, as appropriate; (ii) requiring 30 days prior written
notice to Agent in the event of cancellation of the policy for any reason
whatsoever; and (iii) specifying that the interest of Agent shall not be
impaired or invalidated by any act or neglect of any Borrower or the owner of
the Property, nor by the occupation of the premises for purposes more hazardous
than are permitted by the policy. If any Borrower fails to provide and pay for
such insurance, Agent may, at its option, but shall not be required to, procure
the insurance and charge Borrowers therefor. Each Borrower agrees to deliver to
Agent, promptly as rendered, copies of all reports made to insurance companies.
While no Event of Default exists, Borrowers may settle, adjust or compromise
any insurance claim, as long as the proceeds are delivered to Agent. If an
Event of Default exists, only Agent shall be authorized to settle, adjust and
compromise such claims.

(b) Any proceeds of insurance (other than proceeds from
workers’ compensation or D&O insurance) and any awards arising from
condemnation of any Collateral shall be paid to Agent. Any such proceeds or
awards that relate to Inventory shall be applied to payment of the Revolver
Loans, and then to any other Obligations outstanding. Subject to clause
(c) below, any proceeds or awards that relate to Equipment or Real Estate
shall be applied first to Revolver Loans and then to other Obligations.

(c) If requested by Borrowers in writing within
15 days after Agent’s receipt of any insurance proceeds or
condemnation awards relating to any loss or destruction of Equipment or Real
Estate, Borrowers may use such proceeds or awards to repair or replace such
Equipment or Real Estate (and until so used, the proceeds shall be held by
Agent as Cash Collateral) as long as (i) no Default or Event of Default
exists; (ii) such repair or replacement is promptly undertaken and
concluded, in accordance with plans satisfactory to Agent;
(iii) replacement buildings are constructed on the sites of the original
casualties and are of comparable size, quality and utility to the destroyed
buildings; (iv) the repaired or replaced Property is free of Liens, other
than Permitted Liens that are not Purchase Money Liens; (v) Borrowers
comply with disbursement procedures for such repair or replacement as Agent may
reasonably require; and (vi) the aggregate amount of such proceeds or
awards from any single casualty or condemnation does not exceed $500,000.

8.6.3.
Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by Borrowers. Agent shall not be liable
or responsible in any way for the safekeeping of any Collateral, for any loss
or damage thereto (except for reasonable care in its custody while Collateral
is in Agent’s actual possession), for any diminution in the value
thereof, or for any act or default of any

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warehouseman, carrier, forwarding
agency or other Person whatsoever, but the same shall be at Borrowers’
sole risk.

8.6.4. Defense
of Title to Collateral. Each Borrower shall at all times defend its title
to Collateral and Agent’s Liens therein against all Persons, claims and
demands whatsoever, except Permitted Liens.

8.7.
Power of Attorney. Each Borrower hereby irrevocably
constitutes and appoints Agent (and all Persons designated by Agent) as such
Borrower’s true and lawful attorney (and agent-in-fact) for the purposes
provided in this Section. Agent, or Agent’s designee, may, without notice
and in either its or a Borrower’s name, but at the cost and expense of
Borrowers:

(a) Endorse a Borrower’s name on any Payment Item or
other proceeds of Collateral (including proceeds of insurance) that come into
Agent’s possession or control; and

(b) After the occurrence and during the continuation of an
Event of Default, (i) notify any Account Debtors of the assignment of
their Accounts, demand and enforce payment of Accounts, by legal proceedings or
otherwise, and generally exercise any rights and remedies with respect to
Accounts; (ii) settle, adjust, modify, compromise, discharge or release
any Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other
Collateral upon such terms, for such amounts and at such times as Agent deems
advisable; (iv) take control, in any manner, of any proceeds of
Collateral; (v) prepare, file and sign a Borrower’s name to a proof
of claim or other document in a bankruptcy of an Account Debtor, or to any
notice, assignment or satisfaction of Lien or similar document;
(vi) receive, open and dispose of mail addressed to a Borrower, and notify
postal authorities to change the address for delivery thereof to such address
as Agent may designate; (vii) endorse any Chattel Paper, Document,
Instrument, invoice, freight bill, bill of lading, or similar document or
agreement relating to any Accounts, Inventory or other Collateral;
(viii) use a Borrower’s stationery and sign its name to
verifications of Accounts and notices to Account Debtors; (ix) use the
information recorded on or contained in any data processing equipment and
computer hardware and software relating to any Collateral; (x) make and
adjust claims under policies of insurance; (xi) take any action as may be
necessary or appropriate to obtain payment under any letter of credit or
banker’s acceptance for which a Borrower is a beneficiary; and
(xii) take all other actions as Agent deems appropriate to fulfill any
Borrower’s obligations under the Loan Documents.

SECTION 9.

REPRESENTATIONS AND
WARRANTIES

9.1.
General Representations and Warranties. To induce Agent and
Lenders to enter into this Agreement and to make available the Commitments,
Loans and Letters of Credit, each Borrower represents and warrants that:

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9.1.1.
Organization and Qualification. Borrowers and Subsidiary are duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their organization. Borrowers and Subsidiary are duly
qualified, authorized to do business and in good standing as a foreign
corporation or limited liability company in each jurisdiction where failure to
be so qualified could reasonably be expected to have a Material Adverse Effect.

9.1.2. Power and
Authority. Each Obligor is duly authorized to execute, deliver and perform
its Loan Documents. The execution, delivery and performance of the Loan
Documents have been duly authorized by all necessary action, and do not
(a) require any consent or approval of any holders of Equity Interests of
any Obligor, other than those already obtained; (b) contravene the Organic
Documents of any Obligor; (c) violate or cause a default under any
Applicable Law or Material Contract; or (d) result in or require the
imposition of any Lien (other than Permitted Liens) on any Property of any
Obligor.

9.1.3.
Enforceability. Each Loan Document is a legal, valid and binding
obligation of each Obligor party thereto, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

9.1.4. Capital
Structure. Schedule 9.1.4 shows, for each Borrower and
Subsidiary, its name, its jurisdiction of organization, its authorized and
issued Equity Interests, the holders of its Equity Interests, and all
agreements binding on such holders with respect to their Equity Interests. Each
Borrower has good title to its Equity Interests in its Subsidiaries, subject
only to Agent’s Lien, and all such Equity Interests are duly issued,
fully paid and non-assessable. Except as set forth in
Schedule 9.1.4, there are no outstanding options to purchase,
warrants, subscription rights, agreements to issue or sell, convertible
interests, phantom rights or powers of attorney relating to any Equity
Interests of any Borrower or Subsidiary.

9.1.5. Corporate
Names; Locations. During the five years preceding the Closing Date, except
as shown on Schedule 9.1.5, no Borrower or Subsidiary has been
known as or used any corporate, fictitious or trade names, has been the
surviving corporation of a merger or combination, or has acquired any
substantial part of the assets of any Person. The chief executive offices and
other places of business of Borrowers and Subsidiaries are shown on
Schedule 8.6.1. During the five years preceding the Closing Date,
no Borrower or Subsidiary has had any other office or place of business.

9.1.6. Title to
Properties; Priority of Liens. Each Borrower and Subsidiary has good and
marketable title to (or valid leasehold interests in) all of its Real Estate,
and good title to all of its personal Property, including all Property
reflected in any financial statements delivered to Agent or Lenders, in each
case free of Liens except Permitted Liens. Each Borrower and Subsidiary has
paid and discharged all lawful claims that, if unpaid, could become a Lien on
its Properties, other than Permitted Liens. All Liens of Agent in the
Collateral are duly perfected, first priority Liens, subject only to Permitted
Liens that are expressly allowed to have priority over Agent’s Liens.

9.1.7.
Accounts. Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrowers with respect
thereto.

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Borrowers warrant, with respect to
each Account at the time it is shown as an Eligible Account in a Borrowing Base
Certificate, that:

(a) it is genuine and in all respects what it purports to
be, and is not evidenced by a judgment;

(b) it arises out of a completed, bona fide sale
and delivery of goods or rendition of services in the Ordinary Course of
Business, and substantially in accordance with any purchase order, contract or
other document relating thereto;

(c) it is for a sum certain, maturing as stated in the
invoice covering such sale or rendition of services, a copy of which has been
furnished or is available to Agent on request;

(d) it is not subject to any offset, Lien (other than
Agent’s Lien), deduction, defense, dispute, counterclaim or other adverse
condition except as arising in the Ordinary Course of Business and disclosed to
Agent; and it is absolutely owing by the Account Debtor, without contingency in
any respect;

(e) no purchase order, agreement, document or Applicable
Law restricts assignment of the Account to Agent (regardless of whether, under
the UCC, the restriction is ineffective);

(f) no extension, compromise, settlement, modification,
credit, deduction or return has been authorized with respect to the Account,
except discounts or allowances granted in the Ordinary Course of Business for
prompt payment that are reflected on the face of the invoice related thereto or
applicable Borrowing Base Certificate and in the reports submitted to Agent
hereunder; and

(g) to the best of Borrowers’ knowledge,
(i) there are no facts or circumstances that are reasonably likely to
impair the enforceability or collectibility of such Account; (ii) the
Account Debtor had the capacity to contract when the Account arose, continues
to meet the applicable Borrower’s customary credit standards, is Solvent,
is not contemplating or subject to an Insolvency Proceeding, and has not
failed, or suspended or ceased doing business; and (iii) there are no
proceedings or actions threatened or pending against any Account Debtor that
could reasonably be expected to have a material adverse effect on the Account
Debtor’s financial condition.

9.1.8. Financial
Statements. The consolidated and consolidating balance sheets, and related
statements of income, cash flow and shareholder’s equity, of Borrowers
and Subsidiaries that have been and are hereafter delivered to Agent and
Lenders, are prepared in accordance with GAAP, and fairly present the financial
positions and results of operations of Borrowers and Subsidiaries at the dates
and for the periods indicated, except that monthly and quarterly financial
statements shall not include footnotes and may be subject to normal year end
audit adjustments and monthly statements may not be consolidated. All
projections delivered from time to time to Agent and Lenders have been prepared
in good faith, based on reasonable assumptions in light of the circumstances at
such time. Since December 31, 2006, there has been no change in the
condition, financial or otherwise, of any Borrower or Subsidiary that could

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reasonably be expected to have a
Material Adverse Effect other than as set forth in Chromcraft’s
Form 10Q for the Fiscal Quarter ended on or about March 31, 2007 and
in Chromcraft’s projections for its Fiscal Year ended December 31,
2007 provided to Agent. No financial statement delivered to Agent or Lenders at
any time contains any untrue statement of a material fact, nor fails to
disclose any material fact necessary to make such statement not materially
misleading. Each Borrower and Subsidiary is Solvent.

9.1.9. Surety
Obligations. No Borrower or Subsidiary is obligated as surety or indemnitor
under any bond or other contract that assures payment or performance of any
obligation of any Person, except as permitted hereunder.

9.1.10.
Taxes. Each Borrower and Subsidiary has filed all federal, state and
local tax returns and other reports that it is required by law to file, and has
paid, or made provision for the payment of, all Taxes upon it, its income and
its Properties that are due and payable, except to the extent being Properly
Contested. The provision for Taxes on the books of each Borrower and Subsidiary
is adequate for all years not closed by applicable statutes, and for its
current Fiscal Year.

9.1.11.
Brokers. There are no brokerage commissions, finder’s fees or
investment banking fees payable in connection with any transactions
contemplated by the Loan Documents.

9.1.12.
Intellectual Property. Each Borrower and Subsidiary owns or has the
lawful right to use all Intellectual Property necessary for the conduct of its
business, without conflict with any rights of others. There is no pending or,
to any Borrower’s knowledge, threatened Intellectual Property Claim with
respect to any Borrower, any Subsidiary or any of their Property (including any
Intellectual Property). Except as disclosed on Schedule 9.1.12, no
Borrower or Subsidiary pays or owes any Royalty or other compensation to any
Person with respect to any Intellectual Property. All Intellectual Property
owned, used or licensed by, or otherwise subject to any interests of, any
Borrower or Subsidiary is shown on Schedule 9.1.12.

9.1.13.
Governmental Approvals. Each Borrower and Subsidiary has, is in
compliance with, and is in good standing with respect to, all Governmental
Approvals necessary to conduct its business and to own, lease and operate its
Properties. All necessary import, export or other licenses, permits or
certificates for the import or handling of any goods or other Collateral have
been procured and are in effect, and Borrowers and Subsidiaries have complied
with all foreign and domestic laws with respect to the shipment and importation
of any goods or Collateral, except where noncompliance could not reasonably be
expected to have a Material Adverse Effect.

9.1.14.
Compliance with Laws. Each Borrower and Subsidiary has duly complied,
and its Properties and business operations are in compliance, in all material
respects with all Applicable Law, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect. There have been no
citations, notices or orders of material noncompliance issued to any Borrower
or Subsidiary under any Applicable Law. No Inventory has been produced in
violation of the FLSA.

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9.1.15.
Compliance with Environmental Laws. Except as disclosed on
Schedule 9.1.15, no Borrower’s or Subsidiary’s past or
present operations, Real Estate or other Properties are subject to any federal,
state or local investigation to determine whether any remedial action is needed
to address any environmental pollution, hazardous material or environmental
clean-up. No Borrower or Subsidiary has received any Environmental Notice. No
Borrower or Subsidiary has any contingent liability with respect to any
Environmental Release, environmental pollution or hazardous material on any
Real Estate now or previously owned, leased or operated by it.

9.1.16.
Burdensome Contracts. No Borrower or Subsidiary is a party or subject to
any contract, agreement or charter restriction that could reasonably be
expected to have a Material Adverse Effect. No Borrower or Subsidiary is party
or subject to any Restrictive Agreement, except as shown on
Schedule 9.1.16, none of which prohibit the execution or delivery
of any Loan Documents by an Obligor nor the performance by an Obligor of any
obligations thereunder.

9.1.17.
Litigation. Except as shown on Schedule 9.1.17, there are no
proceedings or investigations pending or, to any Borrower’s knowledge,
threatened against any Borrower or Subsidiary, or any of their businesses,
operations, Properties, prospects or conditions, that (a) relate to any
Loan Documents or transactions contemplated thereby; or (b) could
reasonably be expected to have a Material Adverse Effect if determined
adversely to any Borrower or Subsidiary. No Borrower or Subsidiary is in
default with respect to any order, injunction or judgment of any Governmental
Authority.

9.1.18. No
Defaults. No event or circumstance has occurred or exists that constitutes
a Default or Event of Default. No Borrower or Subsidiary is in default, and no
event or circumstance has occurred or exists that with the passage of time or
giving of notice would constitute a default, under any Material Contract or in
the payment of any Borrowed Money. There is no basis upon which any party
(other than a Borrower or Subsidiary) could terminate a Material Contract prior
to its scheduled termination date.

9.1.19.
ERISA. Except as disclosed on Schedule 9.1.19, no Borrower
or Subsidiary has any Multiemployer Plan or Foreign Plan. Each Borrower and
Subsidiary is in full compliance with the requirements of all Applicable Law,
including ERISA, relating to each Multiemployer Plan and Foreign Plan. No fact
or situation exists that could reasonably be expected to result in a Material
Adverse Effect in connection with any Multiemployer Plan or Foreign Plan. No
Borrower or Subsidiary has any withdrawal liability in connection with a
Multiemployer Plan or Foreign Plan. All employer and employee contributions to
Foreign Plans, to the extent required by law or the terms of such plans, have
been made or accrued in accordance with normal accounting principles. The fair
market value of the assets of each funded Foreign Plan, the liability of each
insurer for any Foreign Plan funded through insurance and/or the book reserve
established for each Foreign Plan, together with any accrued contributions, are
sufficient to provide the accrued benefit obligations of all participants in
such plans according to the actuarial assumptions and valuations most recently
used to account for such obligations in accordance with applicable generally
accepted accounting principles. Each Foreign Plan required to be registered has
been registered and is maintained in good standing with all applicable
regulatory authorities.

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9.1.20. Trade
Relations. There exists no actual or threatened termination, limitation or
modification of any business relationship between any Borrower or Subsidiary
and any customer or supplier, or any group of customers or suppliers, who
individually or in the aggregate are material to the business of such Borrower
or Subsidiary. There exists no condition or circumstance that could reasonably
be expected to impair the ability of any Borrower or Subsidiary to conduct its
business at any time hereafter in substantially the same manner as conducted on
the Closing Date.

9.1.21. Labor
Relations. Except as described on Schedule 9.1.21, no Borrower
or Subsidiary is party to or bound by any collective bargaining agreement,
management agreement or consulting agreement. There are no material grievances,
disputes or controversies with any union or other organization of any
Borrower’s or Subsidiary’s employees, or, to any Borrower’s
knowledge, any asserted or threatened strikes, work stoppages or demands for
collective bargaining.

9.1.22. Payable
Practices. No Borrower or Subsidiary has made any material change in its
historical accounts payable practices from those in effect on the Closing Date.

9.1.23. Not a
Regulated Entity. No Obligor is (a) an “investment
company” or a “person directly or indirectly controlled by or
acting on behalf of an investment company” within the meaning of the
Investment Company Act of 1940; (b) a “holding company,” a
“subsidiary company” of a “holding company,” or an
“affiliate” of either, within the meaning of the Public Utility
Holding Company Act of 1935; or (c) subject to regulation under the
Federal Power Act, the Interstate Commerce Act, any public utilities code or
any other Applicable Law regarding its authority to incur Debt.

9.1.24. Margin
Stock. No Borrower or Subsidiary is engaged, principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit
will be used by Borrowers to purchase or carry, or to reduce or refinance any
Debt incurred to purchase or carry, any Margin Stock or for any related purpose
governed by Regulations T, U or X of the Board of Governors.

9.1.25. Plan
Assets. No Borrower is an entity deemed to hold “plan assets”
within the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit
plan” (as defined in Section 3(3) of ERISA) that is subject to Title
I of ERISA or any “plan” (within the meaning of Section 4975
of the Internal Revenue Code), and neither the execution of this Agreement nor
the funding of any Loans gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code.

9.2.
Complete Disclosure. No Loan Document contains any untrue
statement of a material fact, nor fails to disclose any material fact necessary
to make the statements contained therein not materially misleading. There is no
fact or circumstance that any Obligor has failed to disclose to Agent in
writing that could reasonably be expected to have a Material Adverse Effect.

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SECTION 10.

COVENANTS AND CONTINUING
AGREEMENTS

10.1.
Affirmative Covenants. For so long as any Commitments or
Obligations are outstanding, each Borrower shall, and shall cause each
Subsidiary to:

10.1.1.
Inspections; Appraisals.

(a) Permit Agent from time to time, subject (except when a
Default or Event of Default exists) to reasonable notice and normal business
hours, to visit and inspect the Properties of any Borrower or Subsidiary,
inspect, audit and make extracts from any Borrower’s or
Subsidiary’s books and records, and discuss with its officers, employees,
agents, advisors and independent accountants such Borrower’s or
Subsidiary’s business, financial condition, assets, prospects and results
of operations. Lenders may participate in any such visit or inspection, at
their own expense. Neither Agent nor any Lender shall have any duty to any
Borrower to make any inspection, nor to share any results of any inspection,
appraisal or report with any Borrower. To the extent any appraisal or other
information is shared by Agent or a Lender with any Borrower, such Borrower
acknowledges that it was prepared by Agent and Lenders for their purposes and
Borrowers shall not be entitled to rely upon it.

(b) Reimburse Agent for all charges, costs and expenses of
Agent in connection with (i) examinations of any Obligor’s books and
records or any other financial or Collateral matters as Agent deems
appropriate, up to four times per Loan Year; and (ii) appraisals of
Inventory and Equipment up to one time per Loan Year; provided,
however, that if an examination or appraisal is initiated during a
Default or Event of Default, all charges, costs and expenses therefor shall be
reimbursed by Borrowers without regard to such limits. Subject to the
foregoing, Borrowers shall pay Agent’s then standard charges for each day
that an employee of Agent or its Affiliates is engaged in any examination
activities, and shall pay the standard charges of Agent’s internal
appraisal group. This Section shall not be construed to limit
Agent’s right to conduct examinations or to obtain appraisals at any time
in its discretion, nor to use third parties for such purposes.

10.1.2.
Financial and Other Information. Keep adequate records and books of
account with respect to its business activities, in which proper entries are
made in accordance with GAAP reflecting all financial transactions; and furnish
to Agent and Lenders:

(a) as soon as available, and in any event within
90 days after the close of each Fiscal Year, balance sheets as of the end
of such Fiscal Year and the related statements of income, cash flow and
shareholders’ equity for such Fiscal Year, on consolidated and
consolidating basis for Borrowers and Subsidiaries, which consolidated
statements shall be audited and certified (without qualification as to scope,
“going concern” or similar items) by a firm of independent
certified public accountants of recognized standing selected by Borrowers and
reasonably acceptable to Agent, and shall

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set forth in
comparative form corresponding figures for the preceding Fiscal Year and other
information acceptable to Agent;

(b) as soon as available, and in any event within
45 days after the end of each Fiscal Quarter (but within 90 days
after the last Fiscal Quarter in a Fiscal Year), unaudited balance sheets as of
the end of such Fiscal Quarter and the related statements of income and cash
flow for such Fiscal Quarter and for the portion of the Fiscal Year then
elapsed, on consolidated and consolidating basis for Borrowers and
Subsidiaries, setting forth in comparative form corresponding figures for the
preceding Fiscal Year and certified by the chief financial officer of Borrower
Agent as prepared in accordance with GAAP and fairly presenting the financial
position and results of operations for such month and period, subject to normal
year end adjustments and the absence of footnotes;

(c) as soon as available, and in any event within
30 days after the end of each month (but within 60 days after the
last month in a Fiscal Year), unaudited balance sheets as of the end of such
month and the related statements of income and cash flow for such month and for
the portion of the Fiscal Year then elapsed, on an unconsolidated and if
available, consolidated and consolidating basis for Borrowers and Subsidiaries,
setting forth in comparative form corresponding figures for the preceding
Fiscal Year and certified by the chief financial officer of Borrower Agent as
prepared in accordance with GAAP (except that such monthly financial statements
may not be consolidated) and fairly presenting the financial position and
results of operations for such month and period, subject to normal quarterly
and year end adjustments and the absence of footnotes;

(d) concurrently with delivery of financial statements
under clauses (a) and (b) above, or more frequently if requested by
Agent while a Default or Event of Default exists, a Compliance Certificate
executed by the chief financial officer of Borrower Agent;

(e) concurrently with delivery of financial statements
under clause (a) above, copies of all management letters and other
material reports submitted to Borrowers by their accountants in connection with
such financial statements;

(f) not later than the end of each Fiscal Year,
projections of Borrowers’ consolidated balance sheets, results of
operations, cash flow and Availability for the next three Fiscal Years, year by
year, and for the next Fiscal Year, Fiscal Quarter by Fiscal Quarter (if
practical month by month);

(g) at Agent’s request, a listing of each
Borrower’s trade payables, specifying the trade creditor and balance due,
and a detailed trade payable aging, all in form reasonably satisfactory to
Agent;

(h) promptly after the sending or filing thereof, copies
of any proxy statements, financial statements or reports that any Borrower has
made generally available to its shareholders; copies of any regular, periodic
and special reports or registration statements or prospectuses that any
Borrower files with the Securities and

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Exchange Commission
or any other Governmental Authority, or any securities exchange; and copies of
any press releases or other statements made available by a Borrower to the
public concerning changes to or developments in the business of such Borrower
that could reasonably be expected to have a Material Adverse Effect;

(i) promptly after the sending or filing thereof, copies
of any annual report to be filed in connection with each Plan or Foreign Plan;

(j) such other reports and information (financial or
otherwise) as Agent may request from time to time in connection with any
Collateral or any Borrower’s, Subsidiary’s or other Obligor’s
financial condition or business; and

(k) to the extent not included in Chromcraft’s
consolidated and consolidating financial statements, as soon as available, and
in any event within 120 days after the close of each Fiscal Year,
financial statements for each Guarantor (if any), in form and substance
satisfactory to Agent.

Simultaneously with retaining
accountants for their annual audit, Borrowers shall send a letter to the
accountants, with a copy to Agent and Lenders, notifying the accountants that
one of the primary purposes for retaining their services and obtaining audited
financial statements is for use by Agent and Lenders. Agent is authorized to
send such notice if Borrowers fail to do so for any reason.

10.1.3.
Notices. Notify Agent and Lenders in writing, promptly after a
Borrower’s obtaining knowledge thereof, of any of the following that
affects an Obligor: (a) the threat or commencement of any proceeding or
investigation, whether or not covered by insurance, if an adverse determination
could have a Material Adverse Effect; (b) any pending or threatened labor
dispute, strike or walkout, or the expiration of any material labor contract;
(c) any default under or termination of a Material Contract; (d) the
existence of any Default or Event of Default; (e) any judgment in an
amount exceeding $250,000; (f) the assertion of any Intellectual Property
Claim, if an adverse resolution could have a Material Adverse Effect;
(g) any violation or asserted violation of any Applicable Law (including
ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution could
have a Material Adverse Effect; (h) any Environmental Release by an
Obligor or on any Property owned, leased or occupied by an Obligor; or receipt
of any Environmental Notice; (i) the discharge of or any withdrawal or
resignation by Borrowers’ independent accountants; or (j) any
opening of a new office or place of business, at least 30 days prior to
such opening.

10.1.4. Landlord
and Storage Agreements. Upon request, provide Agent with copies of all
existing agreements, and promptly after execution thereof provide Agent with
copies of all future agreements, between an Obligor and any landlord,
warehouseman, processor, shipper, bailee or other Person that owns any premises
at which any Collateral may be kept or that otherwise may possess or handle any
Collateral. With respect to any lease (other than leases for sales offices),
warehousing agreement or any processing agreement in any case entered into
after the Closing Date, Borrowers shall provide Agent with a Lien Waiver.

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10.1.5.
Compliance with Laws. Comply with all Applicable Laws, including ERISA,
Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding
collection and payment of Taxes, and maintain all Governmental Approvals
necessary to the ownership of its Properties or conduct of its business, unless
failure to comply (other than failure to comply with Anti-Terrorism Laws) or
maintain could not reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, if any Environmental Release
occurs at or on any Properties of any Borrower or Subsidiary, it shall act
promptly and diligently to investigate and report to Agent and all appropriate
Governmental Authorities the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release, whether or not directed to do so by
any Governmental Authority.

10.1.6.
Taxes. Pay and discharge all Taxes prior to the date on which they
become delinquent or penalties attach, unless such Taxes are being Properly
Contested.

10.1.7.
Insurance. In addition to the insurance required hereunder with respect
to Collateral, maintain insurance with insurers (rated A7 or better by Best
Rating Guide) reasonably satisfactory to Agent, (a) with respect to the
Properties and business of Borrowers and Subsidiaries of such type (including
product liability, workers’ compensation, larceny, embezzlement, or other
criminal misappropriation insurance), in such amounts, and with such coverages
and deductibles as are customary for companies similarly situated, and
(b) business interruption insurance in an amount not less than $5,000,000
with deductibles and subject to an Insurance Assignment satisfactory to Agent.

10.1.8.
Licenses. Keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) or any other material
Property of Borrowers and Subsidiaries in full force and effect; promptly
notify Agent of any proposed modification to any such License, or entry into
any new License, in each case at least 30 days prior to its effective
date; pay all Royalties when due; and notify Agent of any default or breach
asserted by any Person to have occurred under any License.

10.1.9. Future
Subsidiaries. Promptly notify Agent upon any Person becoming a Subsidiary
and, if such Person is not a Foreign Subsidiary, cause it to guaranty the
Obligations or becomes a co-Borrower hereunder in a manner satisfactory to
Agent, and to execute and deliver such documents, instruments and agreements
and to take such other actions as Agent shall require to evidence and perfect a
Lien in favor of Agent (for the benefit of Secured Parties) on all assets of
such Person, including delivery of such legal opinions, in form and substance
satisfactory to Agent, as it shall deem appropriate.

10.1.10. Cash
Management Services. Commencing with the date that is 60 days after
the Closing Date, Borrower shall maintain its lockbox deposit and disbursement
accounts and other Cash Management Services with Bank and shall utilize Bank
for its other cash management services.

10.2.
Negative Covenants. For so long as any Commitments or
Obligations are outstanding, each Borrower shall not, and shall cause each
Subsidiary not to:

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10.2.1.
Permitted Debt. Create, incur, guarantee or suffer to exist any Debt,
except:

(a) the Obligations;

(b) Subordinated Debt (if any);

(c) Permitted Purchase Money Debt;

(d) Borrowed Money (other than the Obligations,
Subordinated Debt and Permitted Purchase Money Debt), but only to the extent
outstanding on the Closing Date and not satisfied with proceeds of the initial
Loans;

(e) Bank Product Debt;

(f) Debt that is in existence when a Person becomes a
Subsidiary or that is secured by an asset when acquired by a Borrower or
Subsidiary, as long as such Debt was not incurred in contemplation of such
Person becoming a Subsidiary or such acquisition, and does not exceed
$1,000,000 in the aggregate at any time;

(g) Permitted Contingent Obligations;

(h) Refinancing Debt as long as each Refinancing Condition
is satisfied; and

(i) Debt that is not included in any of the preceding
clauses of this Section, is not secured by a Lien and does not exceed
$1,000,000 in the aggregate at any time.

10.2.2.
Permitted Liens. Create or suffer to exist any Lien upon any of its
Property, except the following (collectively, “Permitted
Liens”):

(a) Liens in favor of Agent;

(b) Purchase Money Liens securing Permitted Purchase Money
Debt;

(c) Liens for Taxes not yet due or being Properly
Contested;

(d) statutory Liens (other than Liens for Taxes or imposed
under ERISA) arising in the Ordinary Course of Business, but only if
(i) payment of the obligations secured thereby is not yet due or is being
Properly Contested, and (ii) such Liens do not materially impair the value
or use of the Property or materially impair operation of the business of any
Borrower or Subsidiary;

(e) Liens incurred or deposits made in the Ordinary Course
of Business to secure the performance of tenders, bids, leases, contracts
(except those relating to Borrowed Money), statutory obligations and other
similar obligations, or

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arising as a result
of progress payments under government contracts, as long as such Liens are at
all times junior to Agent’s Liens;

(f) Liens arising by virtue of a judgment or judicial
order against any Borrower or Subsidiary, or any Property of a Borrower or
Subsidiary, as long as such Liens are (i) in existence for less than 30
consecutive days or being Properly Contested, and (ii) at all times junior
to Agent’s Liens;

(g) easements, rights-of-way, restrictions, covenants or
other agreements of record, and other similar charges or encumbrances on Real
Estate, that do not secure any monetary obligation and do not interfere with
the Ordinary Course of Business;

(h) normal and customary rights of setoff upon deposits in
favor of depository institutions, and Liens of a collecting bank on Payment
Items in the course of collection; and

(i) existing Liens shown on Schedule 10.2.2.

10.2.3.
Reserved.

10.2.4.
Distributions; Upstream Payments. Declare or make any Distributions,
except Upstream Payments; or create or suffer to exist any encumbrance or
restriction on the ability of a Subsidiary to make any Upstream Payment, except
for restrictions under the Loan Documents, under Applicable Law or in effect on
the Closing Date as shown on Schedule 9.1.16 unless after giving
effect to any such otherwise prohibited Distribution, no Default or Event of
Default exists and is continuing and Availability and average pro forma
Availability for the most recently ended sixty (60) day period computed on
the basis that such Distribution had occurred on the first day of such sixty
(60) day period, equals or exceeds $10,000,000.

10.2.5.
Restricted Investments. Make any Restricted Investment other than
(x) Permitted Acquisitions and (y) investments in Foreign
Subsidiaries so long as after giving effect to any such investment in a Foreign
Subsidiary, no Event of Default exists and is continuing and Availability and
average pro forma Availability for the most recently ended sixty (60) day
period computed on the basis that such investment had occurred on the first day
of such sixty (60) day period equals or exceeds $10,000,000.

10.2.6.
Disposition of Assets. Make any Asset Disposition, except a Permitted
Asset Disposition, a disposition of Equipment under Section 8.4.2,
or a transfer of Property by a Subsidiary or Obligor to a Borrower.

10.2.7.
Loans. Make any loans or other advances of money to any Person, except
(a) advances to an officer or employee for salary, travel expenses,
commissions and similar items in the Ordinary Course of Business;
(b) prepaid expenses and extensions of trade credit made in the Ordinary
Course of Business; (c) deposits with financial institutions permitted
hereunder; and (d) as long as no Default or Event of Default exists,
intercompany loans by a Borrower to another Borrower.

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10.2.8.
Restrictions on Payment of Certain Debt. Make any payments (whether
voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or
acquisition) with respect to any (a) Subordinated Debt, except regularly
scheduled payments of principal, interest and fees, but only to the extent
permitted under any subordination agreement relating to such Debt (and a Senior
Officer of Borrower Agent shall certify to Agent, not less than five Business
Days prior to the date of payment, that all conditions under such agreement
have been satisfied); or (b) Borrowed Money (other than the Obligations)
prior to its due date under the agreements evidencing such Debt as in effect on
the Closing Date (or as amended thereafter with the consent of Agent).

10.2.9.
Fundamental Changes. Merge, combine or consolidate with any Person, or
liquidate, wind up its affairs or dissolve itself, in each case whether in a
single transaction or in a series of related transactions, except for mergers
or consolidations of a wholly-owned Subsidiary with another wholly-owned
Subsidiary or into a Borrower; change its name or conduct business under any
fictitious name; change its tax, charter or other organizational identification
number; or change its form or state of organization.

10.2.10.
Subsidiaries. Form or acquire any Subsidiary after the Closing Date,
except in accordance with Sections 10.1.9 and 10.2.5; or
permit any existing Subsidiary to issue any additional Equity Interests except
director’s qualifying shares.

10.2.11. Organic
Documents. Amend, modify or otherwise change any of its Organic Documents
as in effect on the Closing Date.

10.2.12. Tax
Consolidation. File or consent to the filing of any consolidated income tax
return with any Person other than Borrowers and Subsidiaries.

10.2.13.
Accounting Changes. Make any material change in accounting treatment or
reporting practices, except as required by GAAP and in accordance with
Section 1.2; or change its Fiscal Year.

10.2.14.
Restrictive Agreements. Become a party to any Restrictive Agreement,
except (a) a Restrictive Agreement as in effect on the Closing Date and
shown on Schedule 9.1.16; (b) a Restrictive Agreement relating
to secured Debt permitted hereunder, if such restrictions apply only to the
collateral for such Debt; and (c) customary provisions in leases and other
contracts restricting assignment thereof.

10.2.15. Hedging
Agreements. Enter into any Hedging Agreement, except to hedge risks arising
in the Ordinary Course of Business and not for speculative purposes.

10.2.16. Conduct
of Business. Engage in any business, other than its business as conducted
on the Closing Date and any activities incidental thereto.

10.2.17.
Affiliate Transactions. Enter into or be party to any transaction with
an Affiliate, except (a) transactions contemplated by the Loan Documents;
(b) payment of reasonable compensation to officers and employees for
services actually rendered, and loans and advances permitted by
Section 10.2.7; (c) payment of customary directors’ fees
and indemnities; (d) transactions solely among Borrowers;
(e) transactions with Affiliates that were consummated

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prior to the Closing Date, as shown
on Schedule 10.2.17; and (f) transactions with Affiliates in
the Ordinary Course of Business, upon fair and reasonable terms fully disclosed
to Agent and no less favorable than would be obtained in a comparable
arm’s-length transaction with a non-Affiliate.

10.2.18.
Plans. Become party to any Multiemployer Plan or Foreign Plan, other
than any in existence on the Closing Date.

10.2.19.
Amendments to Subordinated Debt. Amend, supplement or otherwise modify
any document, instrument or agreement relating to any Subordinated Debt, if
such modification (a) increases the principal balance of such Debt, or
increases any required payment of principal or interest; (b) accelerates
the date on which any installment of principal or any interest is due, or adds
any additional redemption, put or prepayment provisions; (c) shortens the
final maturity date or otherwise accelerates amortization; (d) increases
the interest rate; (e) increases or adds any fees or charges;
(f) modifies any covenant in a manner or adds any representation, covenant
or default that is more onerous or restrictive in any material respect for any
Borrower or Subsidiary, or that is otherwise materially adverse to any
Borrower, any Subsidiary or Lenders; or (g) results in the Obligations not
being fully benefited by the subordination provisions thereof.

10.2.20. Trade
Accounts Payable and Accrued Expenses. Not extend the payment of trade
accounts payable on accrued expenses beyond industry norms.

10.3.
Financial Covenants. For so long as any Commitments or
Obligations are outstanding and during any Financial Covenant Period, Borrowers
shall:

10.3.1. Fixed
Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio of at least
1.0 to 1.0.

As used herein,
Financial Covenant Period means any period commencing on the date Availability
is less than $5,000,000 and continuing until, during the sixty
(60) consecutive days, Availability has been greater than $5,000,000 at
all times.

SECTION 11.

EVENTS OF DEFAULT; REMEDIES ON
DEFAULT

11.1.
Events of Default. Each of the following shall be an
“Event of Default” hereunder, if the same shall occur for
any reason whatsoever, whether voluntary or involuntary, by operation of law or
otherwise:

(a) Any Borrower fails to pay any Obligations when due
(whether at stated maturity, on demand, upon acceleration or otherwise);

(b) Any representation, warranty or other written
statement of any Obligor made in connection with any Loan Documents or
transactions contemplated thereby is incorrect or misleading in any material
respect when given;

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(c) Any Borrower breaches or fail to perform any covenant
contained in Sections 7.2 (Lien on Deposit Accounts; Cash
Collateral), 7.4 (Other Collateral), 7.6 (Further Assurances),
8.1 (Borrowing Base Certificates), 8.2.4 (Maintenance of
Dominion Account), 8.2.5 (Proceeds of Collateral),
8.6.2 (Insurance of Collateral; Condemnation Proceeds),
10.1.1 (Inspections; Appraisals), 10.1.2 (Financial and Other
Information), 10.2 (Negative Covenants) or 10.3 (Financial
Covenants);

(d) Any Obligor breaches or fails to perform any other
covenant contained in any Loan Documents, and such breach or failure is not
cured within 15 days after a Senior Officer of such Obligor has knowledge
thereof or receives notice thereof from Agent, whichever is sooner;
provided, however, that such notice and opportunity to cure shall
not apply if the breach or failure to perform is not capable of being cured
within such period or is a willful breach by an Obligor;

(e) Any Guarantor repudiates, revokes or attempts to
revoke its Guaranty; any Obligor denies or contests the validity or
enforceability of any Loan Documents or Obligations, or the perfection or
priority of any Lien granted to Agent; or any Loan Document ceases to be in
full force or effect for any reason (other than a waiver or release by Agent
and Lenders);

(f) Any breach or default of an Obligor occurs under any
document, instrument or agreement to which it is a party or by which it or any
of its Properties is bound, relating to any Debt (other than the Obligations)
in excess of $250,000, if the maturity of or any payment with respect to such
Debt may be accelerated or demanded due to such breach;

(g) Any judgment or order for the payment of money is
entered against an Obligor in an amount that exceeds, individually or
cumulatively with all unsatisfied judgments or orders against all Obligors,
$250,000 (net of any insurance coverage therefor acknowledged in writing by the
insurer), unless a stay of enforcement of such judgment or order is in effect,
by reason of a pending appeal or otherwise;

(h) Any loss, theft, damage or destruction occurs with
respect to any Collateral if the amount not covered by insurance exceeds
$250,000 in excess of permitted deductibles and co-insurance provisions;

(i) Any Obligor is enjoined, restrained or in any way
prevented by any Governmental Authority from conducting any material part of
its business; any Obligor suffers the loss, revocation or termination of any
material license, permit, lease or agreement necessary to its business; there
is a cessation of any material part of an Obligor’s business for a
material period of time; any material Collateral or Property of an Obligor is
taken or impaired through condemnation; any Obligor agrees to or commences any
liquidation, dissolution or winding up of its affairs; or any Obligor ceases to
be Solvent;

(j) Any Insolvency Proceeding is commenced by any Obligor;
an Insolvency Proceeding is commenced against any Obligor and: such Obligor
consents to

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the institution of
the proceeding against it, the petition commencing the proceeding is not timely
controverted by such Obligor, such petition is not dismissed within
30 days after its filing, or an order for relief is entered in the
proceeding; a trustee (including an interim trustee) is appointed to take
possession of any substantial Property of or to operate any of the business of
any Obligor; or any Obligor makes an offer of settlement, extension or
composition to its unsecured creditors generally;

(k) A Reportable Event occurs that constitutes grounds for
termination by the Pension Benefit Guaranty Corporation of any Multiemployer
Plan or appointment of a trustee for any Multiemployer Plan; any Multiemployer
Plan is terminated or any such trustee is requested or appointed; any Obligor
is in “default” (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan resulting from any withdrawal
therefrom; or any event similar to the foregoing occurs or exists with respect
to a Foreign Plan;

(l) Any Obligor or any of its Senior Officers is
criminally indicted or convicted for (i) a felony committed in the conduct
of such Obligor’s business, or (ii) any state or federal law
(including the Controlled Substances Act, Money Laundering Control Act of 1986
and Illegal Exportation of War Materials Act) that could lead to forfeiture of
any material Property or any Collateral; or

(m) A Change of Control occurs; or any event occurs or
condition exists that has a Material Adverse Effect.

11.2.
Remedies upon Default. If an Event of Default described in
Section 11.1(j) occurs with respect to any Borrower, then to the
extent permitted by Applicable Law, all Obligations shall become automatically
due and payable and all Commitments shall terminate, without any action by
Agent or notice of any kind. In addition, or if any other Event of Default
exists, Agent may in its discretion (and shall upon written direction of
Required Lenders) do any one or more of the following from time to time:

(a) declare any Obligations immediately due and payable,
whereupon they shall be due and payable without diligence, presentment, demand,
protest or notice of any kind, all of which are hereby waived by Borrowers to
the fullest extent permitted by law;

(b) terminate, reduce or condition any Commitment, or make
any adjustment to the Borrowing Base;

(c) require Obligors to Cash Collateralize LC Obligations,
Bank Product Debt and other Obligations that are contingent or not yet due and
payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent
may (and shall upon the direction of Required Lenders) advance the required
Cash Collateral as Revolver Loans (whether or not an Overadvance exists or is
created thereby, or the conditions in Section 6 are satisfied); and

(d) exercise any other rights or remedies afforded under
any agreement, by law, at equity or otherwise, including the rights and
remedies of a secured

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party under the
UCC. Such rights and remedies include the rights to (i) take possession of
any Collateral; (ii) require Borrowers to assemble Collateral, at
Borrowers’ expense, and make it available to Agent at a place designated
by Agent; (iii) enter any premises where Collateral is located and store
Collateral on such premises until sold (and if the premises are owned or leased
by a Borrower, Borrowers agree not to charge for such storage); and
(iv) sell or otherwise dispose of any Collateral in its then condition, or
after any further manufacturing or processing thereof, at public or private
sale, with such notice as may be required by Applicable Law, in lots or in
bulk, at such locations, all as Agent, in its discretion, deems advisable. Each
Borrower agrees that 10 days notice of any proposed sale or other
disposition of Collateral by Agent shall be reasonable. Agent shall have the
right to conduct such sales on any Obligor’s premises, without charge,
and such sales may be adjourned from time to time in accordance with Applicable
Law. Agent shall have the right to sell, lease or otherwise dispose of any
Collateral for cash, credit or any combination thereof, and Agent may purchase
any Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of the purchase price, may set off the amount of such price
against the Obligations.

11.3.
License. Agent is hereby granted an irrevocable, non-
exclusive license or other right to use, license or sub-license (without
payment of royalty or other compensation to any Person) any or all Intellectual
Property of Borrowers, computer hardware and software, trade secrets,
brochures, customer lists, promotional and advertising materials, labels,
packaging materials and other Property, in advertising for sale, marketing,
selling, collecting, completing manufacture of, or otherwise exercising any
rights or remedies with respect to, any Collateral. Each Borrower’s
rights and interests under Intellectual Property shall inure to Agent’s
benefit.

11.4.
Setoff. Agent, Lenders and their Affiliates are each
authorized by Borrowers at any time during an Event of Default, without notice
to Borrowers or any other Person, to set off and to appropriate and apply any
deposits (general or special), funds, claims, obligations, liabilities or other
Debt at any time held or owing by Agent, any Lender or any such Affiliate to or
for the account of any Obligor against any Obligations, whether or not demand
for payment of such Obligation has been made, any Obligations have been
declared due and payable, are then due, or are contingent or unmatured, or the
Collateral or any guaranty or other security for the Obligations is adequate.

11.5.
Remedies Cumulative; No Waiver.

11.5.1.
Cumulative Rights. All covenants, conditions, provisions, warranties,
guaranties, indemnities and other undertakings of Borrowers contained in the
Loan Documents are cumulative and not in derogation or substitution of each
other. In particular, the rights and remedies of Agent and Lenders are
cumulative, may be exercised at any time and from time to time, concurrently or
in any order, and shall not be exclusive of any other rights or remedies that
Agent and Lenders may have, whether under any agreement, by law, at equity or
otherwise.

11.5.2.
Waivers. The failure or delay of Agent or any Lender to require strict
performance by Borrowers with any terms of the Loan Documents, or to exercise
any rights or remedies with respect to Collateral or otherwise, shall not
operate as a waiver thereof nor as establishment of a course of dealing. All
rights and remedies shall continue in full force and

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effect until Full Payment of all
Obligations. No modification of any terms of any Loan Documents (including any
waiver thereof) shall be effective, unless such modification is specifically
provided in a writing directed to Borrowers and executed by Agent or the
requisite Lenders, and such modification shall be applicable only to the matter
specified. No waiver of any Default or Event of Default shall constitute a
waiver of any other Default or Event of Default that may exist at such time,
unless expressly stated. If Agent or any Lender accepts performance by any
Obligor under any Loan Documents in a manner other than that specified therein,
or during any Default or Event of Default, or if Agent or any Lender shall
delay or exercise any right or remedy under any Loan Documents, such
acceptance, delay or exercise shall not operate to waive any Default or Event
of Default nor to preclude exercise of any other right or remedy. It is
expressly acknowledged by Borrowers that any failure to satisfy a financial
covenant on a measurement date shall not be cured or remedied by satisfaction
of such covenant on a subsequent date.

SECTION 12.

AGENT

12.1.
Appointment, Authority and Duties of Agent.

12.1.1.
Appointment and Authority. Each Lender appoints and designates Bank of
America as Agent hereunder. Agent may, and each Lender authorizes Agent to,
enter into all Loan Documents to which Agent is intended to be a party and
accept all Security Documents, for Agent’s benefit and the Pro Rata
benefit of Lenders. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the provisions of the Loan Documents, and
the exercise by Agent or Required Lenders of any rights or remedies set forth
therein, together with all other powers reasonably incidental thereto, shall be
authorized and binding upon all Lenders. Without limiting the generality of the
foregoing, Agent shall have the sole and exclusive authority to (a) act as
the disbursing and collecting agent for Lenders with respect to all payments
and collections arising in connection with the Loan Documents; (b) execute
and deliver as Agent each Loan Document, including any intercreditor or
subordination agreement, and accept delivery of each Loan Document from any
Obligor or other Person; (c) act as collateral agent for Secured Parties
for purposes of perfecting and administering Liens under the Loan Documents,
and for all other purposes stated therein; (d) manage, supervise or
otherwise deal with Collateral; and (e) exercise all rights and remedies
given to Agent with respect to any Collateral under the Loan Documents,
Applicable Law or otherwise. The duties of Agent shall be ministerial and
administrative in nature, and Agent shall not have a fiduciary relationship
with any Lender, Secured Party, Participant or other Person, by reason of any
Loan Document or any transaction relating thereto. Agent alone shall be
authorized to determine whether any Accounts or Inventory constitute Eligible
Accounts or Eligible Inventory, or whether to impose or release any reserve,
which determinations and judgments, if exercised in good faith, shall exonerate
Agent from liability to any Lender or other Person for any error in judgment.

12.1.2.
Duties. Agent shall not have any duties except those expressly set forth
in the Loan Documents, nor be required to initiate or conduct any Enforcement
Action except to the extent directed to do so by Required Lenders while an
Event of Default exists. The conferral

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upon Agent of any right shall not
imply a duty on Agent’s part to exercise such right, unless instructed to
do so by Required Lenders in accordance with this Agreement.

12.1.3. Agent
Professionals. Agent may perform its duties through agents and employees.
Agent may consult with and employ Agent Professionals, and shall be entitled to
act upon, and shall be fully protected in any action taken in good faith
reliance upon, any advice given by an Agent Professional. Agent shall not be
responsible for the negligence or misconduct of any agents, employees or Agent
Professionals selected by it with reasonable care.

12.1.4.
Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of
joinder of any other party, unless required by Applicable Law. Agent may
request instructions from Required Lenders with respect to any act (including
the failure to act) in connection with any Loan Documents, and may seek
assurances to its satisfaction from Lenders of their indemnification
obligations under Section 12.6 against all Claims that could be
incurred by Agent in connection with any act. Agent shall be entitled to
refrain from any act until it has received such instructions or assurances, and
Agent shall not incur liability to any Person by reason of so refraining.
Instructions of Required Lenders shall be binding upon all Lenders, and no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting in accordance with the instructions of
Required Lenders. Notwithstanding the foregoing, instructions by and consent of
all Lenders shall be required in the circumstances described in
Section 14.1.1, and in no event shall Required Lenders, without the
prior written consent of each Lender, direct Agent to accelerate and demand
payment of Loans held by one Lender without accelerating and demanding payment
of all other Loans, nor to terminate the Commitments of one Lender without
terminating the Commitments of all Lenders. In no event shall Agent be required
to take any action that, in its opinion, is contrary to Applicable Law or any
Loan Documents or could subject any Agent Indemnitee to personal liability.

12.2.
Agreements Regarding Collateral and Field Examination Reports.

12.2.1. Lien
Releases; Care of Collateral. Lenders authorize Agent to release any Lien
with respect to any Collateral (a) upon Full Payment of the Obligations,
(b) that is the subject of an Asset Disposition which Borrowers certify in
writing to Agent is a Permitted Asset Disposition or a Lien which Borrowers
certify is a Permitted Lien entitled to priority over Agent’s Liens (and
Agent may rely conclusively on any such certificate without further inquiry),
(c) that does not constitute a material part of the Collateral, or
(d) with the written consent of all Lenders. Agent shall have no
obligation whatsoever to any Lenders to assure that any Collateral exists or is
owned by a Borrower, or is cared for, protected, insured or encumbered, nor to
assure that Agent’s Liens have been properly created, perfected or
enforced, or are entitled to any particular priority, nor to exercise any duty
of care with respect to any Collateral.

12.2.2.
Possession of Collateral. Agent and Lenders appoint each other Lender as
agent for the purpose of perfecting Liens (for the benefit of Secured Parties)
for the purpose of perfecting Liens in any Collateral held by such Lender, to
the extent such Liens perfected by possession. If any Lender obtains possession
of any Collateral, it shall notify Agent thereof and, promptly upon
Agent’s request, deliver such Collateral to Agent or otherwise deal with
it in accordance with Agent’s instructions.

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12.2.3.
Reports. Agent shall promptly, upon receipt thereof, forward to each
Lender copies of the results of any field audit or other examination or any
appraisal prepared by or on behalf of Agent with respect to any Obligor or
Collateral (“Report”). Each Lender agrees (a) that
neither Bank of America nor Agent makes any representation or warranty as to
the accuracy or completeness of any Report, and shall not be liable for any
information contained in or omitted from any Report; (b) that the Reports
are not intended to be comprehensive audits or examinations, and that Agent or
any other Person performing any audit or examination will inspect only specific
information regarding Obligations or the Collateral and will rely significantly
upon Borrowers’ books and records as well as upon representations of
Borrowers’ officers and employees; and (c) to keep all Reports
confidential and strictly for such Lender’s internal use, and not to
distribute any Report (or the contents thereof) to any Person (except to such
Lender’s Participants, attorneys and accountants) or use any Report in
any manner other than administration of the Loans and other Obligations. Each
Lender agrees to indemnify and hold harmless Agent and any other Person
preparing a Report from any action such Lender may take as a result of or any
conclusion it may draw from any Report, as well as any Claims arising in
connection with any third parties that obtain all or any part of a Report
through such Lender.

12.3.
Reliance By Agent. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any certification, notice or other
communication (including those by telephone, telex, telegram, telecopy or e-
mail) believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person, and upon the advice and statements of Agent
Professionals.

12.4.
Action Upon Default. Agent shall not be deemed to have
knowledge of any Default or Event of Default unless it has received written
notice from a Lender or Borrower specifying the occurrence and nature thereof.
If any Lender acquires knowledge of a Default or Event of Default, it shall
promptly notify Agent and the other Lenders thereof in writing. Each Lender
agrees that, except as otherwise provided in any Loan Documents or with the
written consent of Agent and Required Lenders, it will not take any Enforcement
Action, accelerate its Obligations, or exercise any right that it might
otherwise have under Applicable Law to credit bid at foreclosure sales, UCC
sales or other similar dispositions of Collateral. Notwithstanding the
foregoing, however, a Lender may take action to preserve or enforce its rights
against an Obligor where a deadline or limitation period is applicable that
would, absent such action, bar enforcement of Obligations held by such Lender,
including the filing of proofs of claim in an Insolvency Proceeding.

12.5.
Ratable Sharing. If any Lender shall obtain any payment or
reduction of any Obligation, whether through set-off or otherwise, in excess of
its share of such Obligation, determined on a Pro Rata basis or in accordance
with Section 5.5.1, as applicable, such Lender shall forthwith
purchase from Agent, Issuing Bank and the other Lenders such participations in
the affected Obligation as are necessary to cause the purchasing Lender to
share the excess payment or reduction on a Pro Rata basis or in accordance with
Section 5.5.1, as applicable. If any of such payment or reduction
is thereafter recovered from the purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.

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12.6.
Indemnification of Agent Indemnitees.

12.6.1.
Indemnification. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE
INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO
RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST
ANY AGENT INDEMNITEE. If Agent is sued by any receiver, trustee in
bankruptcy, debtor-in-possession or other Person for any alleged preference
from an Obligor or fraudulent transfer, then any monies paid by Agent in
settlement or satisfaction of such proceeding, together with all interest,
costs and expenses (including attorneys’ fees) incurred in the defense of
same, shall be promptly reimbursed to Agent by Lenders to the extent of each
Lender’s Pro Rata share.

12.6.2.
Proceedings. Without limiting the generality of the foregoing, if at any
time (whether prior to or after the Commitment Termination Date) any proceeding
is brought against any Agent Indemnitees by an Obligor, or any Person claiming
through an Obligor, to recover damages for any act taken or omitted by Agent in
connection with any Obligations, Collateral, Loan Documents or matters relating
thereto, or otherwise to obtain any other relief of any kind on account of any
transaction relating to any Loan Documents, each Lender agrees to indemnify and
hold harmless Agent Indemnitees with respect thereto and to pay to Agent
Indemnitees such Lender’s Pro Rata share of any amount that any Agent
Indemnitee is required to pay under any judgment or other order entered in such
proceeding or by reason of any settlement, including all interest, costs and
expenses (including attorneys’ fees) incurred in defending same. In
Agent’s discretion, Agent may reserve for any such proceeding, and may
satisfy any judgment, order or settlement, from proceeds of Collateral prior to
making any distributions of Collateral proceeds to Lenders.

12.7.
Limitation on Responsibilities of Agent. Agent shall not be
liable to Lenders for any action taken or omitted to be taken under the Loan
Documents, except for losses directly and solely caused by Agent’s gross
negligence or willful misconduct. Agent does not assume any responsibility for
any failure or delay in performance or any breach by any Obligor or Lender of
any obligations under the Loan Documents. Agent does not make to Lenders any
express or implied warranty, representation or guarantee with respect to any
Obligations, Collateral, Loan Documents or Obligor. No Agent Indemnitee shall
be responsible to Lenders for any recitals, statements, information,
representations or warranties contained in any Loan Documents; the execution,
validity, genuineness, effectiveness or enforceability of any Loan Documents;
the genuineness, enforceability, collectibility, value, sufficiency, location
or existence of any Collateral, or the validity, extent, perfection or priority
of any Lien therein; the validity, enforceability or collectibility of any
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or
Account Debtor. No Agent Indemnitee shall have any obligation to any Lender to
ascertain or inquire into the existence of any Default or Event of Default, the
observance or performance by any Obligor of any terms of the Loan Documents, or
the satisfaction of any conditions precedent contained in any Loan Documents.

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12.8.
Successor Agent and Co-Agents.

12.8.1.
Resignation; Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, Agent may resign at any time by giving
at least 30 days written notice thereof to Lenders and Borrowers. Upon
receipt of such notice, Required Lenders shall have the right to appoint a
successor Agent which shall be (a) a Lender or an Affiliate of a Lender;
or (b) a commercial bank that is organized under the laws of the United
States or any state or district thereof, has a combined capital surplus of at
least $200,000,000 and (provided no Default or Event of Default exists) is
reasonably acceptable to Borrowers. If no successor agent is appointed prior to
the effective date of the resignation of Agent, then Agent may appoint a
successor agent from among Lenders. Upon acceptance by a successor Agent of an
appointment to serve as Agent hereunder, such successor Agent shall thereupon
succeed to and become vested with all the powers and duties of the retiring
Agent without further act, and the retiring Agent shall be discharged from its
duties and obligations hereunder but shall continue to have the benefits of the
indemnification set forth in Sections 12.6 and 14.2.
Notwithstanding any Agent’s resignation, the provisions of this
Section 12 shall continue in effect for its benefit with respect to
any actions taken or omitted to be taken by it while Agent. Any successor by
merger or acquisition of the stock or assets of Bank of America shall continue
to be Agent hereunder without further act on the part of the parties hereto,
unless such successor resigns as provided above.

12.8.2. Separate
Collateral Agent. It is the intent of the parties that there shall be no
violation of any Applicable Law denying or restricting the right of financial
institutions to transact business in any jurisdiction. If Agent believes that
it may be limited in the exercise of any rights or remedies under the Loan
Documents due to any Applicable Law, Agent may appoint an additional Person who
is not so limited, as a separate collateral agent or co-collateral agent. If
Agent so appoints a collateral agent or co-collateral agent, each right and
remedy intended to be available to Agent under the Loan Documents shall also be
vested in such separate agent. Every covenant and obligation necessary to the
exercise thereof by such agent shall run to and be enforceable by it as well as
Agent. Lenders shall execute and deliver such documents as Agent deems
appropriate to vest any rights or remedies in such agent. If any collateral
agent or co-collateral agent shall die or dissolve, become incapable of acting,
resign or be removed, then all the rights and remedies of such agent, to the
extent permitted by Applicable Law, shall vest in and be exercised by Agent
until appointment of a new agent.

12.9.
Due Diligence and Non-Reliance. Each Lender acknowledges and
agrees that it has, independently and without reliance upon Agent or any other
Lenders, and based upon such documents, information and analyses as it has
deemed appropriate, made its own credit analysis of each Obligor and its own
decision to enter into this Agreement and to fund Loans and participate in LC
Obligations hereunder. Each Lender has made such inquiries concerning the Loan
Documents, the Collateral and each Obligor as such Lender feels necessary. Each
Lender further acknowledges and agrees that the other Lenders and Agent have
made no representations or warranties concerning any Obligor, any Collateral or
the legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Lender will, independently and without reliance upon the
other Lenders or Agent, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and participating in LC Obligations,
and in taking or

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refraining from any action under any
Loan Documents. Except for notices, reports and other information expressly
requested by a Lender, Agent shall have no duty or responsibility to provide
any Lender with any notices, reports or certificates furnished to Agent by any
Obligor or any credit or other information concerning the affairs, financial
condition, business or Properties of any Obligor (or any of its Affiliates)
which may come into possession of Agent or any of Agent’s Affiliates.

12.10.
Replacement of Certain Lenders. In the event that any Lender
(a) fails to fund its Pro Rata share of any Loan or LC Obligation
hereunder, and such failure is not cured within two Business Days,
(b) defaults in performing any of its obligations under the Loan
Documents, or (c) fails to give its consent to any amendment, waiver or
action for which consent of all Lenders was required and Required Lenders
consented, then, in addition to any other rights and remedies that any Person
may have, Agent may, by notice to such Lender within 120 days after such
event, require such Lender to assign all of its rights and obligations under
the Loan Documents to Eligible Assignee(s) specified by Agent, pursuant to
appropriate Assignment and Acceptance(s) and within 20 days after
Agent’s notice. Agent is irrevocably appointed as attorney-in-fact to
execute any such Assignment and Acceptance if the Lender fails to execute same.
Such Lender shall be entitled to receive, in cash, concurrently with such
assignment, all amounts owed to it under the Loan Documents, including all
principal, interest and fees through the date of assignment (but excluding any
prepayment charge).

12.11.
Remittance of Payments and Collections.

12.11.1.
Remittances Generally. All payments by any Lender to Agent shall be made
by the time and on the day set forth in this Agreement, in immediately
available funds. If no time for payment is specified or if payment is due
on demand by Agent and request for payment is made by Agent by
11:00 a.m. (Chicago time) on a Business Day, payment shall be made by
Lender not later than 2:00 p.m. on such day, and if request is made after
11:00 a.m. (Chicago time), then payment shall be made by 11:00 a.m.
(Chicago time) on the next Business Day. Payment by Agent to any Lender shall
be made by wire transfer, in the type of funds received by Agent. Any such
payment shall be subject to Agent’s right of offset for any amounts due
from such Lender under the Loan Documents.

12.11.2. Failure
to Pay. If any Lender fails to pay any amount when due by it to Agent
pursuant to the terms hereof, such amount shall bear interest from the due date
until paid at the rate determined by Agent as customary in the banking industry
for interbank compensation. In no event shall Borrowers be entitled to receive
credit for any interest paid by a Lender to Agent.

12.11.3.
Recovery of Payments. If Agent pays any amount to a Lender in the
expectation that a related payment will be received by Agent from an Obligor
and such related payment is not received, then Agent may recover such amount
from each Lender that received it. If Agent determines at any time that an
amount received under any Loan Document must be returned to an Obligor or paid
to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be
required to distribute such amount to any Lender. If any amounts received and
applied by Agent to any Obligations are later required to be returned by Agent
pursuant to Applicable Law,

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Lenders shall pay to Agent,
on demand, such Lender’s Pro Rata share of the amounts
required to be returned.

12.12.
Agent in its Individual Capacity. As a Lender, Bank of
America shall have the same rights and remedies under the other Loan Documents
as any other Lender, and the terms “Lenders,” “Required
Lenders” or any similar term shall include Bank of America in its
capacity as a Lender. Each of Bank of America and its Affiliates may accept
deposits from, maintain deposits or credit balances for, invest in, lend money
to, provide Bank Products to, act as trustee under indentures of, serve as
financial or other advisor to, and generally engage in any kind of business
with, Obligors and their Affiliates, as if Bank of America were any other bank,
without any duty to account therefor (including any fees or other consideration
received in connection therewith) to the other Lenders. In their individual
capacity, Bank of America and its Affiliates may receive information regarding
Obligors, their Affiliates and their Account Debtors (including information
subject to confidentiality obligations), and each Lender agrees that Bank of
America and its Affiliates shall be under no obligation to provide such
information to Lenders, if acquired in such individual capacity and not as
Agent hereunder.

12.13.
Agent Titles. Each Lender, other than Bank of America, that
is designated (on the cover page of this Agreement or otherwise) by Bank
of America as an “Agent” or “Arranger” of any type
shall not have any right, power, responsibility or duty under any Loan
Documents other than those applicable to all Lenders, and shall in no event be
deemed to have any fiduciary relationship with any other Lender.

12.14.
No Third Party Beneficiaries. This Section 12 is
an agreement solely among Lenders and Agent, and does not confer any rights or
benefits upon Borrowers or any other Person. As between Borrowers and Agent,
any action that Agent may take under any Loan Documents shall be conclusively
presumed to have been authorized and directed by Lenders as herein provided.

SECTION 13.

BENEFIT OF AGREEMENT;
ASSIGNMENTS AND PARTICIPATIONS

13.1.
Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Borrowers, Agent and Lenders and their respective
successors and assigns, except that (a) no Borrower shall have the right
to assign its rights or delegate its obligations under any Loan Documents, and
(b) any assignment by a Lender must be made in compliance with
Section 13.3. Agent may treat the Person which made any Loan as the
owner thereof for all purposes until such Person makes an assignment in
accordance with Section 13.3. Any authorization or consent of a
Lender shall be conclusive and binding on any subsequent transferee or assignee
of such Lender.

13.2.
Participations.

13.2.1.
Permitted Participants; Effect. Any Lender may, in the ordinary course
of its business and in accordance with Applicable Law, at any time sell to a
financial institution (“Participant”) a participating interest in
the rights and obligations of such Lender under any

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Loan Documents. Despite any sale by
a Lender of participating interests to a Participant, such Lender’s
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for performance of such
obligations, such Lender shall remain the holder of its Loans and Commitments
for all purposes, all amounts payable by Borrowers shall be determined as if
such Lender had not sold such participating interests, and Borrowers and Agent
shall continue to deal solely and directly with such Lender in connection with
the Loan Documents. Each Lender shall be solely responsible for notifying its
Participants of any matters under the Loan Documents, and Agent and the other
Lenders shall not have any obligation or liability to any such Participant. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.9 unless Borrowers agree
otherwise in writing.

13.2.2. Voting
Rights. Each Lender shall retain the sole right to approve, without the
consent of any Participant, any amendment, waiver or other modification of any
Loan Documents other than that which forgives principal, interest or fees,
reduces the stated interest rate or fees payable with respect to any Loan or
Commitment in which such Participant has an interest, postpones the Commitment
Termination Date or any date fixed for any regularly scheduled payment of
principal, interest or fees on such Loan or Commitment, or releases any
Borrower, Guarantor or substantial portion of the Collateral.

13.2.3. Benefit
of Set-Off. Borrowers agree that each Participant shall have a right of set-
off in respect of its participating interest to the same extent as if such
interest were owing directly to a Lender, and each Lender shall also retain the
right of set-off with respect to any participating interests sold by it. By
exercising any right of set-off, a Participant agrees to share with Lenders all
amounts received through its set-off, in accordance with
Section 12.5 as if such Participant were a Lender.

13.3.
Assignments.

13.3.1.
Permitted Assignments. A Lender may assign to any Eligible Assignee any
of its rights and obligations under the Loan Documents, as long as
(a) each assignment is of a constant, and not a varying, percentage of the
transferor Lender’s rights and obligations under the Loan Documents and,
in the case of a partial assignment, is in a minimum principal amount of
$5,000,000 (unless otherwise agreed by Agent in its discretion) and integral
multiples of $1,000,000 in excess of that amount; (b) except in the case
of an assignment in whole of a Lender’s rights and obligations, the
aggregate amount of the Commitments retained by the transferor Lender be at
least $5,000,000 (unless otherwise agreed by Agent in its discretion); and
(c) the parties to each such assignment shall execute and deliver to
Agent, for its acceptance and recording, an Assignment and Acceptance. Nothing
herein shall limit the right of a Lender to pledge or assign any rights under
the Loan Documents to (i) any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors and any Operating Circular issued by such Federal Reserve Bank, or
(ii) counterparties to swap agreements relating to any Loans; provided,
however, that any payment by Borrowers to the assigning Lender in respect of
any Obligations assigned as described in this sentence shall satisfy
Borrowers’ obligations hereunder to the extent of such payment, and no
such assignment shall release the assigning Lender from its obligations
hereunder.

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13.3.2. Effect;
Effective Date. Upon delivery to Agent of an assignment notice in the form
of Exhibit C and a processing fee of $5,000, such assignment shall
become effective as specified in the notice, if it complies with this
Section 13.3. From the effective date of such assignment, the
Eligible Assignee shall for all purposes be a Lender under the Loan Documents,
and shall have all rights and obligations of a Lender thereunder. Upon
consummation of an assignment, the transferor Lender, Agent and Borrowers shall
make appropriate arrangements for issuance of replacement and/or new Notes, as
appropriate.

13.4.
Tax Treatment. If any interest in a Loan Document is
transferred to a Transferee that is organized under the laws of any
jurisdiction other than the United States or any state or district thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of
Section 5.10.

13.5.
Representation of Lenders. Each Lender represents and
warrants to each Borrower, Agent and other Lenders that none of the
consideration used by it to fund its Loans or to participate in any other
transactions under this Agreement constitutes for any purpose of ERISA or
Section 4975 of the Internal Revenue Code assets of any “plan”
as defined in Section 3(3) of ERISA or Section 4975 of the Internal
Revenue Code and the interests of such Lender in and under the Loan Documents
shall not constitute plan assets under ERISA.

SECTION 14.

MISCELLANEOUS

14.1.
Consents, Amendments and Waivers.

14.1.1.
Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of Agent, with the
consent of Required Lenders, and each Obligor party to such Loan Document;
provided, however, that

(a) without the prior written consent of Agent, no
modification shall be effective with respect to any provision in a Loan
Document that relates to any rights, duties or discretion of Agent;

(b) without the prior written consent of Issuing Bank, no
modification shall be effective with respect to any LC Obligations or
Section 2.3;

(c) without the prior written consent of each affected
Lender, no modification shall be effective that would (i) increase the
Commitment of such Lender; or (ii) reduce the amount of, or waive or delay
payment of, any principal, interest or fees payable to such Lender; and

(d) without the prior written consent of all Lenders
(except a defaulting Lender as provided in Section 4.2), no
modification shall be effective that would (i) extend the Revolver
Termination Date; (ii) alter Section 5.6, 7.1 (except
to add Collateral), or 14.1.1; (iii) amend the definitions of
Borrowing Base (and the defined terms used in such definition), Pro Rata or
Required Lenders; (iv) increase any advance

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rate, decrease the
Availability Block, or increase total Commitments; (vi) release all or
substantially all of the Collateral, except as currently contemplated by the
Loan Documents; or (vii) release any Obligor from liability for any
Obligations, if such Obligor is Solvent at the time of the release.

14.1.2.
Limitations. The agreement of Borrowers shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the
rights and duties of Lenders, Agent and/or Issuing Bank as among themselves.
Only the consent of the parties to the Fee Letter or any agreement relating to
a Bank Product shall be required for any modification of such agreement, and no
Affiliate of a Lender that is party to a Bank Product agreement shall have any
other right to consent to or participate in any manner in modification of any
other Loan Document. The making of any Loans during the existence of a Default
or Event of Default shall not be deemed to constitute a waiver of such Default
or Event of Default, nor to establish a course of dealing. Any waiver or
consent granted by Lenders hereunder shall be effective only if in writing, and
then only in the specific instance and for the specific purpose for which it is
given.

14.1.3. Payment
for Consents. No Borrower will, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest,
fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

14.2.
Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS
THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED
AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN
INDEMNITEE. In no event shall any party to a Loan Document have any
obligation thereunder to indemnify or hold harmless an Indemnitee with respect
to a Claim that is determined in a final, non-appealable judgment by a court of
competent jurisdiction to result from the gross negligence or willful
misconduct of such Indemnitee.

14.3.
Notices and Communications.

14.3.1. Notice
Address. Subject to Section 4.1.4, all notices, requests and
other communications by or to a party hereto shall be in writing and shall be
given to any Borrower, at Borrower Agent’s address shown on the signature
pages hereof, and to any other Person at its address shown on the signature
pages hereof (or, in the case of a Person who becomes a Lender after the
Closing Date, at the address shown on its Assignment and Acceptance), or at
such other address as a party may hereafter specify by notice in accordance
with this Section 14.3. Each such notice, request or other
communication shall be effective only (a) if given by facsimile
transmission, when transmitted to the applicable facsimile number, if
confirmation of receipt is received; (b) if given by mail, three Business
Days after deposit in the U.S. mail, with first-class postage pre-paid,
addressed to the applicable address; or (c) if given by personal delivery
or courier service (including, without limitation, Federal Express or UPS
overnight mail service), when duly delivered to the notice address with receipt
acknowledged. Notwithstanding the foregoing, no notice to Agent pursuant to
Sections 2.1.4, 2.3, 3.1.2, 4.1.1 or
5.3.3 shall be

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effective until actually received by
the individual to whose attention at Agent such notice is required to be sent.
Any written notice, request or other communication that is not sent in
conformity with the foregoing provisions shall nevertheless be effective on the
date actually received by the noticed party. Any notice received by Borrower
Agent shall be deemed received by all Borrowers.

14.3.2.
Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and other information required by
Section 10.1.2, administrative matters, distribution of Loan
Documents for execution, and matters permitted under Section 4.1.4.
Agent and Lenders make no assurances as to the privacy and security of
electronic communications. Electronic and voice mail may not be used as
effective notice under the Loan Documents.

14.3.3. Non-
Conforming Communications. Agent and Lenders may rely upon any notices
purportedly given by or on behalf of any Borrower even if such notices were not
made in a manner specified herein, were incomplete or were not confirmed, or if
the terms thereof, as understood by the recipient, varied from a later
confirmation. Each Borrower shall indemnify and hold harmless each Indemnitee
from any liabilities, losses, costs and expenses arising from any telephonic
communication purportedly given by or on behalf of a Borrower.

14.4.
Performance of Borrowers’ Obligations. Agent may, in
its discretion at any time and from time to time, at Borrowers’ expense,
pay any amount or do any act required of a Borrower under any Loan Documents or
otherwise lawfully requested by Agent to (a) enforce any Loan Documents or
collect any Obligations; (b) protect, insure, maintain or realize upon any
Collateral; or (c) defend or maintain the validity or priority of
Agent’s Liens in any Collateral, including any payment of a judgment,
insurance premium, warehouse charge, finishing or processing charge, or
landlord claim, or any discharge of a Lien. All payments, costs and expenses
(including Extraordinary Expenses) of Agent under this Section shall
be reimbursed to Agent by Borrowers, on demand, with interest
from the date incurred to the date of payment thereof at the Default Rate
applicable to Base Rate Revolver Loans. Any payment made or action taken by
Agent under this Section shall be without prejudice to any right to assert
an Event of Default or to exercise any other rights or remedies under the Loan
Documents.

14.5.
Credit Inquiries. Each Borrower hereby authorizes Agent and
Lenders (but they shall have no obligation) to respond to usual and customary
credit inquiries from third parties concerning any Borrower or Subsidiary.

14.6.
Severability. Wherever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be valid under Applicable
Law. If any provision is found to be invalid under Applicable Law, it shall be
ineffective only to the extent of such invalidity and the remaining provisions
of the Loan Documents shall remain in full force and effect.

14.7.
Cumulative Effect; Conflict of Terms. The provisions of the
Loan Documents are cumulative. The parties acknowledge that the Loan Documents
may use several different limitations, tests or measurements to regulate the
same or similar matters, and they agree that these are cumulative and that each
must be performed as provided. Except as otherwise specifically provided in
another Loan Document (by specific reference to the applicable

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provision of this Agreement), if any
provision contained herein is in direct conflict with any provision in another
Loan Document, the provision herein shall govern and control.

14.8.
Counterparts; Facsimile Signatures. Any Loan Document may be
executed in counterparts, each of which taken together shall constitute one
instrument. Loan Documents may be executed and delivered by facsimile, and they
shall have the same force and effect as manually signed originals. Agent may
require confirmation by a manually-signed original, but failure to request or
deliver same shall not limit the effectiveness of any facsimile signature.

14.9.
Entire Agreement. Time is of the essence of the Loan
Documents. The Loan Documents embody the entire understanding of the parties
with respect to the subject matter thereof and supersede all prior
understandings regarding the same subject matter.

14.10.
Obligations of Lenders. The obligations of each Lender
hereunder are several, and no Lender shall be responsible for the obligations
or Commitments of any other Lender. Amounts payable hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled, to
the extent not otherwise restricted hereunder, to protect and enforce its
rights arising out of the Loan Documents. It shall not be necessary for Agent
or any other Lender to be joined as an additional party in any proceeding for
such purposes. Nothing in this Agreement and no action of Agent or Lenders
pursuant to the Loan Documents shall be deemed to constitute Agent and Lenders
to be a partnership, association, joint venture or any other kind of entity,
nor to constitute control of any Borrower. Each Borrower acknowledges and
agrees that in connection with all aspects of any transaction contemplated by
the Loan Documents, Borrowers, Agent, Issuing Bank and Lenders have an arms-
length business relationship that creates no fiduciary duty on the part of
Agent, Issuing Bank or any Lender, and each Borrower, Agent, Issuing Bank and
Lender expressly disclaims any fiduciary relationship.

14.11.
Confidentiality. During the term of this Agreement and for
18 months thereafter, Agent and Lenders agree to take reasonable
precautions to maintain the confidentiality of any information that Borrowers
deliver to Agent and Lenders and identify as confidential at the time of
delivery, except that Agent and any Lender may disclose such information
(a) to their respective officers, directors, employees, Affiliates and
agents, including legal counsel, auditors and other professional advisors;
(b) to any party to the Loan Documents from time to time;
(c) pursuant to the order of any court or administrative agency;
(d) upon the request of any Governmental Authority exercising regulatory
authority over Agent or such Lender; (e) which ceases to be confidential,
other than by an act or omission of Agent or any Lender, or which becomes
available to Agent or any Lender on a nonconfidential basis; (f) to the
extent reasonably required in connection with any litigation relating to any
Loan Documents or transactions contemplated thereby, or otherwise as required
by Applicable Law; (g) to the extent reasonably required for the exercise
of any rights or remedies under the Loan Documents; (h) to any actual or
proposed party to a Bank Product or to any Transferee, as long as such Person
agrees to be bound by the provisions of this Section; (i) to the National
Association of Insurance Commissioners or any similar organization, or to any
nationally recognized rating agency that requires access to information about a
Lender’s portfolio in connection with ratings issued with respect to such
Lender; (j) to any investor or potential investor in an Approved Fund that
is a Lender or Transferee, but solely for use by such investor to evaluate an
investment in such Approved Fund, or to any manager, servicer or other Person
in connection with its administration

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of any such Approved Fund; or
(k) with the consent of Borrowers. Notwithstanding the foregoing, Agent
and Lenders may issue and disseminate to the public general information
describing this credit facility, including the names and addresses of Borrowers
and a general description of Borrowers’ businesses, and may use
Borrowers’ names in advertising and other promotional materials.

14.12.
GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT
GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

14.13.
CONSENT TO FORUM. EACH BORROWER HEREBY CONSENTS TO THE NON-
EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH
JURISDICTION OVER COOK COUNTY, ILLINOIS, IN ANY PROCEEDING OR DISPUTE RELATING
IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE
BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH BORROWER IRREVOCABLY WAIVES ALL
CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH
COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT
FORUM. Nothing herein shall limit the right of Agent or any Lender to bring
proceedings against any Obligor in any other court. Nothing in this Agreement
shall be deemed to preclude enforcement by Agent of any judgment or order
obtained in any forum or jurisdiction.

14.14.
Waivers by Borrowers. To the fullest extent permitted by
Applicable Law, each Borrower waives (a) the right to trial by jury (which
Agent and each Lender hereby also waives) in any proceeding, claim or
counterclaim of any kind relating in any way to any Loan Documents, Obligations
or Collateral; (b) presentment, demand, protest, notice of presentment,
default, non-payment, maturity, release, compromise, settlement, extension or
renewal of any commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which a
Borrower may in any way be liable, and hereby ratifies anything Agent may do in
this regard; (c) notice prior to taking possession or control of any
Collateral; (d) any bond or security that might be required by a court
prior to allowing Agent to exercise any rights or remedies; (e) the
benefit of all valuation, appraisement and exemption laws; (f) any claim
against Agent or any Lender, on any theory of liability, for special, indirect,
consequential, exemplary or punitive damages (as opposed to direct or actual
damages) in any way relating to any Enforcement Action, Obligations, Loan
Documents or transactions relating thereto; and (g) notice of acceptance
hereof. Each Borrower acknowledges that the foregoing waivers are a
material inducement to Agent and Lenders entering into this Agreement and that
Agent and Lenders are relying upon the foregoing in their dealings with
Borrowers. Each Borrower has reviewed the foregoing waivers with its legal
counsel and has knowingly and voluntarily waived its jury trial and other
rights following consultation with legal counsel. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.

82

92

 

14.15.
Patriot Act Notice. Agent and Lenders hereby notify Borrowers
that pursuant to the requirements of the Patriot Act, Agent and Lenders are
required to obtain, verify and record information that identifies each
Borrower, including its legal name, address, tax ID number and other
information that will allow Agent and Lenders to identify it in accordance with
the Patriot Act. Agent and Lenders will also require information regarding each
personal guarantor, if any, and may require information regarding
Borrowers’ management and owners, such as legal name, address, social
security number and date of birth.

[Remainder of
page intentionally left blank; signatures begin on following page]

 

83

93

 

(Signature Page to Loan and
Security Agreement)

IN WITNESS WHEREOF, this
Agreement has been executed and delivered as of the date set forth above.

BORROWERS:

CHROMCRAFT REVINGTON, INC., a Delaware corporation

By: /s/
Frank T.
Kane                               

Frank
T. Kane

Senior Vice President 

Address for itself
and all other Borrowers:

1330 Win Hentschel
Blvd., Suite 280 

West Lafayette, IN 47906 

Attn:
Sr. Vice President
Finance           

Telecopy: (765) 807-2660 

CR CHROMCRAFT, INC, a
Delaware corporation 

By: /s/ Frank T.
Kane                            

Frank T. Kane 

Vice President 

CR HOME OCCASIONAL, INC., a
Tennessee corporation

By:
/s/ Frank T.
Kane                               

Frank T. Kane 

Vice President 

CR HOME, INC., a South
Carolina corporation 

By: /s/ Frank T.
Kane                                

Frank T. Kane 

Vice President

 

94

 

(Signature Page to Loan and
Security Agreement)

AGENT AND
LENDERS:

BANK OF AMERICA, N.A., 

as Agent and Lender

By: /s/
Philip
Nomura                           

Title:
Vice
President                              

Address:

231 South LaSalle
Street 

7th Floor 

Chicago, IL 60604 

Attn:
Loan Administration Manager 

Telecopy: 312.755.3300

Schedule 10.2.17

96Unassociated Document

     

     

    
      Exhibit
        10.1

    

     

    
      

      STOCK
        PURCHASE AGREEMENT

      

      This
        Stock Purchase Agreement (“Agreement”)
        is made
        as of October 16, 2006, by and among Vemics, Inc., a Nevada corporation
        (“Buyer”);
        NuScribe, Inc., a Texas corporation (the “Company”);
        John
        Mehmet Ulgar Dogru, Thomas Dorsett, C. Robert Heritage Trust, Jang Kim, Reid
        Moody, Angela Moody, Steven Williams, Clark Redus and Bala Sambandam
        (individually a “Founding
        Shareholder”,
        and
        together, the “Founding Shareholders”); and
        the
        other shareholders of NuScribe, Inc. who are signatories hereto and are
        identified on the signature page hereof as the “Investor
        Shareholders.”
The
        Founding Shareholders and the Investor Shareholders are collectively referred
        to
        herein as, the “Sellers”).

      

      RECITALS

      

      Sellers
        desire to sell, and Buyer desires to purchase, all of the issued and outstanding
        shares of capital stock of the Company held by (i) the Founding Shareholders
        (the “Founders
        Shares”)
        and (ii)
        the Investor Shareholders (the “Investor
        Shares”,
        and
        collectively with the Founders Shares, the “Shares”),
        for
        the consideration and on the terms set forth in this Agreement.

      

      It
        is
        intended that the Contemplated Transactions qualify as a tax-free acquisition
        within the meaning of Section 368(a) of the IRC.

      

      AGREEMENT

      

      The
        parties, intending to be legally bound, agree as follows:

      

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

      

      “Adjustment
        Amount” is
        defined in Section
        2.5.

      

      “Adjustment
        Shares”
is
        defined in Section
        2.5.

      

      “Applicable
        Contract”
means
        any Contract (a) under which any Person has or may acquire any rights, (b)
        under
        which any Person has or may become subject to any obligation or liability,
        or
        (c) by which any Person or any of the assets owned or used by it is or may
        become bound.

      

      “Best
        Efforts”
        means
        the efforts that a prudent Person desirous of achieving a result would use
        in
        similar circumstances to ensure that such result is achieved as expeditiously
        as
        possible; provided,
        however,
        that an
        obligation to use Best Efforts under this Agreement does not require the
        Person
        subject to that obligation to take actions that would result in a materially
        adverse change in the benefits to such Person of this Agreement and the
        Contemplated Transactions.

      

      “Breach”
—
A
        “Breach” with respect to any representation, warranty, covenant, obligation, or
        other provision of this Agreement or any instrument delivered pursuant to
        this
        Agreement will be deemed to have occurred if there is or has been (a) any
        inaccuracy in or breach of or any failure to perform or comply with, such
        representation, warranty, covenant, obligation, or other provision, or (b)
        any
        claim (by any Person) or other occurrence or circumstance that is or was
        inconsistent with such representation, warranty, covenant, obligation, or
        other
        provision, and the term “Breach” means any such inaccuracy, breach, failure,
        claim, occurrence, or circumstance.

      

      “Buyer”
is
        defined in the first paragraph of this Agreement.

      

      “Buyer
        Copyrights”
is
        defined in Section
        4.22(a)(iii).

      

      “Buyer
        Financial Statements”
is
        defined in Section
        4.7.

      

      “Buyer
        Intellectual Property Assets”
is
        defined in Section
        4.22(a).

      

      “Buyer
        Marks”
is
        defined in Section
        4.22(a)(i).

      

      “Buyer
        Material Contract”
is
        defined in Section
        4.17(a).

      

      “Buyer
        Other Benefit Obligations”
means
        all obligations, arrangements, or customary practices, whether or not legally
        enforceable, to provide benefits, other than salary, as compensation for
        services rendered, to present or former directors, employees, or agents,
        other
        than obligations, arrangements, and practices that are Buyer Plans. Buyer
        Other
        Benefit Obligations include consulting agreements under which the compensation
        paid does not depend upon the amount of service rendered, sabbatical policies,
        severance payment policies, and fringe benefits within the meaning of any
        equivalent Legal Requirement.

      

      “Buyer
        Patents”
is
        defined in Section
        4.22(a)(ii).

      

      “Buyer
        Plan”
—
any
        plan, fund, or program which was established, maintained or contributed to
        by
        Buyer, to the extent that such plan, fund, or program was established,
        maintained or contributed to for the purpose of providing for employees of
        Buyer
        or their dependents (A) medical, surgical, or hospital care or benefits,
        or
        benefits in the event of sickness, accident, disability, death or unemployment,
        or vacation benefits, apprenticeship or other training programs, or day care
        centers, scholarship funds, or prepaid legal services, (B) provides retirement
        income payments, supplemental retirement income payments or severance payment
        arrangements to employees of Buyer, or (D) results in a deferral of income
        by
        employees for periods extending to the termination of covered employment
        or
        beyond. The term “Buyer
        Plan”
shall
        include all plans, funds, or programs described in the immediately preceding
        sentence, whether qualified or unqualified, whether funded or unfunded, and
        whether existing under any applicable Legal Requirement.

      

      “Buyer
        Premises”
is
        defined in Section
        4.19.
        

      

      “Buyer
        Shares”
is
        defined in Section
        2.2.

      

      “Buyer
        Trade Secrets”
is
        defined in Section 4.22(iv).

      

      “Buyer’s
        Disclosure Schedule”
means
        the disclosure schedule attached hereto as Schedule
        A,
        and
        made a part hereof.

      

      “Closing”
is
        defined in Section
        23.

      

      “Closing
        Date”
means
        the date and time as of which the Closing actually takes place.

      

      “Company”
is
        defined in the first paragraph of this Agreement.

      

      “Company
        Breach”
is
        defined in Section
        7.5.

      

      “Company
        Other Benefit Obligations”
means
        all obligations, arrangements, or customary practices, whether or not legally
        enforceable, to provide benefits, other than salary, as compensation for
        services rendered, to present or former directors, employees, or agents,
        other
        than obligations, arrangements, and practices that are Company Plans. Company
        Other Benefit Obligations include consulting agreements under which the
        compensation paid does not depend upon the amount of service rendered,
        sabbatical policies, severance payment policies, and fringe benefits within
        the
        meaning of any equivalent Legal Requirement.

      

      “Company
        Plan”
any
        plan, fund, or program which was established, maintained or contributed to
        by
        the Company, to the extent that such plan, fund, or program was established,
        maintained or contributed to for the purpose of providing for employees of
        the
        Company or their dependents (A) medical, surgical, or hospital care or benefits,
        or benefits in the event of sickness, accident, disability, death or
        unemployment, or vacation benefits, apprenticeship or other training programs,
        or day care centers, scholarship fluids, or prepaid legal services, (B) provides
        retirement income payments, supplemental retirement income payments or severance
        payment arrangements to employees of the Company, or (D) results in a deferral
        of income by employees for periods extending to the termination of covered
        employment or beyond. The term “Company
        Plan”
shall
        include all plans, funds, or programs described in the immediately preceding
        sentence, whether qualified or unqualified, whether funded or unfunded, and
        whether existing under any applicable Legal Requirement.

      

      “Company
        Records”
is
        defined in Section
        3.5.

      

      “Consent”
means
        any approval, consent, ratification, waiver, or other authorization (including
        any Governmental Authorization).

      

      “Consulting
        Agreement”
is
        defined in Section
        2.4(a)(iv).

      

      “Contemplated
        Transactions”
means
        all of the transactions contemplated by this Agreement, including:

      

      (a) the
        sale
        of the Shares by Sellers to Buyer;

      

      (b) the
        execution, delivery, and performance of the Employment Agreements, the
        Consulting Agreement, the Sellers’ Releases and the Stock Pledge
        Agreement;

      

      (c) the
        performance by Buyer and Sellers of their respective covenants and obligations
        under this Agreement; and

      

      (d) Buyer’s
        acquisition and ownership of the Shares and exercise of control over the
        Company.

      

      “Contract”
means
        any agreement, contract, obligation, promise, or undertaking (whether written
        or
        oral and whether express or implied) that is legally binding.

      

      “Copyrights”
is
        defined in Section
        3.20(a)(iii).

      

      “Damages”
is
        defined in Section
        10.2.

      

      “Employment
        Agreements”
is
        defined in Section
        2.4(a)(iii).

      

      “Encumbrance”
means
        any charge, claim, community property interest, condition, equitable interest,
        lien, option, pledge, security interest, right of first refusal, or restriction
        of any kind, including any restriction on use, voting, transfer, receipt
        of
        income, or exercise of any other attribute of ownership.

      

      “Environment”
means
        soil, land surface or subsurface strata, surface waters (including navigable
        waters, ocean waters, streams, ponds, drainage basins, and wetlands),
        groundwaters, drinking water supply, stream sediments, ambient air (including
        indoor air), plant and animal life, and any other environmental medium or
        natural resource.

      

      “Environmental
        Law”
means
        any Federal, state, local or foreign law, ordinance, rule, regulation, permit
        or
        authorization pertaining to the protection of human health or the
        environment.

      

      “ERISA”
means
        the Employee Retirement Income Security Act of 1974 or any successor law,
        and
        regulations and rules issued pursuant to that Act or any successor
        law.

      

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934 or any successor law, and regulations
        and
        rules issued pursuant to that Act or any successor law.

      

      “GAAP”
means
        generally accepted United States accounting principles, applied on a basis
        consistent with the basis on which the Interim Balance Sheet and the other
        financial statements referred to in Section
        3.4
        were
        prepared.

      

      “Governmental
        Authorization”
means
        any approval, consent, license, permit; waiver, or other authorization issued,
        granted, given, or otherwise made available by or under the authority of
        any
        Governmental Body or pursuant to any Legal Requirement.

      

      “Governmental
        Body”
means
        any:

      

      (a) nation,
        state, county, city, town, village, district, or other jurisdiction of any
        nature;

      

      (b) federal,
        state, local, municipal, foreign, or other government;

      

      (c) governmental
        or quasi-governmental authority of any nature (including any governmental
        agency, branch, department, official, or entity and any court or other
        tribunal);

      

      (d) multi-national
        organization or body; or

      

      (e) body
        exercising, or entitled to exercise, any administrative, executive, judicial,
        legislative, police, regulatory, or taxing authority or power of any
        nature.

      

      “Intellectual
        Property Assets”
is
        defined in Section
        3.20.

      

      “Interim
        Balance Sheet”
is
        defined in Section
        3.4.

      

      “IRC”
means
        the Internal Revenue Code of 1986 or any successor law, and regulations issued
        by the IRS pursuant to the Internal Revenue Code or any successor
        law.

      

      “IRS”
means
        the United States Internal Revenue Service or any successor agency and, to
        the
        extent relevant, the United States Department of the Treasury.

      

      “Knowledge”
—An
        individual will be deemed to have “Knowledge” of a particular fact or other
        matter if such individual is actually aware of such fact or other
        matter.

      

      “Knowledge
        of the Buyer”
means
        the Knowledge of Fred Zolla, Brian Howell, Rick Marciniak, Tom Owens, and
        Craig
        Stout as officers, directors and/or shareholders of Buyer.

      

      “Knowledge
        of the Company”
means
        the Knowledge of Thomas Dorsett and John Mehmet Ulgar Dogru as officers,
        directors and/or shareholders of the Company.

      

      “Legal
        Requirement”
        means
        any federal, state, local, municipal, foreign, international, multinational,
        or
        other administrative order, constitution, law, ordinance, principle of common
        law, regulation, statute, or treaty.

      

      “Marks”
is
        defined in Section
        3.20(a)(i).

      

      “Material
        Adverse Effect”
means
        any event, circumstance or condition that has a material adverse effect on
        the
        business, assets (including intangible assets), liabilities, financial
        condition, property or results of operations of the Company or Buyer, as
        applicable.

      

      “Order”
means
        any award, decision, injunction, judgment, order, ruling, subpoena, or verdict
        entered, issued, made, or rendered by any court, administrative agency, or
        other
        Governmental Body or by any arbitrator.

      

      “Ordinary
        Course of Business”
—
An
        action taken by a Person will be deemed to have been taken in the “Ordinary
        Course of Business” only if such action is consistent with the past practices of
        such Person and is taken in the ordinary course of the normal day-to-day
        operations of such Person.

      

      “Organizational
        Documents”‘,
        where
        applicable, means (a) the articles or certificate of incorporation and the
        bylaws of a corporation; (b) the partnership agreement and any statement
        of
        partnership of a general partnership; (c) the limited partnership agreement
        and
        the certificate of limited partnership of a limited partnership; (d) the
        articles or certificate of formation or organization, and operating agreement
        of
        any limited liability company, (e) any charter or similar document adopted
        or
        filed in connection with the creation, formation, or organization of a Person;
        and (f) any amendment to any of the foregoing.

      

      “Patents”
is
        defined in Section
        3.20(a)(ii).

      

      “Permitted
        Encumbrances”
means
        (a) security interests shown on the Interim Balance Sheet (as with respect
        to
        the Company) or the Buyer Financial Statements (as with respect to Buyer)
        as
        securing specified liabilities or obligations, with respect to which no default
        (or event that, with notice or lapse of time or both, would constitute a
        default) exists, (b) security interests incurred in connection with the purchase
        of property or assets after the date of the Interim Balance Sheet (as with
        respect to the Company) or the Buyer Financial Statements (as with respect
        to
        Buyer (such security interests being limited to the property or assets so
        acquired), with respect to which no default (or event that, with notice or
        lapse
        of time or both, would constitute a default) exists, (c) liens for current
        taxes
        or other assessments not yet due, (d) Encumbrances in favor of operators,
        vendors, carriers, warehousemen, repairmen, mechanics, workmen and materialmen
        and construction or similar Encumbrances arising by operation of law or in
        the
        Ordinary Course of Business in respect of obligations that are not yet due
        or
        that are being contested in good faith by appropriate proceedings, and (e)
        workers’ or unemployment compensation Encumbrances arising in the Ordinary
        Course of Business.

      

      “Person”
means
        any individual, corporation (including any non-profit corporation), general
        or
        limited partnership, limited liability company, joint venture, estate, trust,
        association, organization, labor union, or other entity or Governmental
        Body.

      

      “Premises”
is
        defined in Section
        3.17.

      

      “Pro
        Rata Share”
means,
        as to any Seller, the percentage obtained by dividing the number of Shares
        owned
        by such Seller by the total number of Shares.

      

      “Proceeding”
means
        any action, arbitration, audit, hearing, investigation, litigation, or suit
        (whether civil, criminal, administrative, investigative, or informal) commenced,
        brought, conducted, or heard by or before, or otherwise involving any
        Governmental Body or arbitrator.

      

      “Related
        Person”
means,
        with respect to a particular individual:

      

      (a) each
        other member of such individual’s Family;

      

      (b) any
        Person that is directly or indirectly controlled by such individual or one
        or
        more members of such individual’s Family; and

      

      (c) any
        Person with respect to which such individual or one or more members of such
        individual’s Family serves as a director, officer, partner, executor, or trustee
        (or in a similar capacity).

      With
        respect to a specified Person other than an individual, “Related Person”
means:

      

      (a) any
        Person that directly or indirectly controls, is directly or indirectly
        controlled by, or is directly or indirectly under common control with such
        specified Person;

      

      (b) each
        Person that serves as a director, officer, partner, executor, or trustee
        of such
        specified Person (or in a similar capacity); and

      

      (c) any
        Related Person of any individual described in clause (b) or (c).

      

      For
        purposes of this definition, the “Family”
of
        an
        individual includes (i) the individual, (ii) the individual’s spouse, and (iii)
        any other natural person who is related to the individual or the individual’s
        spouse within the second degree.

      

      “Representative”
means,
        with respect to a particular Person, any director, officer, employee, agent,
        consultant, advisor, or other representative of such Person, including legal
        counsel, accountants, and financial advisors.

      

      “Securities
        Act”
means
        the Securities Act of 1933 or any successor law, and regulations and rules
        issued pursuant to that Act or any successor law.

      

      “Sellers
        Breach”
is
        defined in Section
        7.5.

      

      “Sellers”
is
        defined in the first paragraph of this Agreement

      

      “Sellers’
        Disclosure Schedule”
means
        the disclosure schedule attached hereto as Schedule B, and made a part
        hereof

      

      “Sellers’
        Releases”
is
        defined in Section
        2.4(a)(ii).

      

      “Sellers’
        Representative”
is
        defined in Section
        11.16.

      

      “Shares”
is
        defined in the Recitals of this Agreement.

      

      “Stock
        Pledge Agreement”
is
        defined in Section
        2.4.

      

      “Subsidiary”
means,
        with respect to any Person (the “Owner”),
        any
        corporation or other Person of which securities or other interests having
        the
        power to elect a majority of that corporation’s or other Person’s board of
        directors or similar governing body, or otherwise having the power to direct
        the
        business and policies of that corporation or other Person (other than securities
        or other interests having such power only upon the happening of a contingency
        that has not occurred) are held by the Owner or one or more of its Subsidiaries;
        when used without reference to a particular Person, “Subsidiary”
means
        a
        Subsidiary of the Company.

      

      “Tax
        Return”
means
        any return (including any information return), report, statement, schedule,
        notice, form, or other document or information statement filed with or submitted
        to, or required to be filed with or submitted to, any Governmental Body in
        connection with the 

      determination,
        assessment, collection, or payment of any Tax or in connection with the
        administration, implementation, or enforcement of or compliance with any
        Legal
        Requirement relating to any Tax.

      

      “Threatened”
means
        that a claim, Proceeding, dispute, action, or other matter will be deemed
        to
        have been “Threatened” if any written demand or statement has been made or any
        written notice has been given.

      

      “Trade
        Secrets”
is
        defined in Section
        3.20(a)(iv).

      

      “Venus
        Stock Price”
means
        $0.90, as adjusted for stock splits, stock dividends, stock subdivisions
        or
        combinations and the like.

      

      2. SALE
        AND TRANSFER OF SHARES; CLOSING

      

      2.1 SHARES.
        Subject
        to the terms and conditions of this Agreement, at the Closing, Sellers will
        sell
        and transfer the Shares to Buyer; and Buyer will purchase the Shares from
        Sellers.

      

      2.2 PURCHASE
        PRICE.
        The
        purchase wire for the Shares will be $9,000,000 (the “Purchase Price”), payable
        in the form of that number of shares of Buyer’s common stock, par value $0.01
        per share calculated, by dividing $9,000,000 by the Venues Stock Price (the
        “Buyer Shares”).
        The
        Purchase Price and the corresponding number of Buyer Shares to be delivered
        to
        Sellers shall be adjusted as provided in Sections
        2.5
        and
2.6
        and
2.7(d).

      

      2.3 CLOSING.
        The
        exchange of the Buyer Shares for the Shares (the “Closing”)
        provided for in this Agreement will take place at the offices of Buyer’s counsel
        at 11921 Rockville Pike, Third Floor, Rockville, MI) 20852, at 10:00 a.m.
        (local
        time) on the later of (i) October 16, 2006, or (ii) at such other time and
        place
        as the parties may agree.

      

      2.4 CLOSING
        OBLIGATIONS.
        At the
        Closing:

      

      (a) Sellers
        will deliver to Buyer:

      

      (i) certificates
        representing the Shares, duly endorsed (or accompanied by duly executed stock
        powers) for transfer to Buyer;

      

      (ii) releases
        in the form of Exhibit
        2.4(a)(ii)
        executed
        by Sellers (collectively, “Sellers’ Releases”);

      

      (iii) employment
        agreements in the form of Exhibit
        2.4(a)(iii),
        executed by each of Tom Dorsett and John Dogru (together, the “Employment
        Agreements”)
        ;

      

      (iv) a
        consulting agreement in the form of Exhibit
        2.4(a)(iv),
        executed by Brian Groh (the “Consulting
        Agreement”);

      

      (v) an
        opinion of Jackson Walker L.L.P., dated the Closing Date reasonably acceptable
        to Buyer;

      (vi) all
        Consents necessary for the Company to consummate the Contemplated
        Transactions;

      

      (vii) access
        to
        the Company Records; and

      

      (viii) such
        other documents as Buyer may reasonably request for the purpose of (i) enabling
        its counsel to provide the opinion referred to in Section
        2.4(b)(v),
        or (ii)
        otherwise facilitating the consummation or performance of any of the
        Contemplated Transactions.

      

      (b) Buyer
        will deliver to Sellers:

      

      (i) 99.0%
        of
        the number of Buyer Shares, delivered to the Sellers in proportion to their
        respective ownership of the Shares;

      

      (ii) the
        balance of the Buyer Shares (the “Holdback
        Shares”)
        shall
        be delivered to the Sellers pursuant to Section
        2.6(b);

      

      (iv) an
        opinion of Shulman, Rogers, Gandal, Pordy & Ecker, PA., dated the Closing
        Date reasonably acceptable to the Seller Representative;

      

      (v) the
        Employment Agreements, executed by Buyer;

      

      (vi) the
        Consulting Agreement, executed by Buyer, and

      

      (vii) all
        Consents necessary for Buyer to consummate the Contemplated Transactions;
        and

      

      (viii) such
        other documents as Sellers may reasonably request for the purpose of (i)
        enabling its counsel to provide the opinion referred to in Section
        2.4(a)(iv),
        or (ii)
        otherwise facilitating the consummation or performance of any of the
        Contemplated Transactions.

      

      (c) Buyer
        and
        the Founding Shareholders will enter into an stock pledge agreement in a
        foam
        mutually acceptable to Buyer and the Founding Shareholders (the “Stock Pledge
        Agreement”),
        whereby the Founding Shareholders will pledge 10% of their Buyer’s Shares for
        one year as security for the indemnification obligations set forth in
Section
        7.2.

      

      2.5 ADJUSTMENT
        AMOUNT.
        The
        Purchase Price and the corresponding number of Buyer Shares to be delivered
        to
        Sellers shall be decreased by the amount; if any, by which the accrued total
        liabilities of the Company as of the Closing Date determined in accordance
        with
        GAAP is greater than $70,000, including Thomas Dorsett’s American Express credit
        card debt incurred on behalf of the Company (the “Adjustment
        Amount”);
        provided, however, no adjustment will be so made to the extent that the
        Adjustment Amount does not exceed $50,000 in either event the Adjustment
        Amount
        shall be converted into a number of Buyer Shares by dividing the Adjustment
        Amount by the Vemics Closing Price (the “Adjustment
        Shares”).

      

      2.6 ADJUSTMENT
        PROCEDURE.

      

      (a) The
        Sellers’ Representative will prepare and will cause Todd Keller, CPA, the
        Company’s certified public accountant, to review (as the Company’s expense), a
        balance sheet (“Closing
        Balance Sheet”)
        of the
        Company as of the Closing Date and a calculation of the Adjustment Amount.
        Sellers will deliver the Closing Balance Sheet to Buyer within thirty (30)
        clays
        after the Closing Date. Following the Closing, Buyer shall provide the Sellers’
Representative access to the records and employees of the Company to the
        extent
        necessary for the preparation of the Closing Balance Sheet and shall cooperate
        and cause the Company and the employees of the Company to cooperate with
        the
        Sellers’ Representative, the accounting firm reviewing the Closing Balance Sheet
        (the “Closing
        Balance Sheet Accounting Firm”)
        in
        connection with its preparation and review of the Closing Balance Sheet,
        which
        cooperation shall include executing and delivery to the Closing Balance Sheet
        Accounting Firm such management representation letters and engagement letters
        as
        may be requested by the Closing Balance Sheet Accounting Firm and taking
        all
        such reasonable actions necessary to permit completion of the review of the
        Closing Balance Sheet. If within ten (10) days following delivery of the
        Closing
        Balance Sheet, Buyer has not given Sellers’ Representative notice of its
        objection to Sellers’ Representative’s calculation of the Adjustment Amount
        (such notice must contain a statement of the basis of Buyer’s objection), then
        such Adjustment Amount will be deemed to be the final Adjustment Amount for
        all
        purposes hereunder. If Buyer gives such notice of objection, then, within
        three
        (3) business days of delivery of such notice of objection, the issues in
        dispute
        with respect to the calculation of the Adjustment Amount will be submitted
        to
        BDO Seidman, certified public accountants, or such other certified public
        accountants as Buyer and the Sellers’ Representative may agree (the
“Accountants’’),
        for
        resolution, and (i) each party will furnish to the Accountants such workpapers
        and other documents and information relating to the disputed issues as the
        Accountants may request and are available to that party, and will be afforded
        the opportunity to present to the Accountants any material relating to the
        determination and to discuss the determination with the Accountants; (ii)
        the
        determination by the Accountants of the Adjustment Amount, as set forth in
        a
        notice delivered to both parties by the Accountants within twenty (20) days
        of
        the date such dispute is referred to the Accountants, will be binding and
        conclusive on the parties; and (in) Buyer and Sellers will each bear 50%
        of the
        fees of the Accountants for such determination. The date on which the Adjustment
        Amount is finally determined in accordance with this Section
        2.6(a)
        is
        hereinafter referred to as the “Determination Date.”

      

      (b) On
        the
        tenth (10th) business day following the (i) final acceptance of the calculation
        of the Adjustment Amount or (ii) the Determination Date, Buyer shall deliver
        to
        Sellers the Holdback Shares, less the Adjustment Shares (if any), allocated
        to
        Sellers based upon their respective Pro Rata Shares.

      

      2.7 RESTRICTIONS
        AND RIGHTS AS TO BUYER SHARES.
        The
        following provisions shall apply to the Buyer Shares delivered to
        Sellers:

      

      (a)  The
        certificate or certificates evidencing the Buyer Shares delivered to all
        Sellers
        will bear a restrictive legend substantially in the following form as long
        as
        applicable:

      

      “THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW. THESE SECURITIES
        HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
        RESALE,
        AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
        WITHOUT AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER
        THE
        ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN
        FORM
        AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT REGISTRATION OF THESE SECURITIES
        IS NOT REQUIRED UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES
        LAWS.”

      

      The
        certificate or certificates -evidencing the Buyer Shares delivered to the
        Founding Shareholders will bear an additional restrictive legend substantially
        in the following form as long as applicable:

      

      THE
        SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CONTRACTUAL RESTRICTIONS
        ON TRANSFER EXPIRING ON OCTOBER __, 2007, PURSUANT TO THAT CERTAIN STOCK
        PURCHASE AGREEMENT DATED AS OF OCTOBER __, 2006 (THE “AGREEMENT’), BY AND AMONG
        COMPANY AND CERTAIN OTHER PARTIES THERETO. PRIOR TO THE EXPIRATION OF SUCH
        HOLDING PERIOD, SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED AND
        THE
        COMPANY SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, TRANSFER
        OR.
        ASSIGNMENT EXCEPT TO THE EXTENT SUCH SALE, TRANSFER OR ASSIGNMENT IS IN
        COMPLIANCE WITH THE AGREEMENT. UPON THE WRITTEN REQUEST OF THE HOLDER OF
        THIS
        CERTIFICATE, THE COMPANY AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY
        STOP
        ORDER PLACED WITH THE TRANSFER AGENT) WHEN THE HOLDING PERIOD HAS
        EXPIRED.”

      

      (b) Except
        with the consent of Buyer; the Founding Shareholders agree that they will
        not,
        directly or indirectly, offer, sell, contract to sell, pledge or otherwise
        dispose of any of the Buyer Shares received as part of the Purchase Price
        prior
        to the first anniversary of the Closing (“Lock-Up
        Period”).
        Thereafter, these restrictions will expire on a monthly basis with respect
        to
        eight and 33/100 percent (8.33%) of the aggregate number of Buyer Shares
        per
        month for the twelve (12) months following the end of the Lock-Up Period,
        subject to any applicable Legal Requirements.

      

      (c) (i)
        If,
        at any time following the Closing, Buyer files a registration statement under
        the Securities Act for purposes of a public offering of securities of the
        Buyer
        for its own account, it shall notify the prior holders of Investor Shares
        (and
        the prior holders of Founders Shares after the first anniversary of the date
        hereof) in writing (the “Company Notice”).
        Each
        Seller entitled to receive a Company Notice shall have the right (the
“Piggyback
        Right”),
        subject to the limitations set forth in this Section
        2.7(c),
        to
        include in any such registration statement all or any portion of the Buyer
        Shares then held by such Seller. In order to exercise the Piggyback Right,
        a
        Seller shall give written notice to Buyer (the “Piggyback
        Notice”)
        no
        later than fifteen (15) days following the date on which the Buyer gives
        the
        Company Notice. The Piggyback Notice shall set forth the number of Buyer
        Shares
        that such Seller desires to include in the registration statement. All expenses
        of any such registration will be paid by the Buyer.

      

      (ii)
        If
        the registration statement under which Buyer gives notice under this
Section
        2.7(c)
        is for
        an underwritten offering, Buyer shall so advise the Sellers in the Company
        Notice. In such event, the right of any Seller to be included in a registration
        pursuant to this Section
        2.7(c)
        shall be
        conditioned upon such holder’s participation in such underwritten offering and
        the inclusion of such holder’s Buyer Shares in the underwritten offering to the
        extent provided herein. All holders of Buyer Shares proposing to distribute
        their shares by means of such underwritten offering shall-enter into an
        underwriting agreement in customary form with the underwriter or underwriters
        selected for such underwriting by Buyer. Notwithstanding any other provision
        of
        this Agreement, if the underwriter determines in good faith that marketing
        factors require a limitation of the number of shares to be underwritten,
        the
        number of shares that may be included in the underwriting shall be allocated,
        first, to Buyer; second, to the holders of Buyer Shares on a pro rate basis
        based on the total number of Buyer Shares requested to be included in such
        registration by the holders of Buyer Shares; and third, to any stockholder
        of
        the Company (other than a holder of Buyer Shares) on a pro rata basis. No
        such
        reduction shall reduce the securities being offered by Buyer for its own
        account
        to be included in the registration and underwriting. If any holder of Buyer
        Shares disapproves of the terms of any such underwriting, such holder may
        elect
        to withdraw therefrom by written notice to Buyer and the underwriter, delivered
        at least twenty (20) business days prior to the effective date of the
        registration statement.

      

      (iii)
        Buyer shall have the right to terminate or withdraw any registration initiated
        by it under this Section
        2.7(c)
        prior to
        the effectiveness of such registration whether or not any holder of Buyer
        Shares
        has elected to include securities in such registration.

      

      (d) Buyer
        shall use its Best Efforts to have the Buyer listed as a reporting issuer
        on the
        Pink Sheets on or before December 31, 2006, and furthermore to be listed
        as a
        reporting bulletin board company no later than June 30, 2007. If Buyer fails
        to
        meet either of these deadlines, Buyer shall issue additional shares to Sellers
        equal to five percent (5%) of the Buyers Shares for each missed deadline
        up to a
        total of ten percent (10%) of the Buyers Shares, such additional shares to
        be
        delivered within ten (10) business days of the date of such failure to meet
        either such deadline and to be allocated to Sellers in proportion to their
        respective Pro Rata Shares.

      

      (e) With
        a
        view to making available to the Sellers the benefits of SEC Rule 144 and
        any
        other rule or regulation of the SEC that may at any time permit a Seller
        to sell
        securities of the Company to the public without registration, the Company
        shall:
        (i) make and keep available adequate current public information, as those
        terms
        are understood and defined in SEC Rule 144, at all times; (ii) use Best Efforts
        to file with the SEC in a timely manner all reports and other documents required
        of the Company under the Exchange Act (at any time after the Company has
        become
        subject to such reporting requirements); and (iii) furnish to any Seller,
        so
        long as the Seller owns any Buyers Shares, forthwith upon request (i) to
        the
        extent accurate, a written statement by the Company that it has complied
        with
        the reporting requirements of SEC Rule 144, the Securities Act, and the Exchange
        Act, or that it qualifies as a registrant whose securities may be resold
        pursuant to Fort S-3 (at any time after the Company so qualifies); (ii) a
        copy
        of the most recent annual or quarterly report of the Company and such other
        reports and documents so filed by the Company; and (iii) such other information
        as may be reasonably requested in availing any Seller of any rule or regulation
        of the SEC that permits the selling of any such securities without
        registration.

      

      3. REPRESENTATIONS
        AND WARRANTIES OF SELLERS AND THE COMPANY.
        Except
        as set forth on the Sellers’ Disclosure Schedule, which exceptions shall be
        deemed to be part of the representations and warranties made hereunder, the
        Sellers (severally and not jointly) and the Company hereby represents and
        warrant to Buyer as follows:

      

      3.1 ORGANIZATION
        AND GOOD STANDING.

      

      (a) Section
        3.1
        of the
        Sellers’ Disclosure Schedule contains a complete and accurate list for the
        Company of its name, its jurisdiction of incorporation, other jurisdictions
        in
        which it is authorized to do business, and its capitalization (including
        the
        identity of each stockholder and the number of shares held by each). The
        Company
        is a corporation duly organized, validly existing, and in good standing under
        the laws of its jurisdiction of incorporation, with full corporate power
        and
        authority to conduct its business as it is now being conducted, to own or
        use
        the properties and assets that it purports to own or use, and to perform
        all its
        obligations under Applicable Contracts. The Company is duly qualified to
        do
        business as a foreign corporation and is in good standing under the laws
        of each
        state or other jurisdiction in which the failure to so qualify would have
        a
        Material Adverse Effect.

      

      (b) The
        Company has delivered or made available to Buyer copies of the Organizational
        Documents of the Company, as currently in effect.

      

      3.2 AUTHORITY;
        NO CONFLICT.

      

      (a) This
        Agreement constitutes the legal, valid, and binding obligation of Sellers,
        enforceable against Sellers in accordance with its terms. As to any Seller
        who
        is a party thereto, upon the execution and delivery by such Seller of the
        Employment Agreements, the Sellers’ Releases, the Consulting Agreement and the
        Stock Pledge Agreement (collectively, the “Sellers’
        Closing Documents”),
        the
        Sellers’ Closing Documents will, as to such Seller, constitute the legal, valid,
        and binding obligations of such Seller, enforceable against such Seller in
        accordance with their respective terms except (i) as limited by applicable
        bankruptcy, insolvency, reorganization, moratorium; fraudulent conveyance,
        or
        other laws of general application relating to or affecting the enforcement
        of
        creditors’ rights generally, (ii) as limited by laws relating to the
        availability of specific performance, injunctive relief, or other equitable
        remedies, and (iii) to the extent the indemnification provisions and the
        choice
        of law provisions contained in the Sellers’ Closing Documents may be limited by
        applicable laws. Sellers have the absolute and unrestricted right, power,
        authority, and capacity to execute and deliver this Agreement and, as to
        any
        Seller who is a party thereto, the Sellers’ Closing Documents, and to perform
        their obligations under this Agreement and the Sellers’ Closing
        Documents.

      

      (b) Neither
        the execution and delivery of this Agreement nor the consummation or performance
        of any of the Contemplated Transactions will, directly or indirectly (with
        or
        without notice or lapse of time):

      

      (i) contravene,
        conflict with, or result in a violation of (A) any material provision of
        the
        Organizational Documents of the Company, or (B) any resolution adopted by
        the
        board of directors or the stockholders of the Company; 

      

      (ii) contravene,
        conflict with, or result in a violation of; or give any Governmental Body
        or
        other Person the right to challenge any of the Contemplated Transactions
        or to
        exercise any remedy or obtain any relief under, any material Legal Requirement
        or any material Order to which the Company or any Seller, or any of the assets
        owned or used by Company, maybe subject;

      

      (iii) contravene,
        conflict with, or result in a violation of any of the terms or requirements
        of,
        or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
        terminate, or modify, any material Governmental Authorization that is held
        by
        the Company;

      

      (iv) cause
        Buyer or the Company to become subject to, or to become liable for the payment
        of, any material amount of Tax;

      

      (v) 
        cause
        any of the assets owned by the Company to be reassessed or revalued by any
        taxing authority or other Governmental Body;

      

      (vi) contravene,
        conflict with, or result in a violation or breach of any material provision
        of
        or give any Person the right to declare a default or exercise any remedy
        under,
        or to accelerate the maturity or performance of; or to cancel, terminate,
        or
        modify, any Seller Material Contract; or

      

      (vii) result
        in
        the imposition or creation of any material Encumbrance upon or with respect
        to
        any of the assets owned or used by the Company.

      

      Neither
        the Sellers nor the Company is or will be required to give any notice to
        or
        obtain any Consent from any Person in connection with the execution and delivery
        of this Agreement or the consummation or performance of any of the Contemplated
        Transactions.

      

      (c) Sellers
        are acquiring the Buyer Shares for their own account and not with a view
        to
        their distribution within the meaning of Section 2(11) of the Securities
        Act.
        Each Seller is an “accredited investor” as such term is defined in Rule 501(a)
        under the Securities Act.

      

      (d) Each
        Seller has had an opportunity to (1) ask questions of and receive answers
        from
        Buyer concerning the terms and conditions of the Contemplated Transactions,
        (ii)
        obtain any additional information which Buyer possesses or can acquire without
        unreasonable effort or expense that is necessary to verify the accuracy of
        the
        information furnished, and (iii) consult and seek advice from an attorney
        of
        such Seller’s own choosing prior to entering into this Agreement. The Company
        and each Seller acknowledge that, except as set forth herein, no representations
        or warranties have been made to it, or to its Representatives, by Buyer or
        others with respect to Buyer’s business and its financial condition and has
        obtained, in its judgment, sufficient information from Buyer to evaluate
        the
        merits and risks of an investment in the Buyer Shares. Each Seller acknowledges
        that it has received full and fair disclosure and carefully considered each
        of
        the following items in its entirety: (i) the Buyer’s Business Plan, dated March
        2006 and all exhibits thereto; (ii) the audited financial statements of the
        Buyer as of and for the year ended June 30, 2004 and 2005, and unaudited
        interim
        financial statements as of and for the twelve months ended June 30, 2006;
        and
        (iii) the Risk Factors attached hereto as Exhibit
        3.2(d)(iii).
        Each
        Seller is aware of the risks inherent in an investment in the Buyer Shares
        and
        acknowledges that there can be no assurance of the future viability or
        profitability of Buyer, nor can there be any assurance relating to the current
        or future value of the Buyer Shares. The foregoing, however, does not limit
        or
        modify the representations and warranties of Buyer in Section
        4
        of this
        Agreement or the right of Sellers to rely thereon.

      

      (e) Each
        Seller has such knowledge and experience in financial, investment and business
        matters as to be capable of evaluating the merits and risk of an investment
        in
        the Buyer Shares. Each Seller represents and warrants that (i) the Seller’s
        overall commitment to investments which are not readily marketable, including
        the purchase of Buyer Shares, is reasonable in relation to the Seller’s net
        worth; (ii) each Seller is acquiring the Buyer Shares for investment for
        the
        Seller’s own account, and not with a view towards the resale or distribution of
        any or all such Buyer Shares; and (iii) the Seller can bear the economic
        risk of
        losing the Seller’s entire investment.

      

      3.3 CAPITALIZATION
        AND TITLE TO SHARES.

      

      (a) The
        authorized equity securities of the Company consist of 12,000,000 shares
        of
        common stock, par value $0.001 per share, and 2,000,000 shares of preferred
        stock, par value $0.001 per share all of which have been designated as Series
        A
        Preferred Stock, of which 8,000,000 shares of common stock and 1,750,000
        shares
        of Series A Preferred Stock are issued and outstanding and constitute the
        Shares. Sellers are, and will be on the Closing Date, the record owners and
        holders of the Shares. No legend or other reference to any purported Encumbrance
        appears upon any certificate representing equity securities of the Company
        other
        than restrictions under applicable securities laws. All of the outstanding
        equity securities of the Company have been duly authorized and validly issued
        and are fully paid and nonassessable. Other than the Sellers’ Closing Documents,
        there are no Contracts relating to the issuance, sale, or transfer of any
        equity
        securities or other securities of the Company. None of the outstanding equity
        securities or other securities of the Company was issued in violation of
        the
        Securities Act or any other Legal Requirement. The Company owns, or has any
        Contract to acquire, any equity securities or other securities of any Person
        or
        any direct or indirect equity or ownership interest in any other
        business.

      

      (b) As
        to
        each Seller, such Seller is, and will be on the Closing Date, the record
        and
        beneficial owner and holder of the number of Shares listed next to such Seller’s
        name in Section
        3.3
        of the
        Sellers’ Disclosure Schedule, free and clear of all Encumbrances, except for any
        restrictions existing under applicable securities laws and the restrictions
        imposed in this Agreement.

      

      (c) The
        Company has no Subsidiaries.

      

      3.4 FINANCIAL
        STATEMENTS.
        The
        Company has delivered to Buyer. (a) unaudited balance sheets of the Company
        as
        at April 31, 2006, May 31, 2006, June 30, 2006 and July 31, 2006 (the
“Interim
        Balance Sheet”),
        and
        the related unaudited statements of income, changes in stockholders’ equity, and
        cash flow for each of the months them ended. Such financial statements and
        notes
        fairly present the financial condition and the results of operations, changes
        in
        stockholders’ equity, and cash flow of the Company as at the respective dates of
        and for the periods-referred: to in such financial statements, all in accordance
        with GAAP, subject, in the case of interim financial statements, to normal
        reaming year-end adjustments and the absence of notes; the financial statements
        referred to in this Section 3.4 reflect the consistent application of such
        accounting principles throughout the periods involved, except as disclosed
        in
        the notes to such financial statements.

      

      3.5 BOOKS
        AND RECORDS.
        The
        looks of account, minute books, stock record books, and other records of
        the
        Company (the “Company Records”, all of which have been made available to Buyer,
        are complete and correct in all material respects. The minute books of the
        Company contain materially accurate and complete records of all meetings
        held of
        and corporate action taken by, the stockholders, the Board of Directors,
        and
        committer of the Board of Directors of the Company, and no meeting of any
        such
        stockholders, Board of Directors, or committee has been held for which minutes
        have not been prepared and are not contained in such minute books. At the
        Closing, all of those books and records will be in the possession of the
        Company.

      

      3.6 ENCUMBRANCES.
        All
        material properties and assets of the Company are free and clear of all
        Encumbrances except for (i) Encumbrances reflected in the Interim Balance
        Sheet,
        (u) Encumbrances incurred in the Ordinary Course of Business since the date
        of
        the Interim Balance Sheet, and (iii) Permitted Encumbrances.

      

      3.7 [Intentionally
        omitted]

      

      3.8 NO
        UNDISCLOSED LIABILITIES.
        To the
        Knowledge of the Company, the Company has no material liabilities or obligations
        of any nature except for liabilities or obligations reflected or reserved
        against in the Interim Balance Sheet and current liabilities incurred in
        the
        Ordinary Course of Business.

      

      3.9 TAXES.

      

      (a) The
        Company has filed or caused to be filed (on a timely basis since inception)
        all
        Tax Returns that are or were required to be filed by or with respect to any
        of
        than, either separately or as a member of a group of corporations, pursuant
        to
        applicable Legal Requirements. Sellers have delivered or made available to
        Buyer
        copies of, and Section
        3.9
        of the
        Sellers’ Disclosure Schedule contains a complete and accurate list of, all such
        Tax Returns filed since inception. The Company has paid, or made provision
        for
        the payment of, all Taxes that have or may have become due pursuant to those
        Tax
        Returns or otherwise, or pursuant to any assessment received by Sellers or
        the
        Company, except such Taxes, if any, as are listed in Section
        3.9
        of the
        Sellers’ Disclosure Schedule and are being contested in good faith and as to
        which adequate reserves (determined in accordance with GAAP) have been provided
        in the Interim Balance Sheet.

      

      (b) No
        Tax
        Return filed by or on behalf of the Company is currently being, or has been,
        audited. There is no claim or assessment pending against the Company for
        any
        alleged deficiency in Taxes or for the failure to file any Tax Return. Neither
        Seller nor the Company has given or been requested to give waivers or extensions
        of any statute of limitations relating to the payment of Taxes of the
        Company.

      

      (c) All
        Tax
        Returns filed by the Company are true, correct, and complete in all material
        respects. There is no tax sharing agreement that will require any payment
        by the
        Company after the date of this Agreement lining the consistency period (as
        defined in Section 338(h)(4) of the IRC with respect to the sale of the Shares
        to Buyer), neither the Company nor any target affiliate (as defined in Section
        338(h)(6) of the IRC with respect to the sale of the Shares to Buyer) has
        sold
        or will sell any property or assets to Buyer or to any member of the affiliated
        group (as defined in Section 338(h)(5) of the IRC) that includes
        Buyer.

      

      3.10 NO
        MATERIAL ADVERSE CHANGE.
        Since
        the date of the Interim Balance Sheet, there has not been any material adverse
        change in the business, operations, properties, prospects, assets, or condition
        of the Company, and, to the Knowledge of the Company, no event has occurred
        or
        circumstance exists that may result in such a material adverse
        change.

      

      3.11 EMPLOYEE
        BENEFITS.

      

      (a) Schedule
        3.11(a) of
        the
        Sellers’ Disclosure Schedule contains a complete and accurate list of all
        Company Plans and Company Other Benefit Obligations.

      

      (b) The
        Company has delivered or made available to Buyer: (i) all documents that
        set
        forth the terms of each Company Plan and Company Other Benefit Obligation;
        (ii)
        all personnel, payroll, and employment manuals and policies; (iii) all contracts
        with third party administrators, actuaries, investment managers, consultants,
        and other independent contractors that relate to any Company Plan or Company
        Other Benefit Obligation; (iv) all reports submitted within the four years
        preceding the date of this Agreement by third party administrators, actuaries,
        investment managers, consultants, or other independent contractors with respect
        to any Company Plan or Company Other Benefit Obligation; (v) all notices
        that
        were given by the Company to any Governmental Body or any current or former
        employee, participant or beneficiary, pursuant to statute, within the four
        years
        preceding the date of this Agreement; and (vi) all notices that were given
        by
        any Governmental Body to the Company within the four years preceding the
        date of
        this Agreement.

      

      (c) Except
        as
        set forth in Schedule
        3.11(c)
        of the
        Sellers’ Disclosure Schedule: (i) the Company has performed all of its
        obligations under all Company Plans and Company Other Benefit Obligations,
        including making all required contributions or payments with respect to any
        Company Plans and Company Other. Benefit Obligations; (ii) the Company, with
        respect to all Company Plans and Company Other Benefits Obligations, is,
        and
        each Company Plan and Company Other Benefit Obligation is, in full compliance
        with all applicable Legal Requirements; (iii) the Company has made appropriate
        entries in its financial records and statements for all obligations and
        liabilities under such Company Plans and Company Other Benefit Obligations
        that
        have accrued but are not due to be paid in cash. The Company has no obligations
        to any person or Governmental Body with respect to any Company Plans or Company
        Other Benefit Obligations, except as set forth on the Interim Balance Sheet;
        (iv) all filings required by any applicable Legal Requirement as to each
        Company
        Plan and Company Other Benefit Obligation has been timely filed, and all
        notices
        and disclosures to participants required by any Governmental Body have been
        timely provided; (v) the Company has the right to modify and terminate each
        Company Plan and Company Other Benefit Obligation; and (vi) the consummation
        of
        the Contemplated Transactions will not result in the payment, vesting, or
        acceleration of any benefit or amount due under any Company Plan and Company
        Other Benefit Obligation or otherwise.

      

      
        	 	
                3.12

              	
                COMPLIANCE
                  WITH LEGAL REOUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.

              

      

      

      (a) the
        Company is, and at all times since inception, has been, in full compliance
        with
        each material Legal Requirement that is applicable to it;

      

      (b) no
        event
        has occurred or circumstance exists that (with or without notice or lapse
        of
        time) may constitute or result in a violation by the Company of, or a failure
        on
        the part of the Company to comply with, any material Legal Requirement;
        and

      

      (c) the
        Company has not received, at any time since inception, any written notice
        from
        any Governmental Body or any other Person regarding any actual or alleged
        violation of; or failure to comply with, any material Legal
        Requirement.

      

      3.13 LEGAL
        PROCEEDINGS; ORDERS.

      

      (a) There
        is
        no pending Proceeding:

      

      (i) that
        has
        been commenced by or against the Company; or

      

      (ii) that
        challenges, or that may have the effect of preventing, delaying, making illegal,
        or otherwise interfering with, any of the Contemplated
        Transactions.

      

      To
        the
        Knowledge of the Company, (1) no such Proceeding has been Threatened, and
        (2) no
        event has occurred or circumstance exists that may give rise to or serve
        as a
        basis for the commencement of any such Proceeding.

      

      (b) There
        is
        no Order to which the Company, or any of the assets owned or used by the
        Company, is subject.

      

      3.14 ABSENCE
        OF CERTAIN CHANGES AND EVENTS.
        Since
        the date of the Interim Balance Sheet, the Company has conducted its business
        only in the Ordinary Course of Business and there has not been any:

      

      (a) change
        in
        the Company’s authorized or issued capital stock; grant of any stock option or
        right to purchase shares of capital stock of the Company; issuance of any
        security convertible into such capital stock; grant of any registration rights;
        purchase, redemption, retirement, or other acquisition by the Company of
        any
        shares of any such capital stock; or declaration or payment of any dividend
        or
        other distribution or payment in respect of shares of capital
        stock;

      

      (b) amendment
        to the Organizational Documents of the Company;

      

      (c) payment
        or increase by the Company of any bonuses, salaries, or other compensation
        to
        any stockholder, director, officer, or employee (except in the Ordinary Course
        of Business) or entry into any employment, severance, or similar Contract
        with
        any director, officer, or employee;

      

      (d) adoption
        o g or increase in the payments to or benefits under, any profit sharing,
        bonus,
        deferred compensation, savings, insurance, pension, retirement, or other
        employee benefit plan for or with any employees of the Company;

      

      (e) damage
        to
        or destruction or loss of any asset or property of the Company, whether or
        not
        covered by insurance, that would have a Material Adverse Effect on the
        Company;

      

      (f) entry
        into, termination of, or receipt of notice of termination of (i) any license,
        distributorship, dealer, sales representative, joint venture, credit, or
        similar
        agreement, or (ii) any Contract or transaction involving a total remaining
        commitment by or to the Company of at least $25,000;

      

      (g) sale,
        lease (other than sales or leases of inventory in the Ordinary Course of
        Business), or other disposition of any asset or property of the Company or
        any
        Encumbrance on any material asset or property of the Company, other than
        Permitted Encumbrances;

      

      (h) cancellation
        or waiver of any claims or rights with a value to the Company in excess of
        $25,000;

      

      (i) material
        change in the accounting methods used by the Company; or

      

      (j) agreement,
        whether oral or written, by the Company to do any of the foregoing.

      

      3.15 CONTRACTS:
        NO DEFAULTS.

      

      (a) Section
        3.15(a)
        of the
        Sellers’ Disclosure Schedule contains a complete and accurate list, and Sellers
        have delivered or made available to Buyer true and complete copies, of (each,
        a
“Company
        Material Contract”):

      

      (i) each
        Applicable Contract that involves performance of services or delivery of
        goods
        or materials by or to the Company, or that was not entered into in the Ordinary
        Course of Business, of an amount or value in excess of $20,000;

      

      (ii) each
        Applicable Contract affecting the ownership of, leasing of, title to, use
        of, or
        any leasehold or other interest in, any real or personal property (except
        personal property leases and installment and conditional sales agreements
        having
        a value per item or aggregate payments of less than $10,000 and with terms
        of
        less than one year);

      

      (iii) each
        licensing agreement or other Applicable Contract with respect to patents,
        trademarks, copyrights, or other intellectual property, including agreements
        with current or former employees, consultants, or contractors regarding the
        appropriation or the non-disclosure of any of the Intellectual Property
        Assets;

      

      (iv) each
        collective bargaining agreement and other Applicable Contract to or with
        any
        labor union or other employee representative of a group of
        employees;

      

      (v) each
        joint venture, partnership, and other Applicable Contract (however named)
        involving a sharing of profits, losses, costs, or liabilities by the Company
        with any other Person;

      

      (vi) each
        Applicable Contract containing covenants that in any way purport to restrict
        the
        business activity of the Company or limit the freedom of the Company to engage
        in any line of business or to compete with any Person;

      

      (vii) each
        Applicable Contract entered into other than in the Ordinary Course of Business
        that contains or provides for an express undertaking by the Company to be
        responsible for consequential damages;

      

      (viii) each
        written warranty, guaranty, and or other similar undertaking with respect
        to
        contractual performance extended by the Company other than in the Ordinary
        Course of Business; and

      

      (xiii) each
        written amendment, supplement, and modification in respect of any of the
        foregoing.

      

      (b) Except
        as
        set forth in Section
        3.15(b)
        of the
        Sellers’ Disclosure Schedule:

      

      (i) no
        Seller
        (and no Related Person of any Seller) has or may acquire any rights under,
        and
        no Seller has or may become subject to any obligation or liability under,
        any
        Contract that relates to the business of, or any of the assets owned or used
        by,
        the Company; and

      

      (ii) to
        the
        Knowledge of the Company, no officer, director, agent, employee, consultant;
        or
        contractor of the Company is bound by any Contract that purports to limit
        the
        ability of such officer, director, agent; employee, consultant, or contractor
        to
        (A) engage in or continue any conduct, activity, or practice relating to
        the
        business of the Company, or (B) assign to the Company or to any other Person
        any
        rights to any invention, improvement, or discovery.

      

      (c) To
        the
        Knowledge of the Company, each Company Material Contract is in full force
        and
        effect and is valid and enforceable in accordance with its terms.

      

      (d) To
        the
        Knowledge of the Company:

      

      (i) the
        Company is, and at all times since October 13, 2003 has been, in full compliance
        with all applicable material terms and requirements of each Company Material
        Contract;

      

      (ii)  each
        other Person that has or had any obligation or liability under any Company
        Material Contract under which the Company has or had any rights is, and at
        all
        times since inception has been, in full compliance with all material applicable
        terms and requirements of such Company Material Contract; and

      

      (iii) no
        event
        has occurred or circumstance exists that (with or without notice or lapse
        of
        time) may result in a violation or breach of any Company Material
        Contract.

      

      3.16 INSURANCE.

      

      (a) The
        Company has delivered or made available to Buyer true and complete copies
        of all
        policies of insurance to which the Company is a party or under which the
        Company, or any director of the Company, is or has been covered at any time
        within the two (2) years preceding the date of this Agreement.

      

      (b) Section
        3.16(b)
        of the
        Sellers’ Disclosure Schedule describes any self-insurance arrangement by or
        affecting the Company, including any reserves established
        thereunder:

      

      (c) To
        the
        Knowledge of the Company all policies to which the Company is a party or
        that
        provide coverage to any Seller, the Company, or any director or officer of
        the
        Company:

      

      (A) are
        valid, outstanding, and enforceable; and

      

      (B) taken
        together, provide adequate insurance coverage for the assets and the operations
        of the Company for all risks to which the Company is normally
        exposed.

      

      3.17 ENVIRONMENTAL
        MATTERS.
        The
        Company, the operation of its business and any real property that the Company
        owns or has owned, leased or has leased (the “Premises”)
        are,
        to the Knowledge of the Company, in compliance with all applicable Environmental
        Laws and orders or directives of any governmental authorities having
        jurisdiction under such Environmental Laws. The Company has not received
        any
        written citation, directive, letter or other communication, or any notice
        of any
        proceeding claim or lawsuit, from any person arising out of the ownership
        or
        occupation of the Premises, or the conduct of its operations, and the Company
        is
        not aware of any basis therefor. To the Knowledge of the Company, no material
        expenditures are or will be required in order to comply with any Environmental
        Laws.

      

      3.18 EMPLOYEES.

      

      (a) Section
        3.18
        of the
        Sellers’ Disclosure Schedule contains a complete and accurate list of the
        following information for each employee or director of the Company, including
        each employee on leave of absence or layoff status: employer; name; job title;
        current compensation paid or payable; vacation accrued; and service credited
        for
        purposes of vesting and eligibility to participate under any Company Plan
        or
        Company Other Benefit Obligation.

      

      (b) To
        the
        Knowledge of the Company, no employee or director of the Company is a party
        to,
        or is otherwise bound by, any agreement or arrangement, including any
        confidentiality, noncompetition, or proprietary rights agreement, between
        such
        employee or director and any other Person (“Proprietary
        Rights Agreement”)
        that in
        any way adversely affects or will affect (i) the performance of his duties
        as an
        employee or director of the Company, or (ii) the ability of the Company to
        conduct its business, including any Proprietary Rights Agreement with Sellers
        or
        the Company by any such employee or director. To the Knowledge of the Company,
        no director, officer, or other key employee of the Company intends to terminate
        his employment with the Company.

      

      3.19 LABOR
        RELATIONS: COMPLIANCE.
        The
        Company is not a party to any collective bargaining or other labor Contract.
        The
        Company has complied in all respects with all material Legal Requirements
        relating to employment, equal employment opportunity, nondiscrimination,
        immigration, wages, hours, benefits, collective bargaining, the payment of
        social security and similar taxes, occupational safety and health, and plant
        closing. To the Knowledge of the Company, the Company is not liable for the
        payment of any compensation, damages, taxes, fines, penalties, or other amounts,
        however designated, for failure to comply with any of the foregoing Legal
        Requirements.

      

      3.20 INTELLECTUAL
        PROPERTY.

      

      (a) The
        term
“Intellectual Property Assets” includes:

      

      (i) the
        name
“Nuscribe”, all fictional business names, trading names, registered and
        unregistered trademarks, service marks, and applications (collectively,
“Marks”);

      

      (ii) all
        patents, patent applications, and inventions and discoveries that may be
        patentable (collectively, “Patents”);

      

      (iii) all
        copyrights in both published works and unpublished works (collectively,
“Copyrights”);
        and

      

      (iv)
         all
        know-how, trade secrets, confidential information, customer lists, software,
        technical information, data, process technology, plans, drawings, and blue
        prints (collectively, “Trade
        Secrets”);

      

      in
        each
        case owned, used, or licensed by the Company as licensee or
        licensor.

      

      (b) Section
        3.20(b)
        of the
        Sellers’ Disclosure Schedule contains a complete and accurate list and summary
        description, including any royalties paid or received by the Company, of
        all
        Contracts relating to the Intellectual Property Assets to which the Company
        is a
        party or by which the Company is bound, except for any license implied by
        the
        sale of a product and perpetual, paid-up licenses for commonly available
        software programs with a value of less than $1,000 under which the Company
        is
        the licensee. There are no outstanding and, to the Knowledge of the Company,
        no
        Threatened disputes or disagreements with respect to any such
        agreement.

      

      (c) Know-How
        Necessary for the Business.

      

      (i) The
        Intellectual Property Assets are all those necessary for the operation of
        the
        Company’s business as they are currently conducted. The Company is the owner of
        all right, title, and interest in and to each of the Intellectual Property
        Assets, free and clear of all Encumbrances, other than Permitted Encumbrances,
        and has the right to use without payment to a third party all of the
        Intellectual Property Assets.

      

      (ii) Except
        as
        set forth in Section
        3.20(c)
        of the
        Sellers’ Disclosure Schedule, all former and current employees of the Company
        has executed written Contracts with the Company that assign to the Company
        all
        rights to any inventions, improvements, discoveries, or information relating
        to
        the business of the Company. No employee of the Company has entered into
        any
        Contract that restricts or limits in any way the scope or type of work in
        which
        the employee may be engaged or requires the employee to transfer, assign,
        or
        disclose information concerning his work to anyone other than the
        Company.

      

      (d) Patents.

      

      (i) Section
        3.20(d)
        of the
        Sellers’ Disclosure Schedule contains a complete and accurate list and summary
        description of all filed Patents. The Company is the owner of all right,
        title,
        and interest in and to each of the filed Patents, free and clear of all
        Encumbrances, other than Permitted Encumbrances.

      

      (ii) All
        of
        the issued Patents are currently in compliance with all material formal Legal
        Requirements (including payment of filing, examination, and maintenance fees
        and
        proofs of working or use), are valid and enforceable, and are not subject
        to any
        maintenance fees or taxes or actions falling due within ninety days after
        the
        Closing Date.

      

      (iii) No
        Patent
        has been or is now involved in any interference, reissue, reexamination,
        or
        opposition proceeding. To the Knowledge of the Company, there is no potentially
        interfering patent or patent application of any third party.

      

      None
        of
        the products manufactured and sold, nor any process or know-how used, by
        the
        Company infringes or is alleged to infringe any patent or other proprietary
        right of any other Person.

      

      (e) Trademarks.

      

      (i) Section
        3.20(e)
        of
        Sellers’ Disclosure Schedule contains a complete and accurate list and summary
        description of all Marks. The Company is the owner of all right, title, and
        interest in and to each of the Marks, free and clear of all Encumbrances,
        other
        than Permitted Encumbrances.

      

      (ii) All
        Marks
        that have been registered with the United States Patent and Trademark Office
        are
        currently in compliance with all material formal legal requirements (including
        the timely post registration filing of affidavits of use and incontestability
        and renewal applications), are valid and enforceable, and are not subject
        to any
        maintenance fees or taxes or actions falling due within ninety days after
        the
        Closing Date.

      

      (iii) No
        Mark
        has been or is now involved in any opposition, invalidation, or cancellation
        and, to the Knowledge of the Company, no such action is Threatened with the
        respect to any of the Marks.

      

      (iv) To
        the
        Knowledge of the Company, there is no potentially interfering trademark or
        trademark application of any third party.

      

      (v) None
        of
        the Marks used by the Company infringes or is alleged to infringe any trade
        name, trademark, or service mark of any third party.

      

      (f) Copyrights.

      

      (i) Section
        3.20(f)
        of the
        Sellers’ Disclosure Schedule contains a complete and accurate list and summary
        description of all Copyrights. The Company is the owner of all right, title,
        and
        interest in and to each of the Copyrights, free and clear of all Encumbrances,
        other than Permitted Encumbrances.

      

      (ii) All
        the
        Copyrights have been registered and are currently in compliance with material
        formal legal requirements, are valid and enforceable, and are not subject
        to any
        maintenance fees, taxes, or actions falling due within ninety days after
        the
        date of Closing.

      

      (iii)
        None of the subject matter of any of the Copyrights infringes or is alleged
        to
        infringe any copyright of any third party or is a derivative work based on
        the
        work of a third party.

      

      (g) Trade
        Secrets.

      

      (i) With
        respect to each Trade Secret, the documentation relating to such Trade Secret
        is
        current, accurate, and sufficient in detail and content to identify and explain
        it and to allow its full and proper use without reliance on the knowledge
        or
        memory of any individual.

      

      (ii) The
        Company has taken all reasonable precautions to protect the secrecy,
        confidentiality, and value of the Trade Secrets.

      

      (iii) The
        Company has a right to use the Trade Secrets. The Trade Secrets are not part
        of
        the public knowledge or literature, and, to the Knowledge of the Company,
        have
        not been used, divulged, or appropriated either for the benefit of any Person
        (other than the Company) or to the detriment of the Company.

      

      3.21 CERTAIN
        PAYMENTS.
        Since
        inception, neither the Company nor any director, officer, agent, or employee
        of
        the Company, or to Knowledge of the Company, any other Person associated
        with or
        acting for or on behalf of the Company, has directly or indirectly, in violation
        of any Legal Requirement (a) made any contribution, gift, babe, rebate, payoff
        influence payment, kickback, or other payment to any Person, private or public,
        regardless of form, whether in money, property, or services (i) to obtain
        favorable treatment in securing business, (ii) to pay for favorable treatment
        for business secured, or (iii) to obtain special concessions or for special
        concessions already obtained, for or in respect of the Company or any Affiliate
        of the Company, or (b) established or maintained any fiord or asset for such
        purposes that has not been recorded in the books and records of the
        Company.

      

      3.22 DISCLOSURE.
        No
        representation or warranty of Sellers or the Company in this Agreement, and
        no
        statement in the Sellers’ Disclosure Schedule applicable to the Company, omits
        to state a material fact necessary to make the statements herein or therein,
        in
        light of the circumstances in which they were made, not misleading.

      

      3.23 RELATIONSHIPS
        WITH RELATED PERSONS.
        None of
        the Sellers, or any Related Person of the Sellers or of the Company has,
        or has
        had, any interest in any property (whether real, personal, or mixed and whether
        tangible or intangible), used in or pertaining to the Company’s business. No
        Seller or any Related Person of Sellers or of the Company owns, or has owned
        (of
        record or as a beneficial owner) an equity interest or any other financial
        or
        profit interest in, a Person that has (i) had business dealings or a material
        financial interest in any transaction with the Company other than business
        dealings or transactions conducted in the Ordinary Course of Business with
        the
        Company at substantially prevailing market prices and on substantially
        prevailing market terms, or (ii) engaged in competition with the Company
        with
        respect to any line of the products or services of the Company in any market
        presently served by the Company. No Seller or any Related Person of Sellers
        or
        of the Company is a party to any Contract with, or has any claim or right
        against, the Company.

      

      3.24 BROKERS
        OR FINDERS.
        Sellers
        and their agents have incurred no obligation or liability, contingent or
        otherwise, for brokerage or finders’ fees or agents’ commissions or other
        similar payment in connection with this Agreement

      

      4. REPRESENTATIONS
        AND WARRANTIES OF BUYER.
        Except
        as set forth on the Buyer’s Disclosure Schedule, which exceptions shall be
        deemed to be part of the representations and warranties made hereunder, Buyer
        represents and warrants to Sellers as follows:

      

      4.1 ORGANIZATION
        AND GOOD STANDING.
        Buyer
        is a corporation duly organized, validly existing, and in good standing under
        the laws of the State of Nevada, with full corporate power and authority
        to
        conduct its business as it is now being conducted, to own or use the properties
        and assets that it purports to own or use, and to perform its obligations
        under
        Applicable Contracts. Buyer is duly qualified to do business as a foreign
        corporation and is in good standing under the laws of each state or other
        jurisdiction in which the failure to so qualify would have a Material Adverse
        Effect.

      

      4.2 AUTHORITY
        NO CONFLICT.

      

      (a) This
        Agreement constitutes the legal, valid, and binding obligation of Boyer,
        enforceable against Buyer in accordance with its teams. Upon the execution
        and
        delivery by Buyer of the Employment Agreements, the Sellers’ Releases, the
        Consulting Agreement and the Stock Pledge Agreement (collectively, the
“Buyer’s
        Closing Documents”),
        the
        Buyer’s Closing Documents will constitute the legal, valid, and binding
        obligations of Buyer, enforceable against Buyer in accordance with their
        respective terms except (i) as limited by applicable bankruptcy, insolvency,
        reorganization, moratorium, fraudulent conveyance, or other laws of general
        application relating to or affecting the enforcement of creditors’ rights
        generally, (ii) as limited by laws relating to the availability of specific
        performance, injunctive relief, or other equitable remedies, and (iii) to
        the
        extent the indemnification provisions and the choice of law provisions contained
        in the Sellers’ Closing Documents may be limited by applicable laws. Buyer has
        the absolute and unrestricted right power and authority to execute and deliver
        this Agreement and the Buyer’s Closing Documents and to perform its obligations
        under this Agreement and the Buyer’s Closing Documents.

      

      (b) Neither
        the execution and delivery of this Agreement by Buyer; nor the consummation
        or
        performance of any of the Contemplated Transactions by Buyer will, directly
        or
        indirectly (with or without notice or lapse of time):

      

      (i) contravene,
        conflict with, or result in a violation of (A) any material provision of
        Buyer’s
        Organizational Documents, or (B) any resolution adopted by the board of
        directors or the stockholders of Buyer;

      

      (ii) contravene,
        conflict with, or result in a violation of or give any Governmental Body
        or
        other Person the right to challenge any of the Contemplated Transactions
        or to
        exercise any remedy or obtain any relief under, any material Legal Requirement
        or any material Order to which the Buyer, or any of the assets owned or used
        by
        the Buyer, may be subject;

      

      (iii) contravene,
        conflict with, or result in a violation of any of the teens or requirements
        of,
        or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
        terminate, or modify, any material Governmental Authorization that is held
        by
        Buyer;

      

      (iv) cause
        Buyer or the Company to become subject to, or to become liable for the payment
        of, any material amount of Tax;

      

      (iv) cause
        any
        of the assets owned by Buyer to be reassessed or revalued by any taxing
        authority or other Governmental Body,

      

      (v) contravene,
        conflict with, or result in a violation or breach of any material provision
        of,
        or give any Person the right to declare a default or exercise any remedy
        under,
        or to accelerate the maturity or performance of or to cancel, terminate,
        or
        modify, any Buyer Material Contract; or

      

      (vi) result
        in
        the imposition or creation of any material Encumbrance upon or with respect
        to
        any of the assets owned or used by Buyer.

      

      Buyer
        is
        not and will not be required to give any notice to or obtain any Consent
        from
        any Person in connection with the execution and delivery of this Agreement
        or
        the consummation or performance of any of the Contemplated
        Transactions.

      

      (c) Buyer
        has
        had an opportunity to (i) ask questions of and receive answers from Sellers
        and
        the Company concerning the terms and conditions of the Contemplated
        Transactions, (ii) obtain any additional information which Sellers of the
        Company possesses or can acquire without unreasonable effort or expense that
        is
        necessary to verify the accuracy of the information furnished, and (iii)
        consult
        and seek advice from an attorney of Buyer’s own choosing prior to entering into
        this Agreement. Buyer acknowledges that, except as set forth herein, no
        representations or warranties have been made to it, or to its Representatives,
        by any Seller or the Company or others with respect to the Company’s business
        and its financial condition and has obtained, in its judgment, sufficient
        information from Sellers and the Company to evaluate the merits and risks
        of the
        Contemplated Transactions. Buyer is aware of the risks inherent in the purchase
        of the Shares and acknowledges that there can be no assurance of the future
        viability or profitability of the Company, nor can there be any assurance
        relating to the current or future value of the Shares. The foregoing; however,
        does not limit or modify the representations and warranties of Sellers and
        the
        Company in Section
        3
        of this
        Agreement or the right of Buyer to rely thereon.

      

      4.3 INVESTMENT
        INTENT.
        Buyer
        is acquiring the Shares for its own account and not with a view to their
        distribution within the meaning of Section 2(11) of the Securities Act. Buyer
        has had an opportunity to ask questions of and receive answers from each
        Seller
        concerning the terms and conditions of the Contemplated Transactions and
        to
        obtain any additional information, which the Sellers possess or can acquire
        without unreasonable effort or expense that is necessary to verify the accuracy
        of the information f unshed. The foregoing, however, does not limit or modify
        the representations and warranties of the Company in Section 3 of this Agreement
        or the right of Buyer to rely thereon.

      

      4.4 CERTAIN
        PROCEEDINGS.
        There
        is no pending Proceeding that has been commenced against Bayer and that
        challenges, or may have the effect of preventing, delaying making illegal,
        or
        otherwise interfering with, any of the Contemplated Transactions. To Buyer’s
        Knowledge, no such Proceeding has been Threatened.

      

      4.5 BROKERS
        OR FINDERS.
        Buyer
        and its officers and agents have incurred no obligation or liability, contingent
        or otherwise, for brokerage or finders’ fees or agents’ commissions or other
        similar payment in connection with this Agreement and will indemnify and
        hold
        Sellers harmless from any such payment alleged to be due by or through Buyer
        as
        a result of the action of Buyer or its officers or agents.

      

      4.6 CAPITALIZATION;
        BUYER SHARES.
        The
        authorized equity securities of Buyer consist of 75,000,000 shares of common
        stock, par value $0.001 per share, of which 23,637,000 shares are issued
        and
        outstanding. The Buyer Shares when issued and delivered to Sellers pursuant
        to
        this Agreement will be duly authorized, validly issued, fully paid and
        non-assessable shares of common stock of Buyer Upon delivery of the Buyer
        Shares
        to the Sellers, the Sellers will receive good title to the Buyer Shares,
        free
        and clear of all Encumbrances, except for any restrictions existing under
        applicable securities laws and the restrictions imposed in this Agreement.
        Buyer
        has no subsidiaries other than Vemics, Inc, a Delaware corporation, which
        is
        wholly owned by Buyer.

      

      4.7 FINANCIAL
        STATEMENTS.
        Buyer
        has delivered to the Company the bran sited consolidated balance sheet of
        Buyer
        as at June 30, 2006, and the related unaudited consolidated statements of
        income, changes in stockholders’ equity, and cash flow for each of the fiscal
        year then ended (the “Buyer
        Financial Statements”):
        The
        Buyer Financial Statements and notes fairly present the financial condition
        and
        the results of operations, changes in stockholders’ equity, and cash flow of
        Buyer as at such date of and for the period referred to in therein, and reflect
        the consistent application of sound accounting principles throughout the
        periods
        involved, except as disclosed in the notes to the Buyer Financial
        Statements.

      

      4.8 BOOKS
        AND RECORDS.
        The
        books of account, minute books, stock record books, and other records of
        Buyer,
        all of which have been made available to Buyer, are complete and correct
        and
        have been maintained in accordance with sound business practices and the
        requirements of Section 13(b)(2) of the Exchange Act (regardless of whether
        or
        not Buyer is subject to that Section), including the maintenance of an adequate
        system of internal controls. The minute books of Buyer contain materially
        accurate and complete records of all meetings held of, and corporate action
        taken by, the stockholders, the Board of Directors, and committees of the
        Board
        of Directors of Buyer, and no meeting of any such stockholders, Board of
        Directors, or committee has been held for which minutes have not been prepared
        and are not contained in such minute books.

      

      4.9 TAXES.
        Buyer
        has filed or caused to be filed (on a timely basis since inception) all Tax
        Returns that are or were required to be filed by or with respect to Buyer,
        either separately or as a member of a group of corporations, pursuant to
        applicable Legal Requirements. Buyer has delivered or made available to Sellers
        copies of, and Section
        4.9
        of
        Buyer’s Disclosure Schedule contains a complete and accurate list of; all such
        Tax Returns filed since inception. Buyer has paid, or made provision for
        the
        payment of; all Taxes that have or may have become due pursuant to those
        Tax
        Returns or otherwise, or pursuant to any assessment received by Buyer, except
        such Taxes, if any, as are listed in Schedule
        4.9
        of
        Buyer’s Disclosure Schedule and are being contested in good faith and as to
        which adequate reserves (determined in accordance with GAAP) have been provided
        in Buyer’s Financial Statements.

      

      4.10 DISCLOSURE.
        No
        representation or warranty of Buyer in this Agreement, and no statement in
        the
        Buyer’s Disclosure Schedule applicable to Buyer, omits to state a material fact
        necessary to make the statements herein or therein, in light of the
        circumstances in which they were made, not misleading.

      

      4.11 ENCUMBRANCES.
        All
        material properties and assets of Buyer are free and clear of all Encumbrances
        except for (i) Encumbrances reflected in the Buyer’s Financial Statements, (ii)
        Encumbrances incurred in the Ordinary Course of Business since the date of
        the
        Buyer’s Financial Statements, and (iii) Permitted Encumbrances.

      

      4.12 NO
        MATERIAL ADVERSE CHANGE.
        Since
        the date of the Buyer Financial Statements, there has not been any material
        adverse change in the business, operations, properties, prospects, assets,
        or
        condition of Buyer, and, to the Knowledge of Buyer, no event has occurred
        or
        circumstance exists that may result in such a material adverse
        change.

      

      4.13 EMPLOYEE
        BENEITS.

      

      (a) Schedule
        4.13 (a)
        of the
        Buyer’s Disclosure Schedule contains a complete and accurate list of all Buyer
        Plans and Buyer Other Benefit Obligations.

      

      (b) Buyer
        has
        delivered or made available to Sellers: (i) all documents that set forth
        the
        terms of each Buyer Plan and Buyer Other Benefit Obligation; (ii) all personnel,
        payroll, and employment manuals and policies; (iii) all contracts with third
        party administrators, actuaries, investment managers, consultants, and other
        independent contractors that relate to any Buyer Plan or Buyer Other Benefit
        Obligation; (iv) all reports submitted within the four years preceding the
        date
        of this Agreement by third party administrators, actuaries, investment managers,
        consultants, or other independent contractors with respect to any Buyer Plan
        or
        Buyer Other Benefit Obligation; (v) all notices that were given by Buyer
        to any
        Governmental Body or any entreat or former employee, participant or beneficiary,
        pursuant to statute, within the four years preceding the date of this Agreement;
        and (vi) all notices that were given by any Governmental Body to Buyer within
        the four years preceding the data of this Agreement.

      

      (c) Except
        as
        set forth in Schedule
        4.13(c)
        of
        Buyer’s Disclosure Schedule: (i) Buyer has performed all of its obligations
        under all Buyer Plans and Buyer Other Benefit Obligations, including making
        all
        required contributions or payments with respect to any Buyer Plans and Buyer
        Other Benefit Obligations; (ii) the Company, with respect to all Buyer Plans
        and
        Buyer Other Benefits Obligations, is, and each Buyer Plan and Buyer Other
        Benefit Obligation is, in full compliance with all applicable Legal
        Requirements; (iii) the Company has made appropriate entries in its financial
        records and statements for all obligations and liabilities under such Buyer
        Plans and Buyer Other Benefit Obligations that have accrued but are not due
        to
        be paid in cash Buyer has no obligations to any person or Governmental Body
        with
        respect to any Buyer Plans or Buyer Other Benefit Obligations, except as
        set
        forth on the Buyer’s Financial Statements; (iv) all filings required by any
        applicable Legal Requirement as to each Buyer Plan and Buyer Other Benefit
        Obligation has been timely filed, and all notices and disclosures to
        participants required by any Governmental Body have been timely provided;
        (v)
        Buyer has the right to modify and terminate each Buyer Plan and Buyer Other
        Benefit Obligation; and (vi) the consummation of the Contemplated Transactions
        will not result in the payment, vesting, or acceleration of any benefit or
        amount due under any Buyer Plan and Buyer Other Benefit Obligation or
        otherwise.

      

      4.14 COMPLIANCE
        WITH LEGAL REOUJREMENTS; GOVERNMENTAL AUTHORIZATIONS.
        Except
        as set forth on Section 4.14 of Buyer’s Disclosure Schedule:

      

      (a)  Buyer
        is,
        and at all times since inception has been, in full compliance with each material
        Legal Requirement that is applicable to it;

      

      (b) no
        event
        has occurred or circumstance exists that (with or without notice or lapse
        of
        time) may constitute or result in a violation by Buyer of, or a failure on
        the
        part of Buyer to comply with, any material Legal Requirement; and

      

      (c) Buyer
        has
        not received, at any time since inception, any written notice from any
        Governmental Body or any other Person regarding any actual or alleged violation
        of; or failure to comply with, any Legal Requirement.

      

      4.15 LEGAL
        PROCEEDINGS: ORDERS.

      

      (a) Except
        as
        set forth on Section
        4.15(a)
        of
        Buyer’s Disclosure Schedule, there is no pending Proceeding:

      

      (i) that
        has
        been commenced by or against Buyer, or

      

      (ii) that
        challenges, or that may have the effect of preventing, delaying, making illegal,
        or otherwise interfering with, any of the Contemplated
        Transactions.

      

      To
        the
        Knowledge of Buyer, (1) no such Proceeding has been Threatened, and (2) no
        event
        has occurred or circumstance exists that may give rise to or serve as a basis
        for the commencement of any such Proceeding.

      

      (b) Except
        as
        set forth on Section
        4.15(b)
        of
        Buyer’s Disclosure Schedule, there is no Order to which Buyer; or any of the
        assets owned or used by Buyer, is subject.

      

      4.16 ABSENCE
        OF CERTAIN CHANGES AND EVENTS.
        Since
        the date of the Buyer Financial Statements, Buyer has conducted its business
        only in the Ordinary Course of Business and there has not been any:

      

      (a) change
        in
        Buyer’s authorized or issued capital stock; grant of any stock option or right
        to purchase shares of capital stock of Buyer, issuance of any security
        convertible into such capital stock; grant of any registration rights; purchase,
        redemption, retirement, or other acquisition by Buyer of any shares of any
        such
        capital stock; or declaration or payment of any dividend or other distribution
        or payment in respect of shares of capital stock, except as set forth on
        Section
        4.16(a)
        of
        Buyer’s Disclosure Schedule;

      

      (b) amendment
        to the Organizational Documents of Buyer;

      

      (c) payment
        or increase by Buyer of any bonuses, salaries, or other compensation to any
        stockholder, director, officer, or employee (except in the Ordinary Course
        of
        Business) or entry into any employment, severance, or similar Contract with
        any
        director, officer, or employee;

      

      (d) adoption
        of; or increase in the payments to or benefits under, any profit sharing,
        bonus,
        deferred compensation, savings, insurance, pension, retirement, or other
        employee benefit plan for or with any employees of Buyer;

      

      (e) damage
        to
        or destruction or loss of any asset or property of Buyer, whether or not
        covered
        by insurance, that would have a Material Adverse Effect on Buyer;

      

      (f) entry
        into, termination of, or receipt of notice of termination of (i) any license,
        distributorship, dealer, sales representative, joint venture, credit, or
        similar
        agreement, or (ii) any Contract or transaction involving a total remaining
        commitment by or to Buyer of at least $25,000;

      

      (g) sale,
        lease (other than sales or leases of inventory in the Ordinary Course of
        Business), or other disposition of any asset or property of Buyer or any
        Encumbrance on any material asset or property of Buyer, other than Permitted
        Encumbrances;

      

      (h) cancellation
        or waiver of any claims or rights with a value to Buyer in 

      excess
        of
        $25,000;

      (i) material
        change in the accounting methods used by Buyer; or

      

      (j) agreement,
        whether oral or written, by Buyer to do any of the foregoing.

      

      4.17 CONTRACTS;
        NO DEFAULTS.

      

      (a)
         Section
        4.17(a)
        of
        Buyer’s Disclosure Schedule contains a complete and accurate list, and Buyer has
        delivered or made available to Sellers true and complete copies, of (each,
        a
“Buyer
        Material Contract”):

      

      (i) each
        Applicable Contract that involves performance of services or delivery of
        goods
        or materials by or to Buyer, or that was not entered into in the Ordinary
        Course
        of Business, of an amount or value in excess of $75,000;

      

      (ii) each
        Applicable Contract affecting the ownership of, leasing of, title to, use
        of or
        any leasehold or other interest in, any real or personal property (except
        personal property leases and installment and conditional sales agreements
        having
        a value per item or aggregate payments of less than $50,000 and with terms
        of
        less than one year);

      

      (iii) each
        licensing agreement or other Applicable Contract with respect to patents,
        trademarks, copyrights, or other intellectual property, including agreements
        with current or former employees, consultants, or contractors regarding the
        appropriation or the non-disclosure of any of the Buyer Intellectual Property
        Assets;

      

      (iv) each
        collective bargaining agreement and other Applicable Contract to or with
        any
        labor union or other employee representative of a group of
        employees;

      

      (v) each
        joint venture, partnership, and other Applicable Contract (however named)
        involving a sharing of profits, losses, costs, or liabilities by Buyer with
        any
        other Person;

      

      (vi) each
        Applicable Contract containing covenants that in any way purport to restrict
        the
        business activity of Buyer or limit the freedom of Buyer to engage in any
        line
        of business or to compete with any Person;

      

      (vii) each
        written warranty, guaranty, and or other similar undertaking with respect
        to
        contractual performance extended by Buyer other than in the Ordinary Course
        of
        Business; and

      

      (viii) each
        written amendment, supplement, and modification in respect of any of the
        foregoing.

      

      (b) Except
        as
        set forth in Section
        4.17(b)
        of
        Buyer’s Disclosure Schedule:

      

      (i) Buyer
        (and no Related Person of Buyer) has not or may not acquire any rights under,
        and Buyer has not or may not become subject to any obligation or liability
        under; any Contract that relates to the business of, or any of the assets
        owned
        or used by, Buyer; and

      

      (ii) to
        the
        Knowledge of Buyer, no officer, director, agent, employee, consultant, or
        contractor of Buyer is bound by any Contract that purports to limit the ability
        of such officer, director, agent, employee, consultant, or contractor to
        (A)
        engage in or continue any conduct, activity, or practice relating to the
        business of Buyer, or (B) assign to Buyer or to any other Person any rights
        to
        any invention, improvement, or discovery.

      

      (c) To
        the
        Knowledge of Buyer, each Buyer Material Contract is in full force and effect
        and
        is valid and enforceable in accordance with its terms.

      

      (d) To
        the
        Knowledge of Buyer:

      

      (i) Buyer
        is,
        and at all times since July 17, 2001 has been, in fail compliance with all
        applicable material terms and requirements of each Buyer Material
        Contract;

      

      (ii) each
        other Person that has or had any obligation or liability under any Buyer
        Material Contract under which Buyer has or had any rights is, and at all
        times
        since inception has been, in full compliance with all material applicable
        terms
        and requirements of such Buyer Material Contract; and

      

      (iii) no
        event
        has occurred or circumstance exists that (with or without notice or lapse
        of
        time) may result in a violation or breach of any Buyer Material
        Contract.

      

      4.18
         INSURANCE.

      

      (a) Buyer
        has
        delivered or made available Sellers true and complete copies of all policies
        of
        insurance to which Buyer is a party or under which Buyer, or any director
        of the
        Company, is or has been covered at any time within the two (2) years preceding
        the date of this Agreement.

      

      (b) Section
        4.18(b)
        of
        Buyer’s Disclosure Schedule describes any self-

      insurance
        arrangement by or affecting Buyer, including any reserves established
        thereunder.

      

      (c) To
        the
        Knowledge of Buyer all policies to which Buyer is a party or that provide
        coverage to Buyer, or any director or officer of Buyer:

      

      (A)
         are
        valid, outstanding, and enforceable; and

      

      (B)
         taken
        together, provide adequate insurance coverage for the assets and the operations
        of Buyer for all risks to which Buyer is normally exposed.

      

      4.19 ENVIRONMENTAL
        MATTERS.
        Buyer,
        the operation of its business and any real property that Buyer owns or has
        owned, leased or has leased (the “Buyer
        Premises”)
        are,
        to the Knowledge of Buyer, in compliance with all applicable Environmental
        Laws
        and orders or directives of any governmental authorities having jurisdiction
        under such Environmental Laws. Buyer has not received any written citation,
        directive, letter or other communication, or any notice of any proceeding,
        claim
        or lawsuit, from any person arising out of the ownership or occupation of
        the
        Buyer Premises, or the conduct of its operations, and Buyer is not aware
        of any
        basis therefor. To the Knowledge of Buyer, no material expenditures are or
        will
        be required in order to comply with any Environmental Laws.

      

      4.20 EMPLOYEES.

      

      (a) Section
        4.20
        of the
        Buyer’s Disclosure Schedule contains a complete and accurate list of the
        following information for each employee or director of Buyer, including each
        employee on leave of absence or layoff status: employer; name; job title;
        current compensation paid or payable; vacation accrued; and service credited
        for
        purposes of vesting and eligibility to participate under Buyer Plan or Buyer
        Other Benefit Obligation.

      

      (b) To
        the
        Knowledge of Buyer, no employee or director of Buyer is a party to, or is
        otherwise bound by, any Proprietary Rights Agreement between such employee
        or
        director and any other Person that in any way adversely affects or will affect
        (i) the performance of his duties as an employee or director of Buyer, or
        (ii)
        the ability of Buyer to conduct its business, including any Proprietary Rights
        Agreement with Buyer by any such employee or director. To the Knowledge of
        Buyer, no director; officer, or other key employee of Buyer intends to terminate
        his employment with Buyer.

      

      4.21 LABOR
        RELATIONS; COMPLIANCE.
        Buyer
        is not a party to any collective bargaining or other labor Contract. Buyer
        has
        complied in all respects with all material Legal Requirements relating to
        employment, equal employment opportunity, nondiscrimination, immigration,
        wages,
        hours, benefits, collective bargaining, the payment of social security and
        similar taxes, occupational safety and health, and plant closing. To the
        Knowledge of Buyer, Buyer is not liable for the payment of any compensation,
        damages, taxes, fines, penalties, or other amounts, however designated, for
        failure to comply with any of the foregoing Legal Requirements.

      

      4.22 INTELLECTUAL
        PROPERTY.

      

      (a) The
        term
“Buyer
        Intellectual Property Assets”
        includes:

      

      (i) the
        name
“Vemics”, all fictional business names, trading names, registered and
        unregistered trademarks, service marks, and applications (collectively,
“Buyer
        Marks”);

      

      (ii) all
        patents, patent applications, and inventions and discoveries that may be
        patentable (collectively, “Buyer
        Patents”);

      

      (iii) all
        copyrights in both published works and unpublished works (collectively,
“Buyer
        Copyrights”);
        and

      

      (iv)
         all
        know-how, trade secrets, confidential information, customer lists, software,
        technical information, data, process technology, plans, drawings, and blue
        prints (collectively, “Buyer
        Trade Secrets”);

      

      in
        each
        case owned, used, or licensed by Buyer as licensee or licensor.

      

      (b) Section
        4.22(b)
        of the
        Buyer’s Disclosure Schedule contains a complete and accurate list and summary
        description, including any royalties paid or received by the Company, of
        all
        Contracts relating to the Buyer Intellectual Property Assets to which Buyer
        is a
        party or by which Buyer is bound, except for any license implied by the sale
        of
        a product and perpetual, paid up licenses for commonly available software
        programs with a value of less than $1,000 under which Buyer is the licensee.
        There are no outstanding and, to the Knowledge of Buyer, no Threatened disputes
        or disagreements with respect to any such agreement

      

      (c) Know
        How
        Necessary for the Business.

      

      (i) The
        Buyer
        Intellectual Property Assets are all those necessary for the operation of
        Buyer’s business as they are currently conducted. Buyer is the owner of all
        right, title, and interest in and to each of the Buyer Intellectual Property
        Assets, free and clear of all Encumbrances, other than Permitted Encumbrances,
        and has the right to use without payment to a third party all of the Buyer
        Intellectual Property Assets.

      

      (ii) Except
        as
        set forth in Section
        4.22(b)
        of the
        Buyer’s Disclosure Schedule, all former and current employees of Buyer have
        executed written Contracts with Buyer that assign to Buyer all rights to
        any
        inventions, improvements, discoveries, or information relating to the business
        of Buyer. No employee of Buyer has entered into any Contract that restricts
        or
        limits in any way the scope or type of work in which the employee may be
        engaged
        or requires the employee to transfer, assign, or disclose information concerning
        his work to anyone other than Buyer.

      

      (d) Buyer
        Patents.

      

      (i) Section
        4.22(d)
        of the
        Buyer’s Disclosure Schedule contains a complete and accurate list and summary
        description of all filed Buyer Patents. Buyer is the owner of all right,
        title,
        and interest in and to each of the filed Buyer Patents, free and clear of
        all
        Encumbrances, other than Permitted Encumbrances.

      

      (ii) All
        of
        the issued Patents are currently in compliance with all material formal Legal
        Requirements (including payment of filing examination, and maintenance fees
        and
        proofs of working or use), are valid and enforceable, and are not subject
        to any
        maintenance fees or taxes or actions falling due within ninety days after
        the
        Closing Date.

      

      (iii) No
        Buyer
        Patent has been or is now involved in any interference, reissue, reexamination,
        or opposition proceeding. To the Knowledge of Buyer, there is no potentially
        interfering patent or patent application of any third party.

      

      None
        of
        the profits manufactured and sold, nor any process or expertise used, by
        Buyer
        infringes or is alleged to infringe any patent or other proprietary right
        of any
        other Person.

      

      (e) Buyer
        Trademarks.

      

      (i) Section
        4.22(f)
        of
        Buyer’s Disclosure Schedule contains a complete and accurate list and summary
        description of all Buyer Marks. Buyer is the owner of all right, title, and
        interest in and to each of the Buyer Marks, free and clear of all Encumbrances,
        other than Permitted Encumbrances.

      

      (ii) All
        Buyer
        Marks that have been registered with the United States Patent and Trademark
        Office are currently in compliance with all material formal legal requirements
        (including the timely post-registration filing of affidavits of use and
        incontestability and renewal applications), are valid and enforceable, and
        are
        not subject to any maintenance fees or taxes or actions falling due within
        ninety days after the Closing Date.

      

      (iii) No
        Buyer
        Mark has been or is now involved in any opposition, invalidation, or
        cancellation and, to the Knowledge of Buyer, no such action is Threatened
        with
        the respect to any of the Buyer Marks.

      

      (iv) To
        the
        Knowledge of Buyer, there is no potentially interfering trademark or trademark
        application of any third party.

      

      (v)
         None
        of
        the Buyer Marks used by Buyer infringes or is alleged to infringe any trade
        name, trademark, or service mark of any third party.

      

      (f) Buyer
        Copyrights.

      

      (i) Section
        4.22(f)
        of the
        Buyer’s Disclosure Schedule contains a complete and accurate list and summary
        description of all Buyer Copyrights. Buyer is the owner of all right, title,
        and
        interest in and to each of the Buyer Copyrights, free and clear of all
        Encumbrances, other than Permitted Encumbrances.

      

      (ii) All
        the
        Buyer Copyrights have been registered and are currently in compliance with
        material formal legal requirements, are valid and enforceable, and are not
        subject to any maintenance fees or taxes or actions falling due within ninety
        days after the date of Closing.

      

      (iii) None
        of
        the subject matter of any of the Buyer Copyrights infringes or is alleged
        to
        infringe any copyright of any third party or is a derivative work based on
        the
        work of a third party.

      

      (g) Buyer
        Trade Secrets.

      

      (i) With
        respect to each Buyer Trade Secret, the documentation relating to such Buyer
        Trade Secret is current, accurate, and sufficient in detail and content to
        identify and explain it and to allow its full and proper use without reliance
        on
        the knowledge or memory of any individual. 

      

      (ii) Buyer
        has
        taken all reasonable precautions to protect the secrecy, confidentiality,
        and
        value of the Buyer Trade Secrets.

      

      (iii) Buyer
        has
        a right to use the Buyer Trade Secrets. The Buyer Trade Secrets are not part
        of
        the public knowledge or literature, and, to the Knowledge of Buyer, have
        not
        been used, divulged, or appropriated either for the benefit of any Person
        (other
        than Buyer) or to the detriment of Buyer.

      

      4.23 CERTAIN
        PAYMENTS.
        Since
        inception, neither Buyer nor any director, officer, agent, or employee of
        Buyer;
        or to Knowledge of Buyer, any other Person associated with or acting for
        or on
        behalf of Buyer, has directly or indirectly, in violation of any Legal
        Requirement (a) made any contribution, gift, bribe, rebate, payoff, influence
        payment, kickback, or other payment to any Person, private or public, regardless
        of form, whether in money, property, or services (i) to obtain favorable
        treatment in securing business, (ii) to pay for favorable treatment for business
        secured, or (iii) to obtain special concessions or for special -concessions
        already obtained, for or in respect of Buyer or any Affiliate of Buyer, or
        (b)
        established or maintained any fund or asset for such purposes that has not
        been
        recorded in the books and records of Buyer.

      

      4.24 RELATIONSHIPS
        WITH RELATED PERSONS.
        Neither
        Buyer, nor any Related Person of Buyer, or has had, any interest in any property
        (whether real, personal, or mixed and whether tangible or intangible), used
        in
        or pertaining to Buyer’s business. Neither Buyer, nor any Related Person of
        Buyer owns, or has owned (of record or as a beneficial owner) an equity interest
        or any other financial or profit interest in, a Person that has (i) had business
        dealings or a material financial interest in any transaction with Buyer other
        than business dealings or transactions conducted in the Ordinary Course of
        Business with Buyer at substantially prevailing market prices and on
        substantially prevailing market terms, or (ii) engaged in competition with
        Buyer
        with respect to any line of the products or services of Buyer in any market
        presently served by Buyer. Neither Buyer nor any Related Person of Buyer
        is a
        party to any Contract with, or has any claim or right against,
        Buyer.

      

      5. ADDITIONAL
        COVENANTS AND AGREEMENTS.

      

      5.1
         BOARD
        OF DIRECTORS REPRESENTATION.
        The
        Board of Directors of Buyer shall initially consist of nine (9) members,
        three
        (3) of which shall have been designated by Sellers. At such time as the Board
        of
        Directors of Buyer consists of six (6) or less members, then Sellers shall
        be
        entitled to designate two (2) members.

      

      5.2 TERMINATION
        OF INVESTOR RIGHTS AND SHAREHOLDER AGREEMENT.
        The
        Company and certain of the Sellers are parties to an Investor Rights and
        Shareholder Agreement dated February 28, 2006 (the “Investor
        Rights Agreement”).
        The
        parties to the Investor Rights Agreement hereby agree that the Investor Rights
        Agreement shall be terminated simultaneously with the consummation of Closing
        hereunder and shall be of no further force or effect.

      

      5.3 TERMINATION
        OF FOUNDER’S STOCK RESTRICTION AGREEMENT.
        Each of
        the Founding Shareholders is a party to a Founder’s Stock Restriction Agreement
        with the Company, each dated February 28, 2006 (the “Founders
        Agreements”).
        The
        Company hereby waives its rights of first refusal under each of the Founders
        Agreements with respect to the exchange of Shares pursuant to this Agreement.
        The parties to each of the Founders Agreements hereby agree that each of
        the
        Founders Agreements shall be terminated simultaneously with the consummation
        of
        Closing hereunder, and shall be of no further force or effect.

      

      5.4 RESIGNATION
        OF COMPANY DIRECTORS.
        Effective upon the consummation of Closing hereunder, Thomas Dorsett and
        Brian
        Groh hereby resign as directors of the Company, and Fred Zolla and Craig
        Stout
        are hereby appointed in their place.

      

      5.5
         RESIGNATION
        OF COMPANY OFFICERS.
        Effective upon the consummation of Closing hereunder, Thomas Dorsett, C.
        Robert
        Dorsett and John Dogru hereby resign as officers of the Company, and Fred
        Zolla
        is hereby appointed as Chairman of the Board of the Company, and Craig Stout
        is
        hereby appointed as Secretary of the Company.

      

      6. TERMINATION.
        This
        Agreement may be terminated by the mutual consent of Buyer and the
        Sellers.

      

      7. INDEMNIFICATION;
        REMEDIES.

      

      7.1 SURVIVAL;
        RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE.
        All
        representations, warranties, covenants, and obligations of the Sellers and
        Buyer
        in this Agreement, the Disclosure Schedules, and any other certificate or
        document delivered pursuant to this Agreement will survive the Closing. All
        representations, warranties, covenants, and obligations of the Company in
        this
        Agreement, the Disclosure Schedule, and any other certificate or document
        delivered pursuant to this Agreement will terminate upon the consummation
        of
        Closing.

      

      7.2
         INDEMNIFICATION
        AND PAYMENT OF DAMAGES BY SELLERS AND THE COMPANY.
        The
        Sellers, severally and not jointly, will indemnify and hold harmless Buyer
        and
        the Company, and their respective Representatives, stockholders, controlling
        persons, and affiliates (collectively, the “Buyer
        Indemnified Persons”)
        for,
        and will pay to the Buyer Indemnified Persons the amount of, any loss,
        liability, claim, damage (but specifically excluding incidental and
        consequential damages), expense (including costs of investigation and defense
        and reasonable attorneys’ fees), whether or not involving a third party claim
        (collectively, “Damages”),
        arising, directly or indirectly, from or in connection with:

      

      (a) any
        Breach of any representation or warranty made by Sellers or the Company in
        this
        Agreement, the Sellers’ Disclosure Schedule, or any other certificate or
        document delivered by Sellers or the Company pursuant to this
        Agreement;

      

      (b) any
        Breach by any Seller or the Company of any covenant or obligation of such
        Seller
        in this Agreement; or

      

      (c) any
        claim
        by any Person for brokerage or finder’s fees or commissions or similar payments
        based upon any agreement or understanding alleged to have been made by any
        such
        Person with Sellers or the Company (or any Person acting on their behalf)
        in
        connection with any of the Contemplated Transactions.

      

      7.3 INDEMNIFICATION
        AND PAYMENT OF DAMAGES BY BUYER.
        Buyer
        will indemnify and hold harmless Sellers and each of their respective
        Representatives, stockholders, controlling persons, affiliates, heirs,
        successors and assigns (collectively, the “Seller
        Indemnified Persons”)
        for,
        and will pay to the Seller Indemnified Persons the amount of any Damages
        arising, directly or indirectly, from or in connection with:

      

      (a) any
        Breach of any representation or warranty made by Buyer in this Agreement,
        the
        Buyer’s Disclosure Schedule, or in any other certificate or document delivered
        by Buyer pursuant to this Agreement;

      

      (b) any
        Breach by Buyer of any covenant or obligation of Buyer in this Agreement;
        or

      

      (c)
         any
        claim
        by any Person for brokerage or finder’s fees or commissions or similar payments
        based upon any agreement or understanding alleged to have been made by such
        Person with Buyer (or any Person acting on its behalf) in connection with
        any of
        the Contemplated Transactions.

      

      7.4 TIME
        LIMITATIONS.
        If the
        Closing occurs, Sellers will have no liability (for indemnification or
        otherwise) with respect to any representation or warranty (other than those
        in
Sections
        3.3,
        3.9,
        3.11,
        and
3.17),
        or
        covenant or obligation to be performed and complied with prior to the Closing
        Date unless on or before the first anniversary of the Closing Date, Buyer
        notifies Sellers of a claim specifying the factual basis of that claim in
        reasonable detail to the extent then known by Buyer; a claim with respect
        to
Sections
        3.3,
        3.11,
        or
3.17
        may be
        made at any time prior to the third anniversary of the Closing Date, and
        a claim
        with respect to Sections
        3.3
        may be
        made at any time prior to the sixth anniversary of the Closing Date. If the
        Closing occurs, Buyer will have no liability (for indemnification or otherwise)
        with respect to any representation or warranty (other than those in Sections
        4.6,
        4.9,
        4.13,
        and
4.19),
        or
        covenant or obligation to be performed and complied with prior to the Closing
        Date, unless on or before first anniversary of the Closing Date Sellers notify
        Buyer of a claim specifying the factual basis of that claim in reasonable
        detail
        to the extent then known by Sellers; a claim with respect to Sections
        4.9,
        4.13,
        or
4.19
        may be
        made at any tune prior to the third anniversary of the Closing Date, and
        a claim
        with respect to Section
        4.6
        may be
        made at any time prior to the sixth anniversary of the Closing Date.
        Notwithstanding anything in this Section
        7.4
        to the
        contrary, any by any party based on fraud may be made at any time prior to
        the
        expiration of the applicable statute of limitations for fraud.

      

      7.5 LIMITATIONS
        ON SELLERS’ LIABILITY.
        Sellers
        will have no liability (for indemnification or otherwise) with respect to
        the
        matters described in clause (a), clause (b) and clause (c) of Section
        7.2
        until
        the total of all Damages with respect to such matters exceeds $50,000, and
        then
        only for the amount by which such Damages exceed $ 50,000. However, first
        sentence of this Section
        7.5
        will not
        apply to any intentional Breach by Sellers or the Company of any covenant
        or
        obligation or to the breach of Section
        3.3,
        whether
        intentional or not. The liability of each of Seller pursuant to Section
        7.2,
        shall
        be limited to an amount equal to ten percent (10%) of the aggregate value
        of the
        Buyer’s Shares (based on the Vemics Stock Price) received by such Seller under
        this Agreement, provided, however; that any liability arising out of fraud
        of
        any Seller shall be limited to the aggregate value of the Buyer’s Shares (based
        on the Vemics Stock Price) received by such Seller under this Agreement.
        Further, in the event of a breach by a Seller of a representation or warranty
        of
        such Seller set forth in Sections
        3.2(a),
        3.3(b),
        3.l5(b)(i)
        and/or
3.24
        (a
        “Seller
        Breach”),
        only
        the Seller responsible for such Seller Breach shall be liable for any Damages
        sustained or incurred as a result of such Seller Breach and the Buyer, on
        behalf
        of itself; its affiliates, Related Persons and all Buyer Indemnified Persons,
        covenants and agrees not to seek any Damages or personal money judgment against
        any Seller other than the Seller responsible for such Seller Breach for Damages
        sustained or incurred by any Buyer Indemnified Party arising out of or in
        connection with such Seller Breach. In addition, Buyer’s recourse against any
        Seller for Damages shall be limited to the Buyer’s Shares received by such
        Seller hereunder or, with respect to any of the Buyer’s Shares that are
        subsequently sold, exchanged or otherwise disposed of by such Seller, the
        proceeds from such sale, exchange or other disposition.

      

      7.6 LIMITATIONS
        ON BUYER’S LIABILITY.
        Buyer
        will have no liability (for indemnification or otherwise) with respect to
        the
        matters described in clause (a) or (b) of Section
        7.3
        until
        the total of all Damages with respect to such matters exceeds $50,000, and
        then
        only for the amount by which such Damages exceed $50,000. However, this
Section
        7.6
        will not
        apply to any Breach of any of Buyer’s representations and warranties of which
        Buyer had Knowledge at any time prior to the date on which such representation
        and warranty is made or any intentional Breach by Buyer of any covenant or
        obligation, and Buyer will be liable for all Damages with respect to such
        Breaches. The total liability of Buyer pursuant to Section
        7.3
        shall be
        limited to an amount equal to $4,050,000.

      

      7.7 NO
        RIGHT OF CONTRIBUTION.
        If
        Closing occurs, none of the Sellers shall have any right of contribution,
        indemnification or other claim against the Company in connection with any
        matter
        and, effective upon the consummation of Closing, the Sellers hereby release
        the
        Company from any such claims.

      

      7.8 PROCEDURE
        FOR INDEMNIFICATION-THIRD PARTY CLAIMS.

      

      (a) Promptly
        after receipt by an indemnified party under Sections
        7.2,
        or
7.3
        of
        notice of the commencement of any Proceeding against it, such indemnified
        party
        will, if a claim is to be made against an indemnifying party under such Section,
        give notice to the indemnifying party of the commencement of such claim,
        but the
        failure to notify the indemnifying party will not relieve the indemnifying
        party
        of any liability that it may have to any indemnified party, except to the
        extent
        that the indemnifying party demonstrates that the defense of such action
        is
        prejudiced by the indemnifying party’s failure to give such notice.

      

      (b) If
        any
        Proceeding referred to in Section
        7.8(a)
        is
        brought against an indemnified party and it gives notice to the indemnifying
        party of the commencement of such Proceeding the indemnifying party will,
        unless
        the claim involves Taxes, be entitled to participate in such Proceeding and,
        to
        the extent that it wishes (unless the indemnifying party is also a party
        to such
        Proceeding and the indemnified party determines in good faith that joint
        representation would be inappropriate), to assume the defense of such Proceeding
        with counsel satisfactory to the indemnified party and, after notice from
        the
        indemnifying party to the indemnified party of its election to assume the
        defense of such Proceeding the indemnifying party will not, as long as it
        diligently conduct such defense, be liable to the indemnified party under
        this
Section
        7
        for any
        fees of other counsel or any other expenses with respect to the defense of
        such
        Proceeding in each case subsequently incurred by the indemnified party in
        connection with the defense of such Proceeding. If the indemnifying party
        assumes the defense of a Proceeding, (i) no compromise or settlement of such
        claims may be effected by the indemnifying party without the indemnified
        party’s
        consent (which shall not be unreasonably withheld) unless (A) there is no
        finding or admission of any violation of Legal Requirements or any violation
        of
        the rights of any Person and no effect on any other claims that may be made
        against the indemnified party, and (B) the sole relief provided is monetary
        damages that are paid in fall by the indemnifying party; and (ii) the
        indemnified party will have no liability with respect to any compromise or
        settlement of such claims effected without its consent. If notice is given
        to an
        indemnifying party of the commencement of any Proceeding and the indemnifying
        party does not, within ten days after the indemnified party’s notice is given,
        give notice to the indemnified party of its election to assume the defense
        of
        such Proceeding, the indemnified party may, by notice to the indemnifying
        party,
        assume the exclusive light to defend, compromise, or settle such Proceeding,
        but
        the indemnifying party will not be bound by any determination made in such
        Proceeding or any compromise or settlement effected by the indemnified party
        without its consent (which may not be unreasonably withheld).

      

      (c) Notwithstanding
        the foregoing, if an indemnified party determines in good faith that there
        is a
        reasonable probability that a Proceeding may adversely affect it or its
        affiliates other than as a result of monetary damages for which it would
        be
        entitled to indemnification under this Agreement, the indemnified party may,
        by
        notice to the indemnifying party, assume the exclusive right to defend,
        compromise, or settle such Proceeding, but the indemnifying party will not
        be
        bound by any determination of a Proceeding so defended or any compromise
        or
        settlement effected without its consent (which may not be unreasonably
        withheld).

      

      (d) Sellers
        hereby consent to the non-exclusive jurisdiction of any court in which a
        Proceeding is brought against any Indemnified Person for purposes of any
        claim
        that an Indemnified Person may have under this Agreement with respect to
        such
        Proceeding or the matters alleged therein, and agree that process may be
        served
        on Sellers with respect to such a claim anywhere in the world.

      

      7.9 PROCEDURE
        FOR INDEMNIFICATION-OTHER CLAIMS.
        A claim
        for indemnification for any matter not involving a third-party claim may
        be
        asserted by notice to the party from whom indemnification is
        sought.

      

      7.10 EXCLUSIVE
        REMEDY.
        Except
        in the event of fraud, if the Closing occurs, the remedies for indemnification
        contained in this Section
        7
        shall be
        the exclusive remedies of the parties hereto, and shall be deemed exclusive
        of
        any other remedy conferred by law or equity upon any party hereto, with respect
        to any matter related to or arising out of this Agreement or any of the
        Contemplated Transactions.

      

      7.11 MITIGATION.

      

      (a) The
        parties shall use reasonable efforts to collect the proceeds of any insurance
        which would have the effect of reducing Damages (in which case such proceeds
        shall reduce such Damages) and, if indemnification payments shall have been
        received by any indemnified person prior to the collection of such proceeds,
        such indemnified person shall remit to the indemnifying party, the amount
        of
        such proceeds (net of the cost of collection thereof) to the extent of
        indemnification payments received in respect of such Damages. To the extent
        any
        Damages of an indemnified person is reduced by receipt of payment (i) under
        insurance policies, or (i) from third parties not affiliated with the
        indemnified person, such payments (net of the expenses of the recovery thereof)
        shall be credited against such Damages.

      

      (b) The
        amount of any Damages payable hereunder shall be net of any tax benefit actually
        derived (or reasonably expected to be derived) by any indemnified person
        on
        account of such Damages.

      

      (c) The
        indemnifying party shall be subrogated to the indemnified person’s rights of
        recovery to the extent of any Damages satisfied by the indemnifying party.
        Such
        indemnified person shall execute and deliver such instruments and papers
        as are
        necessary to assign such rights and assist in the exercise thereof.

      

      8. GENERAL
        PROVISIONS.

      

      8.1 EXPENSES.
        Except
        as otherwise expressly provided in this Agreement, Buyer will bear all expenses
        incurred by Buyer and the Company in connection with the preparation, execution,
        and performance of this Agreement and the Contemplated Transactions, including
        all fees and expenses of agents, representatives, counsel, and accountants
        up to
        an aggregate of $15,000 (but specifically excluding such expenses incurred
        by
        the Sellers).

      

      8.2 PUBLIC
        ANNOUNCEMENTS.
        Any
        public announcement or similar publicity with respect to this Agreement or
        the
        Contemplated Transactions will be issued, if at all, at such time and in
        such
        manner as mutually agreed to by the parties. Unless consented to by the parties
        in advance or required by Legal Requirements, prior to the Closing the parties
        shall keep this Agreement strictly confidential and may not make any disclosure
        of this Agreement to any Person. Sellers and Buyer will consult with each
        other
        concerning the means by which the Company’s employees, customers, and suppliers
        and others having dealings with the Company will be informed of the Contemplated
        Transactions, and Buyer will have the right to be present for any such
        communication.

      

      8.3 CONFIDENTIALITY.
        Between
        the date of this Agreement and the Closing Date, Buyer, Sellers and the Company
        will maintain in confidence, and will cause the directors, officers, employees,
        agents, and advisors of Buyer and the Company to maintain in confidence,
        and not
        use to the detriment of another party or the Company any written, oral, or
        other
        information obtained in confidence from another party or the Company in.
        connection with this Agreement or the Contemplated Transactions, unless (a)
        such
        information is already known to such party or to others not bound by a duty
        of
        confidentiality or such information becomes publicly available through no
        fault
        of such party, (b) the use of such information is necessary or appropriate
        in
        making any filing or obtaining any consent or approval required for the
        consummation of the Contemplated Transactions, or (c) the famishing or use
        of
        such information is required by or necessary or appropriate in connection
        with
        legal proceedings.

      

      8.4 NOTICES.
        All
        notices, consents, waivers, and other communications under this Agreement
        must
        be in writing and will be deemed to have been duly given when (a) delivered
        by
        hand (with written confirmation of receipt), (b) sent by telecopier (with
        written confirmation of receipt), provided that a copy is mailed by registered
        mail, return receipt requested, or (c) when received by the addressee, if
        sent
        by a nationally recognized overnight delivery service (receipt requested),
        in
        each case to the appropriate addresses and telecopier numbers set forth below
        (or to such other addresses and telecopier numbers as a party may designate
        by
        notice to the other parties):

      

      If
        to
        Sellers or the Company.

      

      
        	 	 	
                NuScribe,
                  Inc.

              

      

      3600
        Bee
        Caves Road

      Suite
        216

      Austin,
        Texas 78746

      Attention:
        Thomas Dorsett 

      Facsimile
        No.: (512) 233-5190

      

      With
        a
        copy to (which shall not constitute notice):

      

      Jackson
        Walker L.L.P.

      100
        Congress Avenue

      Suite
        1100

      Austin,
        Texas 78701

      Attention:
        Lawrence A. Waks, Esq. 

      Facsimile
        No.: (512) 236-2002

      

      If
        to
        Buyer:

      

      Vemics,
        Inc.

      523
        Avalon Gardens Drive

      Nanuet,
        New York 10954

      Attention:
        Fred Zolla, Chairman 

      Facsimile
        No.: (845) 371-7381

      

      With
        a
        copy to (which shall not constitute notice):

      

      David
        A.
        Weinstein, Esq.

      29
        Concordia Center

      P.O.
        Box
        7401

      Monroe
        Township, NJ 08831 

      Facsimile
        No.: (732) 792-1427

      

      8.5 JURISDICTION;
        SERVICE OF PROCESS.
        Any
        action or proceeding seeking to enforce any provision of, or based on any
        right
        arising out of, this Agreement may be brought against any of the parties
        in the
        courts of New York, New York, or, if it has or can acquire jurisdiction,
        in the
        United States District Court for the Southern District of New York, and each
        of
        the parties consents to the jurisdiction of such courts (and of the appropriate
        appellate courts) in any such action or proceeding and waives any objection
        to
        venue laid therein. Process in any action or proceeding referred to in the
        preceding sentence may be served on any party anywhere in the
        world.

      

      8.6 FURTHER
        ASSURANCES.
        The
        parties agree (a) to furnish upon request to each other such further
        information, (b) to execute and deliver to each other such other documents,
        and
        (c) to do such other acts and things, all as the other party may reasonably
        request for the purpose of carrying out the intent of this Agreement and
        the
        documents referred to in this Agreement.

      

      8.7 WAIVER.
        The
        rights and remedies of the parties to this Agreement are cumulative and not
        alternative. Neither the failure nor any delay by any party in exercising
        any
        right, power, or privilege under this Agreement or the documents referred
        to in
        this Agreement will operate as a waiver of such right, power; or privilege,
        and
        no single or partial exercise of any such right, power, or privilege will
        preclude any other or further exercise of such right, power, or privilege
        or the
        exercise of any other right, power, or privilege. To the maximum extent
        permitted by applicable law, (a) no claim or right arising out of this Agreement
        or the documents referred to in this Agreement can be discharged by one party,
        in whole or in part, by a waiver or renunciation of the claim or right unless
        in
        writing signed by the other party; (b) no waiver that may be given by a party
        will be applicable except in the specific instance for which it is given;
        and
        (c) no notice to or demand on one party will be deemed to be a waiver of
        any
        obligation of such party or of the right of the party giving such notice
        or
        demand to take further action without notice or demand as provided in this
        Agreement or the documents referred to in this Agreement.

      

      8.8 ENTIRE
        AGREEMENT AND MODIFICATON.
        This
        Agreement supersedes all prior agreements between the parties with respect
        to
        its subject matter (including the Letter of Intent between Buyer and the
        Company
        dated August ___, 2006) and constitutes (along with the documents referred
        to in
        this Agreement) a complete and exclusive statement of the terms of the agreement
        between the parties with respect to its subject matter. This Agreement may
        not
        be amended except by a written agreement executed by the party to be charged
        with the amendment.

      

      8.9 DISCLOSURE
        SCHEDULE.
        The
        disclosures in Sellers’ and Buyer’s Disclosure Schedules shall be arranged in
        sections corresponding to the numbered and lettered sections and subsections
        contained in Section
        3
        or
4
        as
        applicable, and the disclosures in any section or subsection of Sellers’ and
        Buyer’s Disclosure Schedule shall qualify other sections and subsections in
Section
        3
        or
4,
        as
        applicable, only to the extent it is readily apparent from a reading of the
        disclosure that such disclosure is applicable to such other sections and
        subsections.

      

      8.10 ASSIGNMENTS,
        SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
        Neither
        party may assign any of its rights under this Agreement without the prior
        consent of the other parties, except that Buyer may assign any of its rights
        under this Agreement to any Subsidiary of Buyer. Subject to the preceding
        sentence, this Agreement will apply to, be binding in all respects upon,
        and
        inure to the benefit of the successors and permitted assigns of the parties.
        Nothing expressed or referred to in this Agreement will be construed to give
        any
        Person other than the parties to this Agreement and the parties described
        in
Section
        7,
        any
        legal or equitable right, remedy, or claim under or with respect to this
        Agreement or any provision of this Agreement. This Agreement and all of its
        provisions and conditions are for the sole and exclusive benefit of the parties
        to this Agreement and their successors and assigns.

      

      8.11 SEVERABILITY.
        If any
        provision of this Agreement is held invalid or unenforceable by any court
        of
        competent jurisdiction, the other provisions of this Agreement will remain
        in
        full force and effect. Any provision of this Agreement held invalid or
        unenforceable only in part or degree will remain in full force and effect
        to the
        extent not held invalid or unenforceable.

      

      8.12 SECTION
        HEADINGS, CONSTRUCTION.
        The
        headings of Sections in this Agreement are provided for convenience only
        and
        will not affect its construction or interpretation. All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this Agreement.
        All words used in this Agreement will be construed to be of such gender or
        number as the circumstances require. Unless otherwise expressly provided,
        the
        word “including” does not limit the preceding words or terms.

      

      8.13 TIME
        OF ESSENCE.
        With
        regard to all dates and time periods set forth or referred to in this Agreement,
        time is of the essence.

      

      8.14 GOVERNING
        LAW.
        This
        Agreement will be governed by the laws of the State of New York without regard
        to conflicts of laws principles.

      

      8.15 COUNTERPARTS;
        FACSIMILE SIGNATURE.
        This
        Agreement may be executed in one or more counterparts, each of which will
        be
        deemed to be an original copy of this Agreement and all of which, when taken
        together, will be deemed to constitute one and the same agreement. The exchange
        of copies of this Agreement and of signature pages by facsimile transmission
        shall constitute effective execution and delivery of this Agreement as to
        the
        parties and may be used in lieu of the original Agreement for all purposes.
        Signatures of the parties transmitted by facsimile shall be deemed to be
        their
        original signatures for all purposes.

      

      8.16 SELLERS’
        REPRESENTATIVE.

      

      (a) Appointment
        Authority.
        Each of
        the Sellers hereby appoints Thomas Dorsett as their representative (the
“Sellers’
        Representative”),
        as
        the attorney-in-fact for and on behalf of each Seller, and the Sellers’
Representative shall be authorized hereby to take any and all actions and
        make
        any decisions on behalf of the Sellers required or permitted to be taken
        by any
        of the Sellers under this Agreement or any of the Sellers’ Closing Documents in
        connection with the consummation of the Contemplated Transactions, including,
        without limitation, the exercise of the power to (i) receive or give any
        notice
        on behalf of Sellers pursuant to this Agreement or any of the Sellers’ Closing
        Documents, (ii) authorize delivery to Sellers of the Holdback Shares and
        the
        Adjustment Shares, if any, (iii) prepare the Closing Balance Sheet and deliver
        the same to Buyer and otherwise represent Sellers in, and control the
        disposition of, all matters related thereto, (iv) agree to, negotiate, enter
        into settlements and compromises of, and comply with orders of courts with
        respect to claims hereunder or under the Sellers’ Closing Documents, (v)
        terminate this Agreement pursuant to Section
        6,
        and
        (vi) take all actions necessary in the judgment of the Sellers’ Representative
        for the accomplishment of the foregoing and all of the other terms, conditions
        and limitations of this Agreement and the Sellers’ Closing Documents. Each of
        the Sellers shall be bound by all actions taken by the Sellers’ Representative
        in connection with this Agreement and the Sellers’ Closing Documents. Buyer and
        the Company shall be entitled to rely on any action or decision of the Sellers’
Representative evidenced by a written document executed by the Sellers’
Representative as the action or decision of each of the Sellers, and Buyer
        and
        the Company shall be held harmless from and indemnified against any claim
        of any
        Seller in respect of this Section
        8.16.

      

      (b) Acceptance.
        The
        Seller Representative has executed this Agreement as acknowledgment and
        acceptance of the provisions of this Section
        8.16.

      

      (c) Each
        Seller covenants and agrees that it will not voluntarily revoke the power
        of
        attorney conferred in this Section
        8.16.

      

      (e) The
        Sellers’ Representative may resign as the Sellers’ Representative for any reason
        and at any time by written notice to the Buyer and each Seller. The Sellers
        shall designate another Seller as its successor by a majority of the Pro
        Rata
        Shares as soon as practicable and shall notify the Buyer in writing of such
        designation.

      

      [SIGNATURE
        PAGES TO FOLLOW]

      

      

      

      

      

      

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