Document:

EX-10.2

Exhibit 10.2

EXECUTION COPY

ELEVENTH AMENDMENT TO CREDIT AND GUARANTY AGREEMENT

          ELEVENTH AMENDMENT TO CREDIT AND GUARANTY AGREEMENT, dated as of September 17, 2008 (this
“Amendment”), to the Credit and Guaranty Agreement, dated as of April 30, 2007 (as amended,
restated, supplemented or modified from time to time, the “Credit Agreement”), by and among
Handleman Company, a Michigan corporation (“Holdings”), Handleman Services Company, a
Michigan corporation (“Handleman Services”), certain subsidiaries of Holdings identified on
the signature page hereto as “Borrowers” (such Subsidiaries, together with Handleman Services, are
referred to individually as a “Borrower” and collectively, jointly and severally, as
“Borrowers”), certain subsidiaries of Holdings identified on the signature page hereto as
“Guarantors” (such subsidiaries, together with Holdings, are referred to individually as a
“Guarantor” and collectively, jointly and severally, as “Guarantors”), the lenders
party hereto from time to time (“Lenders”), and Silver Point Finance, LLC (“Silver
Point”), as administrative agent for Lenders (in such capacity, together with its successors
and assigns in such capacity, the “Administrative Agent”) and as collateral agent for
Lenders (in such capacity, together with its successors and assigns in such capacity, the
“Collateral Agent” and together with Administrative Agent, each an “Agent” and
collectively the “Agents”).

          WHEREAS, Borrowers and Guarantors have requested that Agents and Lenders agree to amend
certain terms and conditions of the Credit Agreement, in each case, as more fully set forth herein;
and

          WHEREAS, Agents and Lenders have agreed to make such amendments to the Credit Agreement, in
each case, subject to the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

          1. Definitions. All terms used herein which are defined in the Credit Agreement and
not otherwise defined herein are used herein as defined therein.

          2. Amendments to Credit Agreement.

               (a) Section 1.1 of the Credit Agreement is hereby amended by adding the following new
definitions thereto, in appropriate alphabetical order, to read in their entirety as follows:

“‘Eleventh Amendment’ means the Eleventh Amendment to Credit and
Guaranty Agreement, dated as of September 17, 2008, by and among
Credit Parties, Lenders and Agents.”

“‘Eleventh Amendment Effective Date’ has the meaning ascribed to the
term ‘Amendment Effective Date’ in the Eleventh Amendment.”

“‘UK Purchase Agreement’ means the Asset Purchase Agreement, dated
as of September 16, 2008, by and between U.K. OpCo, Holdings and
Oakwood Distribution Limited.”

               (b) Section 1.1 of the Credit Agreement is hereby amended by amending and restating the
definitions of the following terms to read in their entirety as follows:

 

 

“‘Blocked Cash’ means, as of any date of determination, with respect
to any Cash or Cash Equivalents maintained in Canada, the amount of
unrestricted Cash and Cash Equivalents of the Canadian Guarantors
maintained in a deposit account which is subject to a tri-party
blocked account agreement and provides Agent with perfected
first-priority Lien on such account and the contents thereof and
grants Agent sole dominion and control over such account.”

“‘Material Contract’ means, collectively, any contract or other
arrangement to which Holdings or any of its Subsidiaries is a party
(other than the Credit Documents) for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect, and including, in any event each
contract or agreement to which Holdings or any of its Subsidiaries
is a party involving aggregate consideration payable to or by
Holdings or such Subsidiary of $5,000,000 or more (other than
purchase orders in the ordinary course of the business of Holdings
or such Subsidiary and other than contracts that by their terms may
be terminated by Holdings or such Subsidiary in the ordinary course
of its business upon less than 60 days’ notice without penalty or
premium), and including, without limitation, the Anderson Purchase
Agreement, the Canadian Purchase Agreement and the UK Purchase
Agreement, and all documents executed or delivered in connection
with any of the foregoing.”

“‘Working Capital Borrowing Base’ has the meaning assigned to the
term “Borrowing Base” in the Working Capital Agreement, as in effect
on the Closing Date, whether or not such agreement remains in
effect, plus, without duplication, the amount of
unrestricted Cash and Cash Equivalents of the Credit Parties
maintained in a deposit account in the U.S. which is subject to a
tri-party blocked account agreement and provides Collateral Agent
with perfected first-priority Lien on such account and the contents
thereof and grants Agent sole dominion and control over such
account;”

               (c) Section 3.2(a)(vi) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

“(vi) after giving effect to such Credit Extension, (A) the
aggregate Cash and Cash Equivalents of Holdings and its Subsidiaries
shall not exceed the amounts specified in Section 6.6(a) or any
clause thereof, and (B) the aggregate amount of Cash and Cash
Equivalents of Holdings and its Subsidiaries maintained in the
United States (whether or not in Blocked Accounts) shall not exceed
$50,000 for more than one Business Day (excluding (x) amounts
required to be maintained pursuant to Section 6.28, (y) amounts held
in the payroll account not in excess of the amount required to pay
the immediately-succeeding payroll payment, and (z) amounts received
by any Credit Party in any Deposit Account following the daily sweep
of all funds contained therein to Administrative Agent’s Account);”

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               (d) Section 5.1(q) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

“(q) Borrowing Base Certificate. On (i) each Business Day,
current as of the close of business on the immediately preceding
Business Day (except (A) the Accounts and Inventory of Crave
Entertainment Group, Inc. and its Subsidiaries, which shall be
current as of the close of business on the second preceding Business
Day, (B) the Accounts of Handleman UK Limited, which shall be
current on a weekly basis and (C) the accounts payable aging report
of each Credit Party, which shall be current on a weekly basis), (x)
a Borrowing Base Certificate, supported by schedules showing the
derivation thereof and containing such detail and other information
as the Administrative Agent may reasonably request from time to
time, (y) an Accounts aging report of each Credit Party
(collectively and by individual customer), and (z) an accounts
payable aging report of each Credit Party (collectively and by
individual vendor); and (ii) the twentieth day of each Fiscal Month,
or if such date is not a Business Day, the next succeeding Business
Day, a final Borrowing Base Certificate, current as of the close of
business on the last Business Day of the immediately preceding
Fiscal Month, supported by schedules showing the derivation thereof
and containing such detail and other information as Agents may
reasonably request from time to time, together with all accrual
updates since the previous Borrowing Base Certificate delivered
pursuant to this clause (ii); provided that (A) (1) the
Working Capital Borrowing Base set forth in the Borrowing Base
Certificate shall be effective from and including the date such
Borrowing Base Certificate is duly received by the Agents but not
including the date on which a subsequent Borrowing Base Certificate
is received by the Agents, unless the Agents dispute the eligibility
of any property included in the calculation of the Working Capital
Borrowing Base or the valuation thereof, and (2) in the event of any
dispute about the eligibility of any property included in the
calculation of the Working Capital Borrowing Base or the valuation
thereof, the Agents’ good faith business judgment shall control, and
(B) for the period from September 19, 2008 (the “Start
Date”) until October 1, 2008 (the “End Date”), the
following adjustments shall be made to the calculation of the
Working Capital Borrowing Base: (x) the amount of “Eligible
Accounts” shall be determined on the Start Date and reduced on a
daily basis by the amount of Cash received by the Credit Parties on
each such day until the End Date, and (y) the percentage of Accounts
that do not constitute “Eligible Accounts” shall be determined on
the Start Date and deemed to apply until the End Date;”

               (e) Section 5.21 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

“5.21 U.K. Deposit Accounts. After the occurrence and during the
continuance of an Event of Default, Credit Parties shall,
immediately upon the request of the Administrative Agent, transfer
all Cash and Cash
Equivalents of the Credit Parties then held in the United Kingdom to
a Blocked Account in the United States.“

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               (f) Section 6.1 of the Credit Agreement is hereby amended by adding a new clause (m) thereto
to read in its entirety as follows:

“(m) the guarantee made by each of U.K. Opco and Holdings under the
UK Purchase Agreement, as in effect on the date hereof.”

               (g) Section 6.6(a) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

“(a) Investments in Cash and Cash Equivalents; provided,
that, the aggregate amount of Cash and Cash Equivalents of Holdings
and its Subsidiaries (i) maintained in Deposit Accounts in the
United States that do not constitute Blocked Accounts will not
exceed $50,000, (ii) maintained in Deposit Accounts in Canada that
do not constitute Blocked Accounts will not exceed $50,000, (iii)
maintained in Canada, whether or not in Blocked Accounts, but
excluding any Blocked Cash, will not exceed $150,000 for more than
one Business Day; (iv) maintained in Canada and constituting Blocked
Cash will not exceed $500,000, and (v) maintained in the United
Kingdom will not exceed £13,000,000 for more than one Business Day,
or £7,000,000 for more than two Business Days; provided;
however, that notwithstanding anything to the contrary contained
in this Section 6.6(a), under no circumstances shall Deposit
Accounts used for collection of customer payments be maintained
unless such Deposit Account is also a Blocked Account;”

               Section 6.7(e) of the Credit Agreement is hereby amended and restated to read in its entirety
as follows:

“(e) Minimum Asset Coverage. Credit Parties shall not
permit, at any time (i) between the Eleventh Amendment Effective
Date through (but not including) October 31, 2008, the positive
difference between (A) the Working Capital Borrowing Base at such
time (without taking into account the Term Loan Reserve, the Minimum
Availability Amount or any other Reserves (as defined in the Working
Capital Agreement)) and (B) the principal amount of all Indebtedness
outstanding under this Agreement at such time (such positive
difference, the “Minimum Asset Coverage”) to be less than an amount
equal to the greater of (x) the principal amount of all Indebtedness
outstanding under this Agreement at such time, and (y) $20,000,000,
and (ii) on and after October 31, 2008, the Minimum Asset Coverage
to be less than $70,000,000.”

               (h) Clause (b) of Section 6.24 of the Credit Agreement is hereby amended and restated to read
in its entirety as follows:

“(b) by not later than October 31, 2008, a historical and projected
return on investment report for each title owned by the Crave
Entities for which there are any outstanding obligations, which
report shall be in form and substance satisfactory to Agents.”

               (i) Article VI of the Credit Agreement is hereby amended by adding a new Section to the end
thereof to read in its entirety as follows:

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“6.28 Unencumbered Cash. At all times following the Eleventh
Amendment Effective Date, Credit Parties shall not fail to maintain
unrestricted Cash in an aggregate amount of at least $3,000,000 in a
deposit account which is subject to a tri-party blocked account
agreement and provides Collateral Agent with perfected
first-priority Lien on such account and the contents thereof and
grants Agent sole dominion and control over such account.”

          3. Conditions to Effectiveness. This Amendment shall become effective (the
“Amendment Effective Date”) upon satisfaction in full of the following conditions
precedent:

          (a) Immediately after giving effect to this Amendment, (i) the representations and
warranties contained in this Amendment, the Credit Agreement and the other Credit Documents
shall be correct on and as of the date of this Amendment as though made on and as of such
date (except where such representations and warranties relate to an earlier date in which
case such representations and warranties shall be true and correct as of such earlier date)
and (ii) no Default or Event of Default shall have occurred and be continuing (or would
result from this Amendment becoming effective in accordance with its terms).

          (b) Administrative Agent shall have received counterparts of this Amendment that bear
the signatures of each of Credit Parties, Agents and Lenders.

          4. Credit Parties’ Representations and Warranties. Each Credit Party represents and
warrants to Agents and Lenders as follows:

          (a) Such Credit Party (i) is duly organized, validly existing and in good standing
under the laws of the state of its organization and (ii) has all requisite power, authority
and legal right to execute, deliver and perform this Amendment and to perform the Credit
Agreement, as amended hereby.

          (b) The execution, delivery and performance by such Credit Party of this Amendment and
the Purchase Documents and the performance by such Credit Party of the Credit Agreement, as
amended hereby (i) have been duly authorized by all necessary action, (ii) do not and will
not violate or create a default under such Credit Party’s organizational documents, any
applicable law or any contractual restriction binding on or otherwise affecting such Credit
Party or any of such Credit Party’s properties, and (iii) except as provided in the Credit
Documents, do not and will not result in or require the creation of any Lien, upon or with
respect to such Credit Party’s property.

          (c) No authorization or approval or other action by, and no notice to or filing with,
any governmental authority is required in connection with the due execution, delivery and
performance by such Credit Party of this Amendment or the Purchase Documents or the
performance by such Credit Party of the Credit Agreement, as amended hereby.

          (d) This Amendment and the Credit Agreement, as amended hereby, and the Purchase
Documents constitute the legal, valid and binding obligations of such Credit Party,
enforceable against such Credit Party in accordance with their terms except to the extent
the enforceability thereof may be limited by any applicable bankruptcy, insolvency,
reorganization,
moratorium or similar laws from time to time in effect affecting generally the
enforcement of creditors’ rights and remedies and by general principles of equity.

-5-

 

          (e) Immediately after giving effect to this Amendment, (i) the representations and
warranties contained in the Credit Agreement are correct on and as of the date of this
Amendment as though made on and as of the date hereof (except where such representations and
warranties relate to an earlier date in which case such representations and warranties shall
be true and correct as of such earlier date), and (ii) no Default or Event of Default has
occurred and is continuing (or would result from this Amendment becoming effective in
accordance with its terms).

          5. Continued Effectiveness of Credit Agreement. Each Credit Party hereby confirms and
agrees that (a) the Credit Agreement and each other Credit Document to which it is a party is, and
shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects
except that on and after the Amendment Effective Date all references in any such Credit Document to
“the Credit Agreement”, “hereto”, “hereof”, “hereunder”, “thereto”, “thereof”, “thereunder” or
words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended
by this Amendment, (b) to the extent that any such Credit Document purports to assign or pledge to
Collateral Agent, for the ratable benefit of Lenders, or to grant to Collateral Agent, for the
ratable benefit of Lenders a security interest in or Lien on, any Collateral as security for the
Obligations of the Credit Party, or any of their respective Subsidiaries from time to time existing
in respect of the Credit Agreement and the other Credit Documents, such pledge, assignment and/or
grant of the security interest or Lien is hereby ratified and confirmed in all respects, and (c) no
amendment or waiver of any terms or provisions of the Credit Agreement, or the amendments or
consents granted hereunder, shall relieve any Credit Party from complying with such terms and
provisions other than as expressly amended or consented to hereby or from complying with any other
term or provision thereof or herein.

          6. Release. Each Credit Party hereby acknowledges and agrees that: (a) neither it nor
any of its Affiliates has any claim or cause of action against any Agent or any Lender (or any of
their respective Affiliates, officers, directors, employees, attorneys, consultants or agents) and
(b) each Agent and each Lender has heretofore properly performed and satisfied in a timely manner
all of its obligations to Credit Parties and their Affiliates under the Credit Agreement and the
other Credit Documents. Notwithstanding the foregoing, Credit Parties wish (and Agents and Lenders
agree) to eliminate any possibility that any past conditions, acts, omissions, events or
circumstances would impair or otherwise adversely affect any Agent’s or any Lenders’ rights,
interests, security and/or remedies under the Credit Agreement and the other Credit Documents.
Accordingly, for and in consideration of the agreements contained in this Amendment and other good
and valuable consideration, each Credit Party (for itself and its Affiliates and the successors,
assigns, heirs and representatives of each of the foregoing) (collectively, the
“Releasors”) does hereby fully, finally, unconditionally and irrevocably release and
forever discharge each Agent and each Lender and each of their respective Affiliates, officers,
directors, employees, attorneys, consultants and agents (collectively, the “Released
Parties”) from any and all debts, claims, obligations, damages, costs, attorneys’ fees, suits,
demands, liabilities, actions, proceedings and causes of action, in each case, whether known or
unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and
whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has
heretofore had or now or hereafter can, shall or may have against any Released Party by reason of
any act, omission or thing whatsoever done or omitted to be done, arising out of, connected with or
related in any way to the Credit Agreement or any other Credit Document, or any act, event or
transaction related or attendant thereto, or the agreements of any Agent or any Lender contained
therein, or the possession, use, operation or control of any of the assets of any Credit Party, or
the making of any Loans or other advances, or the management of such Loans or advances or the
Collateral.

          7. Miscellaneous.

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          (a) This Amendment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Amendment by telefacsimile or electronic method shall be
equally as effective as delivery of an original executed counterpart of this Amendment.

          (b) Section and paragraph headings herein are included for convenience of reference
only and shall not constitute a part of this Amendment for any other purpose.

          (c) This Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York. Each of the parties to this Amendment hereby irrevocably waives all
rights to trial by jury in any action, proceeding or counterclaim arising out of or relating
to this Amendment.

          (d) Borrowers will pay on demand all reasonable fees, costs and expenses of Agents and
Lenders in connection with the preparation, execution and delivery of this Amendment or
otherwise payable under the Credit Agreement, including, without limitation, reasonable fees
disbursements and other charges of counsel to Agents and Lenders.

          (e) This Amendment is a Credit Document executed pursuant to the Credit Agreement and
shall be construed, administered and interpreted in accordance with the terms thereof.
Accordingly, it shall be an Event of Default under the Credit Agreement if any
representation or warranty made or deemed made by any Credit Party under or in connection
with this Amendment shall have been incorrect when made or deemed made or if any Credit
Party fails to perform or comply with any covenant or agreement contained herein.

[remainder of this page intentionally left blank]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first written
above.

	 	 	 	 	 
	 	BORROWERS:

HANDLEMAN CATEGORY MANAGEMENT COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	

HANDLEMAN SERVICES COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	

HANDLEMAN REAL ESTATE LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	

ARTIST TO MARKET DISTRIBUTION LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	

REPS, L.L.C.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Eleventh Amendment To Credit And Guaranty Agreement

 

 

	 	 	 	 	 
	 	GUARANTORS:

HANDLEMAN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CRAVE ENTERTAINMENT GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HANLEY ADVERTISING COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HANDLEMAN COMPANY OF CANADA LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HANDLEMAN UK LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Eleventh Amendment To Credit And Guaranty Agreement

 

 

	 	 	 	 	 
	 	SVG DISTRIBUTION, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	

CRAVE ENTERTAINMENT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Eleventh Amendment To Credit And Guaranty Agreement

 

 

	 	 	 	 	 
	 	ADMINISTRATIVE AGENT AND COLLATERAL AGENT:

SILVER POINT FINANCE, LLC,

as Administrative Agent and Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Eleventh Amendment To Credit And Guaranty Agreement

 

 

	 	 	 	 	 
	 	LENDERS:

SPF CDO I, LTD.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SPCP GROUP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THERMOPYLAE FUNDING CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	FIELD POINT I, LTD.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	FIELD POINT II, LTD.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Eleventh Amendment To Credit And Guaranty Agreement<PAGE>
EXHIBIT 10.1

                                  ALDEROX, INC

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is entered into as of this 6th day of August 2008, by
and between Brian Creek ("Employee") and ALDEROX, INC., a Colorado Corporation
with its principal place of business at 940 Calle Amanecer, Suite E, San
Clemente, California, USA 92673 ("Alderox" or the "Company").

1. RECITALS:

1.1 The Company is in the business of manufacturing and marketing release agents
and lubricants for asphalt, cement, mining and related industries, the
formulation and ingredients of the release agent are confidential.

1.2 Employee has experience in the businesses conducted and to be conducted by
the Company, or in related businesses, and desires to be employed by the
Company, and the Company desires to employ the Employee, on the terms and
conditions specified below:

2. COVENANTS:

In consideration of the recitals and mutual covenants contained herein, the
parties agree that:

2.1 EMPLOYMENT. The Company will employ Employee to serve as Chief Financial
Officer, with the duties listed and defined by the Company or the Board, in
connection with the Company's operations and Employee does hereby accept such
employment, all subject to the terms and provisions of this Agreement. Employee
represents that he is legally free to enter into this Agreement and that it does
not conflict with any of his duties or obligations to any other person and that
he is not in any way restricted by any duties or obligations to any other person
or entity from contributing his knowledge and talents to the Company in
performing his duties hereunder.

2.2 START DATE. The start date of employment shall be September 9, 2008.

2.3 TERM. The Company or the Employee may at any time terminate this Agreement
and the employment relationship on ninety (90) days' prior notice to the other
within the first year of this agreement and on one-hundred eighty (180) days'
notice thereafter.

2.4 COMPENSATION AND BENEFITS. During the term of employment, the Company agrees
to compensate Employee (from the commencement date of this agreement) at the
rate of not less than $150,000 per year base compensation. Thereafter,
Employee's annual compensation shall be subject to annual review and shall be as
may be established by the Board of Directors, but in no event shall Employee's
minimum base compensation be reduced below $150,000 per year. Such compensation
shall be payable monthly or on such more frequent basis as the Company may
establish.

2.4.1 BONUSES. An annual bonus of up to 100% of the Employee's annual salary
      will be paid to Employee in the second month following the month of the
      fiscal year end, the amount of which is based upon attainment of the
      Company's annual budgeted Net Income according to the formula detailed in
      Schedule A. Employee shall be entitled to participate, without proration,
      in the bonus program for the fiscal year in which he is hired.

<PAGE>

2.4.2 STOCK OPTIONS. Employee shall be granted stock options as described in the
      Stock Option Agreement and shall represent a total of 1,900,000 options
      granted and vesting according to the following schedule. 40% granted on
      the date of the contract and vesting on the first anniversary of the
      contract, 30% granted on the first anniversary of the contract and vesting
      on the second anniversary of the contract and a final 30% granted on the
      second anniversary of the contract and vesting on the third anniversary of
      the contract. In the event of a change of control (as that term is
      commonly defined) of the Company, all options granted to the Employee are
      deemed to have vested the day prior to such change in control. All options
      expire 5 years from the vesting date. The strike price of the options will
      be set based upon the average closing price of the Company's stock during
      the twenty days immediately prior to the grant date. In the event that the
      Company elects to issue additional shares of stock, warrants, or
      convertible debt, subsequent to the contract date, the Company's Board of
      Directors shall consider whether additional shares or options should be
      granted to Employee in order to adjust for the dilution suffered by the
      issuance of the new shares.

2.4.3 RENT EXPENSE. The Company shall work with Employee and shall lease a
      residence chosen by Employee for a period not to exceed 12 months and for
      a monthly lease amount of not more than $3,500 per month. Employee shall
      assume responsibility for full payment of this lease beginning the earlier
      of: a) the month after the sale of Employee's current residence in
      Chicago; or b) month ten.

2.4.4 MOVING ALLOWANCE. The Company will pay the full cost of the Employee's
      move from his residence in Chicago, either by paying the moving company
      directly, or by reimbursing Employee for the cost of the move, grossed up
      for the tax effect of such reimbursement. Employee agrees to undertake the
      move in a cost-effective manner, and to provide the Company with an
      estimate of the cost of the move in advance, if one is requested.

2.4.5 EXPENSE REIMBURSEMENT. The Company agrees to reimburse Employee promptly
      for, or to pay on behalf of Employee, any reasonable expenses incurred by
      Employee (to the extent not paid by others) in the furtherance of the
      goals of the Company upon submission of a satisfactory accounting by
      Employee.

2.4.6 PAID VACATION. Four (4) weeks annual paid vacation. Vacation shall accrue
      on a monthly basis or part thereof; however, once unused vacation has
      accrued to a maximum of four (4) weeks, accrual of additional vacation
      shall cease until the balance of accrued vacation has been reduced below
      three (3) weeks. The Company will not cause the vacation accrual to cease
      by withholding its approval of any of the Employee's vacation requests.

2.4.7 AUTO ALLOWANCE. Employee shall receive an auto allowance of $575 per month
      as full compensation for use of employee's personal auto for company
      related business.

2.4.8 MEDICAL & DENTAL. Employee shall receive both medical and dental coverage,
      as per ALDEROX's standard employee coverage.

2.4.9 Any other standard benefits that may be established by the Company or its
      affiliates for its employees.

                                       2
<PAGE>

2.5 DUTIES. Employee will devote his time, energy and attention to the
development of ALDEROX's scope of business and to perform such reasonable
responsibilities and duties as may be assigned from time to time by the Company
and its Board of Directors. These matters will include (not listed in order of
importance), but shall not be limited to, the following:

      (a)   Keep the Board of Directors properly and fully informed of his
            conduct of the business;

      (b)   Establish internal controls and systems;

      (c)   Direct the financial and accounting affairs of the Company;

      (d)   The Employee will take on the usual duties that are involved with
            the position of CFO in accordance with the terms and conditions of
            this document, with the articles of incorporation of the Company,
            with the law and with the instructions and directives of the Board
            of Directors;

      (e)   Other tasks that may be determined by the Board of Directors from
            time to time; and

      (f)   Courteous and professional representation of the Company at all
            times

2.6 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. It is understood that Employee
will acquire and be informed of confidential technical and/or business
information used by and belonging to the Company ("Confidential Information"),
including Confidential Information as defined in the Company's EMPLOYEE
NON-DISCLOSURE AGREEMENT. Employee agrees that some or all of such Confidential
Information is in the nature of trade secrets and is the sole property of the
Company. Employee will keep confidential, and will not disclose to any third
person or entity, any Confidential Information without Employer's consent and
pursuant to the proceedings further defined in the Company's EMPLOYEE
NON-DISCLOSURE AGREEMENT.

3 CONFIDENTIALITY

3.1 CONFIDENTIALITY AFTER TERMINATION OF EMPLOYMENT. Employee agrees that upon
termination of employment, he or she shall surrender promptly to the Company any
and all documents and property of the Company, including, but not limited to:
reports, drawings, manuals, correspondence, customer lists and other
Confidential Information which he or she may possess, and all other materials
and all copies thereof relating in any way to the Company's business, or in any
way obtained by the Employee during the course of his employment, and that he
shall not retain any copies, notes or abstracts of the foregoing. Employee
further agrees that such documents, lists and information shall be and remain
the sole property of the Company. All of the terms of paragraph 2.8 shall remain
in full force and effect both during the continuation of employment of Employee
by the Company and after the termination of employment for any reason.

3.2 CONFIDENTIALITY. Employee agrees to execute standard Company documents
establishing the Employee's duties of confidentiality and the rights of the
Company to all inventions, trade secrets, etc., developed by the Employee in the
course of his employment, namely the EMPLOYEE NON-DISCLOSURE AGREEMENT.

4 OTHER PROVISIONS

4.1 NON-COMPETITION. Employee agrees that during the term of his/her employment
by Company, Employee will not engage in any way whatsoever, directly or
indirectly, in any business that is competitive with the Company and its
subsidiaries and affiliate operations, nor solicit or in any other manner work
for or assist any business which is competitive to the Company and its
subsidiaries and affiliate operations.

                                       3
<PAGE>

4.2 NON-PARTICIPATION IN COMPETITIVE ACTIVITIES. During the term of this
agreement, Employee will undertake no planning for or organization of any
business activity competitive with the work he/she performs as an Employee of
the Company and its subsidiaries and affiliate operations, and Employee will not
combine or participate with other employees of the Company and its subsidiaries
and affiliate operations for the purpose of organization of any such competitive
business activity.

4.3 ASSIGNMENT TO COMPANY OF PROPRIETARY RIGHTS. Employee agrees to execute any
and all documents and take any and all other actions necessary or desirable for
the assignment to the Company and its subsidiaries and affiliate operations of
all of his/her interests in any Confidential Information, trade secrets,
copyrightable materials and patentable or patented ideas developed by him/her,
alone or in conjunction with others, in the course of his/her employment by the
Company.

4.4 INJUNCTIVE RELIEF. THE PARTIES HERETO agree and acknowledge that many of the
rights conveyed by this Agreement are of a unique and special nature and that
the Company and its subsidiaries and affiliate operations will not have an
adequate remedy at law in the event of failure of Employee to abide by its terms
and conditions, nor will money damages adequately compensate for such injury. It
is, therefore, agreed between the parties that in the event of breach by
Employee of Employee's covenants contained in this Agreement, the Company and
its subsidiaries and affiliate operations shall have the rights, among other
rights, to damages sustained thereby and to a preliminary or permanent
injunction to restrain Employee from the prohibited acts. Employee agrees that
this Paragraph shall survive for one year after the termination of his
employment, and Employee shall be bound by its terms for a period of one year
subsequent to the termination of his/her employment, providing that the Company
and its subsidiaries and affiliate operations continue to conduct the same
business or businesses as they were conducting during the period of this
Agreement. Nothing herein contained shall in any way limit or exclude any and
all other rights granted by law or equity to the Company and its subsidiaries
and affiliate operations.

4.5 TERMINATION OF EMPLOYMENT. If Employee's employment terminates or is
terminated, the rights and obligations of the parties shall depend upon the
reason for termination. Termination may occur for any one of the following
reasons: termination by the Company for cause, termination by the Company
without cause, termination by Employee without cause, termination by Employee
with cause, or termination of Employee by reason of his death or long-term
disability.

4.5.1 TERMINATION BY COMPANY FOR CAUSE. In the event of termination by the
      Company for cause, which shall consist only of specific actions knowingly
      and intentionally taken by Employee to the specific material detriment of
      the Company and not reasonably intended by Employee to benefit the
      Company, the Employee will only be eligible to receive any unpaid salary
      accrued through the last day of employment. Employee agrees, if he/she is
      so terminated for cause, that, for a period of one year following the
      termination of employment of the Employee, Employee will not engage in any
      way whatsoever, directly or indirectly, in any business that is
      competitive with the Company and its subsidiaries and affiliates utilizing
      any Confidential Information acquired while organizing, founding, or
      acting as an officer, director or employee of the Company, its
      subsidiaries or affiliates, nor solicit customers, investors, service
      providers, or strategic partners of the Company, with the Company's, or
      its subsidiary's or affiliates' business whether by interfering with or
      raiding their employees, or disrupting or interfering with their
      relationships with customers, investors, service providers, or strategic
      partners.

                                       4
<PAGE>

4.5.2 TERMINATION BY COMPANY WITHOUT CAUSE. In the event of termination by the
      Company without cause, i.e., an involuntary termination Employee shall be
      entitled to all unpaid salary, bonuses, and other benefits accrued through
      the last day of employment plus 12 months salary and benefits from the
      date of termination. Company must give Employee a minimum of 30 days
      notice of termination in writing.

4.5.3 TERMINATION BY EMPLOYEE WITHOUT CAUSE. In the event of termination by
      Employee without cause, i.e., a voluntary termination, the Employee will
      receive all unpaid salary, bonuses, and other benefits accrued through the
      last day of employment Employee must give the Company a minimum of 30 days
      notice of termination in writing. Employee agrees, if he/she so terminates
      without cause, that, for a period of one year following the termination of
      employment of the Employee, Employee will not engage in any way
      whatsoever, directly or indirectly, in any business that is competitive
      with the Company and its subsidiaries and affiliates utilizing any
      Confidential Information acquired while organizing, founding, or acting as
      an officer, director or employee of the Company, its subsidiaries, or
      affiliates, nor solicit customers, investors, service providers, or
      strategic partners of the Company, or any of its subsidiaries or operating
      affiliates; or disrupt, damage, impair or interfere with the Company's, or
      its subsidiary's or affiliates' business whether by interfering with or
      raiding their employees, or disrupting or interfering with their
      relationships with customers, investors, service providers or strategic
      partners. Thereafter, he/she will be free to so compete or participate
      with a competitor.

4.5.4 TERMINATION BY EMPLOYEE WITH CAUSE. In the event of termination by
      Employee with cause, which shall consist only of a material breach of the
      agreement by the Company including, without limitation, nonpayment of
      salary or other compensation due, non-reimbursement of business expenses,
      or failure to provide either health insurance allowance or coverage or
      other benefits, the Company will have thirty days after receipt of notice
      of termination by Employee remedy the situation or to challenge the
      termination by Employee with cause. If Company does not remedy the
      situation within the allotted 30 day period, Employee shall be entitled to
      all unpaid salary, bonuses, and other benefits accrued through the last
      day of employment plus 6 weeks salary from the last day of employment.

4.5.5 TERMINATION BY DEATH OR DISABILITY. In the event of termination by reason
      of death of the Employee or the long-term disability of the Employee,
      Employee shall be entitled to termination pay equal to three month's pay
      plus three month's benefits, and will receive all unpaid salary, bonuses,
      and other benefits accrued through the last day of employment. All
      payments due under this paragraph will be made on the date of termination
      of employment. For purposes of this section, the Company may terminate the
      Employee due to long-term disability if the Employee is unable to perform
      any of his duties for a period of ninety consecutive days or more, for
      reasons of sickness or injury

4.5.6 TERMINATION FOR ANY REASON. In the event of termination for any reason,
      all pay due under this Agreement is payable by the Company within 30 days
      of the last day of employment.

<PAGE>

4.6 FUTURE AGREEMENT. This Agreement and the documents referred to herein
contain the entire agreement of the parties relevant to the subject matter
hereof, and it may be amended only by a written document signed by both Employee
and Company.

4.7 GOVERNING LAW. The laws of California, without regard to conflicts of laws
principles thereof, shall govern this Agreement and any legal proceedings will
take place in California.

4.8 BINDING EFFECT. This Agreement shall inure to the benefit of and be binding
upon the heirs, successors and assigns of the parties hereto.

                           EMPLOYEE:

                                        /S/ BRIAN CREEK                   8/8/08
                                        ----------------------------------------
                                        BRIAN CREEK

                                        ALDEROX, INC.

                                        By: /S/ MIKE DAVIES
                                            ------------------------------------
                                            Michael C. Davies

                                        Its. CEO, DIRECTOR

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