LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (as amended, modified or restated from time to time, this “ Agreement ”) dated as of JUNE 4, 2009 (the “ Closing Date ”), will serve to set forth the terms of the Credit Facility by and among THERMO CREDIT, LLC , a Colorado limited liability company (together with its successors and assigns, “ Lender ”), FLINT TELECOM GROUP, INC. , a Nevada corporation (“ Parent ”), CVC INT’L, INC. , a Florida corporation (“ CVC ”), PHONE HOUSE OF FLORIDA, INC. , a Florida corporation (“ Phone House Florida ”), DIAL-TONE COMMUNICATION, INC. , a Florida corporation (“ Dial-Tone ”), DIGITAL PHONE SOLUTIONS, INC. , a Florida corporation (“ Digital ”), BETTER CHOICE COMMUNICATIONS, INC. , a Florida corporation (“ Better Choice ”), WIZE COMMUNICATIONS, INC. , a Florida corporation (“ Wize ”), STARCOM ALLIANCE, INC. , a Florida corporation (“ Starcom ”), and PHONE HOUSE, INC. a California corporation (“ Phone House California ,” and together with CVC, Phone House Florida, Dial-Tone, Digital, Better Choice, Wize and Starcom, each a “ Subsidiary ” and jointly and severally, the “ Subsidiaries ,” and together with Parent, jointly and severally, the “ Debtor ”).

WHEREAS , Parent and Subsidiaries desire to establish their borrowing potential on a consolidated basis to the same extent possible if they were merged into a single entity, and this Agreement reflects the establishment of a credit facility which would not otherwise be available to Parent and Subsidiaries if they were not jointly and severally liable for payment and performance of the Indebtedness under the Loan Documents; and

WHEREAS , Parent and Subsidiaries have (1) determined that each will benefit specifically and materially from the Credit Facility contemplated by this Agreement, and (2) have requested and bargained for the structure, terms and obligations set forth in the Loan Documents; and

WHEREAS , Debtor has requested that Lender extend the Credit Facility to Debtor on the terms described in this Agreement; and

WHEREAS , Lender is willing to make the Credit Facility available to Debtor upon and subject to the provisions, terms and conditions set forth in the Loan Documents;

NOW THEREFORE , the parties hereto, intending to be legally bound, agree as follows:

1.            Definitions .  As used in this Agreement, all exhibits, appendices and schedules hereto, and in any other Loan Documents made or delivered pursuant to this Agreement, the following terms will have the meanings given such terms in this Section 1 or in the provisions, sections or recitals herein:

(a)           “ Affiliate ” means, with respect to a specified Person, another Person that directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

(b)           “ Borrowing Base ” means a sum equal to the amount that Lender determines is available for Loans available under the Credit Facility based on Debtor’s accounts, equipment, software, contracts and other assets.

(c)           “ Business Day ” means any day other than a Saturday, Sunday, or any other day on which the Federal Reserve Bank of New Orleans, Louisiana, is closed.

(d)           “ Code ” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of Louisiana; provided, that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different articles or divisions of the Code, the definition of such term contained in Article 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or

priority of, or remedies with respect to, Lender’s lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Louisiana, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

(e)           “ Collateral ” means:

(i)           All present and future accounts, chattel paper (including electronic chattel paper), commercial tort claims, commodity accounts, commodity contracts, deposit accounts, documents, financial assets, general intangibles, health care insurance receivables, instruments, investment property (including, but not limited to, the Pledged Interests), letters of credit, letter of credit rights, payment intangibles, securities, security accounts, and security entitlements now or hereafter owned, held, or acquired.

(ii)           All present and hereafter acquired inventory and goods (including without limitation, all raw materials, work in process and finished goods) held, possessed, owned, held on consignment, or held for sale, lease, return or to be furnished under contracts of services, in whole or in part, wherever located.

(iii)           All equipment and fixtures of whatsoever kind and character now or hereafter possessed, held, acquired, leased or owned, together with all replacements, accessories, additions, substitutions and accessions to all of the foregoing, and all records relating in any way to the foregoing.

(iv)           All books, records, data, plans, manuals, computer software, computer tapes, computer systems, computer disks, computer programs, source codes and object codes containing any information, pertaining directly or indirectly to the Collateral and all rights to retrieve data and other information pertaining directly or indirectly to the Collateral from third parties.

The term “ Collateral ,” as used herein, shall also include (i) any other property or assets, real or personal, tangible or intangible, now existing or hereafter acquired, of any Debtor that may at any time be or become subject to a security interest or lien in favor of Lender as security for the Indebtedness, and (ii) all SUPPORTING OBLIGATIONS, PRODUCTS and PROCEEDS of all of the foregoing (including without limitation, insurance payable by reason of loss or damage to the foregoing property) and any property, assets securities, guaranties or monies of any Debtor which may at any time come into the possession of Lender.  The designation of proceeds does not authorize Debtor to sell, transfer or otherwise convey any of the foregoing property except in the ordinary course of Debtor’s business or as otherwise provided herein.

(f)           “ Constituent Documents ” means (i) in the case of a corporation, its articles or certificate of incorporation and bylaws; (ii) in the case of a general partnership, its partnership agreement; (iii) in the case of a limited partnership, its certificate of limited partnership and partnership agreement; (iv) in the case of a trust, its trust agreement; (v) in the case of a joint venture, its joint venture agreement; (vi) in the case of a limited liability company, its articles of organization and operating agreement or regulations; and (vii) in the case of any other entity, its organizational and governance documents and agreements.

(g)           “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “ Controlling ” and “ Controlled ” have meanings correlative thereto.

(h)           “ Debt ” means as to any Person at any time (without duplication) all items of indebtedness, obligation or liability of a Person, whether mature or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several, that should be classified as liabilities in accordance with GAAP.

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

(j)           “ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

(k)           “ Guarantor ” means any Person, whether one or more, who from time to time guarantees all or any part of the Indebtedness.

(l)           “ Guaranty ” means a GUARANTY AGREEMENT , whether one or more,   executed by Guarantor (as the same may be amended, restated or modified from time to time).

(m)           “ Indebtedness ” means (i) all indebtedness, obligations and liabilities of Debtor to Lender of any kind or character, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint and several, and regardless of whether such indebtedness, obligations and liabilities may, prior to their acquisition by Lender, be or have been payable to or in favor of a third party and subsequently acquired by Lender (it being contemplated that Lender may make such acquisitions from third parties), including without limitation all indebtedness, obligations and liabilities of Debtor to Lender now existing or hereafter arising under the Note, this Agreement, the other Loan Documents or any draft, acceptance, guaranty, endorsement, letter of credit, assignment, purchase, overdraft, discount, indemnity agreement or otherwise, (ii) all accrued but unpaid interest on any of the indebtedness described in (i) above, (iii) all obligations of Obligors to Lender under the Loan Documents, (iv) all costs and expenses incurred by Lender in connection with the collection and administration of all or any part of the indebtedness and obligations described in (i), (ii) and (iii) above or the protection or preservation of, or realization upon, the collateral securing all or any part of such indebtedness and obligations, including without limitation all reasonable attorneys’ fees, and (v) all renewals, extensions, modifications and rearrangements of the indebtedness and obligations described in (i), (ii), (iii) and (iv) above.

(n)           “ Loan Documents ” means this Agreement, the Note, the Guaranty and the other agreements, instruments and documents evidencing, securing, governing, guaranteeing or pertaining to the Loans.

(o)           “ Loans ” means all advances under the Credit Facility as established pursuant to the Loan Documents from time to time.

(p)           “ Material Adverse Effect ” means a material adverse effect on (i) the business, assets, property, operations, condition (financial or otherwise) or prospects, of an Obligor (individually or taken as a whole), (ii) the ability of an Obligor to pay or perform the Indebtedness, (iii) any of the rights of or benefits available to Lender under the Loan Documents, or (iv) the validity or enforceability of the Loan Documents.

(q)           “ Obligors ” means Debtor, any Subsidiary that becomes a Debtor hereunder, any Guarantor or any other Person who guaranteed or is otherwise obligated to pay or perform all or any portion of the Indebtedness.

(r)           “ Permitted Encumbrances ” means the following encumbrances:

(i)           liens for taxes, assessments or governmental charges or levies not yet due and payable or liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;

(ii)           liens in respect of property of a Person imposed by law which were incurred in the ordinary course of business and which have not arisen to secure Debt for borrowed money, such as carriers’, materialmen’s, warehousemen’s and mechanics’ liens, statutory and common law landlord’s liens, and other similar liens arising in the ordinary course of business, and which either (1) do not in the aggregate materially detract from the value of such property or materially impair the use thereof in the operation of the business of a Person, or (2) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject to such lien;

(iii)           liens created by or pursuant to the Loan Documents;

(iv)           liens in existence on the Closing Date which are listed, and the property subject thereto described, on Schedule 1(r) , without giving effect to any extensions or renewals thereof;

(v)           liens arising from judgments, decrees, awards or attachments in circumstances not constituting an Event of Default;

(vi)           liens (1) incurred or deposits made in the ordinary course of business in connection with general insurance maintained by a Person, (2) incurred or deposits made in the ordinary course of business of a Person in connection with workers’ compensation, unemployment insurance and other types of social security, (3) to secure the performance by any Person of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) to the extent incurred in the ordinary course of business, and (4) to secure the performance by a Person of leases of real property, to the extent incurred or made in the ordinary course of business consistent with past practices;

(vii)           licenses, sublicenses, leases or subleases granted to third Persons in the ordinary course of business not interfering in any material respect with the business of a Person;

(viii)            easements, rights-of-way, restrictions, minor defects or irregularities in title, encroachments and other similar charges or encumbrances, in each case not securing Indebtedness and not interfering in any material respect with the ordinary conduct of the business of a Person;

(ix)           liens arising from precautionary Code financing statements regarding operating leases;

(x)           liens created pursuant to or in connection with capital leases permitted pursuant to this Agreement, provided that (1) such liens only serve to secure the payment of rent or indebtedness arising under such capital leases, and (2) the liens encumbering the assets leased or purported to be leased under such capital leases do not encumber any other assets of a Person;

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

(t)           “ Pledged Interests ” means all right, title and interest in and to all of the securities or other equity interests in any corporation, partnership, joint venture or limited liability company now or hereafter owned by such Person,  regardless of class or designation, including, without limitation, in any Person (including, but not limited to those Pledged Interests more fully described on Schedule 1(t) hereto, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including, without limitation, any certificates representing such securities or other equity interests, the right to request after the occurrence and during the continuation of an Event of Default that such securities or equity interests be registered in the name of Lender or any of its nominees, the right to receive any certificates representing any of the securities or equity interests and the right to require that such certificates be delivered to Lender together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by such Person, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.

(u)            “ Subsidiary ” has the mean set forth in the preamble hereto and any entity (i) of which at least a majority of the ownership, equity or voting interest is at the time directly or indirectly owned or controlled by a Person and/or its Subsidiaries, and (ii) which is treated as a subsidiary in accordance with GAAP.

All words and phrases used herein shall have the meaning specified in the Code except to the extent such meaning is inconsistent with this Agreement. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined.  The words “hereof”, “herein”, and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  Any accounting term used in the Loan Documents shall have, unless otherwise specifically provided therein, the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder shall be computed, unless otherwise specifically provided therein, in accordance with GAAP consistently applied; provided, that all financial covenants and calculations in the Loan Documents shall be made in accordance with GAAP as in effect on the Closing Date unless Debtor and Lender shall otherwise specifically agree in writing.  That certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing.

2.            Credit Facility .

(a)            Joint and Several Liability .  Parent, each Subsidiary and any other Person named or identified as a Debtor under the Loan Documents from time to time hereby irrevocably and unconditionally: (i) agree that each is JOINTLY and SEVERALLY liable to Lender for the full and prompt payment and performance of the Indebtedness under the Loan Documents in accordance with the terms thereof; (ii) agree to fully and promptly perform all of their obligations hereunder and the other Loan Documents with respect to each Loan hereunder as if such Loan had been made directly to it; and (iii) agree as a primary obligation to indemnify Lender on demand for and against any loss incurred by Lender as a result of any of the Indebtedness of any Debtor being or becoming void, voidable, unenforceable or ineffective for any reason whatsoever, whether or not known to Lender or any person, the amount of such loss being the amount which Lender would otherwise have been entitled to recover from any one or more of Parent, Subsidiary and any other Person named as a Debtor under the Loan Documents from time to time.  Each Debtor hereby designates Parent as its representative and agent on its behalf for the purposes of giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of Debtor under the Loan Documents.  Parent hereby accepts such appointment.  Lender may regard any notice or other communication pursuant to any Loan Document from Parent as a notice or communication

from each Debtor.  Each warranty, covenant, agreement and undertaking made on behalf of a Debtor by Parent shall be deemed for all purposes to have been made by each Debtor and shall be binding upon and enforceable against such Debtor to the same extent as it if the same had been made directly by such Debtor.

(b)            Cross-Guaranty .  Each Debtor hereby agrees that such Debtor is JOINTLY and SEVERALLY liable for, and hereby absolutely and unconditionally guarantees to Lender and its successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Indebtedness owed or hereafter owing to Lender by any Debtor.  Each Debtor agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under this Section 2(b) shall not be discharged until indefeasible payment and performance, in full, of the Indebtedness has occurred, and that its obligations under this Section 2(b) shall be absolute and unconditional, irrespective of, and unaffected by:

(i)        the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Debtor is or may become a party;

(ii)        the absence of any action to enforce this Agreement, including this Section 2(b) , or any other Loan Document or the waiver or consent by Lender with respect to any of the provisions thereof;

(iii)                  the existence, value or condition of, or failure to perfect its lien against, any security for the Indebtedness or any action, or the absence of any action, by Lender in respect thereof (including the release of any such security);

(iv)                  the insolvency of any Debtor; or

(v)        any other action or circumstance that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

Each Debtor shall be regarded, and shall be in the same position, as principal debtor with respect to the Indebtedness guaranteed hereunder. Notwithstanding any provision herein contained to the contrary, each Debtor’s liability under this Section 2(b) , which liability is in addition to amounts for which such Debtor is liable under Section 2(a) , shall be limited to an amount not to exceed as of any date of determination the greater of: (i) the net amount of all Loans advanced to any Debtor under this Agreement and then re-loaned or otherwise transferred to, or for the benefit of, such Debtor; and (ii) the amount that could be claimed by Lender from such Debtor under this Section 2(b) without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, each Debtor’s right of contribution and indemnification from each other Debtor.  To the extent that any Debtor shall make a payment under this Section 2(b) of all or any of the Indebtedness (other than Loans made to such Debtor for which it is primarily liable) (a “ Guarantor Payment ”) that, taking into account all other Guarantor Payments then previously or concurrently made by any Debtor, exceeds the amount that such Debtor would otherwise have paid if each Debtor had paid the aggregate Indebtedness satisfied by such Guarantor Payment in the same proportion that such Debtor’s Allocable Amount (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each Debtor as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Indebtedness, such Debtor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Debtor for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.  As of any date of determination, the “ Allocable Amount ” of any Debtor shall be equal to the maximum amount of the claim that could then be recovered from such Debtor under this Section 2(b) without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.  This Section 2(b) is intended only

to define the relative rights of each Debtor and nothing set forth herein is intended to or shall impair the obligations of each Debtor, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement.  Nothing contained in this Section 2(b) shall limit the liability of any Debtor to pay the Loans made directly or indirectly to that Debtor and accrued interest, fees and expenses with respect thereto for which such Debtor shall be primarily liable.  The liability of Debtor under this Section 2(b) is in addition to and shall be cumulative with all liabilities of each Debtor to Lender under the Loan Documents to which such Debtor is a party or in respect of any Indebtedness of any other Debtor, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

(c)            Credit Facility .   Subject to the terms and conditions set forth in this Agreement and the other Loan Documents, Lender hereby agrees to lend to Debtor in one or more advances an aggregate sum not to exceed the lesser of (i) the Borrowing Base, of (ii) TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) (the “ Credit Facility ”), commencing on the date hereof and continuing until: (i) the acceleration of the Indebtedness pursuant to the terms of the Loan Documents; (ii)  MAY 30, 2011 ; or (iii) such other date as may be established by a written instrument between Debtor and Lender from time to time (the “ Maturity Date ”).  If at any time the sum of the aggregate principal amount of Loans outstanding hereunder exceeds the Credit Facility or the Borrowing Base, such amounts shall be deemed an “ Overadvance .”  Debtor shall repay the amount of such Overadvance plus all accrued and unpaid interest thereon upon written demand from Lender.  Notwithstanding anything contained herein to the contrary, Lender shall have no obligation to make any Loan under the Credit Facility from and after SEPTEMBER 30, 2009 .

(d)            Funding .  Lender reserves the right to require not less than ONE (1) Business Day prior notice of each Loan under the Credit Facility, specifying the aggregate amount of such Loan together with any documentation relating thereto as Lender may reasonably request; such request to be submitted no later than 1:00 p.m. (New Orleans, Louisiana time) on the date provided herein.  Lender at its option may accept telephonic requests for such Loan, provided that such acceptance shall not constitute a waiver of Lender's right to require delivery of a written request in connection with subsequent Loans.  Lender shall have no liability to Debtor for any loss or damage suffered by Debtor as a result of Lender's honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically, by facsimile or electronically and purporting to have been sent to Lender by Debtor and Lender shall have no duty to verify the origin of any such communication or the identity or authority of the Person sending it.  Subject to the terms and conditions of this Agreement, each Loan under this section shall be made available to Debtor by depositing the same, in immediately available funds, in an account of Debtor designated by Debtor or by paying the proceeds of such Loan to a third party designated by Debtor.

(e)            Use of Proceeds .  The Loans under the Credit Facility shall be used by Debtor for working capital in the ordinary course of business.

(f)            Fees .  Debtor agrees to pay to Lender:

(i)           A commitment fee equal to TWO PERCENT (2.00%) of the amount of the Credit Facility as of the Closing Date; which commitment fee shall be due and payable in TWO (2) equal installments, such installments to be due and payable on the Closing Date and on the FIRST (1 ^st ) anniversary of the Closing Date (the commitment fee shall be deemed fully earned as of the Closing Date); and

(ii)           An unused facility fee on the daily average unused amount of the Credit Facility for the period from the Closing Date to and including the Maturity Date, at the rate of ONE QUARTER OF ONE PERCENT (0.25%) per annum based on a 360 day year and the actual number of days elapsed.  For the purpose of calculating the facility fee hereunder, the Credit Facility shall be deemed utilized by the

amount of all outstanding Loans under the Credit Facility.  The accrued facility fee shall be payable in arrears on each Payment Date (as such term is defined in the Note) and on the Maturity Date; and

(iii)           A monitoring fee for the period from the Closing Date to and including the Maturity Date, in an amount measured as of each Payment Date equal to the greater of (A) ONE THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($1,500.00) per month, or (B) ONE TWENTIETH OF ONE PERCENT (0.05%) of the Credit Facility per week or portion thereof (each week being deemed to have commenced on a Sunday). The accrued monitoring fee shall be payable in arrears on each Payment Date (as such term is defined in the Note) and on the Maturity Date.

The commitment fee, the unused facility fee and monitoring fee shall be to compensate Lender for its costs and expenses in the structuring of the Credit Facility, monitoring the Collateral, and for the commitment of funds hereunder and (to the maximum extent permitted by applicable law) shall not be deemed interest.  In addition to the foregoing, Debtor shall pay to Lender an origination fee in an amount equal to the GREATER of (a) TEN THOUSAND AND NO/100 DOLLARS ($10,000.00), or (b) the actual costs, fees and expenses incurred in the due diligence relating to the transactions contemplated by this Agreement, the drafting and execution of the Loan Documents and closing costs relating to the Loan Documents, of which Debtor has made a deposit equal to TEN THOUSAND AND NO/100 DOLLARS ($10,000.00) ,   as reimbursement for the cost and expenses incurred by Lender in the establishment of the Credit Facility.

3.            Note, Rate and Computation of Interest .  The Credit Facility shall be evidenced by a promissory note (as amended, modified or restated from time to time, the “ Note ”) duly executed by Debtor and payable to the order of Lender, in form and substance acceptable to Lender.  Interest on the Note shall accrue at the rates set forth therein.  The principal of and interest on the Note shall be due and payable in accordance with the terms and conditions set forth in the Note and in this Agreement.

4.            Collateral .

(a)            Grant of Security Interest .  As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Indebtedness, Debtor hereby pledges to and grants Lender, a security interest in, all of Debtor's right, title and interest in the Collateral, whether now owned by Debtor or hereafter acquired and whether now existing or hereafter coming into existence.  If Debtor at any time holds or acquires a commercial tort claim, Debtor shall notify Lender in writing within FIVE (5) Business Days of such occurrence with the details thereof and grant to Lender a security interest therein or lien thereon and in the proceeds thereof, in form and substance satisfactory to Lender.

(b)            Additional Documents .  To secure full and complete payment and performance of the Indebtedness, Debtor shall execute and deliver or cause to be executed and delivered all of the Loan Documents reasonably required by Lender covering the Collateral.  Debtor shall execute and cause to be executed such further documents and instruments, as Lender, in its reasonable discretion, deems necessary or desirable to create, evidence, preserve, and perfect its liens and security interests in the Collateral.  In the event any of the Loan Documents evidencing or securing the Indebtedness misrepresents or inaccurately reflects the correct terms and/or provisions of the Indebtedness, each Obligor shall upon request by Lender and in order to correct such mistake, execute such new documents or initial corrected, original documents as Lender may deem necessary to remedy said errors or mistakes.  Each Obligor shall execute such other documents as Lender shall deem reasonably necessary to correct any defects or deficiencies in the Loan Documents.  Any Obligor’s failure to execute such documents as requested shall constitute an Event of Default under this Agreement.

(c)            Setoff .  If an Event of Default shall have occurred and be continuing, Lender shall have the right to set off and apply against the Indebtedness in such manner as Lender may determine, at any time and without notice to Debtor, any and all deposits (general or special, time or demand, provisional or final) or other sums at any time credited by or owing from Lender to Debtor whether or not the Indebtedness is

then due.  The rights and remedies of Lender hereunder are in addition to any other rights and remedies (including, without limitation, other rights of setoff) which Lender may have.

(d)            Satisfaction of Indebtedness .  Until the Indebtedness has been indefeasibly paid and fully satisfied (other than contingent indemnification obligations to the extent no unsatisfied claim has been asserted) and the commitments of Lender under the Credit Facility have been terminated, Lender shall be entitled to retain the security interests in the Collateral granted under the Loan Documents and the ability to exercise all rights and remedies available to Lender under the Loan Documents and applicable laws.

5.            Conditions Precedent .

(a)            Initial Loan .  The obligation of Lender to make the initial Loan under the Credit Facility, is subject to the condition precedent that Lender shall have received on or before the day of such Loan all of the following, each dated (unless otherwise indicated) as of the Closing Date, in form and substance satisfactory to Lender:

(i)            Resolutions .  Resolutions of the governing body of each Obligor that is not a natural Person certified by an authorized officer or representative of such Obligor which authorize the execution, delivery, and performance of the Loan Documents that such Obligor is a party to;

(ii)            Incumbency Certificate .  A certificate of incumbency certified by an authorized officer or representative of an Obligor certifying the names of the individuals or other Persons authorized to sign the Loan Documents to which any Obligor that is not a natural Person is to be a party (including the certificates contemplated herein) together with specimen signatures of such Persons;

(iii)            Constituent Documents .  The Constituent Documents of each Obligor that is not a natural Person certified to Lender as being true and correct as of the date of this Agreement;

(iv)            Governmental Certificates .  Certificates of the appropriate government officials of the state of organization of each Obligor that is not a natural Person and any state such Obligor is currently doing business as to the existence, qualification and good standing of such Obligor, dated within TEN (10) days of the date of this Agreement;

(v)            Loan Documents .  The Loan Documents executed by each Obligor party thereto;

(vi)            Financing Statements .  Code financing statements covering the Collateral shall have been filed with such filing offices as Lender may request;

(vii)            Insurance Matters .  Copies of insurance certificates describing all insurance policies as may be required by Lender from time-to-time, together with loss payable and lender endorsements in favor of Lender with respect to all insurance policies covering the Collateral;

(viii)            Uniform Commercial Code   Search .  The results of a Code search showing all financing statements and other documents or instruments on file against Debtor in such locations as Lender may reasonably request, such search to be as of a date no more than TEN (10) days prior the Closing Date;

(ix)            Fees and Expenses .  Evidence that the costs and expenses of Lender (including reasonable attorneys' fees) and all fees owing to Lender, shall have been paid in full by Debtor;

(x)            Other Matters .  Such other documents and agreements as may be required by Lender in its reasonable discretion.

(b)            All Loans .  The obligation of Lender to make any Loan shall be subject to the following additional conditions precedent:

(i)              Request for Loan .  Lender shall have received in accordance with this Agreement, a request for a Loan in form and content satisfactory to Lender in its reasonable discretion dated as of the date of request and executed by an authorized officer of Debtor;

(ii)              No Event of Default, Etc .  No Event of Default, event which with the passage of time and/or notice would be an Event of Default, or event which could have a Material Adverse Effect shall have occurred and be continuing, or would result from or after giving effect to such Loan;  and

(iii)              Representations and Warranties .  All of the representations and warranties contained in the Loan Documents shall be true and correct in material respects on and as of the date of such Loan with the same force and effect as if such representations and warranties had been made on and as of such date.

6.            Representations and Warranties .  Each Obligor hereby represents and warrants, and upon each request for a Loan represents and warrants to Lender as follows:

(a)            Existence .  Debtor (i) is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization; (ii) has all requisite power and authority to own its assets and carry on its business as now being or as proposed to be conducted; and (iii) is qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary and where failure to so qualify would have a Material Adverse Effect. Debtor has the power and authority to execute, deliver, and perform its obligations under the Loan Documents to which it is or may become a party.  The federal tax identification number and state organizational number for Debtor are set forth below:

(b)            Binding Obligations .  The execution, delivery and performance of the Loan Documents by each Obligor have been duly authorized by all necessary action by such Obligor, and constitute legal, valid and binding obligations of such Obligor, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors’ rights and except to the extent specific remedies may generally be limited by equitable principles.

(c)            No Consent .  The execution, delivery and performance of the Loan Documents, and the consummation of the transactions contemplated thereby, do not (i) conflict with, result in a violation of, or constitute a default under (1) any provision of the Constituent Documents (if any) or other instrument binding upon any Obligor,  (2) any law, governmental regulation, court decree or order applicable to any Obligor, or (3) any contractual obligation, agreement, judgment, license, order or permit applicable to or binding upon any Obligor, (ii) require the consent, approval or authorization of any third party, or (iii)

 result in or require the creation of any lien, charge or encumbrance upon any property of any Obligor except as may be expressly contemplated in the Loan Documents.

(d)            Financial Condition .  Each financial statement of each Obligor supplied to Lender truly discloses and fairly presents such Person’s financial condition as of the date of each such statement.  There has been no material adverse change in such financial condition or results of operations of any Obligor subsequent to the date of the most recent financial statement supplied to Lender.  

(e)            Operation of Business .  Debtor possesses all contracts, licenses, permits, franchises, patents, copyrights, trademarks and tradenames, or rights thereto, necessary to conduct its businesses substantially as now conducted and as presently proposed to be conducted, and Debtor is not in violation of any valid rights of others with respect to any of the foregoing, except any violations that could not reasonably be expected to have a Material Adverse Effect.  

(f)            Litigation and Judgments .  There is no action, suit, investigation, or proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge of Debtor, threatened against or affecting any Obligor that would, if adversely determined, have a Material Adverse Effect.  There are no outstanding judgments against any Obligor.

(g)            Rights in Properties; Liens .  Debtor has good and indefeasible title to or valid leasehold interests in its properties, including the properties reflected in the financial statements provided to Lender, and none of the properties of Debtor is subject to any lien, except Permitted Encumbrances.

(h)            Disclosure .  No statement, information, report, representation, or warranty made by any Obligor in the Loan Documents or furnished to Lender in connection with the Loan Documents or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading.  There is no fact known to any Obligor which could reasonably be expected to have a Material Adverse Effect that has not been disclosed in writing to Lender.

(i)            Subsidiaries .  Parent has no Subsidiaries other than those listed on Schedule 1(t) and such Schedule sets forth the jurisdiction of organization of each such Person and the percentage of Parent’s ownership interest in such Person.

(j)            Agreements .  Debtor is not a party to any indenture, loan, or credit agreement, or to any lease or other agreement or instrument, or subject to any charter or corporate or other organizational restriction which could reasonably be expected to have a Material Adverse Effect.  Debtor is not in default in any material respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument material to its business.

(k)            Compliance with Laws .  Debtor is not in violation of any law, rule, regulation, order, or decree of any Governmental Authority or arbitrator, the violation of whic