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Loan Agreement - BOLLINGER INDUSTRIES INC - 6-29-2001

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Loan Agreement - BOLLINGER INDUSTRIES INC - 6-29-2001 Powered By Docstoc
					EXHIBIT 10.68

LOAN AGREEMENT BY AND AMONG BOLLINGER INDUSTRIES, INC., BOLLINGER OPERATING CORP., BOLLINGER HOLDING CORP., NBF, INC., C. G. PRODUCTS, INC., AND BOLLINGER INDUSTRIES, L.P. AND THE FROST NATIONAL BANK, A NATIONAL BANKING ASSOCIATION DOING BUSINESS AS FROST CAPITAL GROUP, AND FORMERLY KNOWN AS CREEKWOOD CAPITAL GROUP $12,000,000 REVOLVING LINE OF CREDIT FACILITY DATED AS OF APRIL 2, 2001

TABLE OF CONTENTS
ARTICLE I................................................................................................ Section 1.01 Terms Defined Above................................................................ Section 1.02 Certain Definitions................................................................ Section 1.03 Accounting Principles ............................................................. ARTICLE II .............................................................................................. Section 2.01 The Loans and Commitment .......................................................... Section 2.02 Interest Rate ..................................................................... Section 2.03 Notice and Manner of Revolving Credit Borrowing ................................... Section 2.04 Limitation ........................................................................ Section 2.05 Application of Cash Sums .......................................................... Section 2.06 Computation ....................................................................... Section 2.07 Voluntary Prepayments and Reborrowings ............................................ Section 2.08 Mandatory Prepayments ............................................................. Section 2.09 Cross-collateralization and Default ............................................... Section 2.10 Termination of Commitment ......................................................... Section 2.11 Operating Accounts ................................................................ Section 2.12 Cash Collateral Blocked Accounts .................................................. Section 2.13 Collection of Accounts ............................................................ Section 2.14 Prepayment in Full ................................................................ Section 2.15 Closing Fee ....................................................................... Section 2.16 Unused Line Fee ................................................................... ARTICLE III ............................................................................................. Section 3.01 Corporate Existence ............................................................... Section 3.02 Corporate Power and Authorization ................................................. Section 3.03 Binding Obligations ............................................................... Section 3.04 No Legal Bar or Resultant Lien ....................................................

TABLE OF CONTENTS
ARTICLE I................................................................................................ Section 1.01 Terms Defined Above................................................................ Section 1.02 Certain Definitions................................................................ Section 1.03 Accounting Principles ............................................................. ARTICLE II .............................................................................................. Section 2.01 The Loans and Commitment .......................................................... Section 2.02 Interest Rate ..................................................................... Section 2.03 Notice and Manner of Revolving Credit Borrowing ................................... Section 2.04 Limitation ........................................................................ Section 2.05 Application of Cash Sums .......................................................... Section 2.06 Computation ....................................................................... Section 2.07 Voluntary Prepayments and Reborrowings ............................................ Section 2.08 Mandatory Prepayments ............................................................. Section 2.09 Cross-collateralization and Default ............................................... Section 2.10 Termination of Commitment ......................................................... Section 2.11 Operating Accounts ................................................................ Section 2.12 Cash Collateral Blocked Accounts .................................................. Section 2.13 Collection of Accounts ............................................................ Section 2.14 Prepayment in Full ................................................................ Section 2.15 Closing Fee ....................................................................... Section 2.16 Unused Line Fee ................................................................... ARTICLE III ............................................................................................. Section 3.01 Corporate Existence ............................................................... Section 3.02 Corporate Power and Authorization ................................................. Section 3.03 Binding Obligations ............................................................... Section 3.04 No Legal Bar or Resultant Lien .................................................... Section 3.05 No Consent......................................................................... Section 3.06 Financial Condition ............................................................... Section 3.07 Investments and Guaranties ........................................................ Section 3.08 Ownership ......................................................................... Section 3.09 Liabilities ....................................................................... Section 3.10 Taxes; Governmental Charges ....................................................... Section 3.11 Titles, etc ....................................................................... Section 3.12 Defaults .......................................................................... Section 3.13 Use of Proceeds: Margin Stock ..................................................... Section 3.14 Compliance with the Law ........................................................... Section 3.15 ERISA.............................................................................. Section 3.16 Subsidiaries ...................................................................... Section 3.17 Direct Benefit From Loans .........................................................

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Section 3.18 RICO............................................................................... Section 3.19 Leases and Landlord Waivers ....................................................... Section 3.20 Patents, Trademarks, Copyrights and Licenses ...................................... Section 3.21 Continuous Nature of Representations and Warranties ............................... ARTICLE IV AFFIRMATIVE COVENANTS ........................................................................ Section 4.01 Financial Statements and Reports .................................................. Section 4.02 Compliance with Laws; Payment of Taxes and Other Claims ........................... Section 4.03 Maintenance ....................................................................... Section 4.04 Further Assurances ................................................................ Section 4.05 Performance of Obligations ........................................................ Section 4.06 Reimbursement of Expenses ......................................................... Section 4.07 Insurance ......................................................................... Section 4.08 Right of Inspection ............................................................... Section 4.09 Notice of Certain Events .......................................................... Section 4.10 ERISA Information and Compliance .................................................. Section 4.11 Environmental Requirements ........................................................ Section 4.12 Additional Guarantors ............................................................. Section 4.13 Compliance Certificate ............................................................ Section 4.14 Blocked Accounts .................................................................. Section 4.15 Subordinated Debt Legend and Inspection ........................................... ARTICLE V................................................................................................ Section 5.01 Debts, Guaranties and Other Obligations ........................................... Section 5.02 Liens.............................................................................. Section 5.03 Investments, Loans and Advances ................................................... Section 5.04 Dividends, Distributions and Redemptions .......................................... Section 5.05 Sale of Properties ................................................................ Section 5.06 Nature of Business ................................................................ Section 5.07 Limitation on Leases .............................................................. Section 5.08 Mergers, Consolidations, Acquisitions, Opening New Locations, etc . ............... Section 5.09 ERISA Compliance ..................................................................

Section 3.18 RICO............................................................................... Section 3.19 Leases and Landlord Waivers ....................................................... Section 3.20 Patents, Trademarks, Copyrights and Licenses ...................................... Section 3.21 Continuous Nature of Representations and Warranties ............................... ARTICLE IV AFFIRMATIVE COVENANTS ........................................................................ Section 4.01 Financial Statements and Reports .................................................. Section 4.02 Compliance with Laws; Payment of Taxes and Other Claims ........................... Section 4.03 Maintenance ....................................................................... Section 4.04 Further Assurances ................................................................ Section 4.05 Performance of Obligations ........................................................ Section 4.06 Reimbursement of Expenses ......................................................... Section 4.07 Insurance ......................................................................... Section 4.08 Right of Inspection ............................................................... Section 4.09 Notice of Certain Events .......................................................... Section 4.10 ERISA Information and Compliance .................................................. Section 4.11 Environmental Requirements ........................................................ Section 4.12 Additional Guarantors ............................................................. Section 4.13 Compliance Certificate ............................................................ Section 4.14 Blocked Accounts .................................................................. Section 4.15 Subordinated Debt Legend and Inspection ........................................... ARTICLE V................................................................................................ Section 5.01 Debts, Guaranties and Other Obligations ........................................... Section 5.02 Liens.............................................................................. Section 5.03 Investments, Loans and Advances ................................................... Section 5.04 Dividends, Distributions and Redemptions .......................................... Section 5.05 Sale of Properties ................................................................ Section 5.06 Nature of Business ................................................................ Section 5.07 Limitation on Leases .............................................................. Section 5.08 Mergers, Consolidations, Acquisitions, Opening New Locations, etc . ............... Section 5.09 ERISA Compliance .................................................................. Section 5.10 Issuance of Stock and Interests ................................................... Section 5.11 Changes in Accounting Methods ..................................................... Section 5.12 Transactions With Affiliates ...................................................... Section 5.13 Affiliate Receivables ............................................................. Section 5.14 Use of Proceeds ................................................................... Section 5.15 RICO............................................................................... Section 5.16 Net Income......................................................................... Section 5.17 Fixed Charge Coverage Ratio ....................................................... Section 5.18 Capital Expenditures .............................................................. Section 5.19 Restricted Payments ............................................................... ARTICLE VI .............................................................................................. Section 6.01 Events............................................................................. Section 6.02 Remedies...........................................................................

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Section 6.03 Prohibition of Transfer, Assignment and Assumption ................................ Section 6.04 Right of Setoff ................................................................... ARTICLE VII ............................................................................................. Section 7.01 Closing ........................................................................... Section 7.02 Note............................................................................... Section 7.03 Constituent Documents ............................................................. Section 7.04 Secretary's Certificates .......................................................... Section 7.05 Opinion of Borrower's Counsel ..................................................... Section 7.06 Counsel of Lender ................................................................. Section 7.07 No Default......................................................................... Section 7.08 No Material Adverse Changes ....................................................... Section 7.09 Other Security Instruments and Information ........................................ Section 7.10 Guaranties ........................................................................ Section 7.11 Recordings ........................................................................ Section 7.12 Landlords Waiver .................................................................. Section 7.13 Closing Fee ....................................................................... Section 7.14 Financial Condition ............................................................... Section 7.15 Additional Matters ................................................................ Section 7.16 Revolving Credit Advances ......................................................... Section 7.17 No Litigation ..................................................................... Section 7.18 Excess Availability Requirement ................................................... Section 7.19 Credit Enhancement ................................................................ Section 7.20 Settlement of Litigation .......................................................... Section 7.21 Vendor Payables ................................................................... Section 7.22 Background Check .................................................................. Section 7.23 Blocked Accounts .................................................................. Section 7.24 Payoff Letter ..................................................................... Section 7.25 Insurance Loss Payee .............................................................. Section 7.26 Subordination Agreement ........................................................... ARTICLE VIII ............................................................................................ Section 8.01 Notices ...........................................................................

Section 6.03 Prohibition of Transfer, Assignment and Assumption ................................ Section 6.04 Right of Setoff ................................................................... ARTICLE VII ............................................................................................. Section 7.01 Closing ........................................................................... Section 7.02 Note............................................................................... Section 7.03 Constituent Documents ............................................................. Section 7.04 Secretary's Certificates .......................................................... Section 7.05 Opinion of Borrower's Counsel ..................................................... Section 7.06 Counsel of Lender ................................................................. Section 7.07 No Default......................................................................... Section 7.08 No Material Adverse Changes ....................................................... Section 7.09 Other Security Instruments and Information ........................................ Section 7.10 Guaranties ........................................................................ Section 7.11 Recordings ........................................................................ Section 7.12 Landlords Waiver .................................................................. Section 7.13 Closing Fee ....................................................................... Section 7.14 Financial Condition ............................................................... Section 7.15 Additional Matters ................................................................ Section 7.16 Revolving Credit Advances ......................................................... Section 7.17 No Litigation ..................................................................... Section 7.18 Excess Availability Requirement ................................................... Section 7.19 Credit Enhancement ................................................................ Section 7.20 Settlement of Litigation .......................................................... Section 7.21 Vendor Payables ................................................................... Section 7.22 Background Check .................................................................. Section 7.23 Blocked Accounts .................................................................. Section 7.24 Payoff Letter ..................................................................... Section 7.25 Insurance Loss Payee .............................................................. Section 7.26 Subordination Agreement ........................................................... ARTICLE VIII ............................................................................................ Section 8.01 Notices ........................................................................... Section 8.02 Deviation from Covenants .......................................................... Section 8.03 Invalidity ........................................................................ Section 8.04 Survival of Agreements ............................................................ Section 8.05 Successors and Assigns ............................................................ Section 8.06 Renewal, Extension or Rearrangement ............................................... Section 8.07 Waivers ........................................................................... Section 8.08 Cumulative Rights ................................................................. Section 8.09 Construction ...................................................................... Section 8.10 Interest........................................................................... Section 8.11 Multiple Originals ................................................................ Section 8.12 Exhibits and Schedules ............................................................ Section 8.13 No Triparty Loan .................................................................. Section 8.14 Applicable Rate Ceiling ...........................................................

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Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29 Performance and Venue .....................................................................3 Negotiation of Documents ..................................................................3 Notices Received by Lender ................................................................3 Debtor-Creditor Relationship ..............................................................3 No Third-Party Beneficiaries ..............................................................3 Indemnification ...........................................................................3 Release Of Liability ......................................................................3 WAIVER OF TRIAL BY JURY ...................................................................3 DTPA Waiver ...............................................................................3 Final Expression ..........................................................................4 Reversal of Payments ......................................................................4 Injunctive Relief .........................................................................4 The Term "Borrower" or "Borrowers" ........................................................4 Joint and Several Liability; Rights of Contribution .......................................4 Structure of Credit Facility ..............................................................4

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LOAN AGREEMENT THIS LOAN AGREEMENT is made and entered into as of April 2, 2001, by and between BOLLINGER INDUSTRIES, INC., a Delaware corporation ("Parent"), BOLLINGER OPERATING CORP., a Nevada corporation ("Operating"), BOLLINGER HOLDING CORP., a Delaware corporation ("Holding"), NBF, INC., a Georgia corporation ("NBF"), C. G. PRODUCTS, INC., a California corporation ("Products") and

Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section

8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29

Performance and Venue .....................................................................3 Negotiation of Documents ..................................................................3 Notices Received by Lender ................................................................3 Debtor-Creditor Relationship ..............................................................3 No Third-Party Beneficiaries ..............................................................3 Indemnification ...........................................................................3 Release Of Liability ......................................................................3 WAIVER OF TRIAL BY JURY ...................................................................3 DTPA Waiver ...............................................................................3 Final Expression ..........................................................................4 Reversal of Payments ......................................................................4 Injunctive Relief .........................................................................4 The Term "Borrower" or "Borrowers" ........................................................4 Joint and Several Liability; Rights of Contribution .......................................4 Structure of Credit Facility ..............................................................4

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LOAN AGREEMENT THIS LOAN AGREEMENT is made and entered into as of April 2, 2001, by and between BOLLINGER INDUSTRIES, INC., a Delaware corporation ("Parent"), BOLLINGER OPERATING CORP., a Nevada corporation ("Operating"), BOLLINGER HOLDING CORP., a Delaware corporation ("Holding"), NBF, INC., a Georgia corporation ("NBF"), C. G. PRODUCTS, INC., a California corporation ("Products") and BOLLINGER INDUSTRIES, L.P., a Texas limited partnership ("Industries"), each with their principal office and mailing address at 602 Fountain Parkway, Grand Prairie, Texas 75050 (Parent, Operating, Holding, NBF, Products and Industries are hereinafter called, individually and collectively, jointly and severally, "Borrower") and THE FROST NATIONAL BANK, a national banking association, doing business as FROST CAPITAL GROUP, and formerly known as CREEKWOOD CAPITAL GROUP, with offices at 1010 Lamar, Suite 700, Houston, Harris County, Texas 77002 (hereinafter called, "Lender"); WITNESSETH: For and in consideration of the mutual covenants and agreements herein contained and of the loans and commitment hereinafter referred to, Borrower and Lender agree as follows: ARTICLE I GENERAL TERMS SECTION 1.01 TERMS DEFINED ABOVE. As used in this Agreement, the terms "Parent", "Operating", "Holding", "NBF", "Industries", "Borrower" and "Lender" shall have the meanings indicated above. SECTION 1.02 CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings, unless the context otherwise requires: "Accounts Advance Amount" shall mean at any time an amount equal to the product of (a) all Eligible Accounts times (b) a percentage, which shall initially be seventy-five percent (75%). Lender shall have the right at any time, and from time to time, in its sole discretion, to revise the above-described percentage. "Advances" shall have the meaning set forth in Section 2.01. "Affiliate" shall mean any Person controlling, controlled by or under common control with any other Person. For purposes of this definition, "control" (including "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise. Without limiting the generality of the foregoing, for purposes of this Agreement, Borrower, each Guarantor, if any, and each of Borrower's Subsidiaries, if any, shall be deemed to be Affiliates of one another. 1

LOAN AGREEMENT THIS LOAN AGREEMENT is made and entered into as of April 2, 2001, by and between BOLLINGER INDUSTRIES, INC., a Delaware corporation ("Parent"), BOLLINGER OPERATING CORP., a Nevada corporation ("Operating"), BOLLINGER HOLDING CORP., a Delaware corporation ("Holding"), NBF, INC., a Georgia corporation ("NBF"), C. G. PRODUCTS, INC., a California corporation ("Products") and BOLLINGER INDUSTRIES, L.P., a Texas limited partnership ("Industries"), each with their principal office and mailing address at 602 Fountain Parkway, Grand Prairie, Texas 75050 (Parent, Operating, Holding, NBF, Products and Industries are hereinafter called, individually and collectively, jointly and severally, "Borrower") and THE FROST NATIONAL BANK, a national banking association, doing business as FROST CAPITAL GROUP, and formerly known as CREEKWOOD CAPITAL GROUP, with offices at 1010 Lamar, Suite 700, Houston, Harris County, Texas 77002 (hereinafter called, "Lender"); WITNESSETH: For and in consideration of the mutual covenants and agreements herein contained and of the loans and commitment hereinafter referred to, Borrower and Lender agree as follows: ARTICLE I GENERAL TERMS SECTION 1.01 TERMS DEFINED ABOVE. As used in this Agreement, the terms "Parent", "Operating", "Holding", "NBF", "Industries", "Borrower" and "Lender" shall have the meanings indicated above. SECTION 1.02 CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings, unless the context otherwise requires: "Accounts Advance Amount" shall mean at any time an amount equal to the product of (a) all Eligible Accounts times (b) a percentage, which shall initially be seventy-five percent (75%). Lender shall have the right at any time, and from time to time, in its sole discretion, to revise the above-described percentage. "Advances" shall have the meaning set forth in Section 2.01. "Affiliate" shall mean any Person controlling, controlled by or under common control with any other Person. For purposes of this definition, "control" (including "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise. Without limiting the generality of the foregoing, for purposes of this Agreement, Borrower, each Guarantor, if any, and each of Borrower's Subsidiaries, if any, shall be deemed to be Affiliates of one another. 1

"Agreement" shall mean this Loan Agreement, as the same may from time to time be amended or supplemented or restated. "Blocked Accounts" shall have the meaning set forth in Section 2.12. "Bobby Bollinger" shall mean Bobby D. Bollinger, an individual domiciled in the State of Texas. "Borrowing Base" shall mean at any time an amount not to exceed the lesser of: (a) Twelve Million and no/100 Dollars ($12,000,000.00), or (b) the sum of the Accounts Advance Amount determined as of the date the Borrowing Base is calculated plus the Inventory Advance Amount determined as of the date the Borrowing Base is calculated. "Business Day" shall mean any day on which Reference Bank is open for the conduct of general banking business.

"Agreement" shall mean this Loan Agreement, as the same may from time to time be amended or supplemented or restated. "Blocked Accounts" shall have the meaning set forth in Section 2.12. "Bobby Bollinger" shall mean Bobby D. Bollinger, an individual domiciled in the State of Texas. "Borrowing Base" shall mean at any time an amount not to exceed the lesser of: (a) Twelve Million and no/100 Dollars ($12,000,000.00), or (b) the sum of the Accounts Advance Amount determined as of the date the Borrowing Base is calculated plus the Inventory Advance Amount determined as of the date the Borrowing Base is calculated. "Business Day" shall mean any day on which Reference Bank is open for the conduct of general banking business. "Capital Expenditures" shall mean expenditures made and liabilities incurred (including capitalized lease obligations) for the acquisition of any fixed assets or improvements, replacements, substitutions or additions which have a useful life of more than one year, including the direct or indirect acquisition of such assets by way of capitalized research and development expenses, increased product or service charges, offset items or otherwise. "Closing" shall mean the date and time for closing the transaction contemplated hereby, described in Section 7.01 hereof. "Closing Fee" shall mean the fee payable by Borrower as described in Section 2.15 hereof. "Collateral" shall have the meaning set forth in the Security Agreement, dated as of the date hereof, by and between Borrower and Lender. "Commitment" shall mean the obligation of Lender to make revolving credit loans to Borrower under Section 2.01 hereof, up to the maximum amount therein stated. "Compliance Certificate" shall mean a certificate of Borrower signed by an authorized officer of Borrower, containing the information required by Section 4.13. "Default" shall mean the occurrence of any of the events specified in Article VI hereof, whether or not any requirement for notice or lapse of time or other condition precedent has been satisfied. "Distribution" by any Person shall mean (a) with respect to any Stock issued by such Person, the retirement, redemption, purchase or other acquisition for value of any such Stock, (b) the declaration or payment of any dividend or other distribution on or with respect to such Stock, (c) any loan or advance by such Person to, or other investment by such Person in, the holder of any such Stock and (d) any other payment (other than 2

ordinary salaries to employees or advances made in the ordinary course of business to employees for travel or other expenses incurred in the ordinary course of business) by such Person to or for the benefit of the holder of any such Stock. "Drawdown Termination Date" shall mean April 2, 2004, or such earlier date if Lender exercises its rights to DEMAND payment of the Indebtedness in full pursuant to its rights hereunder and under the Revolving Credit Note, or such later date, if this Agreement is extended pursuant to Section 2.01 hereof. "DTPA" shall mean the Texas Deceptive Trade Practices Consumer Protection Act, Subchapter E of Chapter 17 of the Texas Business and Commerce Code. "EBITDA" means, for any Person and any period, the sum of (a) that Person's Net Income plus (b) to the extent actually deducted in determining Net Income, Interest Expense, tax expense, depreciation, and amortization.

ordinary salaries to employees or advances made in the ordinary course of business to employees for travel or other expenses incurred in the ordinary course of business) by such Person to or for the benefit of the holder of any such Stock. "Drawdown Termination Date" shall mean April 2, 2004, or such earlier date if Lender exercises its rights to DEMAND payment of the Indebtedness in full pursuant to its rights hereunder and under the Revolving Credit Note, or such later date, if this Agreement is extended pursuant to Section 2.01 hereof. "DTPA" shall mean the Texas Deceptive Trade Practices Consumer Protection Act, Subchapter E of Chapter 17 of the Texas Business and Commerce Code. "EBITDA" means, for any Person and any period, the sum of (a) that Person's Net Income plus (b) to the extent actually deducted in determining Net Income, Interest Expense, tax expense, depreciation, and amortization. "Eligible Accounts" shall mean at any time an amount equal to the aggregate net invoice or ledger amount owing on all trade accounts receivable of Revolving Credit Borrower for goods sold or leased or services rendered, in which Lender has a perfected, first-priority Lien or security interest, after deducting (a) the amount of all accounts receivables unpaid for (i) ninety (90) days or more after the date of the original invoice, or (ii) for accounts with special or dated terms, the earlier of thirty (30) days past the original due date thereof or one hundred fifty (150) days past the date of the original invoice; (b) all such accounts for which twenty-five percent (25%) or more of the outstanding aggregate balance owed by any account debtor is unpaid for (i) accounts with special or dated terms, for thirty (30) days or more from the original due date thereof and (ii) all other accounts receivable, for ninety (90) days or more from the date of the original invoice; (c) the amount owed by any account debtor that exceeds forty-five percent (45%) of all Eligible Accounts of Revolving Credit Borrower; (d) all contra-accounts, setoffs, defenses or counterclaims asserted by or available to the Persons obligated on such accounts; (e) accounts where the account debtor is a government agency; (f) accounts where the account debtor is a foreign entity (unless organized under the laws of Canada) and such accounts are not supported by a domestically confirmed letter of credit which is acceptable to Lender in its sole discretion; (g) all accounts owed by account debtors which are bill and hold, guaranteed sale, pre-bill or progress billing; (h) all such accounts owing by officers or employees of Revolving Credit Borrower or by Subsidiaries or by any other Person in which Revolving Credit Borrower may have an equity interest; (i) the amount of all discounts, allowances, rebates, credits and adjustments to such accounts; and (j) all such accounts owed by account debtors which are insolvent, in any bankruptcy proceeding, or otherwise which Lender, in its sole discretion, deems not acceptable. Standards of eligibility and concentration limits may be revised at any time, and from time to time solely by Lender in its sole discretion. "Eligible Inventory" shall mean an amount equal to the value of all of Revolving Credit Borrower's Inventory which is finished goods in which Lender has a perfected, first-priority Lien or security interest valued at the lesser of (i) cost or (ii) current market value. Eligible Inventory will not include, without limitation, Inventory: (a) consigned 3

to or from third parties, (b) that is in-transit, slow-moving, obsolete, damaged or spoiled, (c) accounted for on the books of Revolving Credit Borrower as other than finished goods, (d) comprised of packaging supplies, materials, boxes or containers, (e) comprised of used or returned cores, (f) located outside of the continental United States, or (g) goods which Lender, in its sole discretion, deems not acceptable. Standards of eligibility may be revised at any time, and from time to time, solely by Lender in its sole discretion. "Environmental Laws" shall mean all federal, state and local laws, rules, regulations, ordinances, programs, permits, guidances, orders and consent decrees relating to health, safety or environmental matters. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Event of Default" shall mean the occurrence of any of the events specified in Article VI hereof, provided that any requirement for notice or lapse of time or any other condition precedent has been satisfied.

to or from third parties, (b) that is in-transit, slow-moving, obsolete, damaged or spoiled, (c) accounted for on the books of Revolving Credit Borrower as other than finished goods, (d) comprised of packaging supplies, materials, boxes or containers, (e) comprised of used or returned cores, (f) located outside of the continental United States, or (g) goods which Lender, in its sole discretion, deems not acceptable. Standards of eligibility may be revised at any time, and from time to time, solely by Lender in its sole discretion. "Environmental Laws" shall mean all federal, state and local laws, rules, regulations, ordinances, programs, permits, guidances, orders and consent decrees relating to health, safety or environmental matters. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Event of Default" shall mean the occurrence of any of the events specified in Article VI hereof, provided that any requirement for notice or lapse of time or any other condition precedent has been satisfied. "Financial Statements" shall mean the consolidated and consolidating financial statement or statements of Borrower and its Subsidiaries, if any, described or referred to in Section 3.06 hereof. "Fixed Charge Coverage Ratio" means, for any period, the ratio for Borrower of (a) Borrower's EBITDA for such period to (b) Interest Expense during such period, plus scheduled principal payments on Funded Indebtedness during such period, plus Distributions paid during such period, plus unfinanced Capital Expenditures made during such period, plus any provision for taxes made during such period, plus any amounted expended by Borrower for purposes of redeeming any of its Stock during such period, if any. "Funded Indebtedness" means consolidated indebtedness for money borrowed which in accordance with GAAP would be included in the determination of total liabilities as shown on the liability side of a balance sheet, including capitalized lease obligations. "GAAP" shall mean Generally Accepted Accounting Principles in effect in the United States applied on a consistent basis. "Glenn Bollinger" shall mean Glenn D. Bollinger, an individual domiciled in the State of Texas. "Guaranty Agreement" shall mean the Guaranty Agreement executed by Guarantors in favor of Lender (as the same may be amended, modified, supplemented or restated from time to time). "Guarantors" shall mean any Person that at any time executes a Guaranty Agreement. 4

"Indebtedness" shall mean any and all amounts owing or to be owing by Borrower to Lender in connection with the Note, this Agreement, and other liabilities of Borrower to Lender from time to time existing, including, without limitation, guaranties of indebtedness and obligations acquired from third Persons, whether in connection with this or other transactions, and all amounts owing or to be owing by Borrower to any agent bank of Lender pursuant to any letter of credit agreement, overdraft agreement or other agreement or financial accommodation. "Indemnified Party" shall have the meaning set forth in Section 8.20. "Interest Expense" means for any period interest charges paid or accrued during such period (including imputed interest on capitalized lease obligations, but excluding amortization of debt discount and expense) on Funded Indebtedness. "Inventory" shall mean any goods held by Revolving Credit Borrower for sale in the ordinary course of Revolving Credit Borrower's business which includes goods purchased for resale and shall not include used or surplus goods or goods held on consignment or goods which Lender, in its sole discretion, deems not acceptable. "Inventory Advance Amount" shall mean at any time an amount equal to the product of (a) all Eligible Inventory

"Indebtedness" shall mean any and all amounts owing or to be owing by Borrower to Lender in connection with the Note, this Agreement, and other liabilities of Borrower to Lender from time to time existing, including, without limitation, guaranties of indebtedness and obligations acquired from third Persons, whether in connection with this or other transactions, and all amounts owing or to be owing by Borrower to any agent bank of Lender pursuant to any letter of credit agreement, overdraft agreement or other agreement or financial accommodation. "Indemnified Party" shall have the meaning set forth in Section 8.20. "Interest Expense" means for any period interest charges paid or accrued during such period (including imputed interest on capitalized lease obligations, but excluding amortization of debt discount and expense) on Funded Indebtedness. "Inventory" shall mean any goods held by Revolving Credit Borrower for sale in the ordinary course of Revolving Credit Borrower's business which includes goods purchased for resale and shall not include used or surplus goods or goods held on consignment or goods which Lender, in its sole discretion, deems not acceptable. "Inventory Advance Amount" shall mean at any time an amount equal to the product of (a) all Eligible Inventory of Revolving Credit Borrower located at the facilities of Revolving Credit Borrower and in warehouse locations for which Lender has received a satisfactory warehouseman's agreement and which are otherwise acceptable to Lender, times (b) a percentage, which shall initially be forty-five percent (45%); provided, however, that the Inventory Advance Amount shall not at any time exceed Five Million and no/100 Dollars ($5,000,000.00). Lender shall have the right at any time, and from time to time, in its sole discretion, to revise the above-described percentage. "Lien" shall mean any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest or lien arising from a mortgage, security agreement, deed of trust, assignment, collateral mortgage, chattel mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment, bailment for security purposes or certificate of title lien. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property. For the purposes of this Agreement, Borrower or any Guarantor or any Subsidiary shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes. "Lease" is defined in Section 3.19. "Maximum Facility" shall mean $12,000,000. 5

"Maximum Nonusurious Interest Rate" shall mean the maximum nonusurious interest rate allowable under applicable United States federal law and under the laws of the State of Texas as presently in effect and, to the extent allowed by such laws, as such laws may be amended from time to time to increase such rate. "Net Income" means, for any period, the Borrower's tax net income for such period, decreased by the sum of any extraordinary, non-operating or non-cash income recorded by the Borrower during such period, all as determined in accordance with GAAP. "Note" shall mean the promissory note or notes (whether one or more) of Borrower described in Section 2.01 hereof, together with any and all renewals, extensions, increases or rearrangements thereof. The "Note" shall include, without limitation, the Revolving Credit Note. "Obligations" means all loans, advances, debts, other Indebtedness, principal, interest, liabilities, liquidated damages, obligations, fees, charges, costs or expenses, lease payments, guarantees, covenants, and duties owing by Borrower to Lender of any kind and description whether direct or indirect, absolute or contingent, due or to

"Maximum Nonusurious Interest Rate" shall mean the maximum nonusurious interest rate allowable under applicable United States federal law and under the laws of the State of Texas as presently in effect and, to the extent allowed by such laws, as such laws may be amended from time to time to increase such rate. "Net Income" means, for any period, the Borrower's tax net income for such period, decreased by the sum of any extraordinary, non-operating or non-cash income recorded by the Borrower during such period, all as determined in accordance with GAAP. "Note" shall mean the promissory note or notes (whether one or more) of Borrower described in Section 2.01 hereof, together with any and all renewals, extensions, increases or rearrangements thereof. The "Note" shall include, without limitation, the Revolving Credit Note. "Obligations" means all loans, advances, debts, other Indebtedness, principal, interest, liabilities, liquidated damages, obligations, fees, charges, costs or expenses, lease payments, guarantees, covenants, and duties owing by Borrower to Lender of any kind and description whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including any debt, liability, or obligation from Borrower to any other Person that Lender may have obtained by assignment or otherwise, and further including all interest not paid when due and all expenses that Borrower is required to pay or reimburse by agreement, law or otherwise. "Operating Accounts" shall have the meaning set forth in Section 2.11. "Permitted Liens" shall have the meaning set forth in Section 5.02. "Person" shall mean any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, trustee, unincorporated organization, government or any agency or political subdivision thereof, or any other form of entity. "Plan" shall mean any Plan subject to Title IV of ERISA and maintained by Borrower or any Subsidiary, or any such plan to which Borrower or any Subsidiary is required to contribute on behalf of its employees. "Prime Rate" shall mean that variable rate of interest per annum established by Reference Bank from time to time as its "prime rate." Such rate is set by Reference Bank as a general reference rate of interest, taking into account such factors as Reference Bank may deem appropriate, it being understood that many of Reference Bank's commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that Reference Bank may make various commercial or other loans at rates of interest having no relationship to such rate. The Prime Rate shall never be less than seven percent (7%) per annum. In the event that Reference Bank does not have a rate designated by it as its "prime rate," then the "Prime Rate" hereunder shall be deemed to be the variable rate of interest per annum which is the 6

general reference rate designated by Reference Bank as its "reference rate," "base rate" or other similar rate and which is comparable to the "Prime Rate" as described above. In the event that Reference Bank shall cease to have any of the rates described in the preceding sentence, then the prime rate shall be that variable rate of interest per annum established by any one of the following-described institutions as its "prime rate," subject to the factors described hereinabove, which institution may be chosen by Lender in its sole discretion, and changed by Lender in its sole discretion from time to time; such institutions shall include: Citibank, N.A., The Chase Manhattan Bank, N.A., and Banker's Trust Company. Such institution may be changed at Lender's discretion, such change to be effective on the date of such change. "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Receipts" shall have the meaning set forth in Subsection 2.13(a). "Reference Bank" shall mean The Frost National Bank, a national banking association, and its successors and

general reference rate designated by Reference Bank as its "reference rate," "base rate" or other similar rate and which is comparable to the "Prime Rate" as described above. In the event that Reference Bank shall cease to have any of the rates described in the preceding sentence, then the prime rate shall be that variable rate of interest per annum established by any one of the following-described institutions as its "prime rate," subject to the factors described hereinabove, which institution may be chosen by Lender in its sole discretion, and changed by Lender in its sole discretion from time to time; such institutions shall include: Citibank, N.A., The Chase Manhattan Bank, N.A., and Banker's Trust Company. Such institution may be changed at Lender's discretion, such change to be effective on the date of such change. "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Receipts" shall have the meaning set forth in Subsection 2.13(a). "Reference Bank" shall mean The Frost National Bank, a national banking association, and its successors and assigns. "Revolving Credit Borrower" shall mean Industries. "Revolving Credit Note" shall mean the promissory note of Borrower described in Section 2.01 hereof and being in the form of note attached as Exhibit A hereto, and all renewals, extensions, modifications and rearrangements thereof. "RICO" shall mean the Racketeer Influenced and Corrupt Organization Act of 1970, as amended. "Security Instruments" shall mean this Agreement, the agreements or instruments described or referred to in Sections 7.09, 7.10 and 7.12 hereof, and any and all other agreements or instruments now or hereafter executed and delivered by Borrower, any Subsidiary or any other Person (other than solely by Lender and/or any bank or creditor participating in the benefits of loans evidenced by the Note or any collateral or security therefor) in connection with, or as security for the payment or performance of, the Note or this Agreement (as the same may be amended, modified, supplemented or restated from time to time). "Stock" shall mean all shares, options, warrants, general or limited partnership interests or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity, whether voting or nonvoting, including common stock, preferred stock and any other "equity security" (as defined in Rule 3a11-1 of the General Rules and regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended). "Subordinated Debt" shall mean the indebtedness, obligations and liabilities of Borrower owing to Subordinated Lenders which is subordinated in right of payment to 7

payment of the Indebtedness upon terms and conditions and pursuant to documentation satisfactory to Lender, in its sole discretion. "Subordinated Lenders" shall mean all of the lenders listed on Exhibit B attached hereto to Borrower or to Guarantors, any Subsidiary or any other Person whose rights in respect of Indebtedness from Borrower or any such Subsidiary is subordinated to the Lender pursuant to terms and executed or documentation in form and substance satisfactory to the Lender, in its sole discretion. "Subsidiary" shall mean any corporation of which more than fifty percent (50%) of the issued and outstanding securities having ordinary voting power for the election of directors is owned or controlled, directly or indirectly, by a Borrower and/or one or more of its Subsidiaries and/or one or more shareholders or interest holders of such Borrower. Unless the context otherwise requires, "Subsidiary" shall not include any Subsidiary that is also a Borrower.

payment of the Indebtedness upon terms and conditions and pursuant to documentation satisfactory to Lender, in its sole discretion. "Subordinated Lenders" shall mean all of the lenders listed on Exhibit B attached hereto to Borrower or to Guarantors, any Subsidiary or any other Person whose rights in respect of Indebtedness from Borrower or any such Subsidiary is subordinated to the Lender pursuant to terms and executed or documentation in form and substance satisfactory to the Lender, in its sole discretion. "Subsidiary" shall mean any corporation of which more than fifty percent (50%) of the issued and outstanding securities having ordinary voting power for the election of directors is owned or controlled, directly or indirectly, by a Borrower and/or one or more of its Subsidiaries and/or one or more shareholders or interest holders of such Borrower. Unless the context otherwise requires, "Subsidiary" shall not include any Subsidiary that is also a Borrower. SECTION 1.03 ACCOUNTING PRINCIPLES. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, this shall be done in accordance with GAAP, except where such principles are inconsistent with the requirements of this Agreement. ARTICLE II AMOUNT AND TERMS OF LOAN SECTION 2.01 THE LOANS AND COMMITMENT. Subject to the terms and conditions and relying on the representations and warranties contained in this Agreement, from the date of this Agreement through the Drawdown Termination Date, Lender agrees to make revolving credit loans to Revolving Credit Borrower from time to time on any Business Day in such amounts as Borrower may request up to the maximum amount hereinafter stated, and Borrower may make prepayments (as permitted or required in Sections 2.07 and 2.08 hereof), and Revolving Credit Borrower reborrowings, in respect thereof; provided, however, that the aggregate principal amount of all such revolving credit loans (also referred to herein as "Advances") at any one time outstanding shall not exceed the Borrowing Base. To evidence the revolving credit loans made by Lender pursuant to this Section, Borrower will issue, execute and deliver the Revolving Credit Note dated as of the date of this Agreement, PAYABLE ON DEMAND, but if no demand is made, on the Drawdown Termination Date and secured by all of the Collateral. Thereafter, at the sole discretion of Lender, the term of the Revolving Credit Note and the Drawdown Termination Date may be extended for a term of one (1) year. At the expiration of such term, in the event Borrower has not given Lender sixty (60) days' prior written notice of its intent to terminate the revolving credit loans pursuant to the Revolving Credit Note, then, at the sole discretion of Lender, the revolving credit loans shall be renewed, and the Drawdown Termination Date extended, for a period of one (1) year; and at the end of such one (1) year extension, the revolving credit loans may be again extended, from year to year, in the same fashion. Each such extension shall be upon the same terms and conditions as set forth herein and in the Revolving Credit Note and the Security Instruments relating to the same, and upon such 8

further stipulations and conditions as Lender may require. Interest on the Revolving Credit Note shall accrue and be payable as provided in Section 2.02 hereof. SECTION 2.02 INTEREST RATE. The Revolving Credit Note shall bear interest at the following rates: (a) The Revolving Credit Note shall bear interest from the date thereof until maturity at varying rates of interest which is two percent (2.00%) above the Prime Rate, as the same may change from day to day, calculated on the last day of each month (but in no event to exceed the Maximum Nonusurious Interest Rate). (b) Upon the occurrence of a Default or an Event of Default, principal and past due interest (to the extent permitted by law) in respect of the Note shall bear interest at a rate which is two percent (2%) per annum in excess of the rate set forth in Subsection 2.02(a) hereinabove (but in no event to exceed the Maximum Nonusurious Interest Rate) irrespective of whether the Indebtedness has been accelerated.

further stipulations and conditions as Lender may require. Interest on the Revolving Credit Note shall accrue and be payable as provided in Section 2.02 hereof. SECTION 2.02 INTEREST RATE. The Revolving Credit Note shall bear interest at the following rates: (a) The Revolving Credit Note shall bear interest from the date thereof until maturity at varying rates of interest which is two percent (2.00%) above the Prime Rate, as the same may change from day to day, calculated on the last day of each month (but in no event to exceed the Maximum Nonusurious Interest Rate). (b) Upon the occurrence of a Default or an Event of Default, principal and past due interest (to the extent permitted by law) in respect of the Note shall bear interest at a rate which is two percent (2%) per annum in excess of the rate set forth in Subsection 2.02(a) hereinabove (but in no event to exceed the Maximum Nonusurious Interest Rate) irrespective of whether the Indebtedness has been accelerated. (c) Interest calculations are subject to certain recapture provisions set forth in the Note. (d) Interest charges shall be paid monthly in arrears on the first day of each calendar month. SECTION 2.03 NOTICE AND MANNER OF REVOLVING CREDIT BORROWING. The amount and date of each Advance shall be made as set forth in this Section. Advances under the Revolving Credit Note may be made by Lender (a) pursuant to the terms of any written agreement executed in connection herewith between Borrower and Lender, or (b) at the oral or written request of Borrower or of any officer or agent of Borrower designated by or acting under the authority of resolutions of the board of directors of Borrower, if a corporation, or other written authorization of Borrower if other than a corporation, a duly certified or executed copy of which shall be furnished to Lender, until written notice of the revocation of such authority is received by Lender. Borrower covenants and agrees to furnish to Lender written confirmation of any such oral request within five (5) days of the resulting Advance, but any such Advance shall be deemed to be made under and entitled to the benefits of the Revolving Credit Note irrespective of any failure by Borrower to furnish such written confirmation. Any Advance shall be conclusively presumed to have been made under the terms of the Revolving Credit Note to or for the benefit of Borrower when made pursuant to the terms of any written agreement executed in connection therewith between Borrower and Lender, or in accordance with such requests and directions, or when said Advances are deposited to the credit of the account of Revolving Credit Borrower with Lender regardless of the fact that Persons other than those authorized hereunder may have authority to draw against such account, or may have requested an Advance. SECTION 2.04 LIMITATION. Lender shall have no obligation to make Advances hereunder to the extent such Advance would cause the outstanding principal balance of the Revolving Credit Note to exceed the Borrowing Base. 9

SECTION 2.05 APPLICATION OF CASH SUMS. All cash sums paid to and received by Lender on account of any Property upon which Lender has a Lien (a) shall be promptly applied by Lender on the Indebtedness whether or not such Indebtedness shall have, by its terms, matured, such application to be made to principal or interest or expenses as Lender may elect; provided, however, Lender need not apply or give credit for any item included in such sums until Lender has received final credit therefor from its bank in accordance with normal banking practices (at least two (2) business days shall be allowed for collection of all items through normal banking channels) or has received solvent credits accepted as such by Lender; provided, further, however, Lender's failure to so apply any such sums shall not be a waiver of Lender's right to so apply such sums or any other sums at any time, or (b) prior to the happening of any Default or Event of Default, at the option of Lender, shall be released to Borrower for use in Borrower's business. SECTION 2.06 COMPUTATION. All payments of interest shall be computed on the per annum basis of a year of three hundred sixty (360) days and for the actual number of days (including the first but excluding the last day) elapsed unless such calculation would result in a usurious rate, in which case interest shall be calculated on a per annum basis of a year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be.

SECTION 2.05 APPLICATION OF CASH SUMS. All cash sums paid to and received by Lender on account of any Property upon which Lender has a Lien (a) shall be promptly applied by Lender on the Indebtedness whether or not such Indebtedness shall have, by its terms, matured, such application to be made to principal or interest or expenses as Lender may elect; provided, however, Lender need not apply or give credit for any item included in such sums until Lender has received final credit therefor from its bank in accordance with normal banking practices (at least two (2) business days shall be allowed for collection of all items through normal banking channels) or has received solvent credits accepted as such by Lender; provided, further, however, Lender's failure to so apply any such sums shall not be a waiver of Lender's right to so apply such sums or any other sums at any time, or (b) prior to the happening of any Default or Event of Default, at the option of Lender, shall be released to Borrower for use in Borrower's business. SECTION 2.06 COMPUTATION. All payments of interest shall be computed on the per annum basis of a year of three hundred sixty (360) days and for the actual number of days (including the first but excluding the last day) elapsed unless such calculation would result in a usurious rate, in which case interest shall be calculated on a per annum basis of a year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be. SECTION 2.07 VOLUNTARY PREPAYMENTS AND REBORROWINGS. The unpaid principal balance of the Revolving Credit Note at any time shall be the total amounts loaned or advanced thereunder by Lender, less the amount of payments or prepayments of principal made thereon by or for the account of Borrower. It is contemplated that by reason of prepayments thereon there may be times when no Indebtedness is owing thereunder; but notwithstanding such occurrences, the Revolving Credit Note and Security Instruments shall remain valid and be in full force and effect as to loans or advances made pursuant to and under the terms of the Revolving Credit Note subsequent to each such occurrence. All loans or advances and all payments or prepayments made thereunder on account of principal or interest may be evidenced by Lender, or any subsequent holder, maintaining in accordance with its usual practice an account or accounts evidencing the Indebtedness of Borrower resulting from all loans or advances and all payments or prepayments thereunder from time to time and the amounts of principal and interest payable and paid from time to time thereunder, in which event, in any legal action or proceeding in respect of the Revolving Credit Note, the entries made in such account or accounts shall be conclusive evidence of the existence and amounts of the obligations of Borrower therein recorded. SECTION 2.08 MANDATORY PREPAYMENTS. If at any time the outstanding principal balance under the Revolving Credit Note exceeds the Borrowing Base, then Borrower shall forthwith prepay the amount of such excess for application towards reduction of the outstanding principal balance of the Revolving Credit Note. Said prepayment shall be without premium or penalty, and shall be made together with the payment of accrued interest on the amount prepaid. SECTION 2.09 CROSS-COLLATERALIZATION AND DEFAULT. The Security Instruments, including this Agreement, the Note and any other instrument given in connection with, or as security for, any Indebtedness of Borrower or any Subsidiary, shall serve as security one for the other, and an event of default under the Note or any such instrument shall constitute an event of default under all such other Note and instruments. 10

SECTION 2.10 TERMINATION OF COMMITMENT. Notwithstanding anything to the contrary contained herein, in the Revolving Credit Note, or in any other instrument or agreement executed in connection with or as security for the Indebtedness, Lender may, (a) at any time, and from time to time, in its sole discretion, refuse to make any advance for a revolving credit loan hereunder and under the Revolving Credit Note, or (b) upon giving Borrower at least sixty (60) days' prior notice, at any time terminate its Commitment to advance funds to Borrower hereunder and under the Revolving Credit Note and all other obligations, if any, of Lender hereunder. The rights of Lender under this Section 2.10 are in addition to the rights of Lender to terminate the Commitment pursuant to Section 6.02 hereof. SECTION 2.11 OPERATING ACCOUNTS. Annexed hereto as Schedule 2.11 is a listing of all present operating accounts which are checking or other demand daily depository accounts maintained by Borrower (the "Operating Accounts") together with the address of that depository, the account number(s) maintained with such

SECTION 2.10 TERMINATION OF COMMITMENT. Notwithstanding anything to the contrary contained herein, in the Revolving Credit Note, or in any other instrument or agreement executed in connection with or as security for the Indebtedness, Lender may, (a) at any time, and from time to time, in its sole discretion, refuse to make any advance for a revolving credit loan hereunder and under the Revolving Credit Note, or (b) upon giving Borrower at least sixty (60) days' prior notice, at any time terminate its Commitment to advance funds to Borrower hereunder and under the Revolving Credit Note and all other obligations, if any, of Lender hereunder. The rights of Lender under this Section 2.10 are in addition to the rights of Lender to terminate the Commitment pursuant to Section 6.02 hereof. SECTION 2.11 OPERATING ACCOUNTS. Annexed hereto as Schedule 2.11 is a listing of all present operating accounts which are checking or other demand daily depository accounts maintained by Borrower (the "Operating Accounts") together with the address of that depository, the account number(s) maintained with such depository, and a contact person at such depository. SECTION 2.12 CASH COLLATERAL BLOCKED ACCOUNTS. Borrower and Lender shall establish with banks acceptable to Lender certain lockboxes and blocked accounts (collectively "Blocked Accounts") as set forth on Schedule 2.12 annexed hereto, for the benefit of Lender, for the deposit of all receipts and collections in accordance with Section 2.13 hereof, pursuant to executed blocked account agreements in form and substance satisfactory to Lender, in its sole discretion. All receipts and collections deposited in such Blocked Accounts shall be pledged to Lender and forwarded on a daily basis to Lender's account at Reference Bank. Proceeds received from such Blocked Accounts shall be applied against any Indebtedness owing by Borrower to Lender and shall be applied in accordance with Section 2.05. Only Lender shall have the right to direct withdrawals from such Blocked Accounts. Each bank at which any such Blocked Account is maintained shall waive any right of offset such bank may otherwise have in such Blocked Account and the items deposited therein. Borrower shall pay all fees and charges as may be required by any depository in which such Blocked Accounts are opened. Borrower shall contemporaneously with the execution of this Agreement, provide Lender with the duly executed blocked account agreements related to such Blocked Accounts. SECTION 2.13 COLLECTION OF ACCOUNTS. (a) All receipts of cash, cash equivalents, checks, credit card receipts, notes, drafts, instruments, and other items of payment arising out of the sale of inventory or other Property of Borrower or the creation of accounts receivable, including without limitation, insurance proceeds and tax refunds (referred to as "Receipts"), and all Property of Borrower in which Lender has a security interest or lien, shall be deposited daily into one or more of the Blocked Accounts, and shall be held in trust by Borrower for Lender until so deposited. (b) In the event, notwithstanding the provisions of this Section, Borrower receives or otherwise has dominion and control of any Receipts, or any proceeds or collections of any Property of Borrower in which Lender has a security interest or lien, such Receipts, proceeds, and collections shall be held in trust by Borrower for Lender and 11

shall not be commingled with any of Borrower's other funds or deposited in any account of Borrower other than a Blocked Account. SECTION 2.14 PREPAYMENT IN FULL. In the event Borrower desires to prepay in full the loans evidenced by the Note at any time greater than two (2) years prior to the Drawdown Termination Date, as the same may be extended, Borrower will give Lender sixty (60) days' written notice of Borrower's intention and will pay to Lender, as liquidated damages and not as a penalty, the greater of an amount equal to three percent (3%) of the Maximum Facility on the date of such prepayment, or Three Hundred Sixty Thousand and No/100 Dollars ($360,000.00). In the event Borrower desires to prepay in full the loans evidenced by the Note at any time greater than one (1) year prior to the Drawdown Termination Date, as the same may be extended, Borrower will give Lender sixty (60) days' written notice of Borrower's intention and will pay to Lender, as liquidated damages and not as a penalty, the greater of an amount equal to two percent (2%) of the Maximum Facility on the date of such prepayment or Two Hundred Forty Thousand and No/100 Dollars ($240,000.00). In the event Borrower desires to prepay in full the loans evidenced by the Note at any time which is less than (or exactly) one (1) year

shall not be commingled with any of Borrower's other funds or deposited in any account of Borrower other than a Blocked Account. SECTION 2.14 PREPAYMENT IN FULL. In the event Borrower desires to prepay in full the loans evidenced by the Note at any time greater than two (2) years prior to the Drawdown Termination Date, as the same may be extended, Borrower will give Lender sixty (60) days' written notice of Borrower's intention and will pay to Lender, as liquidated damages and not as a penalty, the greater of an amount equal to three percent (3%) of the Maximum Facility on the date of such prepayment, or Three Hundred Sixty Thousand and No/100 Dollars ($360,000.00). In the event Borrower desires to prepay in full the loans evidenced by the Note at any time greater than one (1) year prior to the Drawdown Termination Date, as the same may be extended, Borrower will give Lender sixty (60) days' written notice of Borrower's intention and will pay to Lender, as liquidated damages and not as a penalty, the greater of an amount equal to two percent (2%) of the Maximum Facility on the date of such prepayment or Two Hundred Forty Thousand and No/100 Dollars ($240,000.00). In the event Borrower desires to prepay in full the loans evidenced by the Note at any time which is less than (or exactly) one (1) year prior to the Drawdown Termination Date, as the same may be extended, or in any year following such extension, Borrower will give Lender sixty (60) days' written notice of Borrower's intention and will pay to Lender, as liquidated damages and not as a penalty, the greater of an amount equal to one percent (1%) of the Maximum Facility on the date of such prepayment or One Hundred Twenty Thousand and No/100 Dollars ($120,000.00). In the event any such notice of prepayment has been given by Borrower, the Commitment shall immediately terminate, and all other obligations, if any, of Lender, shall terminate on the expiration of said sixty (60) day notice period, and the entire principal amount of the Note, together with all accrued interest thereon, and any other Indebtedness, shall be due and payable on such date. SECTION 2.15 CLOSING FEE. Borrower shall pay to Lender at the Closing a closing fee (herein, the "Closing Fee") in the amount of Sixty Thousand and No/100 Dollars ($60,000.00) with respect to the credit facilities established pursuant to this Agreement. SECTION 2.16 UNUSED LINE FEE. If the average outstanding daily principal balance of Advances shall be less than the Maximum Facility in any calendar month, Borrower shall pay to Lender on the first day of the next succeeding calendar month a fee (the "Unused Line Fee") equal to three hundred seventy-five thousandths of one percent (0.375%) per annum of the amount by which the Maximum Facility exceeds the average outstanding daily principal balance of Advances. The Unused Line Fee shall be calculated on the basis of a three hundred sixty (360) day year for the actual number of days elapsed and shall be payable for the entire term of this Agreement, including all renewal terms, or for so long as any of the Indebtedness is outstanding. ARTICLE III REPRESENTATIONS AND WARRANTIES In order to induce Lender to enter into this Agreement, Borrower represents and warrants to Lender (which representations and warranties will survive the delivery of the Note and the making of the loans thereunder) that: 12

SECTION 3.01 CORPORATE EXISTENCE. Each of Parent, Holding, Operating, NBF and Products is a corporation, and Industries is a limited partnership, duly organized, legally existing and in good standing under the laws of the jurisdiction in which it is organized and is duly qualified as a foreign corporation in all jurisdictions wherein it maintains a place of business. Neither Borrower nor any of its Subsidiaries has been known as or used any corporate, fictitious or trade names except those listed on Schedule 3.01 hereto. Except as set forth on Schedule 3.01, neither Borrower nor any of its Subsidiaries has been the surviving corporation of a merger or consolidation or acquired all or substantially all of the assets of any Person. SECTION 3.02 CORPORATE POWER AND AUTHORIZATION. Borrower is duly authorized and empowered to create and issue the Note; and Borrower and each Subsidiary is duly authorized and empowered to execute, deliver and perform the Security Instruments, including without limitation, this Agreement, to which it is a party; and all corporate or partnership action on Borrower's or any Subsidiary's part requisite for the due creation and issuance of the Note and for the due execution, delivery and performance of the Security Instruments, including this Agreement, to which Borrower, or any Subsidiary is a party has been duly and

SECTION 3.01 CORPORATE EXISTENCE. Each of Parent, Holding, Operating, NBF and Products is a corporation, and Industries is a limited partnership, duly organized, legally existing and in good standing under the laws of the jurisdiction in which it is organized and is duly qualified as a foreign corporation in all jurisdictions wherein it maintains a place of business. Neither Borrower nor any of its Subsidiaries has been known as or used any corporate, fictitious or trade names except those listed on Schedule 3.01 hereto. Except as set forth on Schedule 3.01, neither Borrower nor any of its Subsidiaries has been the surviving corporation of a merger or consolidation or acquired all or substantially all of the assets of any Person. SECTION 3.02 CORPORATE POWER AND AUTHORIZATION. Borrower is duly authorized and empowered to create and issue the Note; and Borrower and each Subsidiary is duly authorized and empowered to execute, deliver and perform the Security Instruments, including without limitation, this Agreement, to which it is a party; and all corporate or partnership action on Borrower's or any Subsidiary's part requisite for the due creation and issuance of the Note and for the due execution, delivery and performance of the Security Instruments, including this Agreement, to which Borrower, or any Subsidiary is a party has been duly and effectively taken. The board of directors of each Borrower (and of the general partner of Industries) acting pursuant to a duly called and constituted meeting, after proper notice, or pursuant to valid and unanimous consent, has determined (a) that entry into and performance of this Agreement and each of the other documents to which such Borrower is a party, directly or indirectly benefits such Borrower and (b) that adequate and fair consideration and reasonably equivalent value has been received by such Borrower to execute and perform this Agreement and each of the other documents to which it is a party. SECTION 3.03 BINDING OBLIGATIONS. This Agreement does constitute, and the Note and other Security Instruments to which Borrower or any Subsidiary is a party upon their creation, issuance, execution and delivery will constitute, valid and binding obligations of Borrower or such Subsidiary, as the case may be, enforceable in accordance with their respective terms. SECTION 3.04 NO LEGAL BAR OR RESULTANT LIEN. The Note and the Security Instruments, including, without limitation this Agreement, to which Borrower or any Subsidiary is a party, do not and will not violate any provisions of the articles or certificates of incorporation or limited partnership, or the bylaws or agreement of limited partnership, of Borrower or any Subsidiary, or any contract, agreement, law, regulation, order, injunction, judgment, decree or writ to which Borrower or any Subsidiary is subject, or result in the creation or imposition of any Lien upon any Properties of Borrower or any Subsidiary, other than those contemplated by this Agreement. SECTION 3.05 NO CONSENT. The execution, delivery and performance of the Note and the Security Instruments, including this Agreement, to which Borrower or any Subsidiary are party does not require the consent or approval of any other Person, including, without limitation, any regulatory authority or governmental body of the United States or any state thereof or any political subdivision of the United States or any state thereof. SECTION 3.06 FINANCIAL CONDITION. The unaudited, consolidated and consolidating financial statements of Parent and its Subsidiaries dated December 31, 2000, which have been delivered to Lender, are complete and correct, have been prepared from the books and records of Borrower in accordance with GAAP, consistently applied, and fully and accurately reflect the 13

financial condition and results of the operations of Borrower and its Subsidiaries as at the date or dates and for the period or periods stated (subject only to normal year-end audit adjustments with respect to any unaudited interim statements). No material adverse change, either in any case or in the aggregate, has since occurred in the business, prospects, profits, Properties, operations or condition, financial or otherwise, of Borrower or any Subsidiary, except as disclosed to Lender in writing. SECTION 3.07 INVESTMENTS AND GUARANTIES. Neither Borrower nor any Subsidiary has made investments in, advances to or guaranties of the obligations of any Person, except as reflected in the Financial Statements. SECTION 3.08 OWNERSHIP. Parent owns one hundred percent (100%) of the issued and outstanding Stock

financial condition and results of the operations of Borrower and its Subsidiaries as at the date or dates and for the period or periods stated (subject only to normal year-end audit adjustments with respect to any unaudited interim statements). No material adverse change, either in any case or in the aggregate, has since occurred in the business, prospects, profits, Properties, operations or condition, financial or otherwise, of Borrower or any Subsidiary, except as disclosed to Lender in writing. SECTION 3.07 INVESTMENTS AND GUARANTIES. Neither Borrower nor any Subsidiary has made investments in, advances to or guaranties of the obligations of any Person, except as reflected in the Financial Statements. SECTION 3.08 OWNERSHIP. Parent owns one hundred percent (100%) of the issued and outstanding Stock of Operating, Holding, NBF and Products. Operating owns a one percent (1%) general partner interest in Industries. Holding owns a ninety-nine percent (99%) limited partner interest in Industries. There are no outstanding subscriptions, warrants, options, calls, commitments, convertible securities or other agreements to which Borrower is a party or by which it is bound, calling for the issuance of any capital Stock or securities convertible into capital Stock of Borrower or any Subsidiary, except as disclosed on Schedule 3.08. SECTION 3.09 LIABILITIES. Except for liabilities (a) incurred in the normal course of business, (b) listed on Schedule 3.09 attached hereto or (c) described in the Financial Statements, neither Borrower nor any Subsidiary has liabilities, direct or contingent, owing to any Person other than Lender. Except as described in the Financial Statements, or as otherwise disclosed to Lender in writing, there is no litigation, legal or administrative proceeding, investigation or other action of any nature pending or, to the knowledge of Borrower, threatened against or affecting Borrower or any Subsidiary which involves the possibility of any judgment or liability not fully covered by insurance, and which may adversely affect the business or the Properties of Borrower or any Subsidiary or their ability to carry on business as now conducted. SECTION 3.10 TAXES; GOVERNMENTAL CHARGES. Borrower and each Subsidiary has filed all tax returns and reports required to be filed and has paid all taxes, assessments, fees and other governmental charges levied upon it. SECTION 3.11 TITLES, ETC. Borrower and each Subsidiary has good title to its respective Properties, free and clear of all Liens except those referred to in Schedule 3.09. SECTION 3.12 DEFAULTS. Neither Borrower nor any Subsidiary is in default under any indenture, mortgage, deed of trust, agreement or other instrument to which Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary is bound, except as disclosed to Lender in writing. No Default or Event of Default hereunder has occurred and is continuing. SECTION 3.13 USE OF PROCEEDS: MARGIN STOCK. The proceeds of the Note will be used by Borrower as working capital for Borrower's business. None of such proceeds will be used for, and neither Borrower nor any Subsidiary are engaged in the business of, extending credit for the purpose of purchasing or carrying any "margin stock" as defined in Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221), or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry a 14

margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of said Regulation U. No part of the proceeds of the loans evidenced by the Note will be used for any purpose which violates Regulation X of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 224). All loans evidenced by the Note are and shall be "business loans" as such term is used in the Depository Institutions Deregulation and Monetary Control Act of 1980, as amended, and such loans are for business, commercial, investment or other similar purposes and not primarily for personal, family, household or agricultural use, as such terms are used and defined in Texas Revised Civil Statutes Annotated, Title 4 of the Finance Code, Chapter 346. Neither Borrower nor any Subsidiary nor any Person acting on behalf of Borrower or any Subsidiary has taken or will take any action which might cause the Note or any of the Security Instruments, including this

margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of said Regulation U. No part of the proceeds of the loans evidenced by the Note will be used for any purpose which violates Regulation X of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 224). All loans evidenced by the Note are and shall be "business loans" as such term is used in the Depository Institutions Deregulation and Monetary Control Act of 1980, as amended, and such loans are for business, commercial, investment or other similar purposes and not primarily for personal, family, household or agricultural use, as such terms are used and defined in Texas Revised Civil Statutes Annotated, Title 4 of the Finance Code, Chapter 346. Neither Borrower nor any Subsidiary nor any Person acting on behalf of Borrower or any Subsidiary has taken or will take any action which might cause the Note or any of the Security Instruments, including this Agreement, to violate Regulation U or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereafter be in effect. SECTION 3.14 COMPLIANCE WITH THE LAW. Neither Borrower nor any Subsidiary: (a) is in violation of any law, ordinance, or governmental rule or regulation to which Borrower or any Subsidiary or any of their respective Properties are subject, including but not limited to, those laws, ordinances and governmental rules and regulations regarding employee wages and overtime; (b) has failed to obtain any license, certificate, permit, franchise or other governmental authorization necessary for the operation of its businesses; and (c) has failed to obtain any other license, certificate, permit, franchise or other governmental authorization necessary to the ownership of any of their respective Properties or the conduct of their respective businesses; which violation or failure might adversely affect the business, prospects, profits, Properties, operations or condition (financial or otherwise) of Borrower or any Subsidiary. SECTION 3.15 ERISA. Borrower and its Subsidiaries are in compliance in all material respects with the applicable provisions of ERISA, and no "reportable event," as such term is defined in Section 4043 of ERISA, has occurred with respect to any Plan of Borrower or any Subsidiary. SECTION 3.16 SUBSIDIARIES. A list of all the existing Subsidiaries of Borrower is provided in Schedule 3.16 attached hereto and incorporated by reference. SECTION 3.17 DIRECT BENEFIT FROM LOANS. Borrower has received or, upon the execution and funding thereof, will receive (a) direct benefit from the making and execution of this Agreement and the other documents to which it is a party, and (b) fair and independent consideration for the entry into, and performance of, this Agreement and the other documents to which it is a party. 15

SECTION 3.18 RICO. Borrower is not in violation of any laws, statutes or regulations, including, without limitation, RICO, which contain provisions which could potentially override Lender's security interest in the Collateral. SECTION 3.19 LEASES AND LANDLORD WAIVERS Borrower and/or its Subsidiaries are parties to certain lease agreements pertaining to real property upon which Borrower or a Subsidiary of Borrower operates its business and certain material personal property leases (individually, the "Lease" and collectively, the "Leases"). Schedule 3.19 sets forth the present landlord(s) of the property associated with each real estate Lease and of each lessor with respect to each personal property lease, the expiration date of the respective Lease, and the renewal notice period of each Lease. Schedule 3.19 is complete and correct and fully and accurately describes all Leases to which Borrower and/or any of its Subsidiaries are a party. Borrower has provided Lender with landlord waivers, in form and substance satisfactory to Lender, with respect to all real estate Leases, each of which landlord waivers has been duly executed by the landlord or such landlord's duly authorized representative (as set forth in Schedule 3.19) and each of which landlord waiver is fully enforceable under the terms and conditions of the Leases and applicable state, local or municipal law.

SECTION 3.18 RICO. Borrower is not in violation of any laws, statutes or regulations, including, without limitation, RICO, which contain provisions which could potentially override Lender's security interest in the Collateral. SECTION 3.19 LEASES AND LANDLORD WAIVERS Borrower and/or its Subsidiaries are parties to certain lease agreements pertaining to real property upon which Borrower or a Subsidiary of Borrower operates its business and certain material personal property leases (individually, the "Lease" and collectively, the "Leases"). Schedule 3.19 sets forth the present landlord(s) of the property associated with each real estate Lease and of each lessor with respect to each personal property lease, the expiration date of the respective Lease, and the renewal notice period of each Lease. Schedule 3.19 is complete and correct and fully and accurately describes all Leases to which Borrower and/or any of its Subsidiaries are a party. Borrower has provided Lender with landlord waivers, in form and substance satisfactory to Lender, with respect to all real estate Leases, each of which landlord waivers has been duly executed by the landlord or such landlord's duly authorized representative (as set forth in Schedule 3.19) and each of which landlord waiver is fully enforceable under the terms and conditions of the Leases and applicable state, local or municipal law. SECTION 3.20 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each of Borrower and its Subsidiaries owns or possesses all the patents, trademarks, service marks, trade names, copyrights and licenses necessary for the present and planned future conduct of its business without any known conflict with the rights of others. All such patents, trademarks, service marks, trade names, copyrights, licenses and other similar rights are listed on Schedule 3.20. SECTION 3.21 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each representation and warranty contained in this Agreement and the Note and Security Instruments shall be continuous in nature and shall remain accurate, complete and not misleading at all times during the term of this Agreement, except for changes in the nature of Borrower's or its Subsidiaries' business or operations that would render the information in this Agreement, the Note or the Security Instruments, or any exhibit attached hereto either inaccurate, incomplete or misleading, so long as Lender has consented to such changes or such changes are expressly permitted by this Agreement, and except for such representations and warranties that by their nature are limited only to a specific date. ARTICLE IV AFFIRMATIVE COVENANTS Without the prior written consent of Lender, Borrower will at all times comply with the covenants contained in this Article IV, from the date hereof and for so long as any part of the Indebtedness or the Commitment is outstanding. SECTION 4.01 FINANCIAL STATEMENTS AND REPORTS. Borrower and all Subsidiaries will promptly furnish to Lender from time to time upon request such information regarding the business and affairs and financial condition of Borrower and all its Subsidiaries as Lender may reasonably request, and will furnish to Lender: 16

(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event within one hundred twenty (120) days after the close of each fiscal year of Borrower, audited Financial Statements of Borrower and its Subsidiaries, consisting of the consolidated and consolidating balance sheets of Borrower and its Subsidiaries as at the end of such year and the consolidated and consolidating operating statements of Borrower and its Subsidiaries, as at the end of such year (showing income, expenses and surplus), setting forth in each case in comparative form figures for the previous fiscal year, all prepared in accordance with GAAP, consistently applied, and, with respect to the consolidated Financial Statements only, certified by a nationally recognized independent public accounting firm acceptable to Lender; (b) MONTHLY FINANCIAL STATEMENTS. As soon as available and in any event within twenty (20) days after the end of each calendar month, or forty-five (45) days after the end of a calendar month that is also the end of a calendar quarter, the consolidated and consolidating balance sheets of Borrower and its Subsidiaries, at the end of such month and the consolidated and consolidating operating statements of Borrower and its Subsidiaries,

(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event within one hundred twenty (120) days after the close of each fiscal year of Borrower, audited Financial Statements of Borrower and its Subsidiaries, consisting of the consolidated and consolidating balance sheets of Borrower and its Subsidiaries as at the end of such year and the consolidated and consolidating operating statements of Borrower and its Subsidiaries, as at the end of such year (showing income, expenses and surplus), setting forth in each case in comparative form figures for the previous fiscal year, all prepared in accordance with GAAP, consistently applied, and, with respect to the consolidated Financial Statements only, certified by a nationally recognized independent public accounting firm acceptable to Lender; (b) MONTHLY FINANCIAL STATEMENTS. As soon as available and in any event within twenty (20) days after the end of each calendar month, or forty-five (45) days after the end of a calendar month that is also the end of a calendar quarter, the consolidated and consolidating balance sheets of Borrower and its Subsidiaries, at the end of such month and the consolidated and consolidating operating statements of Borrower and its Subsidiaries, for such month (showing income, expenses and surplus for such month and for the period from the beginning of the fiscal year to the end of such month), all prepared in accordance with GAAP, consistently applied, in a manner acceptable to Lender and certified by the chief financial officer or treasurer of Borrower; (c) ACCOUNTS AGINGS. As soon as available and in any event within ten (10) days (or earlier if deemed necessary by Lender in its sole discretion) after the end of each calendar month, consolidated and consolidating agings, in detail format, of all accounts payable and accounts receivable (the "Account Agings") of Revolving Credit Borrower showing each such account which is thirty (30), sixty (60), ninety (90), one hundred twenty (120), one hundred fifty (150) and over one hundred fifty (150) days past invoice date and, with respect to accounts receivable, reconciling such aging with the reports delivered to Lender pursuant to Section 4.01(f); (d) INVENTORY REPORT. As soon as available and in any event within ten (10) days (or earlier if deemed necessary by Lender in its sole discretion) after the end of each calendar month, an Inventory perpetual report for Revolving Credit Borrower and a schedule that lists Inventory by item, cost and location; and (e) WEEKLY BORROWING BASE REPORTS. On or before the third (3rd) business day of each week, a report in such form as Lender may reasonably request, reflecting the Eligible Accounts and Eligible Inventory of Revolving Credit Borrower as of the end of the preceding week and calculating the Accounts Advance Amount and Inventory Advance Amount based thereon, together with the Account Agings, cash receipt journals or copies of checks, invoices for new billings, sales journals and backup for all miscellaneous credits and debits, purchases journals and cost of goods sold reports and inventory reports, which support such report. Such report shall also reflect the amount of sales and receipts of Revolving Credit Borrower during the preceding week and such other information as Lender may reasonably request. 17

All such balance sheets and other financial statements referred to in this Section 4.01 shall be in such detail as Lender may reasonably request and shall conform to GAAP applied on a basis consistent with those of the Financial Statements, except only for such changes in accounting principles or practice with which independent certified public accountants concur. SECTION 4.02 COMPLIANCE WITH LAWS; PAYMENT OF TAXES AND OTHER CLAIMS. Borrower will (a) observe and comply with all laws, statutes, codes, acts, ordinances, rules, regulations, directions and requirements of all federal, state, county, municipal and other governments, departments, commissions, boards, courts, authorities, officials and officers applicable to it, including without limitation, and (b) pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon Borrower or any Subsidiary or upon the income or any Property of Borrower or any Subsidiary as well as all claims of any kind (including claims for labor, materials, supplies and rent) which, if unpaid, might become a lien upon any or all of the Property of Borrower or any Subsidiary; provided, however, that, subject to the written approval of Lender, neither Borrower nor any Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted and if Borrower or any Subsidiary shall have set up reserves therefor adequate under GAAP.

All such balance sheets and other financial statements referred to in this Section 4.01 shall be in such detail as Lender may reasonably request and shall conform to GAAP applied on a basis consistent with those of the Financial Statements, except only for such changes in accounting principles or practice with which independent certified public accountants concur. SECTION 4.02 COMPLIANCE WITH LAWS; PAYMENT OF TAXES AND OTHER CLAIMS. Borrower will (a) observe and comply with all laws, statutes, codes, acts, ordinances, rules, regulations, directions and requirements of all federal, state, county, municipal and other governments, departments, commissions, boards, courts, authorities, officials and officers applicable to it, including without limitation, and (b) pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon Borrower or any Subsidiary or upon the income or any Property of Borrower or any Subsidiary as well as all claims of any kind (including claims for labor, materials, supplies and rent) which, if unpaid, might become a lien upon any or all of the Property of Borrower or any Subsidiary; provided, however, that, subject to the written approval of Lender, neither Borrower nor any Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted and if Borrower or any Subsidiary shall have set up reserves therefor adequate under GAAP. SECTION 4.03 MAINTENANCE. Borrower will and will cause each Subsidiary to (a) maintain its corporate or partnership existence, rights and franchises; (b) observe and comply with all valid laws, statutes, codes, acts, ordinances, judgments, injunctions, rules, regulations, certificates, franchises, permits and licenses of all federal, state, county, municipal and other governmental authorities; (c) maintain its Properties (and any Properties leased by or consigned to it or held under title retention or conditional sales contracts) in good and workable condition (ordinary wear and tear excepted) at all times and make all repairs, replacements, additions, betterments and improvements to its Properties as are needful and proper so that the business carried on in connection therewith may be conducted properly and efficiently at all times; and (d) maintain and keep books of records and accounts, all in accordance with GAAP, consistently applied, of all dealings and transactions in relation to its business and activity. SECTION 4.04 FURTHER ASSURANCES. Borrower will and will cause each Subsidiary to cure promptly any defects in the creation and issuance of the Note and the execution and delivery of the Security Instruments, including, without limitation, this Agreement. Borrower at its expense will promptly execute and deliver to Lender upon request all such other and further documents, agreements and instruments to effectuate the agreements of Borrower or any Subsidiary in the Security Instruments, including, without limitation, this Agreement, or to further evidence and more fully describe the collateral intended as security for the Note, or to correct any omissions in the Security Instruments, or more fully to state the security obligations set out herein or in any of the Security Instruments, or to perfect, protect or preserve any Liens created pursuant to any of the Security Instruments, or to make any recordings, to file any notices, or obtain any consents, all as may be necessary or appropriate in connection therewith. SECTION 4.05 PERFORMANCE OF OBLIGATIONS. Borrower will pay the Note according to the reading, tenor and effect thereof; and Borrower will do and perform every act and discharge all of the obligations provided to be performed and discharged by Borrower under the Security Instruments, including this Agreement, at the time or times and in the manner specified, and 18

cause each Subsidiary to take such action with respect to their obligations to be performed and discharged under the Security Instruments to which they respectively are parties. SECTION 4.06 REIMBURSEMENT OF EXPENSES. Borrower will pay all reasonable legal fees incurred by Lender in connection with the preparation, amendment, interpretation, administration and enforcement of this Agreement and any and all other Security Instruments contemplated hereby. Borrower will, upon request, promptly reimburse Lender for all amounts expended, advanced or incurred by Lender to satisfy any obligation of Borrower under this Agreement or any other Security Instrument, or to protect the Properties or business of Borrower or any Subsidiary or to collect the Note, or to enforce the rights of Lender under this Agreement, the

cause each Subsidiary to take such action with respect to their obligations to be performed and discharged under the Security Instruments to which they respectively are parties. SECTION 4.06 REIMBURSEMENT OF EXPENSES. Borrower will pay all reasonable legal fees incurred by Lender in connection with the preparation, amendment, interpretation, administration and enforcement of this Agreement and any and all other Security Instruments contemplated hereby. Borrower will, upon request, promptly reimburse Lender for all amounts expended, advanced or incurred by Lender to satisfy any obligation of Borrower under this Agreement or any other Security Instrument, or to protect the Properties or business of Borrower or any Subsidiary or to collect the Note, or to enforce the rights of Lender under this Agreement, the Note, or any other Security Instrument, which amounts will include all court costs, attorneys' fees, fees of auditors and accountants, and investigation expenses reasonably incurred by Lender in connection with any such matters, together with interest at either (a) the post-default rate specified in Section 2.02 on each such amount from the date that the same is expended, advanced or incurred by Lender until the date of reimbursement to Lender, or (b) if no Default shall have occurred and be continuing, the pre-default rate specified in Section 2.02 on each such amount from the date that the same is expended, advanced or incurred by Lender until the date of written demand or request by Lender for the reimbursement of same, and thereafter at the applicable post-default rate specified in Section 2.02 until the date of reimbursement to Lender. SECTION 4.07 INSURANCE. Borrower and each Subsidiary now maintains and will continue to maintain with financially sound and reputable insurers, insurance with respect to their respective Properties and businesses against such liabilities, casualties, risks and contingencies and in such types and amounts as is customary in the case of corporations engaged in the same or similar businesses and similarly situated but in any event, all fixed assets of Borrower shall be insured for an amount at least equal to the unpaid principal balance of the Note, from time to time outstanding. All such policies shall name Lender as loss payee and mortgagee and shall provide that the insurer shall provide Lender with thirty (30) days prior written notification of the cancellation of such policies. Upon request of Lender, Borrower will furnish or cause to be furnished to Lender from time to time a summary of the insurance coverage of Borrower and the Subsidiaries in form and substance satisfactory to Lender and if requested will furnish Lender copies of the applicable policies. SECTION 4.08 RIGHT OF INSPECTION. Borrower will permit and will cause each Subsidiary to permit any officer, employee or agent of Lender to visit and inspect any of the Properties of Borrower, or any Subsidiary, to conduct at least four (4) collateral reviews per year, to examine Borrower's or any Subsidiary's books of record and accounts, to take copies and extracts therefrom, and to discuss the affairs, finances and accounts of Borrower or any Subsidiary with Borrower's or such Subsidiary's officers, employees, accountants and auditors, all at such times and as often as Lender may desire. Borrower shall reimburse Lender for all of Lender's expenses in connection with the collateral reviews, which expenses include Seven Hundred Fifty and No/100 dollars ($750.00) per-person per-day for on-site collateral reviews. SECTION 4.09 NOTICE OF CERTAIN EVENTS. Borrower shall promptly notify Lender if Borrower learns of the occurrence of (a) any event which constitutes a Default, together with a detailed statement by a responsible officer of Borrower of the steps being taken to cure the effect of such Default; (b) the receipt of any notice from, or the taking of any other action by, the 19

holder of any promissory note, debenture or other evidence of indebtedness of Borrower or any Subsidiary or of any security (as defined in the Securities Act of 1933, as amended) of Borrower or any Subsidiary with respect to a claimed default, together with a detailed statement by a responsible officer of Borrower specifying the notice given or other action taken by such holder and the nature of the claimed default and what action such Borrower, or such Subsidiary is taking or proposes to take with respect thereto; (c) any legal, judicial or regulatory proceedings affecting Borrower or any Subsidiary or any of the Properties of Borrower or any Subsidiary in which the amount involved is material and is not covered by insurance or which, if adversely determined, would have a material and adverse effect on the business or the financial condition of Borrower or any Subsidiary; (d) any dispute between Borrower or any Subsidiary and any governmental or regulatory body or any other Person which, if adversely determined, might materially interfere with the normal business operations of Borrower or any Subsidiary; or (e) any material adverse changes, either in any case or in the aggregate, in the assets, liabilities, financial condition, business, operations, affairs or circumstances of Borrower or any Subsidiary, from those

holder of any promissory note, debenture or other evidence of indebtedness of Borrower or any Subsidiary or of any security (as defined in the Securities Act of 1933, as amended) of Borrower or any Subsidiary with respect to a claimed default, together with a detailed statement by a responsible officer of Borrower specifying the notice given or other action taken by such holder and the nature of the claimed default and what action such Borrower, or such Subsidiary is taking or proposes to take with respect thereto; (c) any legal, judicial or regulatory proceedings affecting Borrower or any Subsidiary or any of the Properties of Borrower or any Subsidiary in which the amount involved is material and is not covered by insurance or which, if adversely determined, would have a material and adverse effect on the business or the financial condition of Borrower or any Subsidiary; (d) any dispute between Borrower or any Subsidiary and any governmental or regulatory body or any other Person which, if adversely determined, might materially interfere with the normal business operations of Borrower or any Subsidiary; or (e) any material adverse changes, either in any case or in the aggregate, in the assets, liabilities, financial condition, business, operations, affairs or circumstances of Borrower or any Subsidiary, from those reflected in the Financial Statements or by the facts warranted or represented in any Security Instrument, including without limitation this Agreement. SECTION 4.10 ERISA INFORMATION AND COMPLIANCE. Borrower will promptly furnish to Lender (a) if requested by Lender, promptly after the filing thereof with the United States Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of each annual and other report with respect to each Plan or any trust created thereunder, and (b) immediately upon becoming aware of the occurrence of any "reportable event," as such term is defined in Section 4043 of ERISA, or of any "prohibited transaction," as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, in connection with any Plan or any trust created thereunder, a written notice signed by the Chief Executive Officer or Chief Financial Officer of Borrower specifying the nature thereof, what action Borrower or any of its Subsidiaries is taking or proposes to take with respect thereto, and, when known, any action taken by the Internal Revenue Service with respect thereto. Borrower will fund, or will cause its Subsidiaries to fund, all current service pension liabilities as they are incurred under the provisions of all Plans from time to time in effect for the benefit of employees of Borrower or any of its Subsidiaries, and comply with all applicable provisions of ERISA. SECTION 4.11 ENVIRONMENTAL REQUIREMENTS. Borrower shall comply with all Environmental Laws applicable to Borrower or to its Property with respect to occupational health and safety, hazardous waste and substances and environmental matters. Borrower shall promptly notify Lender of its receipt of any notice of a violation or an alleged violation of any such federal laws, state statutes, municipal ordinances or other governmental standards, rules or regulations. Borrower shall indemnify and hold Lender harmless from all loss, cost, damages, claim and expense incurred by Lender on account of Borrower's failure to perform the obligations of this Section. SECTION 4.12 ADDITIONAL GUARANTORS. Borrower shall cause each of its now or hereafter existing Subsidiaries to duly execute and deliver, or become a party to a Guaranty Agreement with such Security Instruments as Lender may require as security therefor from time to time. 20

SECTION 4.13 COMPLIANCE CERTIFICATE. At the time that Borrower provides the monthly Financial Statements pursuant to Section 4.01, Borrower shall also provide a Compliance Certificate which (a) states that the information on any and all schedules to this Agreement is complete and accurate as of the date of such certificate or, if such is the case, attaches to such certificate updated schedules, and (b) states that, based on a reasonably diligent examination, no Default or Event of Default has occurred or exists, or, if such is not the case, specifies such Default or Event of Default and its nature, when it occurred, whether it is continuing and the steps taken or being taken by Borrower with respect thereto. SECTION 4.14 BLOCKED ACCOUNTS. At all times during the term of this Agreement, Borrower will maintain Blocked Accounts as required by Section 2.12, and will direct all collections and other Receipts to such Blocked Accounts in accordance with Section 2.13. SECTION 4.15 SUBORDINATED DEBT LEGEND AND INSPECTION. (a) Borrower shall cause each instrument or document which now or hereafter evidences all or any portion of the

SECTION 4.13 COMPLIANCE CERTIFICATE. At the time that Borrower provides the monthly Financial Statements pursuant to Section 4.01, Borrower shall also provide a Compliance Certificate which (a) states that the information on any and all schedules to this Agreement is complete and accurate as of the date of such certificate or, if such is the case, attaches to such certificate updated schedules, and (b) states that, based on a reasonably diligent examination, no Default or Event of Default has occurred or exists, or, if such is not the case, specifies such Default or Event of Default and its nature, when it occurred, whether it is continuing and the steps taken or being taken by Borrower with respect thereto. SECTION 4.14 BLOCKED ACCOUNTS. At all times during the term of this Agreement, Borrower will maintain Blocked Accounts as required by Section 2.12, and will direct all collections and other Receipts to such Blocked Accounts in accordance with Section 2.13. SECTION 4.15 SUBORDINATED DEBT LEGEND AND INSPECTION. (a) Borrower shall cause each instrument or document which now or hereafter evidences all or any portion of the Subordinated Debt to be conspicuously marked with a legend as provided in the subordination agreement related thereto. (b) Borrower shall permit Lender at any reasonable time, and from time to time, to examine and make copies and abstracts from Borrower's books, records, instruments and documents evidencing or pertaining to the Subordinated Debt. ARTICLE V NEGATIVE COVENANTS Without the prior written consent of Lender, Borrower will at all times comply with the covenants contained in this Article V, from the date hereof and for so long as any part of the Indebtedness or the Commitment is outstanding. SECTION 5.01 DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Borrower will not, and will not permit any Subsidiary to, incur, create, assume or in any manner become or be liable in respect of any indebtedness (including obligations for the payment of rentals); and no Borrower will, or will permit a Subsidiary to, guarantee or otherwise in any way become or be responsible for obligations of any other Person, whether by agreement to purchase the indebtedness of any other Person or agreement for the furnishing of funds to any other Person through the purchase or lease of goods, supplies or services (or by way of stock purchase, capital contribution, advance or loan) for the purpose of paying or discharging the indebtedness of any other Person, or otherwise, except that the foregoing restrictions shall not apply to: (a) the Note or other Indebtedness to Lender; (b) liabilities, direct or contingent, of Borrower and its Subsidiaries existing on the date of this Agreement which are reflected in the Financial Statements or have been disclosed to Lender in writing, and any renewals and extensions (but not increases) thereof; 21

(c) liabilities in relation to leases and lease agreements to the extent permitted by Section 5.07 hereof; (d) endorsements of negotiable or similar instruments for collection or deposit in the ordinary course of business; (e) trade payables or similar obligations from time to time incurred in the ordinary course of business other than for borrowed money (exclusive of the promissory notes described in Section 7.21, as in effect on the date hereof); (f) taxes, assessments or other government charges which are not yet due or are being contested pursuant to Section 4.02 hereof;

(c) liabilities in relation to leases and lease agreements to the extent permitted by Section 5.07 hereof; (d) endorsements of negotiable or similar instruments for collection or deposit in the ordinary course of business; (e) trade payables or similar obligations from time to time incurred in the ordinary course of business other than for borrowed money (exclusive of the promissory notes described in Section 7.21, as in effect on the date hereof); (f) taxes, assessments or other government charges which are not yet due or are being contested pursuant to Section 4.02 hereof; (g) indebtedness which is subordinated to the Note by terms satisfactory to Lender, in its sole discretion; and (h) indebtedness listed on Schedule 5.01 attached hereto. SECTION 5.02 LIENS. Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except the following (the "Permitted Liens"): (a) Liens securing the payment of any Indebtedness to Lender; (b) Obligations listed on Schedule 3.09 hereto; (c) Liens for taxes, assessments, or other governmental charges not yet due or which are being contested in good faith by appropriate action promptly initiated and diligently conducted, if such reserve as shall be required by GAAP shall have been made therefor; (d) Liens of landlords, vendors, carriers, warehousemen, mechanics, laborers and materialmen arising by law in the ordinary course of business for sums not yet due or, subject to the written approval of Lender, being contested in good faith by appropriate action promptly initiated and diligently conducted, if such reserve as shall be required by GAAP shall have been made therefor; (e) Liens existing on Property owned by Borrower or any Subsidiary on the date of this Agreement which have been disclosed to and permitted by Lender in writing and listed on Schedule 5.02 hereof, and any renewals and extensions thereof on materially the same terms; (f) pledges or deposits made in the ordinary course of business in connection with workmen's compensation, unemployment insurance, social security and other like laws; and 22

(g) inchoate liens arising under ERISA to secure the contingent liability of Borrower or any Subsidiary permitted by Section 4.10 hereof. SECTION 5.03 INVESTMENTS, LOANS AND ADVANCES. Borrower will not, and will not permit any Subsidiary to, make or permit to remain outstanding any loans or advances to or investments in any Person, except that the foregoing restriction shall not apply to: (a) loans, advances or investments the material details of which have been set forth in the Financial Statements or have been otherwise disclosed to Lender in writing prior to the execution of this Agreement; (b) investments in direct obligations of the United States of America or any agency thereof; (c) investments in certificates of deposit issued by commercial banks in the United States having a combined capital and surplus in excess of One Hundred Million and No/100 Dollars ($100,000,000.00); (d) investments in commercial paper with the best rating by Standard & Poor's, Moody's Investors Service, Inc.,

(g) inchoate liens arising under ERISA to secure the contingent liability of Borrower or any Subsidiary permitted by Section 4.10 hereof. SECTION 5.03 INVESTMENTS, LOANS AND ADVANCES. Borrower will not, and will not permit any Subsidiary to, make or permit to remain outstanding any loans or advances to or investments in any Person, except that the foregoing restriction shall not apply to: (a) loans, advances or investments the material details of which have been set forth in the Financial Statements or have been otherwise disclosed to Lender in writing prior to the execution of this Agreement; (b) investments in direct obligations of the United States of America or any agency thereof; (c) investments in certificates of deposit issued by commercial banks in the United States having a combined capital and surplus in excess of One Hundred Million and No/100 Dollars ($100,000,000.00); (d) investments in commercial paper with the best rating by Standard & Poor's, Moody's Investors Service, Inc., or any other rating agency satisfactory to Lender issued by companies in the United States with a combined capital and surplus in excess of One Hundred Million and No/100 Dollars ($100,000,000.00); and (e) loans, advances or investments permitted by Section 5.01 hereof. SECTION 5.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Borrower will not, and will not permit any Subsidiary to (a) declare or pay any dividend, purchase, redeem or otherwise acquire for value any of its Stock now or hereafter outstanding, (b) return any capital to its stockholders or interest holders, as applicable or (c) make any distribution of its assets to any Borrower, Subsidiary, Guarantor or its stockholders or interest holders, as applicable. Borrower will not, and will not permit any Subsidiary to, make any redemption or prepayment or other retirement, prior to the stated maturity thereof or prior to the due date of any regularly scheduled installment or amortization payment with respect thereto, of any indebtedness for borrowed money owing to any Person other than Lender or of any indebtedness that is junior and subordinate to the Indebtedness, except, in the case of any such junior and subordinated indebtedness, as may be expressly allowed by the terms of any subordination agreement governing same. Borrower will not, and will not permit any Subsidiary to, make any payment of any management, consulting or similar fee or of any principal, interest or fees on any indebtedness (other than trade debt incurred in the ordinary course of business), owing to any officer, shareholder or other equity holder of Borrower, any such Subsidiary or to any Affiliate or any officer, shareholder or other equity holder of any such Affiliate if any Default or Event of Default exists at the time of any such payment or would exist as a result of making any such payment. SECTION 5.05 SALE OF PROPERTIES. Borrower will not, and will not permit a Subsidiary to, sell, transfer or otherwise dispose of all or any substantial portion or integral part of its Properties except in the ordinary course of business, or enter into any arrangement, directly or 23

indirectly, with any Person whereby a Borrower or any Subsidiary shall sell or transfer any Property, whether now owned or hereafter acquired, and whereby a Borrower or any Subsidiary shall then or thereafter rent or lease as lessee such Property or any part thereof or other Property which a Borrower or any Subsidiary intends to use for substantially the same purpose or purposes as the Property sold or transferred. SECTION 5.06 NATURE OF BUSINESS. Borrower will not, and will not allow any Subsidiary to, permit any material change to be made in the character of its business as carried on at the date hereof. SECTION 5.07 LIMITATION ON LEASES. Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal), under leases or lease agreements, without the prior written consent of Lender, except (a) leases and lease agreements for equipment used in the operations of Borrower in an aggregate amount for Borrower and all Subsidiaries (determined on a consolidated basis) not to exceed Fifty Thousand and No/100 Dollars ($50,000) in any fiscal year of Borrower, (b) real estate or storage leases and lease agreements with a

indirectly, with any Person whereby a Borrower or any Subsidiary shall sell or transfer any Property, whether now owned or hereafter acquired, and whereby a Borrower or any Subsidiary shall then or thereafter rent or lease as lessee such Property or any part thereof or other Property which a Borrower or any Subsidiary intends to use for substantially the same purpose or purposes as the Property sold or transferred. SECTION 5.06 NATURE OF BUSINESS. Borrower will not, and will not allow any Subsidiary to, permit any material change to be made in the character of its business as carried on at the date hereof. SECTION 5.07 LIMITATION ON LEASES. Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal), under leases or lease agreements, without the prior written consent of Lender, except (a) leases and lease agreements for equipment used in the operations of Borrower in an aggregate amount for Borrower and all Subsidiaries (determined on a consolidated basis) not to exceed Fifty Thousand and No/100 Dollars ($50,000) in any fiscal year of Borrower, (b) real estate or storage leases and lease agreements with a maximum term of thirty (30) days and (c) leases and lease agreements described on Schedule 3.19 attached hereto. SECTION 5.08 MERGERS, CONSOLIDATIONS, ACQUISITIONS, OPENING NEW LOCATIONS, ETC. Borrower will not, and will not permit any Subsidiary to, amend its certificate or articles of incorporation or partnership or otherwise change its corporate name or structure, or consolidate with or merge into or acquire any Person, or permit any other Person to consolidate with or merge into or acquire a Borrower or any Subsidiary or acquire the Stock of any corporation or form any Subsidiary, without prior approval of Lender. SECTION 5.09 ERISA COMPLIANCE. Borrower will not permit any Plan maintained by it or any Subsidiary to: (a) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended; (b) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA; or (c) terminate any such Plan in a manner which could result in the imposition of a Lien on the Property of Borrower or any Subsidiary pursuant to Section 4068 of ERISA. SECTION 5.10 ISSUANCE OF STOCK AND INTERESTS. During the term of this Agreement, no Borrower will issue any additional shares of Stock or partnership interests, as applicable, without the written consent of Lender, unless such shares are issued (a) in the amounts and in the manner set forth in Schedule 5.10 and (b) pursuant to (i) Parent's 1993 Stock Option Plan or 1998 Stock Option Plan, or (ii) a settlement of the litigation set forth in Section 7.20. 24

SECTION 5.11 CHANGES IN ACCOUNTING METHODS. Borrower will not make any change in its accounting method as in effect on the date of this Agreement or change its fiscal year ending date from March 31, unless such change has the prior, written approval of Lender. SECTION 5.12 TRANSACTIONS WITH AFFILIATES. Borrower will not, directly or indirectly, enter into any transaction (including, but not limited to, the sale or exchange of property or the rendering of any service) with any Affiliate, other than in the ordinary course of its business and upon substantially the same or better terms as it could obtain in an arm's length transaction with a Person who is not an Affiliate. SECTION 5.13 AFFILIATE RECEIVABLES. Borrower will not at any time allow any accounts receivable and other receivables to be owed to Borrower by any Affiliate that is not also a Borrower. SECTION 5.14 USE OF PROCEEDS. Borrower will not use the proceeds of the Note for purposes other than those set forth in Section 3.13.

SECTION 5.11 CHANGES IN ACCOUNTING METHODS. Borrower will not make any change in its accounting method as in effect on the date of this Agreement or change its fiscal year ending date from March 31, unless such change has the prior, written approval of Lender. SECTION 5.12 TRANSACTIONS WITH AFFILIATES. Borrower will not, directly or indirectly, enter into any transaction (including, but not limited to, the sale or exchange of property or the rendering of any service) with any Affiliate, other than in the ordinary course of its business and upon substantially the same or better terms as it could obtain in an arm's length transaction with a Person who is not an Affiliate. SECTION 5.13 AFFILIATE RECEIVABLES. Borrower will not at any time allow any accounts receivable and other receivables to be owed to Borrower by any Affiliate that is not also a Borrower. SECTION 5.14 USE OF PROCEEDS. Borrower will not use the proceeds of the Note for purposes other than those set forth in Section 3.13. SECTION 5.15 RICO. Borrower will not violate any laws, statutes or regulations, whether federal or state, for which forfeiture of its properties is a potential penalty, including, without limitation, RICO. SECTION 5.16 NET INCOME. During the term of this Agreement, the Borrower shall not permit its Net Income to be less than the amount set forth below for the periods set forth below:
PERIOD -----Fiscal year ending December 31, 2001 Fiscal Year ending December 31, 2002 Fiscal Year ending December 31, 2003 MINIMUM NET INCOME -----------------$1,000,000 $ (200,000) $ 0

Such determination shall be made at the end of each fiscal year. SECTION 5.17 FIXED CHARGE COVERAGE RATIO. During the term of this Agreement, the Borrower shall not permit its Fixed Charge Coverage Ratio to be less than the ratios set forth below: 25
MAXIMUM DEBT TO TANGIBLE NET WORTH -----------------------1.25 to 1.00

PERIOD -----Nine (9) month period ending December 31, 2001 Twelve (12) month period ending March 31, 2002 Nine (9) month period ending December 31, 2002 Twelve (12) month period ending March 31, 2003 Nine (9) month period ending December 31, 2003 Twelve (12) month period ending March 31, 2004

1.00 to 1.00

1.25 to 1.00

1.00 to 1.00

1.25 to 1.00

1.00 to 1.00

SECTION 5.18 CAPITAL EXPENDITURES. Borrower will not incur any capital expenditures (including payments with respect to capitalized lease obligations) if, as a result thereof, the aggregate capital expenditures of Borrower would exceed $100,000 during any year. SECTION 5.19 RESTRICTED PAYMENTS. Borrower shall not, directly or indirectly, declare, order, pay, make or set apart any sum for any payment or prepayment of principal, premium, if any, or interest on, any

PERIOD -----Nine (9) month period ending December 31, 2001 Twelve (12) month period ending March 31, 2002 Nine (9) month period ending December 31, 2002 Twelve (12) month period ending March 31, 2003 Nine (9) month period ending December 31, 2003 Twelve (12) month period ending March 31, 2004

MAXIMUM DEBT TO TANGIBLE NET WORTH -----------------------1.25 to 1.00

1.00 to 1.00

1.25 to 1.00

1.00 to 1.00

1.25 to 1.00

1.00 to 1.00

SECTION 5.18 CAPITAL EXPENDITURES. Borrower will not incur any capital expenditures (including payments with respect to capitalized lease obligations) if, as a result thereof, the aggregate capital expenditures of Borrower would exceed $100,000 during any year. SECTION 5.19 RESTRICTED PAYMENTS. Borrower shall not, directly or indirectly, declare, order, pay, make or set apart any sum for any payment or prepayment of principal, premium, if any, or interest on, any Subordinated Debt unless permitted by documentation expressly approved by Lender. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01 EVENTS. Any of the following events shall be considered an "Event of Default" as that term is used herein: (a) PRINCIPAL AND INTEREST PAYMENTS. Default is made in the payment or prepayment when due of any installment of principal or interest on the Note or any other Indebtedness; or (b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty made by Borrower, any Subsidiary or any Guarantor in any Security Instrument, including this Agreement, in particular Article III, proves to have been incorrect in any material respect as of the date thereof; or any representation, statement (including financial statements), certificate or data furnished or made by Borrower, any Subsidiary or any Guarantor (or any officer, accountant or attorney of Borrower or any Subsidiary) under any Security Instrument, including this Agreement, proves to have been untrue in any material respect, as of the date as of which the facts therein set forth were stated or certified; or (c) AFFIRMATIVE COVENANTS. Default is made in the due observance or performance of any of the covenants or agreements contained in Article IV of this Agreement or the Security Instruments; or 26

(d) NEGATIVE COVENANTS. Default is made in the due observance or performance by Borrower or any Subsidiary of any of the covenants or agreements contained in Article V of this Agreement or the Security Instruments; or (e) CONDITIONS PRECEDENT. Borrower fail to satisfy, or cause to be satisfied, any of the conditions precedent contained in Article VII hereof which are not to be completed as of the date of this Agreement; or (f) OTHER SECURITY INSTRUMENT OBLIGATIONS. Default is made in the due observance or performance by Borrower, any Subsidiary or any Guarantor of any of the covenants or agreements contained in this Agreement or any Security Instrument other than this Agreement, and such default continues unremedied

(d) NEGATIVE COVENANTS. Default is made in the due observance or performance by Borrower or any Subsidiary of any of the covenants or agreements contained in Article V of this Agreement or the Security Instruments; or (e) CONDITIONS PRECEDENT. Borrower fail to satisfy, or cause to be satisfied, any of the conditions precedent contained in Article VII hereof which are not to be completed as of the date of this Agreement; or (f) OTHER SECURITY INSTRUMENT OBLIGATIONS. Default is made in the due observance or performance by Borrower, any Subsidiary or any Guarantor of any of the covenants or agreements contained in this Agreement or any Security Instrument other than this Agreement, and such default continues unremedied beyond the expiration of any applicable grace period which may be expressly allowed under this Agreement or such Security Instrument; or (g) INVOLUNTARY BANKRUPTCY PROCEEDINGS. A receiver, conservator, custodian, liquidator, creditors' committee, board of inspectors or trustee of Borrower, or any Subsidiary or any Guarantor, or of any of their Property, is created, engaged, retained, procured, authorized or appointed in the United States or under any law of any foreign country by the order or decree of any court or agency or supervisory authority having jurisdiction; or Borrower, or any Subsidiary or any Guarantor becomes a debtor under the Bankruptcy Code of the United States or under the law of any foreign country, or is the subject of an order for relief, or becomes bankrupt or insolvent; or Borrower's, any Subsidiary's or any Guarantor's Property is sequestered, seized or attached in the United States or under any law of any foreign country by court order or decree; or a complaint, petition or similar pleading is filed against Borrower, any Subsidiary or any Guarantor under any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, in the United States or in any foreign country, whether such law is now in existence or hereafter in effect; or (h) VOLUNTARY PETITIONS. Borrower, any Subsidiary or any Guarantor files a petition in bankruptcy or reorganization or seeks relief under any provision of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, in the United States or in any foreign country, whether such law is now in existence or hereafter in effect, or Borrower, any Subsidiary or any Guarantor is the subject of an order for relief or winding up petition entered by any bankruptcy court, or Borrower, any Subsidiary or any Guarantor consents to the filing of any petition against it under any such law in the United States or in any foreign country; or (i) ASSIGNMENTS, CONVEYANCES OR TRANSFERS FOR BENEFIT OF CREDITORS. Borrower, or any Subsidiary, or any Guarantor makes an assignment, conveyance, or transfer for the benefit of its creditors, or for the purpose of enforcing a lien against its Property, or admits in writing its inability to pay its debts generally as they become due, or is generally not paying its debts as such debts become due, or consents to the appointment of a custodian, receiver, trustee, assignee or liquidator of all, substantially all, less than substantially all, or any part of its Property for the purpose of enforcing a lien against its Property; or 27

(j) DISCONTINUANCE OF BUSINESS. Borrower, any Subsidiary or any Guarantor discontinues its usual business; or (k) DEFAULT ON OTHER DEBT OR SECURITY. Borrower, any Subsidiary or any Guarantor fails to make any payment due on any indebtedness or security (as "security" is defined in the Securities Act of 1933, as amended) or any event shall occur or any condition shall exist in respect of any indebtedness or security of Borrower, any Subsidiary or any Guarantor, or under any agreement securing or relating to such indebtedness or security, the effect of which is (i) to cause or to permit any holder of such indebtedness or other security or a trustee to cause (whether or not such holder or trustee elects to cause) such indebtedness or security, or a portion thereof, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or (ii) to permit a trustee or the holder of any security (other than common Stock of Borrower or any Subsidiary) to elect (whether or not such holder or trustee does elect) a majority of the directors on the board of directors of Borrower, any Subsidiary or any Guarantor; or (l) UNDISCHARGED JUDGMENTS. If judgment for the payment of money in excess of Fifty Thousand and

(j) DISCONTINUANCE OF BUSINESS. Borrower, any Subsidiary or any Guarantor discontinues its usual business; or (k) DEFAULT ON OTHER DEBT OR SECURITY. Borrower, any Subsidiary or any Guarantor fails to make any payment due on any indebtedness or security (as "security" is defined in the Securities Act of 1933, as amended) or any event shall occur or any condition shall exist in respect of any indebtedness or security of Borrower, any Subsidiary or any Guarantor, or under any agreement securing or relating to such indebtedness or security, the effect of which is (i) to cause or to permit any holder of such indebtedness or other security or a trustee to cause (whether or not such holder or trustee elects to cause) such indebtedness or security, or a portion thereof, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or (ii) to permit a trustee or the holder of any security (other than common Stock of Borrower or any Subsidiary) to elect (whether or not such holder or trustee does elect) a majority of the directors on the board of directors of Borrower, any Subsidiary or any Guarantor; or (l) UNDISCHARGED JUDGMENTS. If judgment for the payment of money in excess of Fifty Thousand and No/100 Dollars ($50,000.00) is rendered by any court or other governmental body against Borrower, any Subsidiary or any Guarantor and Borrower, any Subsidiary or any Guarantor does not immediately discharge the same or provide for its immediate discharge in accordance with its terms, or procure a stay of execution thereof within ten (10) days from the date of entry thereof, and within said period of ten (10) days from the date of entry thereof or such longer period during which execution of such judgment shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal while providing such reserves therefor as may be required under GAAP; or (m) INSOLVENCY. If Borrower, any Subsidiary or any Guarantor shall be or become insolvent; or (n) FRAUDULENT TRANSFERS. Borrower, any Subsidiary or any Guarantor shall have concealed, removed, or permitted to be concealed or removed, any part of its Property, with intent to hinder, delay or defraud its creditors or any of them, or made or suffered a transfer of any of its Property which may be fraudulent under any bankruptcy, fraudulent transfer or similar law; or shall have made any transfer of its Property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid; or shall have suffered or permitted, while insolvent, any creditor to obtain a Lien upon any of its Property through legal proceedings or distraint or other process which is not vacated within sixty (60) days from the date thereof; or (o) FORFEITURE. The filing of formal charges under a federal or state law for which forfeiture of Borrower's, any Subsidiary's or any Guarantor's Property is a potential penalty; or (p) CHALLENGE TO AGREEMENT OR ANY SECURITY INSTRUMENT. Borrower or any Subsidiary or any Affiliate of any of them, shall challenge or contest in any action, suit or 28

proceeding the validity or enforceability of this Agreement or any of the Security Instruments, the legality or enforceability of any of the Indebtedness or the perfection or priority of any Lien granted to Lender; or (q) REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by such Guarantor, or shall repudiate such Guarantor's liability thereunder or shall be in default under the terms thereof; or (r) REVOCATION PROCEEDING. Any regulatory officer in the State of Texas or in any other state in which Borrower has a location brings an action or proceeding to revoke or otherwise attempts to revoke any license issued to Borrower; or (s) CHANGE OF CONTROL. Parent shall cease to own, directly or indirectly, one hundred percent (100%) of the Stock of Holding, Operating, NBF or Products (other than in connection with a dissolution of NBF or Products approved in writing by Lender), (ii) Operating shall cease to (A) own one percent (1%) of the Stock or (B) be the general partner, of Industries or (iii) Holding shall cease to own ninety-nine percent (99%) of the Stock of Industries; or

proceeding the validity or enforceability of this Agreement or any of the Security Instruments, the legality or enforceability of any of the Indebtedness or the perfection or priority of any Lien granted to Lender; or (q) REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by such Guarantor, or shall repudiate such Guarantor's liability thereunder or shall be in default under the terms thereof; or (r) REVOCATION PROCEEDING. Any regulatory officer in the State of Texas or in any other state in which Borrower has a location brings an action or proceeding to revoke or otherwise attempts to revoke any license issued to Borrower; or (s) CHANGE OF CONTROL. Parent shall cease to own, directly or indirectly, one hundred percent (100%) of the Stock of Holding, Operating, NBF or Products (other than in connection with a dissolution of NBF or Products approved in writing by Lender), (ii) Operating shall cease to (A) own one percent (1%) of the Stock or (B) be the general partner, of Industries or (iii) Holding shall cease to own ninety-nine percent (99%) of the Stock of Industries; or (t) PROCESS AGAINST BORROWER. The issuance of an injunction or order of attachment, or any other process which is prior to a final judgment, for a claim of Fifty Thousand and No/100 Dollars ($50,000.00) or more against Borrower, or any of Borrower's Property, or any Property pledged to secure the Indebtedness; or (u) MARGIN STOCK. The failure of Borrower, any Subsidiary or the Property pledged to secure the Indebtedness to comply with Regulations U or X of the Board of Governors of the Federal Reserve System, as amended; or (v) DECLINE IN VALUE OF COLLATERAL. Any deterioration, impairment or decline in character or value of any part of the Collateral subject to a Lien in favor of Lender to secure the Indebtedness (whether actual or reasonably anticipated) that causes such collateral in the judgment of Lender to become unsatisfactory as to character or value; or (w) FINANCIAL RESPONSIBILITY. If in the reasonable exercise of its judgment Lender, in good faith, determines that the financial responsibility of Borrower has become otherwise unsatisfactory; or (x) KEY PERSONNEL. If Rose Turner (an individual domiciled in the State of Texas), or a replacement satisfactory to Lender in its sole discretion, ceases to be employed as the Chief Operating Officer and Chief Financial Officer of Parent; or (y) PAYMENTS ON SUBORDINATED DEBT. Borrower shall make any payment on account of the Subordinated Debt, except as is permitted by documentation which has been approved by Lender. 29

(z) DELIVERY OF STOCK CERTIFICATES. Borrower shall fail to deliver to Lender, within thirty (30) days of the date hereof, all stock certificates (with blank stock powers attached) issued by Parent to Glenn Bollinger and/or Bobby Bollinger. SECTION 6.02 REMEDIES. Upon DEMAND, or the happening of any Event of Default specified in Section 6.01, (a) Lender may declare the entire principal amount of all Indebtedness then outstanding including interest accrued thereon to be immediately due and payable (provided, that the occurrence of any event described in Subsections 6.01(g) or (h) shall automatically accelerate the maturity of the Indebtedness, without the necessity of any action by Lender) without presentment, demand, protest, notice of protest or dishonor, notice of default, notice of intent to accelerate the maturity thereof, notice of acceleration of the maturity thereof, or other notice of any kind, all of which are hereby expressly waived by Borrower, each Subsidiary and each Guarantor; and (b) all obligations, if any, of Lender hereunder, including the Commitment, shall immediately cease and terminate unless and until Lender shall reinstate same in writing. In addition to and not in limitation of any of the other rights and remedies provided to Lender hereunder or under the Security Instruments in connection with the Property of Borrower in which Lender has a Lien, Borrower hereby agrees that upon request by Lender after the occurrence

(z) DELIVERY OF STOCK CERTIFICATES. Borrower shall fail to deliver to Lender, within thirty (30) days of the date hereof, all stock certificates (with blank stock powers attached) issued by Parent to Glenn Bollinger and/or Bobby Bollinger. SECTION 6.02 REMEDIES. Upon DEMAND, or the happening of any Event of Default specified in Section 6.01, (a) Lender may declare the entire principal amount of all Indebtedness then outstanding including interest accrued thereon to be immediately due and payable (provided, that the occurrence of any event described in Subsections 6.01(g) or (h) shall automatically accelerate the maturity of the Indebtedness, without the necessity of any action by Lender) without presentment, demand, protest, notice of protest or dishonor, notice of default, notice of intent to accelerate the maturity thereof, notice of acceleration of the maturity thereof, or other notice of any kind, all of which are hereby expressly waived by Borrower, each Subsidiary and each Guarantor; and (b) all obligations, if any, of Lender hereunder, including the Commitment, shall immediately cease and terminate unless and until Lender shall reinstate same in writing. In addition to and not in limitation of any of the other rights and remedies provided to Lender hereunder or under the Security Instruments in connection with the Property of Borrower in which Lender has a Lien, Borrower hereby agrees that upon request by Lender after the occurrence of an Event of Default, Borrower shall cooperate with Lender in the transfer of, and will execute all documentation requested by Lender in connection with the transfer of, to such Person as shall be directed by Lender, any or all of the Property then held by Borrower or any Subsidiary, and in connection therewith Borrower agrees to take all other actions reasonably necessary in order to effectuate the transfer of any or all of such Property. SECTION 6.03 PROHIBITION OF TRANSFER, ASSIGNMENT AND ASSUMPTION. This Agreement pertains to the extension of debt financing and financial accommodations for the benefit of Borrower and its Subsidiaries and cannot be transferred to, assigned to or assumed by any other Person either voluntarily or by operation of law. In the event Borrower or any Subsidiary becomes a debtor under the Bankruptcy Code of the United States or under the law of any foreign country, any trustee or debtor in possession may not assume or assign this Agreement nor delegate the performance of any provision hereunder. SECTION 6.04 RIGHT OF SETOFF. Lender and any agent bank of Lender is hereby authorized at any time and from time to time, without notice to Borrower (any such notice being expressly waived by Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Lender or any agent bank of Lender to or for the credit or the account of Borrower against any and all of the Indebtedness of Borrower, irrespective of whether or not Lender shall have made any demand under this Agreement or the Note and although such obligations may, be unmatured. Lender agrees promptly to notify Borrower after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of Lender under this Section 6.04 are in addition to other rights and remedies (including, without limitation, other rights of setoff) which Lender may have. The rights contained in this Section 6.04 shall inure to the benefit of any participant in any loans made hereunder. 30

ARTICLE VII CONDITIONS The obligation of Lender to make the loans to be evidenced by the Note is subject to the accuracy of each and every representation and warranty of Borrower and its Subsidiaries and Guarantors made or referred to in each Security Instrument, including this Agreement, or in any certificate delivered to Lender pursuant to or in connection with any Security Instrument, including this Agreement, to the performance by Borrower of its obligations to be performed hereunder on or before the date of the loan, and to the satisfaction of the following further conditions which must be satisfied as of the date of this Agreement or advance under the Revolving Credit Note. SECTION 7.01 CLOSING. The delivery of all instruments and certificates referred to in this Article VII not theretofore delivered and for the making of the loans provided for in Article II of this Agreement shall occur on or before April 2, 2001.

ARTICLE VII CONDITIONS The obligation of Lender to make the loans to be evidenced by the Note is subject to the accuracy of each and every representation and warranty of Borrower and its Subsidiaries and Guarantors made or referred to in each Security Instrument, including this Agreement, or in any certificate delivered to Lender pursuant to or in connection with any Security Instrument, including this Agreement, to the performance by Borrower of its obligations to be performed hereunder on or before the date of the loan, and to the satisfaction of the following further conditions which must be satisfied as of the date of this Agreement or advance under the Revolving Credit Note. SECTION 7.01 CLOSING. The delivery of all instruments and certificates referred to in this Article VII not theretofore delivered and for the making of the loans provided for in Article II of this Agreement shall occur on or before April 2, 2001. SECTION 7.02 NOTE. Borrower shall have duly and validly issued, executed and delivered the Revolving Credit Note to Lender. SECTION 7.03 CONSTITUENT DOCUMENTS. Lender shall have received a copy of (a) the certificate of limited partnership and the agreement of limited partnership of Industries, and (b) the articles or certificate of incorporation and bylaws of each other Borrower which is to execute this Agreement or any other Security Instrument, certified as true by the Secretary or Assistant Secretary of such Borrower or the general partner of Industries, as applicable. SECTION 7.04 SECRETARY'S CERTIFICATES. Lender shall have received, on or before the date of Closing, certificates of the Secretary of each Borrower which is to execute any Security Instrument setting forth (a) resolutions of its board of directors, or the board of directors of its general partner, in form and substance satisfactory to Lender with respect to the authorization of the Note, this Agreement and any other Security Instruments provided herein and the officers authorized to sign such instruments, and (b) specimen signatures of the officers so authorized. SECTION 7.05 OPINION OF BORROWER'S COUNSEL. Lender shall have received on or before the Closing from counsel for Borrower and the Guarantors, a favorable written opinion satisfactory to Lender and its counsel, as to the matters contained in Sections 3.01, 3.02, 3.03, 3.04 and 3.05 hereof, and as to such counsel's knowledge of pending or threatened material litigation or governmental or regulatory proceedings against Borrower, any Subsidiary, any Guarantor or any of the Property of Borrower, any Subsidiary or any Guarantor and as to the validity, creation, attachment and perfection of Liens under any of the Security Instruments; and as to such other matters incident to the transactions herein contemplated as Lender or its counsel may request. SECTION 7.06 COUNSEL OF LENDER. At the time of the loans hereunder, all legal matters incident to the transactions herein contemplated shall be satisfactory to counsel of Lender. SECTION 7.07 NO DEFAULT. At the time of each loan hereunder, no Default shall have occurred, and there shall not have occurred any condition, event or act which constitutes, or with notice or lapse of time (or both) would constitute a default or event of default under any loan agreement, note agreement or trust indenture to which Borrower or any Subsidiary is a party. 31

SECTION 7.08 NO MATERIAL ADVERSE CHANGES. Prior to each loan, there shall have occurred, in the opinion of Lender, no material adverse changes, either in any case or in the aggregate, in the assets, liabilities, financial condition, business, operations, affairs or circumstances of Borrower, any Guarantor, or any Subsidiary, from those reflected in the Financial Statements or by the facts warranted or represented in any Security Instrument, including this Agreement. SECTION 7.09 OTHER SECURITY INSTRUMENTS AND INFORMATION. Borrower shall have duly and validly executed and delivered, or caused to be executed and delivered, to Lender the following instruments,

SECTION 7.08 NO MATERIAL ADVERSE CHANGES. Prior to each loan, there shall have occurred, in the opinion of Lender, no material adverse changes, either in any case or in the aggregate, in the assets, liabilities, financial condition, business, operations, affairs or circumstances of Borrower, any Guarantor, or any Subsidiary, from those reflected in the Financial Statements or by the facts warranted or represented in any Security Instrument, including this Agreement. SECTION 7.09 OTHER SECURITY INSTRUMENTS AND INFORMATION. Borrower shall have duly and validly executed and delivered, or caused to be executed and delivered, to Lender the following instruments, each in form and substance satisfactory to Lender, in sufficient executed counterparts for recording purposes, as security for the Note and other Indebtedness and shall have delivered the following documents containing information necessary to the preparation and perfection of the liens created by such instruments: (a) Security Agreements covering all of Borrower's accounts receivable, general intangibles, inventory, currently unencumbered machinery and equipment, furniture and fixtures, chattel paper, all regulatory licenses, trademarks, service marks, patents and other intellectual property, instruments, notes, and documents. (b) Stock Pledge Agreements and stock powers sufficient to assign Glenn Bollinger's and Bobby Bollinger's interest in the capital Stock of Parent to Lender. (c) Financing Statements relating to the items described in Subsection (a). SECTION 7.10 GUARANTIES. Each of Bobby Bollinger and Glenn Bollinger shall have duly and validly executed and delivered, or caused to be executed and delivered, to Lender in form and substance satisfactory to Lender, Guaranty Agreements. SECTION 7.11 RECORDINGS. The Security Instruments described in Section 7.09 hereof, including financing statements, security agreements and other notices related thereto, shall have been duly delivered to the appropriate offices for filing, recording or registration, and Lender shall have received confirmations of receipt thereof from the appropriate filing, recording or registration offices. SECTION 7.12 LANDLORD'S WAIVER. Each landlord of Borrower and/or its Subsidiaries, as disclosed on Schedule 3.19, shall have executed and delivered, in form and substance satisfactory to Lender, in sufficient executed counterparts for recording purposes, waivers of any Liens to which it may be entitled, in favor of Lender. SECTION 7.13 CLOSING FEE. Lender shall have received, in immediately available funds, the Closing Fee. SECTION 7.14 FINANCIAL CONDITION. The results of the examination by Lender of the financial condition of Borrower including, but limited to, the examination of the Financial Statements and analysis of related data, shall be satisfactory to Lender, in its sole and absolute discretion. 32

SECTION 7.15 ADDITIONAL MATTERS. Lender shall have received all exhibits, annexes schedules herein referenced and such additional reports, certificates, documents, statements, legal opinions, agreements and instruments, in form and substance reasonably satisfactory to Lender, as Lender shall have reasonably requested from Borrower, Guarantors and their respective counsel. SECTION 7.16 REVOLVING CREDIT ADVANCES. Advances under the Revolving Credit Note shall further be subject to the following specific conditions: (a) There shall have been no Default under this Agreement nor under any of the other Security Instruments; (b) The Financial Statements shall have been furnished and shall be, as of the date thereof, true and correct, and all other financial information required by Lender shall have been furnished and shall be, as of the date of the requested advance, true and correct; and

SECTION 7.15 ADDITIONAL MATTERS. Lender shall have received all exhibits, annexes schedules herein referenced and such additional reports, certificates, documents, statements, legal opinions, agreements and instruments, in form and substance reasonably satisfactory to Lender, as Lender shall have reasonably requested from Borrower, Guarantors and their respective counsel. SECTION 7.16 REVOLVING CREDIT ADVANCES. Advances under the Revolving Credit Note shall further be subject to the following specific conditions: (a) There shall have been no Default under this Agreement nor under any of the other Security Instruments; (b) The Financial Statements shall have been furnished and shall be, as of the date thereof, true and correct, and all other financial information required by Lender shall have been furnished and shall be, as of the date of the requested advance, true and correct; and (c) The financial condition of Borrower, as shown by the most recent Financial Statement described in Section 4.01(b) hereof, shall be acceptable to Lender, in its sole discretion. SECTION 7.17 LITIGATION. Except as disclosed on Schedule 7.17, no action, proceeding, investigation, regulations or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is related to or arises out of disagreement or the consummation of the transactions contemplated hereby. SECTION 7.18 EXCESS AVAILABILITY REQUIREMENT. Lender shall have determined that immediately after Lender has made at Closing the initial Advances contemplated hereby and Borrower has paid (or made provisions for payment of) secured loans, accounts payable over sixty (60) days past due and all closing costs incurred in connection with the transactions contemplated hereby, the amount of the Borrowing Base shall exceed the aggregate principal amount of all outstanding Advances by at least One Million One Hundred Thousand and No/100 Dollars ($1,100,000.00). SECTION 7.19 CREDIT ENHANCEMENT. Borrower shall have (a) provided evidence of the cancellation of the letter of credit issued in favor of IBM Credit Corporation by Wells Fargo Bank Minnesota, National Association and (b) received additional Subordinated Debt (in form and substance satisfactory to Lender in its sole discretion) in an amount equal to Two Hundred Thousand and No/100 Dollars ($200,000.00). SECTION 7.20 SETTLEMENT OF LITIGATION. Borrower shall have entered into a settlement agreement with respect to all presently existing litigation instituted by the shareholders of Parent and identified on Schedule 7.20 the (a) monetary cost to Borrower of which does not exceed Six Hundred Thousand and No/100 Dollars ($600,000.00) and (b) terms of which shall be satisfactory to Lender in its sole discretion. 33

SECTION 7.21 VENDOR PAYABLES. Borrower shall have converted its past-due vendor payables into debt obligations the terms of which are satisfactory to Lender in its sole discretion. SECTION 7.22 BACKGROUND CHECK. Lender shall have completed a background check with respect to Glenn Bollinger and Bobby Bollinger the results of which are satisfactory to Lender in its sole discretion. SECTION 7.23 BLOCKED ACCOUNTS. Borrower shall have established the Blocked Accounts required by Section 2.12 pursuant to executed blocked account agreements in form and substance satisfactory to Lender, in its sole discretion. SECTION 7.24 PAYOFF LETTER. Borrower shall have delivered, or caused to be delivered, to Lender, in form and substance satisfactory to Lender, a payoff letter from Foothill Capital Corporation, together with such UCC termination statements as shall be requested by Lender. SECTION 7.25 INSURANCE LOSS PAYEE. Lender shall have received a certificate, on form Accord 27, naming Lender as the loss payee and an additional insured with respect to each policy maintained by Borrower

SECTION 7.21 VENDOR PAYABLES. Borrower shall have converted its past-due vendor payables into debt obligations the terms of which are satisfactory to Lender in its sole discretion. SECTION 7.22 BACKGROUND CHECK. Lender shall have completed a background check with respect to Glenn Bollinger and Bobby Bollinger the results of which are satisfactory to Lender in its sole discretion. SECTION 7.23 BLOCKED ACCOUNTS. Borrower shall have established the Blocked Accounts required by Section 2.12 pursuant to executed blocked account agreements in form and substance satisfactory to Lender, in its sole discretion. SECTION 7.24 PAYOFF LETTER. Borrower shall have delivered, or caused to be delivered, to Lender, in form and substance satisfactory to Lender, a payoff letter from Foothill Capital Corporation, together with such UCC termination statements as shall be requested by Lender. SECTION 7.25 INSURANCE LOSS PAYEE. Lender shall have received a certificate, on form Accord 27, naming Lender as the loss payee and an additional insured with respect to each policy maintained by Borrower pursuant to Section 4.07. SECTION 7.26 SUBORDINATION AGREEMENT. The Subordinated Lenders will enter into a Subordination Agreement with Lender in form and substance satisfactory to Lender in its sole discretion which will subordinate all the outstanding indebtedness of the Borrower owing to such Subordinated Lender to the Obligations of Borrower to Lender pursuant to this Agreement and the other Security Instruments. ARTICLE VIII MISCELLANEOUS SECTION 8.01 NOTICES. All communications under or in connection with this Agreement or the Note shall be in writing and shall be mailed by registered or certified mail, return receipt requested, postage prepaid, or personally delivered to an officer of the receiving party. All such communications shall be mailed or delivered as follows: (a) If to Borrower: c/o Bollinger Industries, Inc. 602 Fountain Parkway Dallas, Texas 75050 Attn: Ms. Rose Turner, Chief Operating Officer and Chief Financial Officer (b) If to Lender: Frost Capital Group 1010 Lamar Street, Suite 700 Houston, Texas 77002 Attn: Mr. Peter J. Levy Any notice so addressed and mailed by registered or certified mail, return receipt requested, shall be deemed to be given when so mailed, and any notice so delivered in person shall be deemed to 34

be given when actually received by, or receipt therefor is given by, an authorized officer of Borrower or Lender, as the case may be. SECTION 8.02 DEVIATION FROM COVENANTS. The procedure to be followed by Borrower to obtain the consent of Lender to any deviation from the covenants contained in this Agreement or any other Security Instrument shall be as follows: (a) Borrower shall send a written notice to Lender setting forth (i) the covenant(s) relevant to the matter, (ii) the requested deviation from the covenant(s) involved, and (iii) the reason for the requested deviation from the covenant(s); and (b) Lender will within a reasonable time send a written notice to Borrower, signed by an authorized officer of Lender, permitting or refusing the request; but in no event will any deviation from the covenants of this Agreement or any other Security Instrument be effective without the written consent of Lender.

be given when actually received by, or receipt therefor is given by, an authorized officer of Borrower or Lender, as the case may be. SECTION 8.02 DEVIATION FROM COVENANTS. The procedure to be followed by Borrower to obtain the consent of Lender to any deviation from the covenants contained in this Agreement or any other Security Instrument shall be as follows: (a) Borrower shall send a written notice to Lender setting forth (i) the covenant(s) relevant to the matter, (ii) the requested deviation from the covenant(s) involved, and (iii) the reason for the requested deviation from the covenant(s); and (b) Lender will within a reasonable time send a written notice to Borrower, signed by an authorized officer of Lender, permitting or refusing the request; but in no event will any deviation from the covenants of this Agreement or any other Security Instrument be effective without the written consent of Lender. SECTION 8.03 INVALIDITY. In the event that any one or more of the provisions contained in the Note, this Agreement or in any other Security Instrument shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of the Note, this Agreement or any other Security Instrument. SECTION 8.04 SURVIVAL OF AGREEMENTS. All representations and warranties of Borrower herein, and all covenants and agreements herein not fully performed before the effective date of this Agreement, shall survive such date. SECTION 8.05 SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on behalf of Borrower or any Subsidiary or any Guarantor in the Note, this Agreement and any other Security Instrument shall bind its successors and assigns or the heirs and personal representatives of any individual Guarantor and shall inure to the benefit of Lender and its successors and assigns; except that neither Borrower, nor any Subsidiary, nor any Guarantor, nor any Person acting on behalf of any of them may assign any of their rights hereunder without the prior written consent of Lender. In the event that Lender sells participations in the Note, or other Indebtedness of Borrower incurred or to be incurred pursuant to this Agreement, to other lenders, each of such other lenders shall have the rights of set off against such Indebtedness and similar rights or Liens to the same extent as may be available to Lender. SECTION 8.06 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of this Agreement relating to the Note or other Indebtedness shall apply with equal force and effect to each and all promissory Note hereinafter executed which in whole or in part represent a renewal, extension, increase or rearrangement of any part of the Indebtedness originally represented by the Note or of any part of such other Indebtedness. Any provision of this Agreement to be performed during the "term of this Agreement," "term hereof" or similar language, shall include any extension period. SECTION 8.07 WAIVERS. No course of dealing on the part of Lender, its officers, employees, consultants or agents, nor any failure or delay by Lender with respect to exercising 35

any right, power or privilege of Lender under the Note, this Agreement or any other Security Instrument shall operate as a waiver thereof, except as otherwise provided in Section 8.02 hereof. SECTION 8.08 CUMULATIVE RIGHTS. Rights and remedies of Lender under the Note, this Agreement and each other Security Instrument shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy. SECTION 8.09 CONSTRUCTION. This Agreement is, and the Revolving Credit Note will be, a contract made under and shall be construed in accordance with and governed by the laws of the State of Texas. SECTION 8.10 INTEREST. It is the intention of the parties hereto to conform strictly to applicable usury laws

any right, power or privilege of Lender under the Note, this Agreement or any other Security Instrument shall operate as a waiver thereof, except as otherwise provided in Section 8.02 hereof. SECTION 8.08 CUMULATIVE RIGHTS. Rights and remedies of Lender under the Note, this Agreement and each other Security Instrument shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy. SECTION 8.09 CONSTRUCTION. This Agreement is, and the Revolving Credit Note will be, a contract made under and shall be construed in accordance with and governed by the laws of the State of Texas. SECTION 8.10 INTEREST. It is the intention of the parties hereto to conform strictly to applicable usury laws now in force. Accordingly, if the transactions contemplated hereby would be usurious under applicable law, then, in that event, notwithstanding anything to the contrary in the Note, this Agreement or in any other Security Instrument or agreement entered into in connection with or as security for the Note, it is agreed as follows: (a) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, charged or received under the Note, this Agreement or under any of the other aforesaid Security Instruments or agreements or otherwise in connection with the Note shall under no circumstances exceed the maximum amount of interest permitted by applicable law, and any excess shall be credited on the Note by the holder thereof (or, if the Note shall have been paid in full, refunded to Borrower); (b) determination of the rate of interest for determining whether the loans hereunder are usurious shall be made by amortizing, prorating, allocating and spreading, during the full stated term of such loans, all interest at any time contracted for, charged or received from Borrower in connection with such loans, and any excess shall be canceled, credited or refunded as set forth in (a) herein; and (c) in the event that the maturity of the Note is accelerated by reason of an election of the holder thereof resulting from any Default or Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the maximum amount permitted by applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the Note (or, if the Note shall have been paid in full, refunded to Borrower). SECTION 8.11 MULTIPLE ORIGINALS. This Agreement may be executed in two (2) or more copies; each fully executed copy shall be deemed an original, but all of which together shall constitute one and the same instrument. SECTION 8.12 EXHIBITS AND SCHEDULES. All exhibits and schedules to this Agreement are incorporated herein by this reference for all purposes. The exhibits and schedules may be attached hereto, or bound together with or separately from this Agreement, and such binding shall be effective to identify such exhibits as if attached to this Agreement. SECTION 8.13 NO TRIPARTY LOAN. Texas Revised Civil Statutes Annotated, Finance Code, Chapter 346 (which regulates certain revolving loan accounts and revolving triparty accounts) shall not apply to the loans evidenced by this Agreement or the Note. 36

SECTION 8.14 APPLICABLE RATE CEILING. Unless changed in accordance with law, the applicable rate ceiling under Texas law shall be the indicated (weekly) rate ceiling from time to time in effect as provided in Texas Revised Civil Statutes Annotated, Finance Code, Chapter 303, as amended. SECTION 8.15 PERFORMANCE AND VENUE. The obligations of Borrower contained herein are performable at Lender's offices in Houston, Harris County, Texas, and venue for any action in connection therewith shall be in Harris County, Texas. SECTION 8.16 NEGOTIATION OF DOCUMENTS. This Agreement, the Note and all other Security Instruments have been negotiated by the parties at arm's length, each represented by its own counsel, and the fact that the documents have been prepared by Lender's counsel, after such negotiation, shall not be cause to construe any of such documents against Lender.

SECTION 8.14 APPLICABLE RATE CEILING. Unless changed in accordance with law, the applicable rate ceiling under Texas law shall be the indicated (weekly) rate ceiling from time to time in effect as provided in Texas Revised Civil Statutes Annotated, Finance Code, Chapter 303, as amended. SECTION 8.15 PERFORMANCE AND VENUE. The obligations of Borrower contained herein are performable at Lender's offices in Houston, Harris County, Texas, and venue for any action in connection therewith shall be in Harris County, Texas. SECTION 8.16 NEGOTIATION OF DOCUMENTS. This Agreement, the Note and all other Security Instruments have been negotiated by the parties at arm's length, each represented by its own counsel, and the fact that the documents have been prepared by Lender's counsel, after such negotiation, shall not be cause to construe any of such documents against Lender. SECTION 8.17 NOTICES RECEIVED BY LENDER. Any instrument in writing, telex, telegram, telecopy or cable received by Lender in connection with any loan hereunder, which purports to be dispatched or signed by or on behalf of Borrower, shall conclusively be deemed to have been signed by such party, and Lender may rely thereon and shall have no obligation, duty or responsibility to determine the validity or genuineness thereof or authority of the Person or Persons executing or dispatching the same. SECTION 8.18 DEBTOR-CREDITOR RELATIONSHIP. None of the terms of this Agreement or of any other document executed in conjunction herewith or related hereto shall be deemed to give Lender the rights or powers to exercise control over the business or affairs of Borrower. The relationship between Borrower and Lender created by this Agreement is only that of debtor/creditor. SECTION 8.19 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole and exclusive benefit of Borrower and Lender. This Agreement does not create, and is not intended to create, any rights in favor of or enforceable by any other Person. This Agreement may be amended or modified by the agreement of Borrower and Lender, without any requirement or necessity for notice to, or the consent of or approval of any other Person. SECTION 8.20 INDEMNIFICATION. EACH BORROWER JOINTLY AND SEVERALLY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND ADVISORS (EACH, AND "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THIS AGREEMENT, THE NOTES, THE SECURITY INSTRUMENTS OR ANY OTHER INSTRUMENT OR AGREEMENT EXECUTED IN CONNECTION THEREWITH OR HEREWITH, ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN OR HEREIN OR THE ACTUAL OR 37

PROPOSED USE OF THE PROCEEDS OF THE LOANS (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSES IS FOUND IN A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT, IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS SECTION 8.20 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE REGARDLESS OF WHETHER SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY BORROWER OR ITS RESPECTIVE DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, WITHOUT PREJUDICE TO

PROPOSED USE OF THE PROCEEDS OF THE LOANS (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSES IS FOUND IN A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT, IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS SECTION 8.20 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE REGARDLESS OF WHETHER SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY BORROWER OR ITS RESPECTIVE DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF BORROWER CONTAINED IN THIS SECTION 8.20 SHALL SURVIVE THE PAYMENT IN FULL OF THE INDEBTEDNESS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT. SECTION 8.21 RELEASE OF LIABILITY. TO THE MAXIMUM EXTENT PERMITTED BY LAW FROM TIME TO TIME IN EFFECT, BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY (AND AFTER EACH HAS CONSULTED WITH ITS OWN ATTORNEY) IRREVOCABLY AND UNCONDITIONALLY AGREES THAT NO CLAIM MAY BE MADE BY BORROWER AGAINST LENDER OR ANY OF ITS AFFILIATES, PARTICIPANTS, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, OR AGENTS OR ANY OF ITS OR THEIR SUCCESSORS AND ASSIGNS, FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM IS BASED ON CONTRACT, TORT OR STATUTE) ARISING OUT OF, OR RELATED TO, THE TRANSACTIONS CONTEMPLATED BY ANY OF THIS AGREEMENT, THE NOTE, THE SECURITY INSTRUMENTS OR ANY OTHER RELATED DOCUMENTS, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH. IN FURTHERANCE OF THE FOREGOING, BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR, AND BORROWER SHALL INDEMNIFY AND HOLD HARMLESS LENDER AND ITS AFFILIATES, PARTICIPANTS, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS AND AGENTS AND THEIR SUCCESSORS AND ASSIGNS OF AND FROM ANY SUCH CLAIMS. SECTION 8.22 WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE 38

DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO. IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTIONS SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 8.22 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. SECTION 8.23 DTPA WAIVER. BORROWER ACKNOWLEDGES AND AGREES, ON BORROWER'S OWN BEHALF OF ANY PERMITTED ASSIGNS AND SUCCESSORS HEREAFTER, THAT THE

DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO. IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTIONS SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 8.22 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. SECTION 8.23 DTPA WAIVER. BORROWER ACKNOWLEDGES AND AGREES, ON BORROWER'S OWN BEHALF OF ANY PERMITTED ASSIGNS AND SUCCESSORS HEREAFTER, THAT THE DTPA IS NOT APPLICABLE TO THIS TRANSACTION. ACCORDINGLY, BORROWER'S RIGHTS AND REMEDIES WITH RESPECT TO THE TRANSACTION CONTEMPLATED UNDER THIS AGREEMENT AND WITH RESPECT TO ALL ACTS OR PRACTICES OF LENDER, PAST, PRESENT OR FUTURE, IN CONNECTION WITH SUCH TRANSACTION, SHALL BE GOVERNED BY LEGAL PRINCIPLES OTHER THAN THE DTPA. IN FURTHERANCE THEREOF, BORROWER AGREES AS FOLLOWS: 39

(a) BORROWER REPRESENTS THAT BORROWER HAS THE KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BORROWER TO EVALUATE THE MERITS AND RISKS OF THE BUSINESS TRANSACTION THAT IS THE SUBJECT OF THIS AGREEMENT. BORROWER ALSO REPRESENTS THAT BORROWER IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION IN RELATION TO LENDER. BORROWER HAS NEGOTIATED THE LOAN DOCUMENTS WITH LENDER AT ARM'S LENGTH AND HAVE WILLINGLY ENTERED INTO THE LOAN DOCUMENTS. (b) BORROWER REPRESENTS THAT (I) BORROWER HAS BEEN REPRESENTED BY THE FIRM OF HOLLAND, JOHNS, SCHWARTZ & PENNY, L.L.P., AS LEGAL COUNSEL IN THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND (II) SUCH LEGAL COUNSEL WAS NOT DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED OR SELECTED BY LENDER OR AN AGENT OF LENDER. (c) THIS AGREEMENT RELATES TO A TRANSACTION INVOLVING TOTAL CONSIDERATION BY BORROWER OF MORE THAN $100,000.00 AND DOES NOT INVOLVE BORROWER'S RESIDENCE. BORROWER AGREES, ON BORROWER'S OWN BEHALF AND ON BEHALF OF BORROWER'S PERMITTED ASSIGNS AND SUCCESSORS, THAT ALL OF BORROWER'S RIGHTS AND REMEDIES UNDER THE DTPA ARE WAIVED AND RELEASED, INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ALL RIGHTS AND REMEDIES UNDER THE DTPA RESULTING FROM OR ARISING OUT OF ANY AND ALL ACTS OR PRACTICES OF LENDER IN CONNECTION WITH THIS TRANSACTION, WHETHER SUCH ACTS OR PRACTICES OCCUR BEFORE OR AFTER THE EXECUTION OF THIS AGREEMENT. IN FURTHERANCE THEREOF, BORROWER AGREES THAT BY SIGNING THIS AGREEMENT, BORROWER AND ANY PERMITTED ASSIGNS AND SUCCESSORS ARE BOUND BY THE FOLLOWING WAIVER: WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWER'S OWN SELECTION, BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER.

(a) BORROWER REPRESENTS THAT BORROWER HAS THE KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BORROWER TO EVALUATE THE MERITS AND RISKS OF THE BUSINESS TRANSACTION THAT IS THE SUBJECT OF THIS AGREEMENT. BORROWER ALSO REPRESENTS THAT BORROWER IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION IN RELATION TO LENDER. BORROWER HAS NEGOTIATED THE LOAN DOCUMENTS WITH LENDER AT ARM'S LENGTH AND HAVE WILLINGLY ENTERED INTO THE LOAN DOCUMENTS. (b) BORROWER REPRESENTS THAT (I) BORROWER HAS BEEN REPRESENTED BY THE FIRM OF HOLLAND, JOHNS, SCHWARTZ & PENNY, L.L.P., AS LEGAL COUNSEL IN THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND (II) SUCH LEGAL COUNSEL WAS NOT DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED OR SELECTED BY LENDER OR AN AGENT OF LENDER. (c) THIS AGREEMENT RELATES TO A TRANSACTION INVOLVING TOTAL CONSIDERATION BY BORROWER OF MORE THAN $100,000.00 AND DOES NOT INVOLVE BORROWER'S RESIDENCE. BORROWER AGREES, ON BORROWER'S OWN BEHALF AND ON BEHALF OF BORROWER'S PERMITTED ASSIGNS AND SUCCESSORS, THAT ALL OF BORROWER'S RIGHTS AND REMEDIES UNDER THE DTPA ARE WAIVED AND RELEASED, INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ALL RIGHTS AND REMEDIES UNDER THE DTPA RESULTING FROM OR ARISING OUT OF ANY AND ALL ACTS OR PRACTICES OF LENDER IN CONNECTION WITH THIS TRANSACTION, WHETHER SUCH ACTS OR PRACTICES OCCUR BEFORE OR AFTER THE EXECUTION OF THIS AGREEMENT. IN FURTHERANCE THEREOF, BORROWER AGREES THAT BY SIGNING THIS AGREEMENT, BORROWER AND ANY PERMITTED ASSIGNS AND SUCCESSORS ARE BOUND BY THE FOLLOWING WAIVER: WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWER'S OWN SELECTION, BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. BORROWER HAS READ AND UNDERSTANDS SECTION 8.23: (INITIALS) (PARENT) (INITIALS) (OPERATING) (INITIALS) (HOLDING) (INITIALS) (NBF) (INITIALS) (PRODUCTS) (INITIALS) (INDUSTRIES) 40

SECTION 8.24 FINAL EXPRESSION. THIS WRITTEN LOAN AGREEMENT, THE NOTE AND THE OTHER SECURITY INSTRUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. SECTION 8.25 REVERSAL OF PAYMENTS. Lender shall have the continuing and exclusive right to apply, reverse and re-apply any and all payments to any portion of the Indebtedness in a manner consistent with the terms of this Agreement. To the extent Borrower makes a payment or payments to Lender, or Lender receives any payment or proceeds of any collateral for Borrower's benefit, which payment(s) or proceed or any part

SECTION 8.24 FINAL EXPRESSION. THIS WRITTEN LOAN AGREEMENT, THE NOTE AND THE OTHER SECURITY INSTRUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. SECTION 8.25 REVERSAL OF PAYMENTS. Lender shall have the continuing and exclusive right to apply, reverse and re-apply any and all payments to any portion of the Indebtedness in a manner consistent with the terms of this Agreement. To the extent Borrower makes a payment or payments to Lender, or Lender receives any payment or proceeds of any collateral for Borrower's benefit, which payment(s) or proceed or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other part under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the Indebtedness or party thereof intended to be satisfied shall be revived and continued in full force and effect, as if such payment or proceeds had not been received by Lender. SECTION 8.26 INJUNCTIVE RELIEF. Each Borrower recognizes that, in the event Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy at law may prove to be inadequate relief to Lender, therefore, each Borrower agrees that if any Default or Event of Default shall have occurred and be continuing, Lender shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damages. SECTION 8.27 THE TERM "BORROWER" OR "BORROWERS". All references to "Borrower" or "Borrowers" herein shall refer to and include each of Parent, Operating, Holding, Products, NBF and Industries separately and all representations contained herein shall be deemed to be separately made by each of them, and each of the covenants, agreements and obligations set forth herein shall be deemed to be the joint and several covenants, agreements and obligations of them. Any notice, request, consent, report or other information or agreement delivered to Lender by any Borrower shall be deemed to be ratified by, consented to and also delivered by the other Borrower. Each Borrower recognizes and agrees that each covenant and agreement of "Borrower" or "Borrowers" under this Agreement and the other Loan Documents shall create a joint and several obligation of Borrowers, which may be enforced against Borrowers, jointly, or against each Borrower separately. Without limiting the terms of this Agreement and the other Loan Documents, security interests granted under this Agreement and other Loan Documents in properties, interests, assets and collateral shall extend to the properties, interests, assets and collateral of each Borrower. Similarly, the term "Indebtedness" shall include, without limitation, all obligations, liabilities and indebtedness of such corporations, or any one of them, to Lender, whether such obligations, liabilities and indebtedness shall be joint, several, joint and several or individual. SECTION 8.28 JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION. (a) Each Borrower states and acknowledges that: (i) pursuant to this Agreement, Borrower desires to utilize their borrowing potential on a consolidated basis 41

to the same extent possible if they were merged into a single corporate entity and that this Agreement reflects the establishment of credit facilities which would not otherwise be available to such Borrower if each Borrower were not jointly and severally liable for payment of all of the Indebtedness; (ii) it has determined that it will benefit specifically and materially from the advances of credit contemplated by this Agreement; (iii) it is both a condition precedent to the Indebtedness of Lender hereunder and a desire of Borrower that each Borrower execute and deliver to Lender this Agreement; and (iv) Borrowers have requested and bargained for the structure and terms of and security for the advances contemplated by this Agreement. (b) Each Borrower hereby irrevocably and unconditionally: (i) agrees that it is jointly and severally liable to Lender for the full and prompt payment of the Indebtedness and the performance by each Borrower of its Indebtedness hereunder in accordance with the terms hereof; (ii) agrees to fully and promptly perform all of its Indebtedness hereunder with respect to each advance of credit hereunder as if such advance had been made directly to it; and (iii) agrees as a primary obligation to indemnify Lender on demand for and against any loss

to the same extent possible if they were merged into a single corporate entity and that this Agreement reflects the establishment of credit facilities which would not otherwise be available to such Borrower if each Borrower were not jointly and severally liable for payment of all of the Indebtedness; (ii) it has determined that it will benefit specifically and materially from the advances of credit contemplated by this Agreement; (iii) it is both a condition precedent to the Indebtedness of Lender hereunder and a desire of Borrower that each Borrower execute and deliver to Lender this Agreement; and (iv) Borrowers have requested and bargained for the structure and terms of and security for the advances contemplated by this Agreement. (b) Each Borrower hereby irrevocably and unconditionally: (i) agrees that it is jointly and severally liable to Lender for the full and prompt payment of the Indebtedness and the performance by each Borrower of its Indebtedness hereunder in accordance with the terms hereof; (ii) agrees to fully and promptly perform all of its Indebtedness hereunder with respect to each advance of credit hereunder as if such advance had been made directly to it; and (iii) agrees 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 one or more Borrower 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 Borrower. (c) It is the intent of each Borrower that the Indebtedness and liability hereunder of no one of them be subject to challenge on any basis, including, without limitation, pursuant to any applicable fraudulent conveyance or fraudulent transfer laws. Accordingly, as of the date hereof, the liability of each Borrower under this Section 8.28, together with all of its other liabilities to all Persons as of the date hereof and as of any other date on which a transfer or conveyance is deemed to occur by virtue of this Agreement, calculated in amount sufficient to pay its probable net liabilities on its existing Indebtedness as the same become absolute and matured ("Dated Liabilities") is, and is to be, less than the amount of the aggregate of a fair valuation of its property as of such corresponding date ("Dated Assets"). To this end, each Borrower under this Section 8.28, (i) grants to and recognizes in each other Borrower, ratably, rights of subrogation and contribution in the amount, if any, by which the Dated Assets of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Liabilities of such Borrower or, as the case may be, (ii) acknowledges receipt of and recognizes its right to subrogation and contribution ratably from each of the other Borrowers in the amount, if any, by which the Dated Liabilities of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Assets of such Borrower under this Section 8.28. In recognizing the value of the Dated Assets and the Dated Liabilities, it is understood that Borrowers will recognize, to at least the same extent of their aggregate recognition of liabilities hereunder, their rights to subrogation and contribution hereunder. It is a material objective of this Section 8.28 that each Borrower recognizes rights to subrogation and contribution rather than be deemed to be insolvent (or in contemplation thereof) by reason of an arbitrary interpretation of its joint and several Indebtedness hereunder. In addition to and not in limitation of the foregoing provisions of this Section 42

8.28, Borrowers and Lender hereby agree and acknowledge that it is the intent of each Borrower and of Lender that the Indebtedness of each Borrower hereunder be in all respects in compliance with, and not be voidable pursuant to, applicable fraudulent conveyance and fraudulent transfer laws. (d) Notwithstanding the foregoing, and each Borrower's agreement to be jointly and severally liable for payment of all the Indebtedness, each Borrower is a separate and distinct corporation. Lender acknowledges and agrees that each Borrower is a separate and distinct entity and further agrees not to challenge or dispute the separate existence of each Borrower. SECTION 8.29 STRUCTURE OF CREDIT FACILITY. Each Borrower agrees and acknowledges that the present structure of the credit facilities detailed in this Agreement is based in part upon the financial and other information presently known to Lender regarding each Borrower, the corporate structure of Borrower, and the present financial condition of each Borrower. Each Borrower hereby agrees that upon the occurrence and during the continuance of an Event of Default, Lender shall have the right, in its sole credit judgment, to require that any or all of the following changes be made to these credit facilities: (a) make Advances specifically to a specific Borrower, (b) further restrict loans and advances between Borrowers, (c) require that each Borrower execute a

8.28, Borrowers and Lender hereby agree and acknowledge that it is the intent of each Borrower and of Lender that the Indebtedness of each Borrower hereunder be in all respects in compliance with, and not be voidable pursuant to, applicable fraudulent conveyance and fraudulent transfer laws. (d) Notwithstanding the foregoing, and each Borrower's agreement to be jointly and severally liable for payment of all the Indebtedness, each Borrower is a separate and distinct corporation. Lender acknowledges and agrees that each Borrower is a separate and distinct entity and further agrees not to challenge or dispute the separate existence of each Borrower. SECTION 8.29 STRUCTURE OF CREDIT FACILITY. Each Borrower agrees and acknowledges that the present structure of the credit facilities detailed in this Agreement is based in part upon the financial and other information presently known to Lender regarding each Borrower, the corporate structure of Borrower, and the present financial condition of each Borrower. Each Borrower hereby agrees that upon the occurrence and during the continuance of an Event of Default, Lender shall have the right, in its sole credit judgment, to require that any or all of the following changes be made to these credit facilities: (a) make Advances specifically to a specific Borrower, (b) further restrict loans and advances between Borrowers, (c) require that each Borrower execute a guaranty of the Indebtedness of each other Borrower to Lender and (d) require that any advances made by a Borrower to another Borrower, if otherwise allowed, be collateralized in a manner acceptable to Lender. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 43

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the date first above written. BORROWER: BOLLINGER INDUSTRIES, INC., a Delaware corporation By: Name: Title: BOLLINGER HOLDING CORP., a Delaware corporation By: Name: Title: BOLLINGER OPERATING CORP., a Nevada corporation By: Name: Title: NBF, INC., a Georgia corporation By: Name: Title:

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the date first above written. BORROWER: BOLLINGER INDUSTRIES, INC., a Delaware corporation By: Name: Title: BOLLINGER HOLDING CORP., a Delaware corporation By: Name: Title: BOLLINGER OPERATING CORP., a Nevada corporation By: Name: Title: NBF, INC., a Georgia corporation By: Name: Title: 44

C. G. PRODUCTS, INC., a California corporation By: Name: Title: BOLLINGER INDUSTRIES, L.P., a Texas limited partnership By: Bollinger Operating Corp., its general partner By: Name: Title: LENDER:

C. G. PRODUCTS, INC., a California corporation By: Name: Title: BOLLINGER INDUSTRIES, L.P., a Texas limited partnership By: Bollinger Operating Corp., its general partner By: Name: Title: LENDER: THE FROST NATIONAL BANK, a national banking association doing business as FROST CAPITAL GROUP, and formerly known as CREEKWOOD CAPITAL GROUP By: Name: Peter J. Levy Title: President 45

EXHIBITS AND SCHEDULES List of exhibits and schedules to Loan Agreement by and among Bollinger Industries, Inc., Bollinger Operating Corp., Bollinger Holding Corp., NBF, Inc., C. G. Products, Inc., and Bollinger Industries, L.P. and The Frost National Bank, a national banking association doing business as Frost Capital Group, and formerly known as Creekwood Capital Group, dated as of April 2, 2001, which are not filed herewith:
EXHIBIT OR SCHEDULE ---------Exhibit A Exhibit B Schedule 2.11 Schedule 2.12 Schedule 3.01 Schedule 3.08 Schedule 3.09 Schedule 3.16 Schedule 3.19 Schedule 3.20 Schedule 5.01 Schedule 5.02 Schedule 5.10 Schedule 7.17 Schedule 7.20

DESCRIPTION ----------Revolving Credit Note Subordinate Lenders Operating Accounts Block Accounts Trade Names List of Issued and Convertible Stock Liabilities Subsidiaries Leased Property Patents and Trademarks Permitted Indebtedness Permitted Liens Permitted Stock Issuances Litigation Settled Litigation

The registrant will furnish supplementally a copy of any omitted exhibit or

EXHIBITS AND SCHEDULES List of exhibits and schedules to Loan Agreement by and among Bollinger Industries, Inc., Bollinger Operating Corp., Bollinger Holding Corp., NBF, Inc., C. G. Products, Inc., and Bollinger Industries, L.P. and The Frost National Bank, a national banking association doing business as Frost Capital Group, and formerly known as Creekwood Capital Group, dated as of April 2, 2001, which are not filed herewith:
EXHIBIT OR SCHEDULE ---------Exhibit A Exhibit B Schedule 2.11 Schedule 2.12 Schedule 3.01 Schedule 3.08 Schedule 3.09 Schedule 3.16 Schedule 3.19 Schedule 3.20 Schedule 5.01 Schedule 5.02 Schedule 5.10 Schedule 7.17 Schedule 7.20

DESCRIPTION ----------Revolving Credit Note Subordinate Lenders Operating Accounts Block Accounts Trade Names List of Issued and Convertible Stock Liabilities Subsidiaries Leased Property Patents and Trademarks Permitted Indebtedness Permitted Liens Permitted Stock Issuances Litigation Settled Litigation

The registrant will furnish supplementally a copy of any omitted exhibit or schedule to the Securities and Exchange Commission upon request.

EXHIBIT 10.69 THIS UNSECURED NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED APRIL ______, 2001 BETWEEN THE FROST NATIONAL BANK, A NATIONAL BANKING ASSOCIATION DOING BUSINESS AS FROST CAPITAL GROUP AND DAVID BARR AND ACKNOWLEDGED BY BOLLINGER INDUSTRIES, INC., BOLLINGER OPERATING CORP., BOLLINGER HOLDING CORP., NBF, INC., C.G. PRODUCTS, INC., AND BOLLINGER INDUSTRIES, L.P., AS SUCH SUBORDINATION AGREEMENT MAY BE AMENDED FROM TIME TO TIME. UNSECURED NOTE DATE:__________________, 2001 MAKER: Bollinger Industries, Inc. MAKER'S MAILING ADDRESS (INCLUDING COUNTY): 602 Fountain Parkway Tarrant County, Texas Grand Prairie, Texas 75050 PAYEE: David Barr PLACE FOR PAYMENT (INCLUDING COUNTY): 736 Sundance Drive Tarrant County, Texas Arlington, Texas 76006 PRINCIPAL AMOUNT: $100,000.00

EXHIBIT 10.69 THIS UNSECURED NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED APRIL ______, 2001 BETWEEN THE FROST NATIONAL BANK, A NATIONAL BANKING ASSOCIATION DOING BUSINESS AS FROST CAPITAL GROUP AND DAVID BARR AND ACKNOWLEDGED BY BOLLINGER INDUSTRIES, INC., BOLLINGER OPERATING CORP., BOLLINGER HOLDING CORP., NBF, INC., C.G. PRODUCTS, INC., AND BOLLINGER INDUSTRIES, L.P., AS SUCH SUBORDINATION AGREEMENT MAY BE AMENDED FROM TIME TO TIME. UNSECURED NOTE DATE:__________________, 2001 MAKER: Bollinger Industries, Inc. MAKER'S MAILING ADDRESS (INCLUDING COUNTY): 602 Fountain Parkway Tarrant County, Texas Grand Prairie, Texas 75050 PAYEE: David Barr PLACE FOR PAYMENT (INCLUDING COUNTY): 736 Sundance Drive Tarrant County, Texas Arlington, Texas 76006 PRINCIPAL AMOUNT: $100,000.00 ANNUAL INTEREST RATE ON UNPAID PRINCIPAL FROM DATE: $5,000 per calendar month, pro-rated on a daily basis for partial months TERMS OF PAYMENT (PRINCIPAL AND INTEREST): Interest is payable on or before the first day of each month during the term of this note, with the first payment due May 1, 2001. The principal amount of this note, and any unpaid interest thereon, shall be paid in full on October 1, 2001; provided, however, the due date for this note shall be accelerated in the event of a Change in Control of Maker. An early prepayment of this note may be made without penalty. A "Change in Control" means: (1) the acquisition of beneficial ownership within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended ("Beneficial Ownership"), of an aggregate of more than fifty percent (50%) of the voting power of Maker's outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under such Act) whose Beneficial Ownership is less than ten percent

(10%) of the voting power of Maker's outstanding voting securities on the date hereof; or (2) a sale or other disposition of substantially all of the assets of Maker or substantially all of the operating assets of Bollinger Industries L.P. Maker promises to pay to the order of Payee at the place for payment and according to the terms of payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date. If Maker defaults in the payment of this note, and the default continues after Payee gives Maker notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Payee may declare the unpaid principal balance and earned interest on this note immediately due. Maker and each surety, endorser, and guarantor waive all demands for payment, presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent

(10%) of the voting power of Maker's outstanding voting securities on the date hereof; or (2) a sale or other disposition of substantially all of the assets of Maker or substantially all of the operating assets of Bollinger Industries L.P. Maker promises to pay to the order of Payee at the place for payment and according to the terms of payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date. If Maker defaults in the payment of this note, and the default continues after Payee gives Maker notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Payee may declare the unpaid principal balance and earned interest on this note immediately due. Maker and each surety, endorser, and guarantor waive all demands for payment, presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent permitted by law. If this note is given to an attorney for collection, or if suit is brought for collection, or if it is collected through probate, bankruptcy, or other judicial proceeding, then Maker shall pay Payee all costs of collection, including reasonable attorney's fees and court costs, in addition to other amounts due. Each Maker is responsible for all obligations represented by this note. Bollinger Industries, Inc. By: Glenn Bollinger, CEO -2-

EXHIBIT 10.70 THIS UNSECURED NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED APRIL ______, 2001 BETWEEN THE FROST NATIONAL BANK, A NATIONAL BANKING ASSOCIATION DOING BUSINESS AS FROST CAPITAL GROUP AND DELL BOLLINGER AND ACKNOWLEDGED BY BOLLINGER INDUSTRIES, INC., BOLLINGER OPERATING CORP., BOLLINGER HOLDING CORP., NBF, INC., C.G. PRODUCTS, INC., AND BOLLINGER INDUSTRIES, L.P., AS SUCH SUBORDINATION AGREEMENT MAY BE AMENDED FROM TIME TO TIME. UNSECURED NOTE DATE: __________________, 2001 MAKER: Bollinger Industries, Inc. MAKER'S MAILING ADDRESS (INCLUDING COUNTY): 602 Fountain Parkway Tarrant County, Texas Grand Prairie, Texas 75050 PAYEE: Dell Bollinger PLACE FOR PAYMENT (INCLUDING COUNTY): 217 Chapelwood Drive Tarrant County, Texas Colleyville, Texas 76034 PRINCIPAL AMOUNT: $100,000.00

EXHIBIT 10.70 THIS UNSECURED NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED APRIL ______, 2001 BETWEEN THE FROST NATIONAL BANK, A NATIONAL BANKING ASSOCIATION DOING BUSINESS AS FROST CAPITAL GROUP AND DELL BOLLINGER AND ACKNOWLEDGED BY BOLLINGER INDUSTRIES, INC., BOLLINGER OPERATING CORP., BOLLINGER HOLDING CORP., NBF, INC., C.G. PRODUCTS, INC., AND BOLLINGER INDUSTRIES, L.P., AS SUCH SUBORDINATION AGREEMENT MAY BE AMENDED FROM TIME TO TIME. UNSECURED NOTE DATE: __________________, 2001 MAKER: Bollinger Industries, Inc. MAKER'S MAILING ADDRESS (INCLUDING COUNTY): 602 Fountain Parkway Tarrant County, Texas Grand Prairie, Texas 75050 PAYEE: Dell Bollinger PLACE FOR PAYMENT (INCLUDING COUNTY): 217 Chapelwood Drive Tarrant County, Texas Colleyville, Texas 76034 PRINCIPAL AMOUNT: $100,000.00 ANNUAL INTEREST RATE ON UNPAID PRINCIPAL FROM DATE: $5,000 per calendar month, pro-rated on a daily basis for partial months TERMS OF PAYMENT (PRINCIPAL AND INTEREST): Interest is payable on or before the first day of each month during the term of this note, with the first payment due May 1, 2001. The principal amount of this note, and any unpaid interest thereon, shall be paid in full on October 1, 2001; provided, however, the due date for this note shall be accelerated in the event of a Change in Control of Maker. An early prepayment of this note may be made without penalty. A "Change in Control" means: (1) the acquisition of beneficial ownership within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended ("Beneficial Ownership"), of an aggregate of more than fifty percent (50%) of the voting power of Maker's outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under such Act) whose Beneficial Ownership is less than ten percent

(10%) of the voting power of Maker's outstanding voting securities on the date hereof; or (2) a sale or other disposition of substantially all of the assets of Maker or substantially all of the operating assets of Bollinger Industries L.P. Maker promises to pay to the order of Payee at the place for payment and according to the terms of payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date. If Maker defaults in the payment of this note, and the default continues after Payee gives Maker notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Payee may declare the unpaid principal balance and earned interest on this note immediately due. Maker and each surety, endorser, and guarantor waive all demands for payment, presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent

(10%) of the voting power of Maker's outstanding voting securities on the date hereof; or (2) a sale or other disposition of substantially all of the assets of Maker or substantially all of the operating assets of Bollinger Industries L.P. Maker promises to pay to the order of Payee at the place for payment and according to the terms of payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date. If Maker defaults in the payment of this note, and the default continues after Payee gives Maker notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Payee may declare the unpaid principal balance and earned interest on this note immediately due. Maker and each surety, endorser, and guarantor waive all demands for payment, presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent permitted by law. If this note is given to an attorney for collection, or if suit is brought for collection, or if it is collected through probate, bankruptcy, or other judicial proceeding, then Maker shall pay Payee all costs of collection, including reasonable attorney's fees and court costs, in addition to other amounts due. Each Maker is responsible for all obligations represented by this note. Bollinger Industries, Inc. By: Glenn Bollinger, CEO -2-

EXHIBIT 10.71
SUNTRUST BANK ATLANTA, as Trustee for SUNTRUST RETIREMENT SUNBELT EQUITY FUND, and STI CLASSIC FUNDS, for STI CLASSIC SMALL CAP GROWTH STOCK FUND, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER, CURTIS D. LOGAN, JOHN MAGUIRE, MICHAEL J. BECK and GRANT THORNTON, L.L.P., Defendants. -------------------------------------------------STI CLASSIC FUND and STI CLASSIC SMALL CAP GROWTH STOCK FUND, on behalf of themselves and all persons similarly situated, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER and MICHAEL J. BECK, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

IN THE DISTRICT COURT 191ST JUDICIAL DISTRICT COURT DALLAS COUNTY, TEXAS CAUSE NO. 96-02952-C-68

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

Civil Action No. 3-96-C-V-0823-L

EXHIBIT 10.71
SUNTRUST BANK ATLANTA, as Trustee for SUNTRUST RETIREMENT SUNBELT EQUITY FUND, and STI CLASSIC FUNDS, for STI CLASSIC SMALL CAP GROWTH STOCK FUND, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER, CURTIS D. LOGAN, JOHN MAGUIRE, MICHAEL J. BECK and GRANT THORNTON, L.L.P., Defendants. -------------------------------------------------STI CLASSIC FUND and STI CLASSIC SMALL CAP GROWTH STOCK FUND, on behalf of themselves and all persons similarly situated, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER and MICHAEL J. BECK, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

IN THE DISTRICT COURT 191ST JUDICIAL DISTRICT COURT DALLAS COUNTY, TEXAS CAUSE NO. 96-02952-C-68

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

Civil Action No. 3-96-C-V-0823-L

STIPULATION OF SETTLEMENT
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

SUNTRUST BANK ATLANTA, as Trustee for SUNTRUST RETIREMENT SUNBELT EQUITY FUND, and STI CLASSIC FUNDS, for STI CLASSIC SUNBELT EQUITY FUND, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER, CURTIS D. LOGAN, JOHN MAGUIRE, MICHAEL J. BECK and GRANT THORNTON, L.L.P., Defendants.

IN THE DISTRICT COURT

191ST JUDICIAL DISTRICT COURT DALLAS COUNTY, TEXAS CAUSE NO. 96-02952-C-68

-------------------------------------------------STI CLASSIC FUND and STI CLASSIC SUNBELT EQUITY FUND, on behalf of themselves and all persons similarly situated, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER and MICHAEL J. BECK, Defendants.

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

Civil Action No. 3-96-C-V-0823-L

STIPULATION OF SETTLEMENT
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

SUNTRUST BANK ATLANTA, as Trustee for SUNTRUST RETIREMENT SUNBELT EQUITY FUND, and STI CLASSIC FUNDS, for STI CLASSIC SUNBELT EQUITY FUND, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER, CURTIS D. LOGAN, JOHN MAGUIRE, MICHAEL J. BECK and GRANT THORNTON, L.L.P., Defendants.

IN THE DISTRICT COURT

191ST JUDICIAL DISTRICT COURT DALLAS COUNTY, TEXAS CAUSE NO. 96-02952-C-68

-------------------------------------------------STI CLASSIC FUND and STI CLASSIC SUNBELT EQUITY FUND, on behalf of themselves and all persons similarly situated, Plaintiffs, -againstBOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER and MICHAEL J. BECK, Defendants.

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

Civil Action No. 3-96-C-V-0823-L

-1-

STIPULATION OF SETTLEMENT This Stipulation of Settlement (the "Settlement Stipulation") is entered into by and among the undersigned counsel representing the plaintiffs and the "Bollinger Defendants" (defined below).(1) WHEREAS: A. In March 1996, an action was commenced by Plaintiff SunTrust Bank Atlanta, as Trustee for the SunTrust Retirement Sunbelt Equity Fund against Bollinger Industries, Inc. ("Bollinger" or the "Company"), Glenn D. Bollinger ("G. Bollinger"), Bobby D. Bollinger ("B. Bollinger"), John Maguire, Curtis D. Logan ("Logan"), Michael J. Beck ("Beck"), William Blair & Company ("Blair"), Rauscher Pierce Refsnes, Inc. ("Rauscher"), LLP (2), and Grant Thornton, L.L.P. ("Grant Thornton" or the "Non-Settling Defendant") in the District Court for the 68th Judicial District, Dallas County, Texas (the "State Action"). Plaintiffs' Fourth Amended Petition had joined STI Classic Funds for STI Classic Sunbelt Equity Fund as an additional plaintiff in the State Action and named the afore-referenced additional Underwriter Defendants. Plaintiffs' Fifth Amended Petition substituted STI Classic Small Cap Growth Stock Fund ("Small Cap Fund") for STI Classic Sunbelt Equity Fund ("Equity Fund"), alleging that STI Classic Funds had merged the Equity Fund into the Small Cap Fund and, prior thereto, had caused the Equity Fund to assign its claims to the Small Cap Fund. Plaintiffs commenced the State Action as a class action pursuant to Rule 42 of the Texas Rules of Civil Procedure. On July 28, 1999, Judge Haynes certified a class consisting of all persons who purchased shares of common stock of Bollinger, issued pursuant to a Form S-1 Registration Statement initially filed with the Securities (1) The "Bollinger Defendants" or "Settling Defendants" shall include Bollinger Industries, Inc., Glenn D. Bollinger, Bobby D. Bollinger, John Maguire and Michael J. Beck.

STIPULATION OF SETTLEMENT This Stipulation of Settlement (the "Settlement Stipulation") is entered into by and among the undersigned counsel representing the plaintiffs and the "Bollinger Defendants" (defined below).(1) WHEREAS: A. In March 1996, an action was commenced by Plaintiff SunTrust Bank Atlanta, as Trustee for the SunTrust Retirement Sunbelt Equity Fund against Bollinger Industries, Inc. ("Bollinger" or the "Company"), Glenn D. Bollinger ("G. Bollinger"), Bobby D. Bollinger ("B. Bollinger"), John Maguire, Curtis D. Logan ("Logan"), Michael J. Beck ("Beck"), William Blair & Company ("Blair"), Rauscher Pierce Refsnes, Inc. ("Rauscher"), LLP (2), and Grant Thornton, L.L.P. ("Grant Thornton" or the "Non-Settling Defendant") in the District Court for the 68th Judicial District, Dallas County, Texas (the "State Action"). Plaintiffs' Fourth Amended Petition had joined STI Classic Funds for STI Classic Sunbelt Equity Fund as an additional plaintiff in the State Action and named the afore-referenced additional Underwriter Defendants. Plaintiffs' Fifth Amended Petition substituted STI Classic Small Cap Growth Stock Fund ("Small Cap Fund") for STI Classic Sunbelt Equity Fund ("Equity Fund"), alleging that STI Classic Funds had merged the Equity Fund into the Small Cap Fund and, prior thereto, had caused the Equity Fund to assign its claims to the Small Cap Fund. Plaintiffs commenced the State Action as a class action pursuant to Rule 42 of the Texas Rules of Civil Procedure. On July 28, 1999, Judge Haynes certified a class consisting of all persons who purchased shares of common stock of Bollinger, issued pursuant to a Form S-1 Registration Statement initially filed with the Securities (1) The "Bollinger Defendants" or "Settling Defendants" shall include Bollinger Industries, Inc., Glenn D. Bollinger, Bobby D. Bollinger, John Maguire and Michael J. Beck. (2) Blair and Rauscher are, together with certain additional defendants who were joined in the State Action in April 1998, collectively referred to as the Underwriter Defendants. -2-

and Exchange Commission by Bollinger on September 30, 1993, and amended thereafter, between November 17, 1993 and June 26, 1995 (the "State Class"). Excluded from the State Class are (a) all persons and entities named as defendants, whether or not such persons or entities have been or will be dismissed from this action pursuant to a settlement or compromise or (b) members of the immediate family of any of the foregoing persons, (c) any person, firm, trust, corporation, officer, director or other individual or entity in which any excluded person has a controlling interest or which is related to or affiliated with any excluded person, and (d) the legal representatives, heirs, successors-in-interest or assigns of any excluded person. The class certification Order was appealed by the Bollinger Defendants, and this appeal is pending. Notice of pendency of the State Action was issued to the State Class both by mail and publication, beginning August 4, 1999. The Underwriter Defendants were dismissed from the State Action pursuant to a prior settlement approved by Judge Gary Hall by Order dated February 26, 1999, pursuant to which the Underwriter Defendants paid the State Class $1.5 million. Logan was subsequently dismissed from the State Action, with prejudice and without costs. B. Another securities class action relating to Bollinger was also commenced in March 1996 in the United States District Court for the Northern District of Texas, entitled STI Classic Fund, et. al., v. Bollinger Industries, Inc. et. al., Civ. No. 3:96C-V-0823-L (the "Federal Action"). The action was brought by STI Classic Fund and STI Classic Sunbelt Equity Fund against Bollinger, G. Bollinger, B. Bollinger, Logan and Beck. Logan was dismissed from the Federal Action during discovery, with prejudice and without costs. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, by Order dated August 17, 1998, Judge Buchmeyer certified a class of all persons or entities that purchased the common stock of Bollinger Industries, Inc. -3-

during the period from June 29, 1994 through June 26, 1995, inclusive (the "Federal Class")(3). Excluded from the Federal Class are the defendants in that action; directors, officers and representatives of Bollinger during the

and Exchange Commission by Bollinger on September 30, 1993, and amended thereafter, between November 17, 1993 and June 26, 1995 (the "State Class"). Excluded from the State Class are (a) all persons and entities named as defendants, whether or not such persons or entities have been or will be dismissed from this action pursuant to a settlement or compromise or (b) members of the immediate family of any of the foregoing persons, (c) any person, firm, trust, corporation, officer, director or other individual or entity in which any excluded person has a controlling interest or which is related to or affiliated with any excluded person, and (d) the legal representatives, heirs, successors-in-interest or assigns of any excluded person. The class certification Order was appealed by the Bollinger Defendants, and this appeal is pending. Notice of pendency of the State Action was issued to the State Class both by mail and publication, beginning August 4, 1999. The Underwriter Defendants were dismissed from the State Action pursuant to a prior settlement approved by Judge Gary Hall by Order dated February 26, 1999, pursuant to which the Underwriter Defendants paid the State Class $1.5 million. Logan was subsequently dismissed from the State Action, with prejudice and without costs. B. Another securities class action relating to Bollinger was also commenced in March 1996 in the United States District Court for the Northern District of Texas, entitled STI Classic Fund, et. al., v. Bollinger Industries, Inc. et. al., Civ. No. 3:96C-V-0823-L (the "Federal Action"). The action was brought by STI Classic Fund and STI Classic Sunbelt Equity Fund against Bollinger, G. Bollinger, B. Bollinger, Logan and Beck. Logan was dismissed from the Federal Action during discovery, with prejudice and without costs. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, by Order dated August 17, 1998, Judge Buchmeyer certified a class of all persons or entities that purchased the common stock of Bollinger Industries, Inc. -3-

during the period from June 29, 1994 through June 26, 1995, inclusive (the "Federal Class")(3). Excluded from the Federal Class are the defendants in that action; directors, officers and representatives of Bollinger during the Class Period; members of the individual defendants' immediate families; any person or entity in which any excluded person has or had a controlling interest or to which any excluded person is related; and the legal representatives, heirs, successors or assigns of any excluded person. Notice of the pendency of the Federal Action was issued to the "Federal Class" both by mail and publication, beginning August 26, 1998. By Order dated May 1, 2000, STI Classic Small Cap Growth Fund was substituted in the caption as a plaintiff in place of STI Classic Sunbelt Equity Fund. C. In the State Action, Plaintiffs' Fifth Amended Petition ("Petition") alleges that Bollinger's 1993 Registration Statement as amended, filed with the SEC in November 1993 (the "1993 Registration Statement") in connection with Bollinger's initial public offering (the "1993 IPO"), was materially false and misleading and omitted material facts relating to, among other things, lack of management integrity, unreliable or nonexistent internal controls, the existence of consignment agreements with, and liberal returns policies afforded to certain of Bollinger's major customers, and the manipulation of sales transactions through a related party. Plaintiffs further allege that they and members of the State Class were damaged as a result of the alleged misstatements and non-disclosures. In particular, Plaintiff allege that, as a result of defendants' allegedly false and misleading statements and/or omissions, among others, the offering price and the after-market price of Bollinger common stock were artificially inflated when Plaintiffs and class members purchased their shares. Plaintiffs seek damages under Sections 11, 12 (2) and 15 of the Securities Act of 1933 and certain provisions of Texas statutory and common law, on (3) The State Class and Federal Class together shall be referred to as the "Class". -4-

behalf of the State Class. The defendants deny liability and are vigorously contesting the allegations. D. In the Federal Action, Plaintiffs' Fourth Amended Complaint ("Complaint") alleges that, during the class period covered in the Federal Action, defendants in that action engaged in a number of fraudulent acts, including phony sales, forged shipping documents, the failure to timely record returns, and the improper recognition of revenue in violation of generally accepted accounting principles. Plaintiffs further allege that the purpose and effect of defendants' financial manipulation was to create a false and misleading image of Bollinger's continued growth in

during the period from June 29, 1994 through June 26, 1995, inclusive (the "Federal Class")(3). Excluded from the Federal Class are the defendants in that action; directors, officers and representatives of Bollinger during the Class Period; members of the individual defendants' immediate families; any person or entity in which any excluded person has or had a controlling interest or to which any excluded person is related; and the legal representatives, heirs, successors or assigns of any excluded person. Notice of the pendency of the Federal Action was issued to the "Federal Class" both by mail and publication, beginning August 26, 1998. By Order dated May 1, 2000, STI Classic Small Cap Growth Fund was substituted in the caption as a plaintiff in place of STI Classic Sunbelt Equity Fund. C. In the State Action, Plaintiffs' Fifth Amended Petition ("Petition") alleges that Bollinger's 1993 Registration Statement as amended, filed with the SEC in November 1993 (the "1993 Registration Statement") in connection with Bollinger's initial public offering (the "1993 IPO"), was materially false and misleading and omitted material facts relating to, among other things, lack of management integrity, unreliable or nonexistent internal controls, the existence of consignment agreements with, and liberal returns policies afforded to certain of Bollinger's major customers, and the manipulation of sales transactions through a related party. Plaintiffs further allege that they and members of the State Class were damaged as a result of the alleged misstatements and non-disclosures. In particular, Plaintiff allege that, as a result of defendants' allegedly false and misleading statements and/or omissions, among others, the offering price and the after-market price of Bollinger common stock were artificially inflated when Plaintiffs and class members purchased their shares. Plaintiffs seek damages under Sections 11, 12 (2) and 15 of the Securities Act of 1933 and certain provisions of Texas statutory and common law, on (3) The State Class and Federal Class together shall be referred to as the "Class". -4-

behalf of the State Class. The defendants deny liability and are vigorously contesting the allegations. D. In the Federal Action, Plaintiffs' Fourth Amended Complaint ("Complaint") alleges that, during the class period covered in the Federal Action, defendants in that action engaged in a number of fraudulent acts, including phony sales, forged shipping documents, the failure to timely record returns, and the improper recognition of revenue in violation of generally accepted accounting principles. Plaintiffs further allege that the purpose and effect of defendants' financial manipulation was to create a false and misleading image of Bollinger's continued growth in statements defendants issued to the investing public during the relevant period, thereby artificially inflating the price of Bollinger common stock and causing damage to plaintiffs and the other members of the Federal Class who overpaid for their stock. The Federal Action seeks to recover damages sustained by the members of the Federal Class as a result of defendants' alleged violations of Section 10(b) (the anti-fraud provision) and 20(a) (the control person provision) of the Securities Exchange Act of 1934 and the provisions of the Texas common law prohibiting fraud and negligent misrepresentation. Plaintiffs allege that the fraudulent scheme relating to the Federal Action commenced on June 29, 1994 with the issuance of Bollinger's 1994 year-end financial results. On November 12, 1996, the Court issued a decision denying, in large part, certain defendants' motion to dismiss the Action. The defendants in the Federal Action deny any wrongdoing and all liability with respect to the claims alleged in the Complaint and are vigorously contesting the claims. E. Plaintiffs, through their counsel, have made a thorough investigation into the facts and circumstances relevant to both the State Action and Federal Action (the "Actions"). In connection with that investigation, they have conducted substantial discovery (which was -5-

coordinated between the Actions), including (i) inspection of hundreds of thousands of pages of documents produced by party and non-party witnesses; (ii) conducting depositions of more than twenty witnesses; (iii) defending over twenty depositions of Plaintiffs' employees and advisors; (iv) conducting interviews with numerous witnesses; and (v) holding extensive consultations with experts. In addition, with the agreement of the Bollinger Defendants, Plaintiffs retained the services of a nationally recognized mediator, Carl D. Liggio, Esq. former general counsel for Ernst & Young. Mr. Liggio engaged in detailed analyses of Bollinger's financial position and

behalf of the State Class. The defendants deny liability and are vigorously contesting the allegations. D. In the Federal Action, Plaintiffs' Fourth Amended Complaint ("Complaint") alleges that, during the class period covered in the Federal Action, defendants in that action engaged in a number of fraudulent acts, including phony sales, forged shipping documents, the failure to timely record returns, and the improper recognition of revenue in violation of generally accepted accounting principles. Plaintiffs further allege that the purpose and effect of defendants' financial manipulation was to create a false and misleading image of Bollinger's continued growth in statements defendants issued to the investing public during the relevant period, thereby artificially inflating the price of Bollinger common stock and causing damage to plaintiffs and the other members of the Federal Class who overpaid for their stock. The Federal Action seeks to recover damages sustained by the members of the Federal Class as a result of defendants' alleged violations of Section 10(b) (the anti-fraud provision) and 20(a) (the control person provision) of the Securities Exchange Act of 1934 and the provisions of the Texas common law prohibiting fraud and negligent misrepresentation. Plaintiffs allege that the fraudulent scheme relating to the Federal Action commenced on June 29, 1994 with the issuance of Bollinger's 1994 year-end financial results. On November 12, 1996, the Court issued a decision denying, in large part, certain defendants' motion to dismiss the Action. The defendants in the Federal Action deny any wrongdoing and all liability with respect to the claims alleged in the Complaint and are vigorously contesting the claims. E. Plaintiffs, through their counsel, have made a thorough investigation into the facts and circumstances relevant to both the State Action and Federal Action (the "Actions"). In connection with that investigation, they have conducted substantial discovery (which was -5-

coordinated between the Actions), including (i) inspection of hundreds of thousands of pages of documents produced by party and non-party witnesses; (ii) conducting depositions of more than twenty witnesses; (iii) defending over twenty depositions of Plaintiffs' employees and advisors; (iv) conducting interviews with numerous witnesses; and (v) holding extensive consultations with experts. In addition, with the agreement of the Bollinger Defendants, Plaintiffs retained the services of a nationally recognized mediator, Carl D. Liggio, Esq. former general counsel for Ernst & Young. Mr. Liggio engaged in detailed analyses of Bollinger's financial position and ability to fund a settlement, spent many months reconciling the positions of the parties, assisted the parties in difficult discussions with Bollinger's asset-based lender, and, after an agreement on settlement terms in the summer of 1999 foundered on disagreements between Bollinger's lender and Plaintiffs, spent many more months restructuring the settlement, taking into consideration Bollinger's revised financial condition and maintaining and enhancing an opportunity for class members to participate in any potential improvement in that condition. Plaintiffs have considered the expense and length of time necessary to prosecute this action through trial, the uncertainties of the outcome of this complex litigation, the limited financial resources of the Settling Defendants and the substantial benefit provided by the proposed settlement. Based upon these considerations, Plaintiffs and their counsel have concluded that it is in the best interests of Plaintiffs and the Class to settle these Actions with respect to the Settling Defendants on the terms set forth herein. F. The Settling Defendants, while denying all wrongdoing as alleged by Plaintiffs in the Petition and Complaint or any wrongdoing whatsoever and denying any liability to Plaintiffs or the Class, and relying on the provisions of this Settlement Stipulation that the Settlement shall in no event be construed or deemed to be evidence, or an admission or a concession on the part -6-

of the Settling Defendants, of any fault or liability whatsoever, and without conceding any infirmity in the defenses they have asserted or intended to assert in the Actions, considers it desirable that these Actions be dismissed as to the Settling Defendants on the terms set forth herein in order to avoid further expense and protracted litigation. NOW, THEREFORE, IT IS STIPULATED AND AGREED, by and among plaintiffs and the Settling Defendants, by themselves and their undersigned counsel, subject to approval by each Court pursuant, respectively, to Rule 42(e) of the Texas Rules of Civil Procedure and Rule 23 (e) of the Federal Rules of Civil Procedure, that the Actions shall be settled and compromised with respect to the Settling Defendants, according

coordinated between the Actions), including (i) inspection of hundreds of thousands of pages of documents produced by party and non-party witnesses; (ii) conducting depositions of more than twenty witnesses; (iii) defending over twenty depositions of Plaintiffs' employees and advisors; (iv) conducting interviews with numerous witnesses; and (v) holding extensive consultations with experts. In addition, with the agreement of the Bollinger Defendants, Plaintiffs retained the services of a nationally recognized mediator, Carl D. Liggio, Esq. former general counsel for Ernst & Young. Mr. Liggio engaged in detailed analyses of Bollinger's financial position and ability to fund a settlement, spent many months reconciling the positions of the parties, assisted the parties in difficult discussions with Bollinger's asset-based lender, and, after an agreement on settlement terms in the summer of 1999 foundered on disagreements between Bollinger's lender and Plaintiffs, spent many more months restructuring the settlement, taking into consideration Bollinger's revised financial condition and maintaining and enhancing an opportunity for class members to participate in any potential improvement in that condition. Plaintiffs have considered the expense and length of time necessary to prosecute this action through trial, the uncertainties of the outcome of this complex litigation, the limited financial resources of the Settling Defendants and the substantial benefit provided by the proposed settlement. Based upon these considerations, Plaintiffs and their counsel have concluded that it is in the best interests of Plaintiffs and the Class to settle these Actions with respect to the Settling Defendants on the terms set forth herein. F. The Settling Defendants, while denying all wrongdoing as alleged by Plaintiffs in the Petition and Complaint or any wrongdoing whatsoever and denying any liability to Plaintiffs or the Class, and relying on the provisions of this Settlement Stipulation that the Settlement shall in no event be construed or deemed to be evidence, or an admission or a concession on the part -6-

of the Settling Defendants, of any fault or liability whatsoever, and without conceding any infirmity in the defenses they have asserted or intended to assert in the Actions, considers it desirable that these Actions be dismissed as to the Settling Defendants on the terms set forth herein in order to avoid further expense and protracted litigation. NOW, THEREFORE, IT IS STIPULATED AND AGREED, by and among plaintiffs and the Settling Defendants, by themselves and their undersigned counsel, subject to approval by each Court pursuant, respectively, to Rule 42(e) of the Texas Rules of Civil Procedure and Rule 23 (e) of the Federal Rules of Civil Procedure, that the Actions shall be settled and compromised with respect to the Settling Defendants, according to the following terms and conditions: 1. As used herein, the following capitalized terms shall have the following meanings: a. "Bollinger" means defendant Bollinger Industries, Inc. b. "Claimant" means any Class Member who files or has filed a Proof of Claim, as hereinafter defined, in such form, in such manner and within the time limitation as set forth in the Proof of Claim form. c. "Claims Administrator" means The Garden City Group, previously retained by Plaintiffs' counsel to distribute notice and review claims in accordance with the Plan of Distribution set forth in the prior settlement with the Underwriter Defendants. d. "Class Member" means any person or entity included within either or both the State and Federal Class. e. "Complaint" means the Fourth Amended Complaint filed in the Federal Action on or about August 26, 1998. -7-

f. "Costs of Administration" means all expenses incurred in connection with the administration of the Settlement of the Actions, including all fees and expenses of the Claims Administrator. g. "Costs of Notice" means all costs and expenses incurred in discharging the obligation to notify potential Class Members of the pending Actions against, and settlement with the Bollinger Defendants, either through direct mail

of the Settling Defendants, of any fault or liability whatsoever, and without conceding any infirmity in the defenses they have asserted or intended to assert in the Actions, considers it desirable that these Actions be dismissed as to the Settling Defendants on the terms set forth herein in order to avoid further expense and protracted litigation. NOW, THEREFORE, IT IS STIPULATED AND AGREED, by and among plaintiffs and the Settling Defendants, by themselves and their undersigned counsel, subject to approval by each Court pursuant, respectively, to Rule 42(e) of the Texas Rules of Civil Procedure and Rule 23 (e) of the Federal Rules of Civil Procedure, that the Actions shall be settled and compromised with respect to the Settling Defendants, according to the following terms and conditions: 1. As used herein, the following capitalized terms shall have the following meanings: a. "Bollinger" means defendant Bollinger Industries, Inc. b. "Claimant" means any Class Member who files or has filed a Proof of Claim, as hereinafter defined, in such form, in such manner and within the time limitation as set forth in the Proof of Claim form. c. "Claims Administrator" means The Garden City Group, previously retained by Plaintiffs' counsel to distribute notice and review claims in accordance with the Plan of Distribution set forth in the prior settlement with the Underwriter Defendants. d. "Class Member" means any person or entity included within either or both the State and Federal Class. e. "Complaint" means the Fourth Amended Complaint filed in the Federal Action on or about August 26, 1998. -7-

f. "Costs of Administration" means all expenses incurred in connection with the administration of the Settlement of the Actions, including all fees and expenses of the Claims Administrator. g. "Costs of Notice" means all costs and expenses incurred in discharging the obligation to notify potential Class Members of the pending Actions against, and settlement with the Bollinger Defendants, either through direct mail or publication, as required by either the State or Federal Court, but shall not include attorneys' fees or expenses incurred by plaintiffs or the Settling Defendants. h. "Effective Date" means the date by which all of the following have occurred: (1) a Notice Order, as defined in subparagraph (r) below, has been entered by each of the State and Federal Courts; (2) adequate proof of notice to each class has been submitted to the respective Courts; (3) the Settlement has been approved in all respects by both Courts; (4) an Order and Final Judgment as defined in subparagraph s below, has been entered by the respective Courts and not vacated or modified upon appeal or otherwise, unless any such modifications are agreed to by the Settling Defendants and Plaintiffs; (5) the Settling Defendants have not exercised the right to vacate this Settlement Stipulation under paragraph 5 hereto, upon the event described in that paragraph; (6) either (i) the time to appeal, or otherwise seek review of both Orders and Final Judgments has expired without any appeal having been taken or review sought, or (ii) if an appeal is taken or review sought, the expiration of five days after the -8-

final of any such appeal or review shall have been finally determined by the highest court before which appeal or review is sought and is not subject to further judicial review; and (7) the entry of a bar order or other procedural remedy, as described in paragraph 15 herein, by each of the State and Federal Courts. i. "Escrow" means an escrow account Lead Counsel shall identify in writing to counsel for the Settling Defendants prior to execution of this agreement for holding the Settlement Fund for Class Members prior to distribution in the

f. "Costs of Administration" means all expenses incurred in connection with the administration of the Settlement of the Actions, including all fees and expenses of the Claims Administrator. g. "Costs of Notice" means all costs and expenses incurred in discharging the obligation to notify potential Class Members of the pending Actions against, and settlement with the Bollinger Defendants, either through direct mail or publication, as required by either the State or Federal Court, but shall not include attorneys' fees or expenses incurred by plaintiffs or the Settling Defendants. h. "Effective Date" means the date by which all of the following have occurred: (1) a Notice Order, as defined in subparagraph (r) below, has been entered by each of the State and Federal Courts; (2) adequate proof of notice to each class has been submitted to the respective Courts; (3) the Settlement has been approved in all respects by both Courts; (4) an Order and Final Judgment as defined in subparagraph s below, has been entered by the respective Courts and not vacated or modified upon appeal or otherwise, unless any such modifications are agreed to by the Settling Defendants and Plaintiffs; (5) the Settling Defendants have not exercised the right to vacate this Settlement Stipulation under paragraph 5 hereto, upon the event described in that paragraph; (6) either (i) the time to appeal, or otherwise seek review of both Orders and Final Judgments has expired without any appeal having been taken or review sought, or (ii) if an appeal is taken or review sought, the expiration of five days after the -8-

final of any such appeal or review shall have been finally determined by the highest court before which appeal or review is sought and is not subject to further judicial review; and (7) the entry of a bar order or other procedural remedy, as described in paragraph 15 herein, by each of the State and Federal Courts. i. "Escrow" means an escrow account Lead Counsel shall identify in writing to counsel for the Settling Defendants prior to execution of this agreement for holding the Settlement Fund for Class Members prior to distribution in the manner set forth in this agreement. j. The "Federal Class" means all persons or entities that purchased the common stock of Bollinger during the period from June 29, 1994 through June 26, 1995, inclusive. Excluded from the Federal Class are the defendants herein; directors, officers and representatives of Bollinger during the Class Period; members of the individual defendants immediate families; any person or entity in which any excluded person has or had a controlling interest or to which any excluded person is related; and the legal representatives, heirs, successors or assigns of an excluded person. The prior Class Notice in the Federal Action required class members to exclude themselves no later than October 8, 1998. Two requests for exclusion were received. k. The "Federal Action" means STI Classic Fund, et al. v. Bollinger Industries, Inc., et. al., Cause No. 3-96-CV-0823-R in the United States District Court For The Northern District Of Texas, Dallas Division. -9-

l. "Federal Court" means the United States District Court for the Northern District of Texas, Dallas Division. m. "Fees and Expenses" means the attorneys' fees and expenses, administration and notice fees, experts' and consultant's fees, incurred by Plaintiffs in connection with the prosecution and settlement of the Actions. n. "Fifth Amended Petition" or "Petition" means Plaintiffs' Fifth Amended Petition, filed in the State Action on or about June 20, 2000. o. "Lead Counsel" shall mean the firms of Goodkind Labaton Rudoff & Sucharow, LLP and Zwerling, Schachter & Zwerling, LLP.

final of any such appeal or review shall have been finally determined by the highest court before which appeal or review is sought and is not subject to further judicial review; and (7) the entry of a bar order or other procedural remedy, as described in paragraph 15 herein, by each of the State and Federal Courts. i. "Escrow" means an escrow account Lead Counsel shall identify in writing to counsel for the Settling Defendants prior to execution of this agreement for holding the Settlement Fund for Class Members prior to distribution in the manner set forth in this agreement. j. The "Federal Class" means all persons or entities that purchased the common stock of Bollinger during the period from June 29, 1994 through June 26, 1995, inclusive. Excluded from the Federal Class are the defendants herein; directors, officers and representatives of Bollinger during the Class Period; members of the individual defendants immediate families; any person or entity in which any excluded person has or had a controlling interest or to which any excluded person is related; and the legal representatives, heirs, successors or assigns of an excluded person. The prior Class Notice in the Federal Action required class members to exclude themselves no later than October 8, 1998. Two requests for exclusion were received. k. The "Federal Action" means STI Classic Fund, et al. v. Bollinger Industries, Inc., et. al., Cause No. 3-96-CV-0823-R in the United States District Court For The Northern District Of Texas, Dallas Division. -9-

l. "Federal Court" means the United States District Court for the Northern District of Texas, Dallas Division. m. "Fees and Expenses" means the attorneys' fees and expenses, administration and notice fees, experts' and consultant's fees, incurred by Plaintiffs in connection with the prosecution and settlement of the Actions. n. "Fifth Amended Petition" or "Petition" means Plaintiffs' Fifth Amended Petition, filed in the State Action on or about June 20, 2000. o. "Lead Counsel" shall mean the firms of Goodkind Labaton Rudoff & Sucharow, LLP and Zwerling, Schachter & Zwerling, LLP. p. "Net Settlement Fund" means the Settlement Fund (from the Settlement of these Actions only) as defined herein, less all Fees and Expenses, Costs of Notice and Costs of Administration, less any income taxes payable by the Settlement Fund as approved by the Court. q. "Non-Settling Defendant" means Grant Thornton, LLP, defendant in the State Action. r. "Notice Order" means the Notice Order and Exhibits referred to in paragraph 10, below, to be substantially in the form of Exhibit A, annexed hereto, which will be submitted to each Court. s. "Order and Final Judgment" means the Order and Final Judgment referred to in paragraph 11, below, to be substantially in the form of Exhibits B and C, annexed hereto relating to the State and Federal Actions, respectively. Among other provisions, the inclusion of -10-

paragraphs 15 and 16 of the Order and Final Judgment in the State Action is a material term of this Settlement Stipulation. t. "Plaintiffs" means SunTrust Bank, Atlanta, as trustee for SunTrust Retirement Sunbelt Equity Fund and STI Classic Funds, for STI Classic Small Cap Growth Fund. u. "Plan of Distribution" means the terms and procedures for allocating the Net Settlement Fund among, and

l. "Federal Court" means the United States District Court for the Northern District of Texas, Dallas Division. m. "Fees and Expenses" means the attorneys' fees and expenses, administration and notice fees, experts' and consultant's fees, incurred by Plaintiffs in connection with the prosecution and settlement of the Actions. n. "Fifth Amended Petition" or "Petition" means Plaintiffs' Fifth Amended Petition, filed in the State Action on or about June 20, 2000. o. "Lead Counsel" shall mean the firms of Goodkind Labaton Rudoff & Sucharow, LLP and Zwerling, Schachter & Zwerling, LLP. p. "Net Settlement Fund" means the Settlement Fund (from the Settlement of these Actions only) as defined herein, less all Fees and Expenses, Costs of Notice and Costs of Administration, less any income taxes payable by the Settlement Fund as approved by the Court. q. "Non-Settling Defendant" means Grant Thornton, LLP, defendant in the State Action. r. "Notice Order" means the Notice Order and Exhibits referred to in paragraph 10, below, to be substantially in the form of Exhibit A, annexed hereto, which will be submitted to each Court. s. "Order and Final Judgment" means the Order and Final Judgment referred to in paragraph 11, below, to be substantially in the form of Exhibits B and C, annexed hereto relating to the State and Federal Actions, respectively. Among other provisions, the inclusion of -10-

paragraphs 15 and 16 of the Order and Final Judgment in the State Action is a material term of this Settlement Stipulation. t. "Plaintiffs" means SunTrust Bank, Atlanta, as trustee for SunTrust Retirement Sunbelt Equity Fund and STI Classic Funds, for STI Classic Small Cap Growth Fund. u. "Plan of Distribution" means the terms and procedures for allocating the Net Settlement Fund among, and distributing the Net Settlement Fund to Claimants with approved Proofs of Claim, as set forth in the Plan of Distribution which shall be submitted separately by plaintiffs. Any Plan of Distribution is not part of the Settlement Stipulation. v. "Proof of Claim" means the Proof of Claim and Release and Substitute Form W-9 annexed to the Notice Order as Exhibit 2 which was either previously completed by Class Members in connection with the Underwriter's Settlement or will be mailed to Class Members with the Notice. w. "Put and Call Agreement" means the agreement attached to this Stipulation as Exhibit D. x. "Released Claims" shall collectively mean all claims that have been or could be asserted in the Actions or otherwise by Plaintiffs or any Class Members, in whatever capacity, including, but not limited to all claims for violations of federal or state law, against the Settling Defendants, as defined in subparagraph z, and all present and former -11-

officers, directors, agents, employees, advisors and attorneys of the Settling Defendants (except Grant Thornton, LLP), arising out of or relating to the facts and circumstances alleged, or that could have been alleged, in the Petition or the Complaint or otherwise relating in any way to Bollinger or its stock. Released Claims expressly include "Unknown Claims." "Unknown Claims" means any claim which Plaintiffs or any Class Member does not know or suspect to exist in his, her or its favor at the time of the Effective Date which, if known by him, her, or it,

paragraphs 15 and 16 of the Order and Final Judgment in the State Action is a material term of this Settlement Stipulation. t. "Plaintiffs" means SunTrust Bank, Atlanta, as trustee for SunTrust Retirement Sunbelt Equity Fund and STI Classic Funds, for STI Classic Small Cap Growth Fund. u. "Plan of Distribution" means the terms and procedures for allocating the Net Settlement Fund among, and distributing the Net Settlement Fund to Claimants with approved Proofs of Claim, as set forth in the Plan of Distribution which shall be submitted separately by plaintiffs. Any Plan of Distribution is not part of the Settlement Stipulation. v. "Proof of Claim" means the Proof of Claim and Release and Substitute Form W-9 annexed to the Notice Order as Exhibit 2 which was either previously completed by Class Members in connection with the Underwriter's Settlement or will be mailed to Class Members with the Notice. w. "Put and Call Agreement" means the agreement attached to this Stipulation as Exhibit D. x. "Released Claims" shall collectively mean all claims that have been or could be asserted in the Actions or otherwise by Plaintiffs or any Class Members, in whatever capacity, including, but not limited to all claims for violations of federal or state law, against the Settling Defendants, as defined in subparagraph z, and all present and former -11-

officers, directors, agents, employees, advisors and attorneys of the Settling Defendants (except Grant Thornton, LLP), arising out of or relating to the facts and circumstances alleged, or that could have been alleged, in the Petition or the Complaint or otherwise relating in any way to Bollinger or its stock. Released Claims expressly include "Unknown Claims." "Unknown Claims" means any claim which Plaintiffs or any Class Member does not know or suspect to exist in his, her or its favor at the time of the Effective Date which, if known by him, her, or it, might have affected his, her or its Settlement with and release of the Settling Defendants, or might have affected his, her, or its decision not to object to this Settlement. Plaintiffs and the Class Members may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but hereby stipulate and agree that each Plaintiff does and each Class Member shall be deemed to, upon the Effective Date, fully, finally, and forever settle and release any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Plaintiffs acknowledge that the foregoing waiver was separately bargained for and a key element of the settlement of which this -12-

Release is a part. In each provision hereof concerning releases, the Settling Defendants means each of the Settling Defendants and all of their present and former directors, officers, employees, agents, attorneys and advisors, predecessors, successors, parents, subsidiaries and affiliates. Upon the Effective Date, as defined in subparagraph h, each of the Settling Defendants shall be deemed to have, and by operation of the Orders and Judgments shall have, fully, finally, and forever released, relinquished and discharged each and all of the Class Members and counsel to the Plaintiffs from all claims (including "Unknown Claims"), arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement or resolution of the Actions or the Released Claims. y. "Settlement Hearing" or "Final Settlement Hearing" means the hearing to be held by each Court on notice to the Class, to consider approval of the Settlement, Plan of Distribution and Plaintiffs' counsel's application for attorneys' fees and reimbursement of expenses.

officers, directors, agents, employees, advisors and attorneys of the Settling Defendants (except Grant Thornton, LLP), arising out of or relating to the facts and circumstances alleged, or that could have been alleged, in the Petition or the Complaint or otherwise relating in any way to Bollinger or its stock. Released Claims expressly include "Unknown Claims." "Unknown Claims" means any claim which Plaintiffs or any Class Member does not know or suspect to exist in his, her or its favor at the time of the Effective Date which, if known by him, her, or it, might have affected his, her or its Settlement with and release of the Settling Defendants, or might have affected his, her, or its decision not to object to this Settlement. Plaintiffs and the Class Members may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but hereby stipulate and agree that each Plaintiff does and each Class Member shall be deemed to, upon the Effective Date, fully, finally, and forever settle and release any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Plaintiffs acknowledge that the foregoing waiver was separately bargained for and a key element of the settlement of which this -12-

Release is a part. In each provision hereof concerning releases, the Settling Defendants means each of the Settling Defendants and all of their present and former directors, officers, employees, agents, attorneys and advisors, predecessors, successors, parents, subsidiaries and affiliates. Upon the Effective Date, as defined in subparagraph h, each of the Settling Defendants shall be deemed to have, and by operation of the Orders and Judgments shall have, fully, finally, and forever released, relinquished and discharged each and all of the Class Members and counsel to the Plaintiffs from all claims (including "Unknown Claims"), arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement or resolution of the Actions or the Released Claims. y. "Settlement Hearing" or "Final Settlement Hearing" means the hearing to be held by each Court on notice to the Class, to consider approval of the Settlement, Plan of Distribution and Plaintiffs' counsel's application for attorneys' fees and reimbursement of expenses. z. "Settlement Fund" means the cash deposited in Escrow by Bollinger, plus interest, as well as certain shares of Bollinger common stock contributed to the Settlement as set forth in paragraphs 2-3, below. aa. "Settling Defendants" means Bollinger, Glenn D. Bollinger, Bobby D. Bollinger, John Maguire and Michael J. Beck. bb. The "State Action" means SunTrust Bank, Atlanta, et. al. v. Bollinger Industries, Inc., et. al., Cause No. 96-02952-C-68 in the District -13-

Court, 68th Judicial District, Dallas County, Texas, now pending in the 191st Judicial District. cc. The "State Class" means all persons who purchased shares of common stock of Bollinger, issued pursuant a Form S-1 Registration Statement initially filed with the Securities and Exchange Commission by Bollinger on September 30, 1993, and amended thereafter, between November 17, 1993 and June 26, 1995 (the "State Class"). Excluded from the State Class are (a) all persons and entities named as defendants, whether or not such persons or entities have been or will be dismissed from this action pursuant to a settlement or compromise or (b) members of the immediate family of any of the foregoing persons, (c) any person, firm, trust, corporation, officer, director or other individual or entity in which any excluded person has a controlling interest or which is related to or affiliated with any excluded person, and (d) the legal representatives, heirs, successors-in-interest or assigns of any excluded person. The prior Class

Release is a part. In each provision hereof concerning releases, the Settling Defendants means each of the Settling Defendants and all of their present and former directors, officers, employees, agents, attorneys and advisors, predecessors, successors, parents, subsidiaries and affiliates. Upon the Effective Date, as defined in subparagraph h, each of the Settling Defendants shall be deemed to have, and by operation of the Orders and Judgments shall have, fully, finally, and forever released, relinquished and discharged each and all of the Class Members and counsel to the Plaintiffs from all claims (including "Unknown Claims"), arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement or resolution of the Actions or the Released Claims. y. "Settlement Hearing" or "Final Settlement Hearing" means the hearing to be held by each Court on notice to the Class, to consider approval of the Settlement, Plan of Distribution and Plaintiffs' counsel's application for attorneys' fees and reimbursement of expenses. z. "Settlement Fund" means the cash deposited in Escrow by Bollinger, plus interest, as well as certain shares of Bollinger common stock contributed to the Settlement as set forth in paragraphs 2-3, below. aa. "Settling Defendants" means Bollinger, Glenn D. Bollinger, Bobby D. Bollinger, John Maguire and Michael J. Beck. bb. The "State Action" means SunTrust Bank, Atlanta, et. al. v. Bollinger Industries, Inc., et. al., Cause No. 96-02952-C-68 in the District -13-

Court, 68th Judicial District, Dallas County, Texas, now pending in the 191st Judicial District. cc. The "State Class" means all persons who purchased shares of common stock of Bollinger, issued pursuant a Form S-1 Registration Statement initially filed with the Securities and Exchange Commission by Bollinger on September 30, 1993, and amended thereafter, between November 17, 1993 and June 26, 1995 (the "State Class"). Excluded from the State Class are (a) all persons and entities named as defendants, whether or not such persons or entities have been or will be dismissed from this action pursuant to a settlement or compromise or (b) members of the immediate family of any of the foregoing persons, (c) any person, firm, trust, corporation, officer, director or other individual or entity in which any excluded person has a controlling interest or which is related to or affiliated with any excluded person, and (d) the legal representatives, heirs, successors-in-interest or assigns of any excluded person. The prior Class Notice in the State Action required class members to exclude themselves no later than September 7, 1999. No such requests for exclusion were received. dd. "State Court" means the District Court, 191st Judicial District, Dallas County, Texas. 2. In full and complete satisfaction and settlement of the Actions and of all Released Claims, as set forth in paragraph 4, below, Bollinger, on behalf of the Settling Defendants, will pay into the Escrow for the benefit of the Class the amount of $400,000 (four -14-

hundred thousand dollars) upon the execution and delivery of this Settlement Stipulation. The interest earned or accruing on the Settlement Fund shall remain in Escrow until the Effective Date for the benefit of the Class and shall become part of Settlement Fund, or shall be provided to the Settling Defendants upon the occurrence of the events referenced in paragraph 8 herein. 3. Bollinger, on behalf of the Settling Defendants, shall deliver to the Escrow, as additional consideration to the Class, 200,000 (two hundred thousand) shares of fully paid shares of Bollinger common stock ($0.01 par) free of any liens or encumbrances, for the benefit of the Class, which shall be exempt from registration under the

Court, 68th Judicial District, Dallas County, Texas, now pending in the 191st Judicial District. cc. The "State Class" means all persons who purchased shares of common stock of Bollinger, issued pursuant a Form S-1 Registration Statement initially filed with the Securities and Exchange Commission by Bollinger on September 30, 1993, and amended thereafter, between November 17, 1993 and June 26, 1995 (the "State Class"). Excluded from the State Class are (a) all persons and entities named as defendants, whether or not such persons or entities have been or will be dismissed from this action pursuant to a settlement or compromise or (b) members of the immediate family of any of the foregoing persons, (c) any person, firm, trust, corporation, officer, director or other individual or entity in which any excluded person has a controlling interest or which is related to or affiliated with any excluded person, and (d) the legal representatives, heirs, successors-in-interest or assigns of any excluded person. The prior Class Notice in the State Action required class members to exclude themselves no later than September 7, 1999. No such requests for exclusion were received. dd. "State Court" means the District Court, 191st Judicial District, Dallas County, Texas. 2. In full and complete satisfaction and settlement of the Actions and of all Released Claims, as set forth in paragraph 4, below, Bollinger, on behalf of the Settling Defendants, will pay into the Escrow for the benefit of the Class the amount of $400,000 (four -14-

hundred thousand dollars) upon the execution and delivery of this Settlement Stipulation. The interest earned or accruing on the Settlement Fund shall remain in Escrow until the Effective Date for the benefit of the Class and shall become part of Settlement Fund, or shall be provided to the Settling Defendants upon the occurrence of the events referenced in paragraph 8 herein. 3. Bollinger, on behalf of the Settling Defendants, shall deliver to the Escrow, as additional consideration to the Class, 200,000 (two hundred thousand) shares of fully paid shares of Bollinger common stock ($0.01 par) free of any liens or encumbrances, for the benefit of the Class, which shall be exempt from registration under the Securities Act of 1933, as amended, in reliance upon the exemption from registration provided under Section 3 (a)(10) thereof and based upon the entry by the respective Courts of the Order and Final Judgment (the "Settlement Shares"). The Settlement Shares shall be subject to the terms of the Put and Call Agreement. The Settlement Shares and executed originals of the Put and call Agreement shall be delivered into the Escrow on or before 20 (twenty) days following the execution and delivery of this Settlement Stipulation. Appropriate directions to the transfer agent regarding the transfer of the shares to Lead Counsel shall be delivered within one week after the Effective Date. Any share certificates issued pursuant to the foregoing will be held in the Escrow and then distributed in accordance with the Plan of Distribution or under further Order of the Court. However, following the Effective Date and prior to distribution of the Net Settlement Fund, Lead Counsel shall have the right to sell some or all of the Settlement Shares pursuant to further Order of the Court. Lead Counsel shall deposit into the Settlement Fund the proceeds received from any sales of Settlement Shares. All dividends declared with respect to the Settlement Shares on and after the date of issuance as provided above, shall become part of the Settlement Fund. -15-

4. Upon the Effective Date, each Class Member shall be deemed to have, and by operation of the Orders and Final Judgments shall have, fully, finally, and forever released, relinquished and discharged all Released Claims against each of the Settling Defendants, whether or not such Class Member executes and delivers a Proof of Claim. 5. The Settling Defendants shall have the right, but not the obligation, to vacate this Settlement Stipulation should Class Members holding an aggregate number of common shares of Bollinger issued in the 1993 IPO greater than an amount specified in a separate Supplemental Agreement between Settling Defendants and Plaintiffs exercise a right of exclusion from the Class. The Settling Defendants may exercise such option by providing written notice to Plaintiffs' Lead Counsel within seven (7) business days after receipt from Plaintiffs' Lead Counsel of written notice

hundred thousand dollars) upon the execution and delivery of this Settlement Stipulation. The interest earned or accruing on the Settlement Fund shall remain in Escrow until the Effective Date for the benefit of the Class and shall become part of Settlement Fund, or shall be provided to the Settling Defendants upon the occurrence of the events referenced in paragraph 8 herein. 3. Bollinger, on behalf of the Settling Defendants, shall deliver to the Escrow, as additional consideration to the Class, 200,000 (two hundred thousand) shares of fully paid shares of Bollinger common stock ($0.01 par) free of any liens or encumbrances, for the benefit of the Class, which shall be exempt from registration under the Securities Act of 1933, as amended, in reliance upon the exemption from registration provided under Section 3 (a)(10) thereof and based upon the entry by the respective Courts of the Order and Final Judgment (the "Settlement Shares"). The Settlement Shares shall be subject to the terms of the Put and Call Agreement. The Settlement Shares and executed originals of the Put and call Agreement shall be delivered into the Escrow on or before 20 (twenty) days following the execution and delivery of this Settlement Stipulation. Appropriate directions to the transfer agent regarding the transfer of the shares to Lead Counsel shall be delivered within one week after the Effective Date. Any share certificates issued pursuant to the foregoing will be held in the Escrow and then distributed in accordance with the Plan of Distribution or under further Order of the Court. However, following the Effective Date and prior to distribution of the Net Settlement Fund, Lead Counsel shall have the right to sell some or all of the Settlement Shares pursuant to further Order of the Court. Lead Counsel shall deposit into the Settlement Fund the proceeds received from any sales of Settlement Shares. All dividends declared with respect to the Settlement Shares on and after the date of issuance as provided above, shall become part of the Settlement Fund. -15-

4. Upon the Effective Date, each Class Member shall be deemed to have, and by operation of the Orders and Final Judgments shall have, fully, finally, and forever released, relinquished and discharged all Released Claims against each of the Settling Defendants, whether or not such Class Member executes and delivers a Proof of Claim. 5. The Settling Defendants shall have the right, but not the obligation, to vacate this Settlement Stipulation should Class Members holding an aggregate number of common shares of Bollinger issued in the 1993 IPO greater than an amount specified in a separate Supplemental Agreement between Settling Defendants and Plaintiffs exercise a right of exclusion from the Class. The Settling Defendants may exercise such option by providing written notice to Plaintiffs' Lead Counsel within seven (7) business days after receipt from Plaintiffs' Lead Counsel of written notice of the total shares of Bollinger held by persons who have requested exclusions, which notice shall be sent by Plaintiffs' Lead Counsel in sufficient time so that it shall be received by the Settling Defendants' counsel at least seven (7) business days prior to the date of the Final Settlement Hearing. 6. The Plaintiffs, Class, and Settling Defendants appoint Carl D. Liggio, Esq. with full authority as a single arbitrator, to resolve, if necessary, as he sees fit upon such information he deems relevant, and pursuant to such procedures he deems appropriate, any and all issues with respect to the interpretation of the Settlement Stipulation, or other questions with respect to settlement documentation or the implementation of the Settlement. He shall be compensated equally by the Class Plaintiffs and the Bollinger Defendants at his current rates. All other issues remain for decision by the respective Courts under applicable law. The undersigned may, by mutual agreement, and in writing name a successor to Carl D. Liggio, Esq. to serve in such capacity. -16-

7. The cash portion of the Settlement Fund deposited in Escrow pursuant to paragraph 2 above shall be invested in instruments backed by the full faith and credit of the United States Government or fully insured by the United States Government or an agency thereof and it shall be reinvested in the proceeds of these instruments as they mature in similar instruments at their then current market rates. The Settling Defendants shall bear no risk related to investment of the Settlement Fund. a. Lead Counsel shall not disburse any portion of the Settlement Fund except as provided in the Settlement Stipulation, or with the written agreement of counsel for Settling Defendants and Plaintiffs' Counsel or by order of

4. Upon the Effective Date, each Class Member shall be deemed to have, and by operation of the Orders and Final Judgments shall have, fully, finally, and forever released, relinquished and discharged all Released Claims against each of the Settling Defendants, whether or not such Class Member executes and delivers a Proof of Claim. 5. The Settling Defendants shall have the right, but not the obligation, to vacate this Settlement Stipulation should Class Members holding an aggregate number of common shares of Bollinger issued in the 1993 IPO greater than an amount specified in a separate Supplemental Agreement between Settling Defendants and Plaintiffs exercise a right of exclusion from the Class. The Settling Defendants may exercise such option by providing written notice to Plaintiffs' Lead Counsel within seven (7) business days after receipt from Plaintiffs' Lead Counsel of written notice of the total shares of Bollinger held by persons who have requested exclusions, which notice shall be sent by Plaintiffs' Lead Counsel in sufficient time so that it shall be received by the Settling Defendants' counsel at least seven (7) business days prior to the date of the Final Settlement Hearing. 6. The Plaintiffs, Class, and Settling Defendants appoint Carl D. Liggio, Esq. with full authority as a single arbitrator, to resolve, if necessary, as he sees fit upon such information he deems relevant, and pursuant to such procedures he deems appropriate, any and all issues with respect to the interpretation of the Settlement Stipulation, or other questions with respect to settlement documentation or the implementation of the Settlement. He shall be compensated equally by the Class Plaintiffs and the Bollinger Defendants at his current rates. All other issues remain for decision by the respective Courts under applicable law. The undersigned may, by mutual agreement, and in writing name a successor to Carl D. Liggio, Esq. to serve in such capacity. -16-

7. The cash portion of the Settlement Fund deposited in Escrow pursuant to paragraph 2 above shall be invested in instruments backed by the full faith and credit of the United States Government or fully insured by the United States Government or an agency thereof and it shall be reinvested in the proceeds of these instruments as they mature in similar instruments at their then current market rates. The Settling Defendants shall bear no risk related to investment of the Settlement Fund. a. Lead Counsel shall not disburse any portion of the Settlement Fund except as provided in the Settlement Stipulation, or with the written agreement of counsel for Settling Defendants and Plaintiffs' Counsel or by order of the Courts. b. All funds held in Escrow shall be deemed and considered to be in custodia legis of the Court, and shall remain subject to the jurisdiction of the Courts, until such time as such funds shall be distributed pursuant to the Settlement Stipulation and/or further order(s) of the Courts. c. The Settling Defendants and the Plaintiffs agree to treat the Settlement Fund as being at all times a "qualified settlement fund" within the meaning of Treas. Reg. Section 1.468B-1. In addition, Lead Counsel and, as required, the Settling Defendants shall jointly and timely make such elections as necessary or advisable to carry out the provisions of this paragraph, including the "relation-back election" (as defined in Treas. Reg. Section 1.468B-1) back to the earliest permitted date. Such elections shall be made in compliance with the procedures and requirements contained in such regulations. -17-

d. For the purpose of Section 468B of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, the "administrator" shall be the Claims Administrator. The Claims Administrator shall timely and properly file all informational and other tax returns necessary or advisable with respect to the Settlement Fund (including without limitations the returns described in Treas. Reg. Section 1.468B-2(k)). Such returns (as well as the election described in (c) shall be consistent with this paragraph and in all events shall reflect that all taxes (including any interest or penalties) on the income earned by the Settlement Fund shall be paid out of the Settlement Fund as provided in subparagraph (e) hereof. e. All (a) taxes (including any interest or penalties) arising with respect to the income earned by the Settlement

7. The cash portion of the Settlement Fund deposited in Escrow pursuant to paragraph 2 above shall be invested in instruments backed by the full faith and credit of the United States Government or fully insured by the United States Government or an agency thereof and it shall be reinvested in the proceeds of these instruments as they mature in similar instruments at their then current market rates. The Settling Defendants shall bear no risk related to investment of the Settlement Fund. a. Lead Counsel shall not disburse any portion of the Settlement Fund except as provided in the Settlement Stipulation, or with the written agreement of counsel for Settling Defendants and Plaintiffs' Counsel or by order of the Courts. b. All funds held in Escrow shall be deemed and considered to be in custodia legis of the Court, and shall remain subject to the jurisdiction of the Courts, until such time as such funds shall be distributed pursuant to the Settlement Stipulation and/or further order(s) of the Courts. c. The Settling Defendants and the Plaintiffs agree to treat the Settlement Fund as being at all times a "qualified settlement fund" within the meaning of Treas. Reg. Section 1.468B-1. In addition, Lead Counsel and, as required, the Settling Defendants shall jointly and timely make such elections as necessary or advisable to carry out the provisions of this paragraph, including the "relation-back election" (as defined in Treas. Reg. Section 1.468B-1) back to the earliest permitted date. Such elections shall be made in compliance with the procedures and requirements contained in such regulations. -17-

d. For the purpose of Section 468B of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, the "administrator" shall be the Claims Administrator. The Claims Administrator shall timely and properly file all informational and other tax returns necessary or advisable with respect to the Settlement Fund (including without limitations the returns described in Treas. Reg. Section 1.468B-2(k)). Such returns (as well as the election described in (c) shall be consistent with this paragraph and in all events shall reflect that all taxes (including any interest or penalties) on the income earned by the Settlement Fund shall be paid out of the Settlement Fund as provided in subparagraph (e) hereof. e. All (a) taxes (including any interest or penalties) arising with respect to the income earned by the Settlement Fund, including any taxes or tax detriments that may be imposed upon the Settling Defendants with respect to any income earned by the Settlement Fund for any period during which the Settlement Fund does not qualify as a "qualified settlement fund" for Federal or state income tax purposes ("Taxes") and (b) expenses and costs incurred in connection with the operation and implementation of this paragraph (including, without limitation, expenses of tax attorneys and/or accountants and mailing and distribution costs and expenses relating to filing (or failing to file) the returns described in this paragraph) ("Tax Expenses"), shall be paid out of the Settlement Fund; in all events the Settling Defendants shall have no liability or responsibility for the -18-

Taxes or the Tax Expenses. Further, Taxes and Tax Expenses shall be treated as, and considered to be, a cost of administration of the Settlement and shall be timely paid out of the Settlement Fund without prior order from the Court and the Claims Administrator shall be obligated (notwithstanding anything herein to the contrary) to withhold from distribution to Class Members any funds necessary to pay such amounts including the establishment of adequate reserves for any Taxes and Tax Expenses (as well as any amounts that may be required to be withheld under Treas. Reg. Section 1.468B-2(1) (2)). The Settling Defendants are not responsible and shall have no liability for Taxes or Tax Expenses. The parties hereto agree to cooperate with the Claims Administrator, each other, and their tax attorneys and accountants to the extent reasonably necessary to carry out the provisions of this paragraph. 8. If the Settlement Stipulation is terminated, canceled, or rejected, including, at Plaintiffs' option, by reason of Bollinger's failure to timely and fully fund the Settlement Fund as set forth in paragraphs 2-3 above, or if either Court enters an Order and Final Judgment which is vacated or modified, upon appeal or otherwise, unless such modifications are agreed to by the Settling Defendants and Plaintiffs, or if the Effective Date does not otherwise

d. For the purpose of Section 468B of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, the "administrator" shall be the Claims Administrator. The Claims Administrator shall timely and properly file all informational and other tax returns necessary or advisable with respect to the Settlement Fund (including without limitations the returns described in Treas. Reg. Section 1.468B-2(k)). Such returns (as well as the election described in (c) shall be consistent with this paragraph and in all events shall reflect that all taxes (including any interest or penalties) on the income earned by the Settlement Fund shall be paid out of the Settlement Fund as provided in subparagraph (e) hereof. e. All (a) taxes (including any interest or penalties) arising with respect to the income earned by the Settlement Fund, including any taxes or tax detriments that may be imposed upon the Settling Defendants with respect to any income earned by the Settlement Fund for any period during which the Settlement Fund does not qualify as a "qualified settlement fund" for Federal or state income tax purposes ("Taxes") and (b) expenses and costs incurred in connection with the operation and implementation of this paragraph (including, without limitation, expenses of tax attorneys and/or accountants and mailing and distribution costs and expenses relating to filing (or failing to file) the returns described in this paragraph) ("Tax Expenses"), shall be paid out of the Settlement Fund; in all events the Settling Defendants shall have no liability or responsibility for the -18-

Taxes or the Tax Expenses. Further, Taxes and Tax Expenses shall be treated as, and considered to be, a cost of administration of the Settlement and shall be timely paid out of the Settlement Fund without prior order from the Court and the Claims Administrator shall be obligated (notwithstanding anything herein to the contrary) to withhold from distribution to Class Members any funds necessary to pay such amounts including the establishment of adequate reserves for any Taxes and Tax Expenses (as well as any amounts that may be required to be withheld under Treas. Reg. Section 1.468B-2(1) (2)). The Settling Defendants are not responsible and shall have no liability for Taxes or Tax Expenses. The parties hereto agree to cooperate with the Claims Administrator, each other, and their tax attorneys and accountants to the extent reasonably necessary to carry out the provisions of this paragraph. 8. If the Settlement Stipulation is terminated, canceled, or rejected, including, at Plaintiffs' option, by reason of Bollinger's failure to timely and fully fund the Settlement Fund as set forth in paragraphs 2-3 above, or if either Court enters an Order and Final Judgment which is vacated or modified, upon appeal or otherwise, unless such modifications are agreed to by the Settling Defendants and Plaintiffs, or if the Effective Date does not otherwise occur: (a) the contents, if any, of the Settlement Fund (including any Bollinger common stock) shall be returned to Bollinger forthwith (less the costs for any notice provided to the Class) and Plaintiffs' counsel shall immediately execute any documents necessary to effect such return; and (b) Plaintiffs and the Settling Defendants shall be deemed to have reverted to their respective status as of the date and time immediately prior to the execution of this Settlement Stipulation, -19-

and they shall proceed in all respects as if the Settlement Stipulation had not been executed and any related orders had not been entered. 9. Neither this Settlement Stipulation, whether or not executed or consummated, nor any of its terms and provisions or Exhibits, including the Plan of Distribution, nor any of the negotiations or proceedings connected with it, shall be: a. Construed as an admission of any sort whatsoever, either by these Settling Defendants or Plaintiffs, relating to any issue in these Actions; b. Offered or received in evidence in the Actions or any other action or proceeding; or c. Referred to for any reason other than to effect the provisions of this Settlement Stipulation. 10. As soon as practicable after execution of this Settlement Stipulation, Plaintiffs and the Settling Defendants

Taxes or the Tax Expenses. Further, Taxes and Tax Expenses shall be treated as, and considered to be, a cost of administration of the Settlement and shall be timely paid out of the Settlement Fund without prior order from the Court and the Claims Administrator shall be obligated (notwithstanding anything herein to the contrary) to withhold from distribution to Class Members any funds necessary to pay such amounts including the establishment of adequate reserves for any Taxes and Tax Expenses (as well as any amounts that may be required to be withheld under Treas. Reg. Section 1.468B-2(1) (2)). The Settling Defendants are not responsible and shall have no liability for Taxes or Tax Expenses. The parties hereto agree to cooperate with the Claims Administrator, each other, and their tax attorneys and accountants to the extent reasonably necessary to carry out the provisions of this paragraph. 8. If the Settlement Stipulation is terminated, canceled, or rejected, including, at Plaintiffs' option, by reason of Bollinger's failure to timely and fully fund the Settlement Fund as set forth in paragraphs 2-3 above, or if either Court enters an Order and Final Judgment which is vacated or modified, upon appeal or otherwise, unless such modifications are agreed to by the Settling Defendants and Plaintiffs, or if the Effective Date does not otherwise occur: (a) the contents, if any, of the Settlement Fund (including any Bollinger common stock) shall be returned to Bollinger forthwith (less the costs for any notice provided to the Class) and Plaintiffs' counsel shall immediately execute any documents necessary to effect such return; and (b) Plaintiffs and the Settling Defendants shall be deemed to have reverted to their respective status as of the date and time immediately prior to the execution of this Settlement Stipulation, -19-

and they shall proceed in all respects as if the Settlement Stipulation had not been executed and any related orders had not been entered. 9. Neither this Settlement Stipulation, whether or not executed or consummated, nor any of its terms and provisions or Exhibits, including the Plan of Distribution, nor any of the negotiations or proceedings connected with it, shall be: a. Construed as an admission of any sort whatsoever, either by these Settling Defendants or Plaintiffs, relating to any issue in these Actions; b. Offered or received in evidence in the Actions or any other action or proceeding; or c. Referred to for any reason other than to effect the provisions of this Settlement Stipulation. 10. As soon as practicable after execution of this Settlement Stipulation, Plaintiffs and the Settling Defendants shall jointly move the State and Federal Courts, respectively for preliminary approval and entry of the Notice Order. 11. If the Settlement Stipulation is approved by both Courts, after settlement hearings on notice, as provided by Rule 42 of the Texas Rules of Civil Procedure and Rule 23 of the Federal Rules of Civil Procedure, respectively, Plaintiffs shall move in each Court for entry of the Order and Final Judgment in each respective Court. 12. At each Settlement Hearing, Plaintiffs will seek approval of the Court to distribute the Net Settlement Fund to the Class, in accordance with the Plan of Distribution, the terms and conditions of which are set forth in Plan of Distribution submitted separately herewith. 13. At the Settlement Hearing, Plaintiffs' counsel will seek approval of each Court for reimbursement of a portion of out-of-pocket expenses actually incurred in prosecuting -20-

the Actions, in an amount not to exceed one-third (1/3) of the Settlement Fund, and for Class Notice and the costs of administration and review of Class Members' claims, as well as, up to a maximum of $10,000, Plaintiffs' costs and expenses (including lost wages) directly relating to the representation of the class. Plaintiffs intend to

and they shall proceed in all respects as if the Settlement Stipulation had not been executed and any related orders had not been entered. 9. Neither this Settlement Stipulation, whether or not executed or consummated, nor any of its terms and provisions or Exhibits, including the Plan of Distribution, nor any of the negotiations or proceedings connected with it, shall be: a. Construed as an admission of any sort whatsoever, either by these Settling Defendants or Plaintiffs, relating to any issue in these Actions; b. Offered or received in evidence in the Actions or any other action or proceeding; or c. Referred to for any reason other than to effect the provisions of this Settlement Stipulation. 10. As soon as practicable after execution of this Settlement Stipulation, Plaintiffs and the Settling Defendants shall jointly move the State and Federal Courts, respectively for preliminary approval and entry of the Notice Order. 11. If the Settlement Stipulation is approved by both Courts, after settlement hearings on notice, as provided by Rule 42 of the Texas Rules of Civil Procedure and Rule 23 of the Federal Rules of Civil Procedure, respectively, Plaintiffs shall move in each Court for entry of the Order and Final Judgment in each respective Court. 12. At each Settlement Hearing, Plaintiffs will seek approval of the Court to distribute the Net Settlement Fund to the Class, in accordance with the Plan of Distribution, the terms and conditions of which are set forth in Plan of Distribution submitted separately herewith. 13. At the Settlement Hearing, Plaintiffs' counsel will seek approval of each Court for reimbursement of a portion of out-of-pocket expenses actually incurred in prosecuting -20-

the Actions, in an amount not to exceed one-third (1/3) of the Settlement Fund, and for Class Notice and the costs of administration and review of Class Members' claims, as well as, up to a maximum of $10,000, Plaintiffs' costs and expenses (including lost wages) directly relating to the representation of the class. Plaintiffs intend to seek reasonable costs and expenses incurred in connection with their representation of the Class. All expenses so awarded will be paid from the Settlement Fund. The Settling Defendants will take no position with respect to Plaintiffs' counsels' applications for expenses. Any order or proceedings relating to this application, or any appeal from such an order, is not a material term of the Settlement and shall not operate to terminate or cancel the Settlement Stipulation, or affect or delay the finality of either Court's Order and Final Judgment approving the Settlement Stipulation and the Settlement set forth herein. Neither a modification nor reversal on appeal of any award of expenses shall constitute grounds for cancellation or termination of the Settlement Stipulation. 14. Plaintiffs reserve their right to continue the State Action and proceed against the Non-Settling Defendant, Grant Thornton, on any claims, demands, causes of action or liabilities of any nature. Neither the compromise and settlement set forth in this Settlement Stipulation or the Order and Final Judgments, nor any covenant or agreement contained herein shall be deemed to reduce, release or discharge any claim, demand, cause of action or liability which Plaintiffs or any Class Members had, now has or may hereafter have against the Non-Settling Defendant, except as set forth in paragraphs 15 and 16 of the Order and Final Judgment. 15. The Class shall consent to entry of a bar order or such other procedural remedy at the appropriate time so as to discharge the Settling Defendants from all liability or claims, including claims for contribution or indemnity by the Non-Settling Defendant. The bar -21-

order shall provide for such set-off rights in favor of any party as are required to discharge the Settling

the Actions, in an amount not to exceed one-third (1/3) of the Settlement Fund, and for Class Notice and the costs of administration and review of Class Members' claims, as well as, up to a maximum of $10,000, Plaintiffs' costs and expenses (including lost wages) directly relating to the representation of the class. Plaintiffs intend to seek reasonable costs and expenses incurred in connection with their representation of the Class. All expenses so awarded will be paid from the Settlement Fund. The Settling Defendants will take no position with respect to Plaintiffs' counsels' applications for expenses. Any order or proceedings relating to this application, or any appeal from such an order, is not a material term of the Settlement and shall not operate to terminate or cancel the Settlement Stipulation, or affect or delay the finality of either Court's Order and Final Judgment approving the Settlement Stipulation and the Settlement set forth herein. Neither a modification nor reversal on appeal of any award of expenses shall constitute grounds for cancellation or termination of the Settlement Stipulation. 14. Plaintiffs reserve their right to continue the State Action and proceed against the Non-Settling Defendant, Grant Thornton, on any claims, demands, causes of action or liabilities of any nature. Neither the compromise and settlement set forth in this Settlement Stipulation or the Order and Final Judgments, nor any covenant or agreement contained herein shall be deemed to reduce, release or discharge any claim, demand, cause of action or liability which Plaintiffs or any Class Members had, now has or may hereafter have against the Non-Settling Defendant, except as set forth in paragraphs 15 and 16 of the Order and Final Judgment. 15. The Class shall consent to entry of a bar order or such other procedural remedy at the appropriate time so as to discharge the Settling Defendants from all liability or claims, including claims for contribution or indemnity by the Non-Settling Defendant. The bar -21-

order shall provide for such set-off rights in favor of any party as are required to discharge the Settling Defendants fully from all liability or claims for contribution or indemnity. 16. As of the Effective Date, the Settling Defendants shall cease to have any interest in, or responsibility or control over the Settlement Fund. On and after the Effective Date, Plaintiffs' Counsel shall have sole responsibility and authority for investment of the Settlement Fund, subject to the supervision of the Court. 17. Plaintiffs have retained a Claims Administrator to review, assess and process the Proofs of Claim of Class Members. The Settling Defendants shall have no role in or responsibility for review or evaluation of Proofs of Claim. 18. In order to receive a distribution from the Settlement Fund, a Class Member must file a Proof of Claim in the form and manner to be approved by both Courts. (Exhibit 2 to the Notice Order) For Class Members who previously submitted proof of claim forms in connection with the Underwriter's Settlement, an additional proof of claim form will not be required. 19. Plaintiffs and each Class Member are forever barred and enjoined from commencing, instituting or prosecuting any action or other adversary proceeding in any court of law or equity, arbitration tribunal, or administrative forum, directly or representatively, against the Settling Defendants and all or any of their present and former directors, officers, employees, agents, attorneys and advisors (other than the Non-Settling Defendant), and its predecessors, successors, parents, subsidiaries and affiliates, with respect to any, some or all of the Released Claims. 20. The Settling Defendants shall have no role in or responsibility for the form, substance, method or manner of administration or distribution of the Settlement Fund to -22-

Class Members. All expenses and income taxes related thereto shall be paid from the Settlement Fund. Neither the Settling Defendants nor their counsel shall have any responsibility for or liability with respect to the administration or processing of claims or the allocation of the Settlement Fund, including, without limitation, determinations as to the validity of Proofs of Claims, the amounts of claims, distributions of the Net Settlement

order shall provide for such set-off rights in favor of any party as are required to discharge the Settling Defendants fully from all liability or claims for contribution or indemnity. 16. As of the Effective Date, the Settling Defendants shall cease to have any interest in, or responsibility or control over the Settlement Fund. On and after the Effective Date, Plaintiffs' Counsel shall have sole responsibility and authority for investment of the Settlement Fund, subject to the supervision of the Court. 17. Plaintiffs have retained a Claims Administrator to review, assess and process the Proofs of Claim of Class Members. The Settling Defendants shall have no role in or responsibility for review or evaluation of Proofs of Claim. 18. In order to receive a distribution from the Settlement Fund, a Class Member must file a Proof of Claim in the form and manner to be approved by both Courts. (Exhibit 2 to the Notice Order) For Class Members who previously submitted proof of claim forms in connection with the Underwriter's Settlement, an additional proof of claim form will not be required. 19. Plaintiffs and each Class Member are forever barred and enjoined from commencing, instituting or prosecuting any action or other adversary proceeding in any court of law or equity, arbitration tribunal, or administrative forum, directly or representatively, against the Settling Defendants and all or any of their present and former directors, officers, employees, agents, attorneys and advisors (other than the Non-Settling Defendant), and its predecessors, successors, parents, subsidiaries and affiliates, with respect to any, some or all of the Released Claims. 20. The Settling Defendants shall have no role in or responsibility for the form, substance, method or manner of administration or distribution of the Settlement Fund to -22-

Class Members. All expenses and income taxes related thereto shall be paid from the Settlement Fund. Neither the Settling Defendants nor their counsel shall have any responsibility for or liability with respect to the administration or processing of claims or the allocation of the Settlement Fund, including, without limitation, determinations as to the validity of Proofs of Claims, the amounts of claims, distributions of the Net Settlement Fund, or any loss incurred by the Claims Administrator. 21. The parties hereto and their attorneys agree to cooperate fully with one another in seeking Court approval of this Settlement Stipulation and to use their best efforts to consummate the terms of the Settlement Stipulation. Neither the Plaintiffs nor the Settling Defendants shall seek to evade their good faith obligations to seek approval and implementation of this Settlement Stipulation by virtue of any rulings, orders, governmental report, the results of the proof of claim process or other development, whether in the Actions or in any other litigation, or otherwise that might hereinafter occur and might be deemed to alter the relative strength of the Plaintiffs or the Settling Defendants with respect to any claim or defense or their relative bargaining power with respect to negotiating a Settlement Stipulation. The parties deem this Settlement Stipulation to be fair and reasonable and have arrived at this Settlement Stipulation in arm's-length negotiations taking into account all relevant factors, present or potential. 22. This Settlement Stipulation shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns, and upon any corporation or other entity into or with which any party hereto may merge or consolidate. -23-

23. This Settlement Stipulation shall be construed in accordance with the laws of the State of Texas. 24. The waiver by one party of any breach of this Settlement Stipulation by another party shall not be deemed a waiver of any other prior or subsequent breach of this Settlement Stipulation. 25. The foregoing, including the documents referred to herein, constitutes the entire agreement among Plaintiffs

Class Members. All expenses and income taxes related thereto shall be paid from the Settlement Fund. Neither the Settling Defendants nor their counsel shall have any responsibility for or liability with respect to the administration or processing of claims or the allocation of the Settlement Fund, including, without limitation, determinations as to the validity of Proofs of Claims, the amounts of claims, distributions of the Net Settlement Fund, or any loss incurred by the Claims Administrator. 21. The parties hereto and their attorneys agree to cooperate fully with one another in seeking Court approval of this Settlement Stipulation and to use their best efforts to consummate the terms of the Settlement Stipulation. Neither the Plaintiffs nor the Settling Defendants shall seek to evade their good faith obligations to seek approval and implementation of this Settlement Stipulation by virtue of any rulings, orders, governmental report, the results of the proof of claim process or other development, whether in the Actions or in any other litigation, or otherwise that might hereinafter occur and might be deemed to alter the relative strength of the Plaintiffs or the Settling Defendants with respect to any claim or defense or their relative bargaining power with respect to negotiating a Settlement Stipulation. The parties deem this Settlement Stipulation to be fair and reasonable and have arrived at this Settlement Stipulation in arm's-length negotiations taking into account all relevant factors, present or potential. 22. This Settlement Stipulation shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns, and upon any corporation or other entity into or with which any party hereto may merge or consolidate. -23-

23. This Settlement Stipulation shall be construed in accordance with the laws of the State of Texas. 24. The waiver by one party of any breach of this Settlement Stipulation by another party shall not be deemed a waiver of any other prior or subsequent breach of this Settlement Stipulation. 25. The foregoing, including the documents referred to herein, constitutes the entire agreement among Plaintiffs and the Settling Defendants with respect to the settlement of the Actions, and may not be modified or amended, except in writing, signed by all parties hereto, or their successors in interest. Counsel may sign this Settlement Stipulation on behalf of the parties. 26. This Settlement Stipulation may be executed in one or more counterparts and all counterparts and each of them shall be deemed one and the same instrument.
THIS AGREEMENT has been executed the --GOODKIND LABATON RUDOFF & SUCHAROW LLP day of , 2001. ----------

FREIDMAN DRIEGERT & HSUEH, LLC

By: --------------------------Thomas A. Dubbs, Esq. Ira A. Schochet, Esq. 100 Park Avenue New York, NY 10017-5563

By: ---------------------------3117 Preston Road Dallas, TX 75225

ATTORNEYS FOR THE BOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER and JOHN MAGUIRE

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ZWERLING, SCHACHTER & ZWERLING, LLP

23. This Settlement Stipulation shall be construed in accordance with the laws of the State of Texas. 24. The waiver by one party of any breach of this Settlement Stipulation by another party shall not be deemed a waiver of any other prior or subsequent breach of this Settlement Stipulation. 25. The foregoing, including the documents referred to herein, constitutes the entire agreement among Plaintiffs and the Settling Defendants with respect to the settlement of the Actions, and may not be modified or amended, except in writing, signed by all parties hereto, or their successors in interest. Counsel may sign this Settlement Stipulation on behalf of the parties. 26. This Settlement Stipulation may be executed in one or more counterparts and all counterparts and each of them shall be deemed one and the same instrument.
THIS AGREEMENT has been executed the --GOODKIND LABATON RUDOFF & SUCHAROW LLP day of , 2001. ----------

FREIDMAN DRIEGERT & HSUEH, LLC

By: --------------------------Thomas A. Dubbs, Esq. Ira A. Schochet, Esq. 100 Park Avenue New York, NY 10017-5563

By: ---------------------------3117 Preston Road Dallas, TX 75225

ATTORNEYS FOR THE BOLLINGER INDUSTRIES, INC., GLENN D. BOLLINGER, BOBBY D. BOLLINGER and JOHN MAGUIRE

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ZWERLING, SCHACHTER & ZWERLING, LLP
By: --------------------------Richard A. Speirs, Esq. 767 Third Avenue New York, NY 10017 ---------------------------Michael Beck (Pro Se)

KILGORE & KILGORE

By: --------------------------Theodore Anderson, Esq. 3131 McKinney Avenue Suite 700 Dallas, TX 75204

ATTORNEYS FOR PLAINTIFFS AND THE CLASS -25-

EXHIBIT 10.72

ZWERLING, SCHACHTER & ZWERLING, LLP
By: --------------------------Richard A. Speirs, Esq. 767 Third Avenue New York, NY 10017 ---------------------------Michael Beck (Pro Se)

KILGORE & KILGORE

By: --------------------------Theodore Anderson, Esq. 3131 McKinney Avenue Suite 700 Dallas, TX 75204

ATTORNEYS FOR PLAINTIFFS AND THE CLASS -25-

EXHIBIT 10.72 PUT AND CALL AGREEMENT This Put and Call Agreement ("Agreement") is entered into by Goodkind Labaton Rudoff & Sucharow, L.L.P., a New York limited liability partnership ("Goodkind"), Bollinger Industries, Inc., a Delaware corporation ("Company"), and Glenn D. Bollinger and Bobby D. Bollinger (collectively "Bollinger"). Goodkind is entering into this Agreement in its representative capacity as agent for the Class Members and Lead Counsel (as these terms are defined in the Stipulation, as defined below), and the terms of this Agreement shall be binding on the Class Members and Lead Counsel. WHEREAS, Company and other persons have agreed to a settlement of STI Classic Fund, et al. v. Bollinger Industries, Inc., et. al., Cause No. 3-96-C-V-0823-R in the United States District Court For The Northern District Of Texas, Dallas Division and in SunTrust Bank, Atlanta, et. al. v. Bollinger Industries, Inc., et. al., Cause No. 96-02952-C-68 in the District Court, 68th Judicial District, Dallas County, Texas (the "Litigation"), as same is more particularly described in a Stipulation of Settlement as filed in the Litigation, reference to which is hereby made for all purposes (the "Stipulation"); WHEREAS, pursuant to the terms of the Stipulation, Company has agreed to issue 200,000 shares of its common stock, $0.01 par value (the "Common Stock") at the time and on the terms as set forth in the Stipulation; WHEREAS, Goodkind has agreed to grant Company and Bollinger an option to purchase the Common Stock on the terms herein described; WHEREAS, Goodkind has also agreed to grant Company and Bollinger a right of first refusal in the event the Common Stock is offered for sale during the term of this Agreement; and WHEREAS, Company and Bollinger have agreed that Goodkind shall have the right to require Company and Bollinger to purchase the Common Stock on the terms herein described; NOW, THEREFORE, in consideration for the mutual covenants and agreements herein contained, Company, Goodkind and Bollinger agree as follows:

EXHIBIT 10.72 PUT AND CALL AGREEMENT This Put and Call Agreement ("Agreement") is entered into by Goodkind Labaton Rudoff & Sucharow, L.L.P., a New York limited liability partnership ("Goodkind"), Bollinger Industries, Inc., a Delaware corporation ("Company"), and Glenn D. Bollinger and Bobby D. Bollinger (collectively "Bollinger"). Goodkind is entering into this Agreement in its representative capacity as agent for the Class Members and Lead Counsel (as these terms are defined in the Stipulation, as defined below), and the terms of this Agreement shall be binding on the Class Members and Lead Counsel. WHEREAS, Company and other persons have agreed to a settlement of STI Classic Fund, et al. v. Bollinger Industries, Inc., et. al., Cause No. 3-96-C-V-0823-R in the United States District Court For The Northern District Of Texas, Dallas Division and in SunTrust Bank, Atlanta, et. al. v. Bollinger Industries, Inc., et. al., Cause No. 96-02952-C-68 in the District Court, 68th Judicial District, Dallas County, Texas (the "Litigation"), as same is more particularly described in a Stipulation of Settlement as filed in the Litigation, reference to which is hereby made for all purposes (the "Stipulation"); WHEREAS, pursuant to the terms of the Stipulation, Company has agreed to issue 200,000 shares of its common stock, $0.01 par value (the "Common Stock") at the time and on the terms as set forth in the Stipulation; WHEREAS, Goodkind has agreed to grant Company and Bollinger an option to purchase the Common Stock on the terms herein described; WHEREAS, Goodkind has also agreed to grant Company and Bollinger a right of first refusal in the event the Common Stock is offered for sale during the term of this Agreement; and WHEREAS, Company and Bollinger have agreed that Goodkind shall have the right to require Company and Bollinger to purchase the Common Stock on the terms herein described; NOW, THEREFORE, in consideration for the mutual covenants and agreements herein contained, Company, Goodkind and Bollinger agree as follows: ARTICLE I PUT, CALL, AND RIGHT OF FIRST REFUSAL 1.01 GRANT OF PUT. Company and Bollinger, jointly and severally, hereby grant to Goodkind the right and option for Goodkind to require Company and Bollinger to purchase the Common Stock in whole, but not in part, on the terms and conditions herein set forth in this ARTICLE I (the "Put").

1.02 GRANT OF CALL. Goodkind hereby irrevocably grants to Company and Bollinger the right and option to buy from Goodkind the Common Stock in whole, but not in part, on the terms herein set forth in this ARTICLE I (the "Call"). 1.03 GRANT OF RIGHT OF FIRST REFUSAL. Goodkind hereby irrevocably grants to Company and Bollinger a right of first refusal in the event of a proposed sale or any other type of transfer of the Common Stock (the "Right of First Refusal"). If Goodkind reaches an agreement for the sale or transfer of the Common Stock before the Expiration Date (as defined below), it shall provide written notice of the terms of the proposed transaction as provided for in SECTION 3.01. The terms of this Right of First Refusal shall be the same as those being offered to Goodkind for the Common Stock, except that Company and Bollinger shall have five (5) weekdays after receipt of the written notice in which to elect to exercise the Right of First Refusal. 1.04 PURCHASE PRICE OF PUT AND CALL.

1.02 GRANT OF CALL. Goodkind hereby irrevocably grants to Company and Bollinger the right and option to buy from Goodkind the Common Stock in whole, but not in part, on the terms herein set forth in this ARTICLE I (the "Call"). 1.03 GRANT OF RIGHT OF FIRST REFUSAL. Goodkind hereby irrevocably grants to Company and Bollinger a right of first refusal in the event of a proposed sale or any other type of transfer of the Common Stock (the "Right of First Refusal"). If Goodkind reaches an agreement for the sale or transfer of the Common Stock before the Expiration Date (as defined below), it shall provide written notice of the terms of the proposed transaction as provided for in SECTION 3.01. The terms of this Right of First Refusal shall be the same as those being offered to Goodkind for the Common Stock, except that Company and Bollinger shall have five (5) weekdays after receipt of the written notice in which to elect to exercise the Right of First Refusal. 1.04 PURCHASE PRICE OF PUT AND CALL. (a) PUT PURCHASE PRICE. The purchase price of the Put (the "Put Purchase Price") shall be equal to the One Dollar ($1.00) per share. (b) CALL PURCHASE PRICE. (1) Subject to the provisions of subsection (2) below, the purchase price of the Call (the "Call Purchase Price") shall be Two Dollars ($2.00) per share. (2) If a Qualified Public Offering or a Change in Control (as defined below) is agreed to by Company within three hundred sixty-five (365) days immediately following the Call Closing (as defined below) (the "Look Back Period") at a price per share of Common Stock greater than the Call Purchase Price (the excess being referred to as the "Difference"), Company and/or Bollinger shall pay to Goodkind the amount obtained by multiplying the number of shares of Common Stock that were purchased at the Call Closing by the Difference. This amount shall be paid to Goodkind within fifteen (15) days immediately following the closing of the Qualified Public Offering or Change in Control, as the case may be. If a Qualified Public Offering or a Change in Control is agreed to, but not closed, by Company within the 365 day period, the announced transaction must be closed within one hundred twenty (120) days after the end of the 365 day period in order for the provisions of this subsection to be applicable. 1.05 TERM OF PUT, CALL, AND RIGHT OF FIRST REFUSAL. The Put and Call are each exercisable at any time before the end of one (1) year following the Effective Date (as defined in the Stipulation). The Right of First Refusal shall be effective for one (1) year following the Effective Date. For purposes of this Agreement, the end of these one (1) periods is referred to as the Expiration Date. -2-

1.06 METHOD OF EXERCISE. (a) NOTICE OF EXERCISE. The Put may be exercised by delivery of written notice to Company and Bollinger in the manner and at the addresses in SECTION 3.01 before the Expiration Date. The Call may be exercised by delivery of written notice to Goodkind in the manner and at the addresses in SECTION 3.01 before the Expiration Date. (b) PUT CLOSING; CALL CLOSING. In the event of the exercise of the Put or the Call, the purchase and sale of the Common Stock will be closed (the "Put Closing" or the "Call Closing" as appropriate) within fifteen (15) days following the exercise of the Put or the Call, as the case may be. The Closing shall be held at the offices of Company or at such other place as may be mutually agreed upon in writing by the parties hereto. (c) PAYMENT. The Put Purchase Price or the Call Purchase Price, as applicable, shall be paid by cash or by certified or cashier's check at the Closing. If the Difference provided for in SECTION 1.04(b)(2) becomes payable to Goodkind after the Call Closing, it shall be paid by cash or by certified or cashier's check within

1.06 METHOD OF EXERCISE. (a) NOTICE OF EXERCISE. The Put may be exercised by delivery of written notice to Company and Bollinger in the manner and at the addresses in SECTION 3.01 before the Expiration Date. The Call may be exercised by delivery of written notice to Goodkind in the manner and at the addresses in SECTION 3.01 before the Expiration Date. (b) PUT CLOSING; CALL CLOSING. In the event of the exercise of the Put or the Call, the purchase and sale of the Common Stock will be closed (the "Put Closing" or the "Call Closing" as appropriate) within fifteen (15) days following the exercise of the Put or the Call, as the case may be. The Closing shall be held at the offices of Company or at such other place as may be mutually agreed upon in writing by the parties hereto. (c) PAYMENT. The Put Purchase Price or the Call Purchase Price, as applicable, shall be paid by cash or by certified or cashier's check at the Closing. If the Difference provided for in SECTION 1.04(b)(2) becomes payable to Goodkind after the Call Closing, it shall be paid by cash or by certified or cashier's check within fifteen (15) days after the closing of the Change in Control Transaction or Qualified Public Offering. 1.07 LETTER OF CREDIT. The obligation of Company and Bollinger to purchase the Common Stock in the event of Goodkind's exercise of the Put shall be secured by an irrevocable bank letter of credit in favor of Goodkind in the amount of $200,000. This letter of credit shall be in such form as reasonably satisfactory to the parties, and it shall be delivered to Goodkind on or before the Effective Date. If the letter of credit initially delivered to Goodkind is for a period of time that ends before twenty (20) days after the Expiration Date, Company and Bollinger shall be required to deliver a new letter of credit to Goodkind on or before five (5) banking days before the expiration of the preceding letter of credit, but with the commencement date of the new letter of credit being on the expiration of the preceding letter of credit. 1.08 CHANGE IN CONTROL. A "Change in Control" means the acquisition of beneficial ownership within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended ("Beneficial Ownership"), of an aggregate of more than fifty percent (50%) of the voting power of Company's outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under such Act) whose Beneficial Ownership is less than ten percent (10%) of the voting power of Company's outstanding voting securities on the date hereof. 1.09 QUALIFIED PUBLIC OFFERING. A "Qualified Public Offering" means an underwritten public offering covering the sale of Common Stock in Company in which the gross proceeds to Company are at least Five Million Dollars ($5,000,000). -3-

ARTICLE II REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS 2.01 WARRANTIES AND REPRESENTATIONS OF COMPANY. Company and Bollinger, as applicable, warrant and represent to Goodkind as follows: (a) CORPORATE STATUS AND AUTHORIZATION. Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has the corporate power and authority to own and operate its properties, to carry on its business as now conducted and to enter into and to perform its obligations under this Agreement. Company has the power and authority to execute, deliver and perform this Agreement. (b) NO CONFLICTS OR CONSENTS. Neither the execution and delivery of this Agreement nor the performance by Company or Bollinger of its obligations hereunder will contravene or materially conflict with any provision of law, statute or regulation to which either is subject, or any judgment, license, order or permit applicable to either, or any indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which either is a party or by which either may be bound, or to which either may be subject, or violate any

ARTICLE II REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS 2.01 WARRANTIES AND REPRESENTATIONS OF COMPANY. Company and Bollinger, as applicable, warrant and represent to Goodkind as follows: (a) CORPORATE STATUS AND AUTHORIZATION. Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has the corporate power and authority to own and operate its properties, to carry on its business as now conducted and to enter into and to perform its obligations under this Agreement. Company has the power and authority to execute, deliver and perform this Agreement. (b) NO CONFLICTS OR CONSENTS. Neither the execution and delivery of this Agreement nor the performance by Company or Bollinger of its obligations hereunder will contravene or materially conflict with any provision of law, statute or regulation to which either is subject, or any judgment, license, order or permit applicable to either, or any indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which either is a party or by which either may be bound, or to which either may be subject, or violate any provision of the charter or bylaws of Company. No consent, approval, authorization or order of any court or governmental authority or third party is required in connection with the execution and delivery by Company or Bollinger of this Agreement or to perform the obligations contemplated hereby. (c) VALIDITY AND BINDING EFFECT. This Agreement is the legal, valid and binding obligation of Company and Bollinger, enforceable in accordance with its terms, subject to limitations imposed by bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally or the application of general equitable principles. (d) CAPITALIZATION. As of the date of this Agreement, the authorized capital stock of Company consists solely of 20,000,000 shares of stock of which 4,400,210 shares ($0.01 par value) are issued and outstanding and 31,595 shares ($0.01 par value) are held as treasury stock. All of such outstanding shares of stock are validly issued, fully paid and nonassessable and have not been issued in violation of any preemptive rights of any person. 2.02 WARRANTIES AND REPRESENTATIONS OF GOODKIND. Goodkind represents and warrants to Company and Bollinger as follows: (a) PARTNERSHIP STATUS AND AUTHORIZATION. Goodkind is a limited liability partnership duly organized, validly existing and in good standing under the laws of the state of New York and has the requisite power and authority to own and operate its properties, to carry on its business as now conducted and to enter into and to perform its obligations under this Agreement. Goodkind has the power and -4-

authority to execute, deliver and perform this Agreement on behalf of the Lead Counsel and Class Members. (b) VALIDITY AND BINDING EFFECT. This Agreement is the legal, valid and binding obligation of the Lead Counsel and Class Members, enforceable in accordance with its terms, subject to limitations imposed by bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally or the application of general equitable principles. (c) VOTING AND DISPOSITIVE CONTROL. From the time of the delivery of the Common Stock to Goodkind until the Expiration Date, Goodkind shall hold the sole voting, investment and dispositive powers relating to the Common Stock. This requirement shall terminate before the Expiration Date in the event of a sale or other transfer of the Common Stock pursuant to the terms of this Agreement. (d) RECEIPT OF INFORMATION. Goodkind believes that it has received all the information Goodkind considers necessary or appropriate for deciding whether to accept the Common Stock in the settlement of the

authority to execute, deliver and perform this Agreement on behalf of the Lead Counsel and Class Members. (b) VALIDITY AND BINDING EFFECT. This Agreement is the legal, valid and binding obligation of the Lead Counsel and Class Members, enforceable in accordance with its terms, subject to limitations imposed by bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally or the application of general equitable principles. (c) VOTING AND DISPOSITIVE CONTROL. From the time of the delivery of the Common Stock to Goodkind until the Expiration Date, Goodkind shall hold the sole voting, investment and dispositive powers relating to the Common Stock. This requirement shall terminate before the Expiration Date in the event of a sale or other transfer of the Common Stock pursuant to the terms of this Agreement. (d) RECEIPT OF INFORMATION. Goodkind believes that it has received all the information Goodkind considers necessary or appropriate for deciding whether to accept the Common Stock in the settlement of the Litigation. (e) RESTRICTIONS ON TRANSFER. Goodkind agrees that it will not transfer any of the Common Stock to any person before the Expiration Date without the written consent of Company and Bollinger; provided, however, that this restriction shall not apply if: (1) Goodkind transfers the Common Stock after Bollinger and Company fail to comply with the Put provisions of this Agreement; or (2) Goodkind transfers the Common Stock after Bollinger and Company elect to not exercise their Right of First Refusal (f) LEGENDS. Each certificate evidencing the Common Stock will be endorsed with the legend set forth below: "THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A PUT AND CALL AGREEMENT BETWEEN THE HOLDER OF THESE SHARES AND THE COMPANY." ARTICLE III MISCELLANEOUS 3.01 NOTICE. Any notice required or permitted by any party to this Agreement shall be in writing and may be delivered personally to the party being given notice or to the person in charge of the office of the party being given such notice or by certified mail, return receipt requested, at the party's address indicated below. Any notice will be effective upon delivery in the case of personal delivery or three (3) weekdays after deposit in the mail, postage prepaid, in the case of delivery by mail. The names and -5-

addresses of persons to receive notice as stated in this Section may be changed by notice given in accordance with this Section. The addresses of the parties are as follows:
COMPANY: Bollinger Industries, Inc. Attn: Glenn D. Bollinger 602 Fountain Parkway Grand Prairie, Texas 75050 Telephone: 972-343-1122 Fax: 972-343-1199 Glenn D. Bollinger Bobby D. Bollinger 602 Fountain Parkway Grand Prairie, Texas 75050 Telephone: 972-343-1122 Fax: 972-343-1199

BOLLINGER:

addresses of persons to receive notice as stated in this Section may be changed by notice given in accordance with this Section. The addresses of the parties are as follows:
COMPANY: Bollinger Industries, Inc. Attn: Glenn D. Bollinger 602 Fountain Parkway Grand Prairie, Texas 75050 Telephone: 972-343-1122 Fax: 972-343-1199 Glenn D. Bollinger Bobby D. Bollinger 602 Fountain Parkway Grand Prairie, Texas 75050 Telephone: 972-343-1122 Fax: 972-343-1199 Holland, Johns, Schwartz & Penny, L.L.P. Attn: George T. Johns 306 West Seventh Street, Suite 500 Fort Worth, Texas 76102 Telephone: 817-335-1050 Fax: 817-332-3140 Goodkind, Labaton, Rudoff & Sucharow, LLP Attn: Thomas Dubbs 100 Park Avenue New York, New York 10017-5563 Telephone: 212-907-0871

BOLLINGER:

With Copy to:

GOODKIND:

Fax: 212-818-0477 3.02 FURTHER ACTIONS. At any time and from time to time, each party agrees, without further consideration, to take such actions and to execute and deliver such documents as may be reasonably necessary to effect the purposes of this Agreement. 3.03 MODIFICATION. This Agreement shall not be varied, altered, modified, changed or in any way amended except by an instrument in writing executed by all parties hereto. 3.04 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall constitute one and the same instrument. 3.05 APPLICATION OF TEXAS LAW. The validity and effect of this Agreement shall be governed by and construed and enforced in accordance with the laws of the state of Texas (without reference to the laws of another jurisdiction). The venue for all actions relating to this Agreement shall be in the United States District Court for the -6-

Northern District of Texas, Dallas Division or, if same is improper, in a Texas District Court sitting in Dallas County, Texas. This Agreement is signed by each party on the dates set forth below. If the Common Stock is delivered to Goodkind in accordance with the Stipulation, this Agreement shall be effective on the Effective Date.
COMPANY: BOLLINGER INDUSTRIES INC. By: --------------------------------Glenn D. Bollinger, CEO BOLLINGER: ---------------------------------

Northern District of Texas, Dallas Division or, if same is improper, in a Texas District Court sitting in Dallas County, Texas. This Agreement is signed by each party on the dates set forth below. If the Common Stock is delivered to Goodkind in accordance with the Stipulation, this Agreement shall be effective on the Effective Date.
COMPANY: BOLLINGER INDUSTRIES INC. By: --------------------------------Glenn D. Bollinger, CEO BOLLINGER: --------------------------------Glenn D. Bollinger

--------------------------------Bobby D. Bollinger GOODKIND: GOODKIND, LABATON, RUDOFF & SUCHAROW, LLP By: ----------------------------Name: --------------------------Title: As Agent for Lead Counsel and Class Members

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EXHIBIT 10.73 PATENT SETTLEMENT AGREEMENT This Patent Settlement Agreement (the "Settlement Agreement") is entered into by and between Precise (as defined below) and Bollinger (as defined below), and is effective as of the Effective Date (as defined below). WHEREAS, Precise owns the Patents (as defined below) and the Patents are valid and enforceable; WHEREAS, Bollinger uses, offers to sell, sells, and distributes the Products (as defined below) and the Patents read on the Products; WHEREAS, the parties to this Settlement Agreement desire to avoid the substantial expense which would be incurred in litigating any patent infringement claims; NOW THEREFORE, for good and valuable consideration, the adequacy of which is hereby acknowledged, Precise and Bollinger do hereby represent, warrant, covenant and agree as follows: I. DEFINITIONS 1. "ACCUSED UNITS OF PRODUCT" shall mean the 400,000 units of Products (defined below) that Bollinger represents and warrants it has, marketed, sold, offered to sell or distributed from September 1, 1999 through the Effective Date, excluding the Current Inventory (defined below). 2. "BOLLINGER ACTION" shall mean Bollinger Industries, L.P., v. Precise Exercise Equipment, Inc., et al., Case No. 400-CV-0135-A in the United States District Court for the Northern District of Texas (the "Texas Court").

EXHIBIT 10.73 PATENT SETTLEMENT AGREEMENT This Patent Settlement Agreement (the "Settlement Agreement") is entered into by and between Precise (as defined below) and Bollinger (as defined below), and is effective as of the Effective Date (as defined below). WHEREAS, Precise owns the Patents (as defined below) and the Patents are valid and enforceable; WHEREAS, Bollinger uses, offers to sell, sells, and distributes the Products (as defined below) and the Patents read on the Products; WHEREAS, the parties to this Settlement Agreement desire to avoid the substantial expense which would be incurred in litigating any patent infringement claims; NOW THEREFORE, for good and valuable consideration, the adequacy of which is hereby acknowledged, Precise and Bollinger do hereby represent, warrant, covenant and agree as follows: I. DEFINITIONS 1. "ACCUSED UNITS OF PRODUCT" shall mean the 400,000 units of Products (defined below) that Bollinger represents and warrants it has, marketed, sold, offered to sell or distributed from September 1, 1999 through the Effective Date, excluding the Current Inventory (defined below). 2. "BOLLINGER ACTION" shall mean Bollinger Industries, L.P., v. Precise Exercise Equipment, Inc., et al., Case No. 400-CV-0135-A in the United States District Court for the Northern District of Texas (the "Texas Court"). 1

3. "BOLLINGER" shall mean Bollinger Industries, Inc., a Delaware corporation, Bollinger Industries, L.P., a Texas limited partnership, and each of their respective directors, officers, stockholders, agents, employees, affiliates, subsidiaries, successors and assigns. 4. "CURRENT INVENTORY" shall mean the units of Products for which Bollinger has a non-cancelable purchase commitment or that are in the possession or control of Bollinger as of the Effective Date which Bollinger represents and warrants do not exceed Two Hundred Thousand (200,000) units. Bollinger shall have the right to market the Current Inventory only in accordance with the Limited Sell-off Right (as defined below). 5. "EFFECTIVE DATE" shall mean the date that this Settlement Agreement is fully executed by the parties. 6. "KMART ACTION" shall mean Precise Exercise Equipment, Inc., et al. v. KMart Corporation, et al., Case No. ED CV 00-312 RT (RCx) in the United States District Court for the Central District of California, Eastern Division (the "Court"). 7. "LIMITED SELL-OFF RIGHT" shall mean the limited right set forth in paragraph II.3 below whereby Precise grants Bollinger the limited right to market and sell-off its Current Inventory. 8. "PATENTS" shall mean U.S. Patent Nos. 5,492,520 and 5,577,987, any corresponding foreign patents and patent applications (a list of which is attached hereto as EXHIBIT A), and any patents which issue on any continuation, continuation-in-part, divisional or reissue applications thereof. 9. "PRECISE" shall mean Precise Exercise Equipment, Inc., a New Jersey corporation, and Fitness Innovations and Technologies (F.I.T.), Inc., a Delaware corporation, and each of their respective directors, officers, stockholders, agents, employees, affiliates, subsidiaries, successors and assigns. 2

3. "BOLLINGER" shall mean Bollinger Industries, Inc., a Delaware corporation, Bollinger Industries, L.P., a Texas limited partnership, and each of their respective directors, officers, stockholders, agents, employees, affiliates, subsidiaries, successors and assigns. 4. "CURRENT INVENTORY" shall mean the units of Products for which Bollinger has a non-cancelable purchase commitment or that are in the possession or control of Bollinger as of the Effective Date which Bollinger represents and warrants do not exceed Two Hundred Thousand (200,000) units. Bollinger shall have the right to market the Current Inventory only in accordance with the Limited Sell-off Right (as defined below). 5. "EFFECTIVE DATE" shall mean the date that this Settlement Agreement is fully executed by the parties. 6. "KMART ACTION" shall mean Precise Exercise Equipment, Inc., et al. v. KMart Corporation, et al., Case No. ED CV 00-312 RT (RCx) in the United States District Court for the Central District of California, Eastern Division (the "Court"). 7. "LIMITED SELL-OFF RIGHT" shall mean the limited right set forth in paragraph II.3 below whereby Precise grants Bollinger the limited right to market and sell-off its Current Inventory. 8. "PATENTS" shall mean U.S. Patent Nos. 5,492,520 and 5,577,987, any corresponding foreign patents and patent applications (a list of which is attached hereto as EXHIBIT A), and any patents which issue on any continuation, continuation-in-part, divisional or reissue applications thereof. 9. "PRECISE" shall mean Precise Exercise Equipment, Inc., a New Jersey corporation, and Fitness Innovations and Technologies (F.I.T.), Inc., a Delaware corporation, and each of their respective directors, officers, stockholders, agents, employees, affiliates, subsidiaries, successors and assigns. 2

10. "PRODUCTS" shall mean any and all abdominal exercise devices on which one or more of the Patents read and which have been manufactured, used, marketed, sold or distributed by Bollinger since September 1, 1999, including, but not limited to, the devices referred to as the "AbRock'It", the "AbRock'It Plus", and the "EZ Abs". 11. "STEP PRODUCT" shall mean all products covered by the Sublicense Agreement attached as Exhibit B. 12. "TERRA STAR" shall mean Terra Star, Inc., a Utah corporation. 13. "WALMART ACTION" shall mean Precise Exercise Equipment, Inc., et al. vs. Walmart Stores Incorporated, Case No. ED CV 00-881 RT (RCx) in the United States District Court for the Central District of California, Eastern Division. II. SETTLEMENT TERMS 1. WARRANTY REGARDING UNITS OF PRODUCT. Bollinger warrants it has not sold, manufactured, caused the manufacture of or distributed more than the 600,000 units of Products since September 1, 1999. Bollinger also warrants that this number of units of Product includes the Current Inventory, which consists of 200,000 units of Products. a. AUDIT. On the Effective Date and for 90 days thereafter, Bollinger shall provide Precise with the opportunity to inspect and audit the applicable records of Bollinger relating to the units of Product made, used, sold or distributed by Bollinger since September 1, 1999. b. SALES IN EXCESS OF ACCUSED UNITS OF PRODUCT AND THE CURRENT INVENTORY. Unless otherwise provided herein, Bollinger shall pay Precise a reasonable royalty rate of $4.50 per unit for each and every additional unit of Product manufactured, sold or 3

10. "PRODUCTS" shall mean any and all abdominal exercise devices on which one or more of the Patents read and which have been manufactured, used, marketed, sold or distributed by Bollinger since September 1, 1999, including, but not limited to, the devices referred to as the "AbRock'It", the "AbRock'It Plus", and the "EZ Abs". 11. "STEP PRODUCT" shall mean all products covered by the Sublicense Agreement attached as Exhibit B. 12. "TERRA STAR" shall mean Terra Star, Inc., a Utah corporation. 13. "WALMART ACTION" shall mean Precise Exercise Equipment, Inc., et al. vs. Walmart Stores Incorporated, Case No. ED CV 00-881 RT (RCx) in the United States District Court for the Central District of California, Eastern Division. II. SETTLEMENT TERMS 1. WARRANTY REGARDING UNITS OF PRODUCT. Bollinger warrants it has not sold, manufactured, caused the manufacture of or distributed more than the 600,000 units of Products since September 1, 1999. Bollinger also warrants that this number of units of Product includes the Current Inventory, which consists of 200,000 units of Products. a. AUDIT. On the Effective Date and for 90 days thereafter, Bollinger shall provide Precise with the opportunity to inspect and audit the applicable records of Bollinger relating to the units of Product made, used, sold or distributed by Bollinger since September 1, 1999. b. SALES IN EXCESS OF ACCUSED UNITS OF PRODUCT AND THE CURRENT INVENTORY. Unless otherwise provided herein, Bollinger shall pay Precise a reasonable royalty rate of $4.50 per unit for each and every additional unit of Product manufactured, sold or 3

distributed by Bollinger after September 1, 1999 in excess of the Accused Units of Product and the Current Inventory. 2. SETTLEMENT AMOUNT. In exchange for Precise settling and dismissing the Action on the terms stated in this Settlement Agreement, Bollinger has agreed to deliver consideration to Precise that the parties have valued at Four Dollars ($4.00) per Accused Product Unit. This consideration will be paid or delivered by Bollinger as follows: (1) on the Effective Date, Bollinger shall pay Precise by wire transfer or by certified check One Hundred Three Thousand Dollars ($103,000.00); (2) Bollinger shall, as expeditiously as possible, obtain any necessary authorization and approval and execute and deliver the Sublicense Agreement to Precise; (3) within nine (9) days after the Effective Date, Bollinger shall execute and deliver the Assignment Agreement to Precise; and (4) Bollinger shall perform its obligations under paragraph II.4 below. The payment and delivery of consideration by Bollinger to Precise under this Settlement Agreement are attributable to, among other things, the past manufacture, use, sale and distribution of the Product by Bollinger and compensation for the diminution in value to the business reputation, goodwill and customer relations of Precise. 3. LIMITED SELL-OFF RIGHT RE: CURRENT INVENTORY. After the Effective Date, Bollinger shall be entitled to market, sell and distribute its Current Inventory only on the following terms: a. LIMITED TO CURRENT INVENTORY. The Limited Sell-Off Right shall apply only to the marketing and sale of the Current Inventory for the purpose of fulfilling existing commitments from current Bollinger customers. The Current Inventory shall not exceed Two Hundred Thousand (200,000) units of Product. This Limited SellOff Right does not grant Bollinger any other right to manufacture, market, sell or distribute any other Products upon which one or more of the Patents read, nor does it permit Bollinger to market or sell any Products in excess of the Two Hundred Thousand (200,000) units of Product of the Current Inventory. 4

distributed by Bollinger after September 1, 1999 in excess of the Accused Units of Product and the Current Inventory. 2. SETTLEMENT AMOUNT. In exchange for Precise settling and dismissing the Action on the terms stated in this Settlement Agreement, Bollinger has agreed to deliver consideration to Precise that the parties have valued at Four Dollars ($4.00) per Accused Product Unit. This consideration will be paid or delivered by Bollinger as follows: (1) on the Effective Date, Bollinger shall pay Precise by wire transfer or by certified check One Hundred Three Thousand Dollars ($103,000.00); (2) Bollinger shall, as expeditiously as possible, obtain any necessary authorization and approval and execute and deliver the Sublicense Agreement to Precise; (3) within nine (9) days after the Effective Date, Bollinger shall execute and deliver the Assignment Agreement to Precise; and (4) Bollinger shall perform its obligations under paragraph II.4 below. The payment and delivery of consideration by Bollinger to Precise under this Settlement Agreement are attributable to, among other things, the past manufacture, use, sale and distribution of the Product by Bollinger and compensation for the diminution in value to the business reputation, goodwill and customer relations of Precise. 3. LIMITED SELL-OFF RIGHT RE: CURRENT INVENTORY. After the Effective Date, Bollinger shall be entitled to market, sell and distribute its Current Inventory only on the following terms: a. LIMITED TO CURRENT INVENTORY. The Limited Sell-Off Right shall apply only to the marketing and sale of the Current Inventory for the purpose of fulfilling existing commitments from current Bollinger customers. The Current Inventory shall not exceed Two Hundred Thousand (200,000) units of Product. This Limited SellOff Right does not grant Bollinger any other right to manufacture, market, sell or distribute any other Products upon which one or more of the Patents read, nor does it permit Bollinger to market or sell any Products in excess of the Two Hundred Thousand (200,000) units of Product of the Current Inventory. 4

b. ROYALTY AND TERMINATION DATE. Bollinger shall pay Precise a royalty equal to Two Dollars and Fifty Cents ($2.50) per unit of Current Inventory [Product] sold or distributed pursuant to the Limited Sell-Off Right (the "Sell-Off Royalty"). Bollinger shall pay Precise all such royalty payments on a monthly basis by wire transfer or by cashier's check for all units of Product which Bollinger has shipped to any customer in the immediately preceding month. Sell-Off Royalties shall be paid within ten (10) days following the end of the month for which they are due. The Sell-Off Royalty shall be paid on all Products shipped from November 1, 2000 through the termination of the Limited Sell-Off Right. The Limited Sell-Off Right shall terminate on March 1, 2001. c. REPORTING REQUIREMENT. Bollinger shall supply Precise on a monthly basis with a written accounting of all units of Product sold from the Current Inventory by customer account. This accounting shall be supplied with the Sell-Off Royalty payment for the relevant month. At Precise's request, Bollinger shall supply Precise with copies of such documents that permit Precise to verify the number of units of Product sold by Bollinger, including all purchase orders, bills of lading, and shipping documentation. d. PATENT NOTICE. Bollinger agrees that prior to selling any Current Inventory after the Effective Date it will apply a label indicating that the unit is covered by the Patents. For Current Inventory Products that are already packaged, the label may be applied to the packaging. For Current Inventory Products that have not yet been packaged, the label shall be applied to the Product. Such label shall be substantially in the following form: U.S. Patent Nos.:

5,492,520 5,577,987 5

and shall be of a size and in a location such that a user can readily locate and read it and shall be of a quality such that it will remain affixed to the unit or packaging as appropriate through normal usage.

b. ROYALTY AND TERMINATION DATE. Bollinger shall pay Precise a royalty equal to Two Dollars and Fifty Cents ($2.50) per unit of Current Inventory [Product] sold or distributed pursuant to the Limited Sell-Off Right (the "Sell-Off Royalty"). Bollinger shall pay Precise all such royalty payments on a monthly basis by wire transfer or by cashier's check for all units of Product which Bollinger has shipped to any customer in the immediately preceding month. Sell-Off Royalties shall be paid within ten (10) days following the end of the month for which they are due. The Sell-Off Royalty shall be paid on all Products shipped from November 1, 2000 through the termination of the Limited Sell-Off Right. The Limited Sell-Off Right shall terminate on March 1, 2001. c. REPORTING REQUIREMENT. Bollinger shall supply Precise on a monthly basis with a written accounting of all units of Product sold from the Current Inventory by customer account. This accounting shall be supplied with the Sell-Off Royalty payment for the relevant month. At Precise's request, Bollinger shall supply Precise with copies of such documents that permit Precise to verify the number of units of Product sold by Bollinger, including all purchase orders, bills of lading, and shipping documentation. d. PATENT NOTICE. Bollinger agrees that prior to selling any Current Inventory after the Effective Date it will apply a label indicating that the unit is covered by the Patents. For Current Inventory Products that are already packaged, the label may be applied to the packaging. For Current Inventory Products that have not yet been packaged, the label shall be applied to the Product. Such label shall be substantially in the following form: U.S. Patent Nos.:

5,492,520 5,577,987 5

and shall be of a size and in a location such that a user can readily locate and read it and shall be of a quality such that it will remain affixed to the unit or packaging as appropriate through normal usage. e. NO ASSIGNMENT OR SUB-LICENSE. This Limited Sell-Off Right is particular to Bollinger, and Bollinger may not assign, sub-license, pledge, mortgage or otherwise encumber it, in whole or in part, except as expressly consented to by Precise in advance in writing and except to the extent of loan agreements. f. INDEMNIFICATION FOR CURRENT INVENTORY. Bollinger agrees that it will defend and indemnify Precise with respect to any claims, damages or causes of action that may be asserted against Precise arising out of or relating to Bollinger's manufacture, use, sale or distribution of Products. Bollinger further agrees that it will maintain product liability insurance of not less than One Million Dollars per occurrence for a period of three years and that it will add Precise as an additional insured to such policies. 4. NOTIFICATION AND TRANSFER OF RETAIL ACCOUNTS. Within 10 days of the Effective Date, Bollinger shall notify its retail customer accounts, including but not limited to Walmart, KMart, Modell's, The Sports Authority and QVC, that the Products will be available for purchase from Bollinger only until the Current Inventory is exhausted and that following March 1, 2001 the Products will no longer be available for purchase from Bollinger. Bollinger shall also notify all its current retail customer accounts that the Products, and any other product covered by the claims of the Patents, may be purchased from Precise and/or its authorized representative, Terra Star. After the Effective Date, but subject to the Limited Sell-Off Right, Bollinger shall direct all customer inquiries for purchase of the Products to Precise. a. TRANSITION TO TERRA STAR. Bollinger shall use all reasonable efforts to effectuate the transition of its current retail customer accounts (including Walmart, KMart, 6

Modell's, The Sports Authority and QVC) for the Products to Terra Star. Such efforts shall include, but shall not be limited to: meetings, conferences, telephone calls and written correspondence with buyers, representatives or

and shall be of a size and in a location such that a user can readily locate and read it and shall be of a quality such that it will remain affixed to the unit or packaging as appropriate through normal usage. e. NO ASSIGNMENT OR SUB-LICENSE. This Limited Sell-Off Right is particular to Bollinger, and Bollinger may not assign, sub-license, pledge, mortgage or otherwise encumber it, in whole or in part, except as expressly consented to by Precise in advance in writing and except to the extent of loan agreements. f. INDEMNIFICATION FOR CURRENT INVENTORY. Bollinger agrees that it will defend and indemnify Precise with respect to any claims, damages or causes of action that may be asserted against Precise arising out of or relating to Bollinger's manufacture, use, sale or distribution of Products. Bollinger further agrees that it will maintain product liability insurance of not less than One Million Dollars per occurrence for a period of three years and that it will add Precise as an additional insured to such policies. 4. NOTIFICATION AND TRANSFER OF RETAIL ACCOUNTS. Within 10 days of the Effective Date, Bollinger shall notify its retail customer accounts, including but not limited to Walmart, KMart, Modell's, The Sports Authority and QVC, that the Products will be available for purchase from Bollinger only until the Current Inventory is exhausted and that following March 1, 2001 the Products will no longer be available for purchase from Bollinger. Bollinger shall also notify all its current retail customer accounts that the Products, and any other product covered by the claims of the Patents, may be purchased from Precise and/or its authorized representative, Terra Star. After the Effective Date, but subject to the Limited Sell-Off Right, Bollinger shall direct all customer inquiries for purchase of the Products to Precise. a. TRANSITION TO TERRA STAR. Bollinger shall use all reasonable efforts to effectuate the transition of its current retail customer accounts (including Walmart, KMart, 6

Modell's, The Sports Authority and QVC) for the Products to Terra Star. Such efforts shall include, but shall not be limited to: meetings, conferences, telephone calls and written correspondence with buyers, representatives or other necessary personnel at each respective retail account; providing consultations regarding warehousing, handling, manufacturing and marketing of the Products; providing information to Terra Star regarding Bollinger's retail customer accounts including monthly shipment information by account, invoice selling price to each account, and future forecast reports by each account; and, for a period of 6 months after the Effective Date, providing Terra Star with any other information or reasonable assistance for the purpose of effectuating the transition of Bollinger's current retail customer accounts for the Products to Terra Star. b. RETAILER COMMITMENTS. Bollinger shall assist Terra Star to obtain commitments from Bollinger's current retailer customers for Terra Star to continue to supply the Product, or a similar product covered by the Patents, to such retailers for calendar years 2001-2002. c. KMART SHELF SPACE AGREEMENT. If requested by KMart as a condition for Terra Star sales of the Products under this paragraph 4 to KMart, Bollinger will release rights to its shelf space as provided for in Bollinger's current marketing agreement with KMart. d. RELEASE. Upon Bollinger's payment to Precise of the $103,000 provided for in paragraph II.2 above, the delivery of a fully executed copy of the Sublicense Agreement, the delivery of a fully executed copy of the Assignment Agreement, and Precise's or Terra Star's receipt of an order from each of KMart and Walmart for any product covered by the Patents, Precise shall completely release Bollinger and its customers, including but not limited to KMart and Walmart, from all claims, actions and causes of action arising from Bollinger's past sales of Product, and Bollinger shall completely release Precise from all claims, actions, and causes 7

Modell's, The Sports Authority and QVC) for the Products to Terra Star. Such efforts shall include, but shall not be limited to: meetings, conferences, telephone calls and written correspondence with buyers, representatives or other necessary personnel at each respective retail account; providing consultations regarding warehousing, handling, manufacturing and marketing of the Products; providing information to Terra Star regarding Bollinger's retail customer accounts including monthly shipment information by account, invoice selling price to each account, and future forecast reports by each account; and, for a period of 6 months after the Effective Date, providing Terra Star with any other information or reasonable assistance for the purpose of effectuating the transition of Bollinger's current retail customer accounts for the Products to Terra Star. b. RETAILER COMMITMENTS. Bollinger shall assist Terra Star to obtain commitments from Bollinger's current retailer customers for Terra Star to continue to supply the Product, or a similar product covered by the Patents, to such retailers for calendar years 2001-2002. c. KMART SHELF SPACE AGREEMENT. If requested by KMart as a condition for Terra Star sales of the Products under this paragraph 4 to KMart, Bollinger will release rights to its shelf space as provided for in Bollinger's current marketing agreement with KMart. d. RELEASE. Upon Bollinger's payment to Precise of the $103,000 provided for in paragraph II.2 above, the delivery of a fully executed copy of the Sublicense Agreement, the delivery of a fully executed copy of the Assignment Agreement, and Precise's or Terra Star's receipt of an order from each of KMart and Walmart for any product covered by the Patents, Precise shall completely release Bollinger and its customers, including but not limited to KMart and Walmart, from all claims, actions and causes of action arising from Bollinger's past sales of Product, and Bollinger shall completely release Precise from all claims, actions, and causes 7

of action arising out of or relating to the dispute over the Patents. This Release shall be effective with respect to the sale or distribution of Current Inventory only to the extent the royalties on such Products set forth herein have been paid by Bollinger to Precise. 5. ADMISSION OF VALIDITY AND ENFORCEABILITY OF PATENTS. Bollinger admits that the Patents are valid and enforceable and that one or more of the claims of U.S. Patent No. 5,577,987 read on each of the Products. Bollinger covenants and agrees not to take any action to contest the validity or enforceability of the Patents. Bollinger also covenants and agrees to abstain from manufacturing, offering to sell, selling, using or distributing the Products and any and all colorable imitations thereof, except as provided in this Settlement Agreement. 6. AGREEMENT TO RESPECT PATENTS. Bollinger covenants and agrees not to take any action or assist any other party in taking any action to contest the validity of the Patents or to dispute infringement of the Products on the Patents, unless required by subpoena or other compulsory process. 7. STIPULATION OF DISMISSAL. Within ten (10) court days of the Effective Date, Precise shall execute and, upon execution by Bollinger, shall file with the Court a Stipulation of Dismissal dismissing the KMart Action without prejudice. Within ten (10) court days of the Effective Date, Precise shall file with the Court a Voluntary Dismissal of the Walmart Action without prejudice. Within ten (10) court days of the Effective Date, Bollinger shall execute and, upon execution by Precise, shall file with the Texas Court a Stipulation of Dismissal dismissing the Bollinger Action with prejudice. Upon Bollinger's payment to Precise of the $103,000 provided for in paragraph II.2 above, the delivery of a fully executed Sublicense Agreement, the delivery of a fully executed Assignment Agreement, and Precise's or Terra Star's receipt of an order from each of KMart and Walmart for any product covered by the Patents, Precise shall (i) execute and, upon execution by Bollinger, shall file with the Court an Amended Stipulation of Dismissal dismissing the 8

KMart Action with prejudice and (ii). file with the Court an Amended Voluntary Dismissal dismissing the Walmart Action with prejudice.

of action arising out of or relating to the dispute over the Patents. This Release shall be effective with respect to the sale or distribution of Current Inventory only to the extent the royalties on such Products set forth herein have been paid by Bollinger to Precise. 5. ADMISSION OF VALIDITY AND ENFORCEABILITY OF PATENTS. Bollinger admits that the Patents are valid and enforceable and that one or more of the claims of U.S. Patent No. 5,577,987 read on each of the Products. Bollinger covenants and agrees not to take any action to contest the validity or enforceability of the Patents. Bollinger also covenants and agrees to abstain from manufacturing, offering to sell, selling, using or distributing the Products and any and all colorable imitations thereof, except as provided in this Settlement Agreement. 6. AGREEMENT TO RESPECT PATENTS. Bollinger covenants and agrees not to take any action or assist any other party in taking any action to contest the validity of the Patents or to dispute infringement of the Products on the Patents, unless required by subpoena or other compulsory process. 7. STIPULATION OF DISMISSAL. Within ten (10) court days of the Effective Date, Precise shall execute and, upon execution by Bollinger, shall file with the Court a Stipulation of Dismissal dismissing the KMart Action without prejudice. Within ten (10) court days of the Effective Date, Precise shall file with the Court a Voluntary Dismissal of the Walmart Action without prejudice. Within ten (10) court days of the Effective Date, Bollinger shall execute and, upon execution by Precise, shall file with the Texas Court a Stipulation of Dismissal dismissing the Bollinger Action with prejudice. Upon Bollinger's payment to Precise of the $103,000 provided for in paragraph II.2 above, the delivery of a fully executed Sublicense Agreement, the delivery of a fully executed Assignment Agreement, and Precise's or Terra Star's receipt of an order from each of KMart and Walmart for any product covered by the Patents, Precise shall (i) execute and, upon execution by Bollinger, shall file with the Court an Amended Stipulation of Dismissal dismissing the 8

KMart Action with prejudice and (ii). file with the Court an Amended Voluntary Dismissal dismissing the Walmart Action with prejudice. 8. CONSENT TO INJUNCTION. Bollinger covenants and agrees to abstain from manufacturing, offering to sell, selling, using or distributing the Products and any and all colorable imitations thereof, in the United States and in such other countries where Precise has patent protection (including those countries listed on EXHIBIT A hereto), except as provided in this Settlement Agreement or otherwise authorized by Precise in writing. Bollinger acknowledges that a breach of this paragraph would not be remediable by monetary damages alone, but would require equitable relief, including injunctive relief that bars Bollinger from (i) making, using, offering to sell, selling, or distributing any device in the United States and in those other countries where Precise has patent protection which infringes Precise's Patent rights, including the Products and any and all colorable imitations thereof; (ii) inducing infringement of Precise's Patent rights; and (iii) marketing or distributing any advertising, promotional materials or packaging bearing any photograph or graphic artwork of any device that infringes Precise's Patent rights, including the Products and any and all colorable imitations thereof. Bollinger hereby consents to the entry of such an injunction upon a sufficient showing by Precise that Bollinger is manufacturing, using, marketing, selling or distributing in the United States and in such other countries where Precise has patent protection any abdominal exercise Product upon which one or more of the Patents reads, except as authorized by this Settlement Agreement or otherwise authorized by Precise in writing. 9. ASSIGNMENT OF RIGHTS TO PRODUCTS AND PROMOTIONAL MATERIALS. As of the Effective Date, but subject to the Sell-Off Rights, Bollinger shall assign and transfer to Precise its entire right, title and interest in intellectual property related to the Products (including but not limited to any trademark, servicemark, trade dress, or patent rights Bollinger may have in or relating to the Products and all marketing and promotional materials). A fully executed Assignment Agreement shall be delivered to Precise within nine (9) days after the Effective Date. 9

KMart Action with prejudice and (ii). file with the Court an Amended Voluntary Dismissal dismissing the Walmart Action with prejudice. 8. CONSENT TO INJUNCTION. Bollinger covenants and agrees to abstain from manufacturing, offering to sell, selling, using or distributing the Products and any and all colorable imitations thereof, in the United States and in such other countries where Precise has patent protection (including those countries listed on EXHIBIT A hereto), except as provided in this Settlement Agreement or otherwise authorized by Precise in writing. Bollinger acknowledges that a breach of this paragraph would not be remediable by monetary damages alone, but would require equitable relief, including injunctive relief that bars Bollinger from (i) making, using, offering to sell, selling, or distributing any device in the United States and in those other countries where Precise has patent protection which infringes Precise's Patent rights, including the Products and any and all colorable imitations thereof; (ii) inducing infringement of Precise's Patent rights; and (iii) marketing or distributing any advertising, promotional materials or packaging bearing any photograph or graphic artwork of any device that infringes Precise's Patent rights, including the Products and any and all colorable imitations thereof. Bollinger hereby consents to the entry of such an injunction upon a sufficient showing by Precise that Bollinger is manufacturing, using, marketing, selling or distributing in the United States and in such other countries where Precise has patent protection any abdominal exercise Product upon which one or more of the Patents reads, except as authorized by this Settlement Agreement or otherwise authorized by Precise in writing. 9. ASSIGNMENT OF RIGHTS TO PRODUCTS AND PROMOTIONAL MATERIALS. As of the Effective Date, but subject to the Sell-Off Rights, Bollinger shall assign and transfer to Precise its entire right, title and interest in intellectual property related to the Products (including but not limited to any trademark, servicemark, trade dress, or patent rights Bollinger may have in or relating to the Products and all marketing and promotional materials). A fully executed Assignment Agreement shall be delivered to Precise within nine (9) days after the Effective Date. 9

10. RIGHTS TO THE STEP PRODUCT. Effective as of the Effective Date, Bollinger will sublicense to Precise rights under certain intellectual property relating to the STEP Product as set forth in the Sublicense Agreement attached hereto as Exhibit B. Bollinger agrees that it will use its best efforts to obtain from the Step Company as soon as possible any authorization or permission that may be required to permit Bollinger to grant the sublicense provided by the Sublicense Agreement. III. GENERAL PROVISIONS 1. ATTORNEYS' FEES AND COSTS. In any action involving any controversy, claim or dispute between or among the parties hereto, arising out of the interpretation or enforcement of this Settlement Agreement or any of its terms, the prevailing party or parties shall be entitled to recover its reasonable attorneys' fees and costs from the other party or parties. 2. AUTHORITY. Each signatory hereto represents and warrants that it has the full power and authority to execute, deliver, and perform this Settlement Agreement. 3. CHOICE OF LAW AND JURISDICTION. This Settlement Agreement, including its existence, validity, construction and operational effect, shall be governed by the substantive laws of the State of California without regard to choice of law principles. The parties hereto hereby consent to the jurisdiction of the courts of the State of California including the Federal Courts located therein. The parties hereto also hereby agree that the venue for any dispute or action arising from this Settlement Agreement shall be in the courts of the State of California and the Federal Courts located therein (Central District). 4. CONFIDENTIALITY. This Settlement Agreement shall be kept confidential, but may disclosed to Terra Star or as reasonably required by normal business operations. 10

10. RIGHTS TO THE STEP PRODUCT. Effective as of the Effective Date, Bollinger will sublicense to Precise rights under certain intellectual property relating to the STEP Product as set forth in the Sublicense Agreement attached hereto as Exhibit B. Bollinger agrees that it will use its best efforts to obtain from the Step Company as soon as possible any authorization or permission that may be required to permit Bollinger to grant the sublicense provided by the Sublicense Agreement. III. GENERAL PROVISIONS 1. ATTORNEYS' FEES AND COSTS. In any action involving any controversy, claim or dispute between or among the parties hereto, arising out of the interpretation or enforcement of this Settlement Agreement or any of its terms, the prevailing party or parties shall be entitled to recover its reasonable attorneys' fees and costs from the other party or parties. 2. AUTHORITY. Each signatory hereto represents and warrants that it has the full power and authority to execute, deliver, and perform this Settlement Agreement. 3. CHOICE OF LAW AND JURISDICTION. This Settlement Agreement, including its existence, validity, construction and operational effect, shall be governed by the substantive laws of the State of California without regard to choice of law principles. The parties hereto hereby consent to the jurisdiction of the courts of the State of California including the Federal Courts located therein. The parties hereto also hereby agree that the venue for any dispute or action arising from this Settlement Agreement shall be in the courts of the State of California and the Federal Courts located therein (Central District). 4. CONFIDENTIALITY. This Settlement Agreement shall be kept confidential, but may disclosed to Terra Star or as reasonably required by normal business operations. 10

5. COUNTERPARTS; INTEGRATION CLAUSE AND MODIFICATION. This Settlement Agreement may be executed in counterparts and may include exhibits and attachments. All counterparts, exhibits and attachments shall constitute one agreement binding on the each of the parties to which they pertain. This Settlement Agreement contains the entire agreement of the parties hereto pertaining to the settlement of the Action and fully supersedes all prior agreements, understandings and/or discussions between the parties hereto pertaining to the subject matter hereof. This Settlement Agreement may not be amended, nor any of its provisions waived, except by a writing executed in like manner by the parties. 6. FURTHER ASSURANCES. Without further consideration, the parties hereby covenant and agree to execute such instruments, documents, pleadings and statements, and to take such further action, as may be reasonably necessary to effectuate and/or further the purposes of this Settlement Agreement or any of its terms or conditions, including, but not limited to, executing and/or consenting to any and all motions to the court presiding over the KMart Action, the Walmart Action or the Bollinger Action for the purpose of dismissing those actions, or any other such matter as may be reasonably required to effectuate this Settlement Agreement or any of its terms and/or conditions. The parties also agree not to take any action that would conflict with the provisions of this Settlement Agreement and the transactions contemplated herein. 7. INTEGRATION CLAUSE AND MODIFICATION. This Settlement Agreement and the exhibits and annexes referenced herein contain the entire agreement of the parties hereto pertaining to the settlement of the KMart Action, the Walmart Action and the Bollinger Action. This Settlement Agreement fully supersedes all prior agreements, understandings and/or discussions between the parties hereto pertaining to the subject matter hereof, and no change in, modification of, or addition, amendment or supplement hereto shall be valid unless set forth in writing signed by each of the parties hereto following the signing of this Settlement Agreement. 11

8. MUTUAL DRAFTING. The parties hereto participated equally in the preparation of this Settlement Agreement; accordingly, any claimed ambiguity should not be construed for or against any party.

5. COUNTERPARTS; INTEGRATION CLAUSE AND MODIFICATION. This Settlement Agreement may be executed in counterparts and may include exhibits and attachments. All counterparts, exhibits and attachments shall constitute one agreement binding on the each of the parties to which they pertain. This Settlement Agreement contains the entire agreement of the parties hereto pertaining to the settlement of the Action and fully supersedes all prior agreements, understandings and/or discussions between the parties hereto pertaining to the subject matter hereof. This Settlement Agreement may not be amended, nor any of its provisions waived, except by a writing executed in like manner by the parties. 6. FURTHER ASSURANCES. Without further consideration, the parties hereby covenant and agree to execute such instruments, documents, pleadings and statements, and to take such further action, as may be reasonably necessary to effectuate and/or further the purposes of this Settlement Agreement or any of its terms or conditions, including, but not limited to, executing and/or consenting to any and all motions to the court presiding over the KMart Action, the Walmart Action or the Bollinger Action for the purpose of dismissing those actions, or any other such matter as may be reasonably required to effectuate this Settlement Agreement or any of its terms and/or conditions. The parties also agree not to take any action that would conflict with the provisions of this Settlement Agreement and the transactions contemplated herein. 7. INTEGRATION CLAUSE AND MODIFICATION. This Settlement Agreement and the exhibits and annexes referenced herein contain the entire agreement of the parties hereto pertaining to the settlement of the KMart Action, the Walmart Action and the Bollinger Action. This Settlement Agreement fully supersedes all prior agreements, understandings and/or discussions between the parties hereto pertaining to the subject matter hereof, and no change in, modification of, or addition, amendment or supplement hereto shall be valid unless set forth in writing signed by each of the parties hereto following the signing of this Settlement Agreement. 11

8. MUTUAL DRAFTING. The parties hereto participated equally in the preparation of this Settlement Agreement; accordingly, any claimed ambiguity should not be construed for or against any party. 9. NOTICES. All notices and other communications pertaining hereto shall be in writing and shall be deemed to have been given when delivered personally or five (5) days after being mailed, certified or registered mail, return receipt requested, postage prepaid, to the respective addresses set forth immediately opposite the signatures of the parties hereto or to such other address or addresses as any of them may from time to time in writing designate hereunder. 10. SEVERABILITY. In the event any provision of this Settlement Agreement is found by a court of competent jurisdiction to be invalid or prohibited by law, such provision shall be revised by said court to the extent, and only to the extent, necessary to render such provision valid, shall be ineffective only to the extent of such prohibition or invalidity, and shall not invalidate or otherwise render ineffective any of the remaining terms and conditions of this Settlement Agreement provided any provision held to be invalid or prohibited by law is not essential to the parties' enjoyment of the economic benefits contemplated by this Agreement. 11. SUCCESSORS AND ASSIGNS. This Settlement Agreement shall be binding upon and shall inure to the benefit of the successors, heirs and assigns of the parties hereto. Bollinger, however, shall not have the right to assign any right or obligation created in this Settlement Agreement to any other party, including any third party, without the express written consent of Precise. Any attempt to assign or transfer any right or obligation under the Agreement in violation of this provision shall be null and void. 12. WAIVER, MODIFICATION AND AMENDMENT. The failure of any party to insist at any time upon the strict performance of any provision, term or condition of this Settlement Agreement or to act upon or exercise any right or remedy available or possibly available 12

to such party, whether hereunder, at law or in equity, shall not be interpreted as a waiver, modification, or amendment of any such provision, right or remedy unless specifically expressed in writing signed by such party.

8. MUTUAL DRAFTING. The parties hereto participated equally in the preparation of this Settlement Agreement; accordingly, any claimed ambiguity should not be construed for or against any party. 9. NOTICES. All notices and other communications pertaining hereto shall be in writing and shall be deemed to have been given when delivered personally or five (5) days after being mailed, certified or registered mail, return receipt requested, postage prepaid, to the respective addresses set forth immediately opposite the signatures of the parties hereto or to such other address or addresses as any of them may from time to time in writing designate hereunder. 10. SEVERABILITY. In the event any provision of this Settlement Agreement is found by a court of competent jurisdiction to be invalid or prohibited by law, such provision shall be revised by said court to the extent, and only to the extent, necessary to render such provision valid, shall be ineffective only to the extent of such prohibition or invalidity, and shall not invalidate or otherwise render ineffective any of the remaining terms and conditions of this Settlement Agreement provided any provision held to be invalid or prohibited by law is not essential to the parties' enjoyment of the economic benefits contemplated by this Agreement. 11. SUCCESSORS AND ASSIGNS. This Settlement Agreement shall be binding upon and shall inure to the benefit of the successors, heirs and assigns of the parties hereto. Bollinger, however, shall not have the right to assign any right or obligation created in this Settlement Agreement to any other party, including any third party, without the express written consent of Precise. Any attempt to assign or transfer any right or obligation under the Agreement in violation of this provision shall be null and void. 12. WAIVER, MODIFICATION AND AMENDMENT. The failure of any party to insist at any time upon the strict performance of any provision, term or condition of this Settlement Agreement or to act upon or exercise any right or remedy available or possibly available 12

to such party, whether hereunder, at law or in equity, shall not be interpreted as a waiver, modification, or amendment of any such provision, right or remedy unless specifically expressed in writing signed by such party. IN WITNESS WHEREOF, the parties have caused this Settlement Agreement to be duly executed as of the date set forth in the signature lines below. PRECISE EXERCISE EQUIPMENT, INC.
500 International Drive Suite 300 Mt. Olive, New Jersey 07828

---------------------------By: Its: Date: ------------------------

FITNESS INNOVATIONS AND TECHNOLOGIES (F.I.T.), INC.
500 International Drive Suite 300 Mt. Olive, New Jersey 07828

---------------------------By: Its: Date: ------------------------

BOLLINGER INDUSTRIES, INC. 602 Fountain Parkway ---------------------------- Grand Prairie, Texas 75050 By: Its: Date:

to such party, whether hereunder, at law or in equity, shall not be interpreted as a waiver, modification, or amendment of any such provision, right or remedy unless specifically expressed in writing signed by such party. IN WITNESS WHEREOF, the parties have caused this Settlement Agreement to be duly executed as of the date set forth in the signature lines below. PRECISE EXERCISE EQUIPMENT, INC.
500 International Drive Suite 300 Mt. Olive, New Jersey 07828

---------------------------By: Its: Date: ------------------------

FITNESS INNOVATIONS AND TECHNOLOGIES (F.I.T.), INC.
500 International Drive Suite 300 Mt. Olive, New Jersey 07828

---------------------------By: Its: Date: ------------------------

BOLLINGER INDUSTRIES, INC. 602 Fountain Parkway ---------------------------- Grand Prairie, Texas 75050 By: Its: Date: 13

EXHIBIT A PATENTS U.S. Patent No. 5,492,520 U.S. Patent No. 5,577,987 European Patent No. EP 0717 649 B1 i

EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF PER SHARE DATA
YEARS ENDED MARCH 31, -----------------------------------------2001 2000 1999 ---------------------------------$ 1,008,351 $ (570,733) $ (7,497,657) ============ ============ ============

Net earnings (loss)

Per share data:

Basic earnings (loss) per share

$ 0.23 ============

$ (0.13) ============

$ (1.79) ============

EXHIBIT A PATENTS U.S. Patent No. 5,492,520 U.S. Patent No. 5,577,987 European Patent No. EP 0717 649 B1 i

EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF PER SHARE DATA
YEARS ENDED MARCH 31, -----------------------------------------2001 2000 1999 ---------------------------------$ 1,008,351 $ (570,733) $ (7,497,657) ============ ============ ============

Net earnings (loss)

Per share data:

Basic earnings (loss) per share

$ 0.23 ============ $ 0.23 ============ $ 0.23 ============

$ (0.13) ============ $ (0.13) ============ $ (0.13) ============

$ (1.79) ============ $ (1.79) ============ $ (1.79) ============

Dilutive earnings (loss) per share

Net earnings (loss) per share

Shares used in the calculation of per share amounts: Weighted average basic common shares Dilutive impact of stock options 4,373,116 ------------4,373,116 ============ 4,400,210 ------------4,400,210 ============ 4,178,840 ------------4,178,840 ============

Weighted average diluted common shares

There were no dilutive options during the years ended March 31, 2001, 2000 and 1999.

EXHIBIT 21 SUBSIDIARIES OF BOLLINGER INDUSTRIES, INC.
SUBSIDIARY ---------Bollinger Operating Corp. Bollinger Holding Corp. C.G. Products, Inc. NBF, Inc. Bollinger Industries, L. P. (Indirect) JURISDICTION OF ORGANIZATION ---------------------------Nevada Delaware California Georgia Texas

EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF PER SHARE DATA
YEARS ENDED MARCH 31, -----------------------------------------2001 2000 1999 ---------------------------------$ 1,008,351 $ (570,733) $ (7,497,657) ============ ============ ============

Net earnings (loss)

Per share data:

Basic earnings (loss) per share

$ 0.23 ============ $ 0.23 ============ $ 0.23 ============

$ (0.13) ============ $ (0.13) ============ $ (0.13) ============

$ (1.79) ============ $ (1.79) ============ $ (1.79) ============

Dilutive earnings (loss) per share

Net earnings (loss) per share

Shares used in the calculation of per share amounts: Weighted average basic common shares Dilutive impact of stock options 4,373,116 ------------4,373,116 ============ 4,400,210 ------------4,400,210 ============ 4,178,840 ------------4,178,840 ============

Weighted average diluted common shares

There were no dilutive options during the years ended March 31, 2001, 2000 and 1999.

EXHIBIT 21 SUBSIDIARIES OF BOLLINGER INDUSTRIES, INC.
SUBSIDIARY ---------Bollinger Operating Corp. Bollinger Holding Corp. C.G. Products, Inc. NBF, Inc. Bollinger Industries, L. P. (Indirect) JURISDICTION OF ORGANIZATION ---------------------------Nevada Delaware California Georgia Texas

EXHIBIT 21 SUBSIDIARIES OF BOLLINGER INDUSTRIES, INC.
SUBSIDIARY ---------Bollinger Operating Corp. Bollinger Holding Corp. C.G. Products, Inc. NBF, Inc. Bollinger Industries, L. P. (Indirect) JURISDICTION OF ORGANIZATION ---------------------------Nevada Delaware California Georgia Texas