Exhibit 10.6
LOAN AGREEMENT
     This Agreement dated as of December 8, 2010, is between Bank of America,
N.A. (the “Bank”) and American Locker Group Incorporated, a Delaware corporation
(“American Locker”), American Locker Security Systems, Inc., a Delaware
corporation (“Security Systems”), Security Manufacturing Corporation, a Delaware
corporation (“Security Manufacturing”) and Canadian Locker Company Limited, a
corporation incorporated under the federal laws of Canada (“Canadian Locker”)
(American Locker, Security Systems, Security Manufacturing and Canadian Locker,
are sometimes referred to collectively as the “Borrowers” and individually as
the “Borrower”).
1. DEFINITIONS
In addition to the terms which are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this Agreement:
1.1 “Borrowing Base” means the sum of:

(a)   80% of the balance due on Acceptable Receivables; and

(b)   the lesser of (i) 50% of the value of Acceptable Inventory, or (ii)
$1,000,000.00.

In determining the value of Acceptable Inventory to be included in the Borrowing
Base, the Bank will use the lowest of (i) the Borrower’s cost, (ii) the
Borrower’s estimated market value, or (iii) the Bank’s independent determination
of the resale value of such inventory in such quantities and on such terms as
the Bank deems appropriate.
After calculating the Borrowing Base as provided above, the Bank may deduct such
reserves as the Bank may establish from time to time in its reasonable credit
judgment, including, without limitation, reserves for rent at leased locations
subject to statutory or contractual landlord’s liens, inventory shrinkage,
dilution, customs charges, warehousemen’s or bailees’ charges, liabilities to
growers of agricultural products which are entitled to lien rights under the
federal Perishable Agricultural Commodities Act or any applicable state law, or
the federal laws of Canada or any applicable laws of any province or territory
of Canada, and the amount of estimated maximum exposure, as determined by the
Bank from time to time, under any interest rate contracts which the Borrower
enters into with the Bank (including interest rate swaps, caps, floors, options
thereon, combinations thereof, or similar contracts).
1.2 “Acceptable Receivable” means an account receivable which satisfies the
following requirements:

(a)   The account has resulted from the sale of goods by the Borrower in the
ordinary course of the Borrower’s business and without any further obligation on
the part of the Borrower to service, repair, or maintain any such goods sold
other than pursuant to any applicable warranty.

(b)   There are no conditions which must be satisfied before the Borrower is
entitled to receive payment of the account. Accounts arising from COD sales,
consignments or guaranteed sales are not acceptable.

(c)   The debtor upon the account does not claim any defense to payment of the
account, whether well founded or otherwise.

(d)   The account balance does not include the amount of any counterclaims or
offsets which have been or may be asserted against the Borrower by the account
debtor (including offsets for any “contra accounts” owed by the Borrower to the
account debtor for goods purchased by the Borrower or for services performed for
the Borrower). To the extent any counterclaims, offsets, or contra accounts
exist in favor of the debtor, such amounts shall be deducted from the account
balance.

 

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(e)   The account represents a genuine obligation of the debtor for goods sold
to and accepted by the debtor. To the extent any credit balances exist in favor
of the debtor, such credit balances shall be deducted from the account balance.

(f)   The account balance does not include the amount of any finance or service
charges payable by the account debtor. To the extent any finance charges or
service charges are included, such amounts shall be deducted from the account
balance.

(g)   The Borrower has sent an invoice to the debtor in the amount of the
account.

(h)   The Borrower is not prohibited by the laws of the state where the account
debtor is located, or if the account debtor is located in Canada, under the
federal laws of Canada or the applicable province or territory of Canada, from
bringing an action in the courts of that jurisdiction to enforce the debtor’s
obligation to pay the account. The Borrower has taken all appropriate actions to
ensure access to the courts of the jurisdiction where the account debtor is
located, including, where necessary, the filing of a Notice of Business
Activities Report or other similar filing with the applicable agency or the
qualification by the Borrower as a foreign corporation authorized to transact
business in such jurisdiction.

(i)   The account is owned by the Borrower free of any title defects or any
liens or interests of others except the security interest in favor of the Bank.

(j)   The debtor upon the account is not any of the following:

  (i)   An employee, affiliate, parent or subsidiary of the Borrower, or an
entity which has common officers or directors with the Borrower.     (ii)   The
U.S. government or any agency or department of the U.S. government unless the
Bank agrees in writing to accept the obligation, the Borrower complies with the
procedures in the Federal Assignment of Claims Act of 1940 (41 U.S.C. §15) with
respect to the obligation, and the underlying contract expressly provides that
neither the U.S. government nor any agency or department thereof shall have the
right of set-off against the Borrower.     (iii)   Any nation (other than the
United States), state, province, territory, county, city, town or municipality.
    (iv)   Any person or entity located in a foreign country (other than Canada)
unless the account is covered by foreign credit insurance acceptable to the Bank
in its sole discretion and the account is otherwise an Acceptable Receivable;
and then only the amount insured is eligible for inclusion in the Borrowing Base
as an Acceptable Receivable.

(k)   The account is not in default. An account will be considered in default if
any of the following occur:

  (i)   the account is not paid within 90 days from its invoice date;     (ii)  
the debtor obligated upon the account suspends business, makes a general
assignment for the benefit of creditors, or fails to pay its debts generally as
they come due; or     (iii)   any petition is filed by or against the debtor
obligated upon the account under any bankruptcy law or any other law or laws for
the relief of debtors.

(l)   The account is not the obligation of a debtor who is in default (as
defined above) on 20% or more of the accounts upon which such debtor is
obligated.

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(m)   The account does not arise from the sale of goods which remain in the
Borrower’s possession or under the Borrower’s control.

(n)   The account is not evidenced by a promissory note or chattel paper, nor is
the account debtor obligated to the Borrower under any other obligation which is
evidenced by a promissory note.

(o)   The account is otherwise acceptable to the Bank.

In addition to the foregoing limitations, the dollar amount of accounts included
as Acceptable Receivables which are the obligations of a single debtor shall not
exceed the concentration limit established for that debtor. To the extent the
total of such accounts exceeds a debtor’s concentration limit, the amount of any
such excess shall be excluded. The concentration limit for each debtor shall be
equal to 20% of the total amount of the Borrower’s total accounts receivable at
that time
1.3 “Acceptable Inventory” means inventory which satisfies the following
requirements:

(a)   The inventory is owned by the Borrower free of any title defects or any
liens or interests of others except the security interest in favor of the Bank.
This does not prohibit any statutory liens which may exist in favor of the
growers of agricultural products which are purchased by the Borrower.

(b)   The inventory is located at locations which the Borrower has disclosed to
the Bank and which are acceptable to the Bank. If the inventory is covered by a
negotiable document of title (such as a warehouse receipt) that document must be
delivered to the Bank. Inventory which is in transit is not acceptable.

(c)   The inventory is held for sale or use in the ordinary course of the
Borrower’s business and is of good and merchantable quality. Display items,
work-in-process, parts, samples, and packing and shipping materials are not
acceptable. Inventory which is obsolete, unsalable, damaged, defective, used,
discontinued or slow-moving, or which has been returned by the buyer, is not
acceptable.

(d)   The inventory is covered by insurance as required in the “Covenants”
section of this Agreement.

(e)   The inventory has not been manufactured to the specifications of a
particular account debtor.

(f)   The inventory is not subject to any licensing agreements which would
prohibit or restrict in any way the ability of the Bank to sell the inventory to
third parties.

(g)   The inventory has been produced in compliance with the requirements of the
U.S. Fair Labor Standards Act (29 U.S.C. §§201 et seq.).

(h)   The inventory is not placed on consignment.

(i)   The inventory is otherwise acceptable to the Bank.

1.4   “Credit Limit” means the amount of Two Million Five Hundred Thousand and
No/100 ($2,500,000.00).

2. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
2.1 Line of Credit Amount.

(a)   During the availability period described below, the Bank will provide a
line of credit to the Borrower. The amount of the line of credit (the “Facility
No. 1 Commitment”) is equal to the lesser of (i) the Credit Limit or (ii) the
Borrowing Base.

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(b)   This is a revolving line of credit. During the availability period, the
Borrower may repay principal amounts and reborrow them.

(c)   The Borrower agrees not to permit the principal balance outstanding to
exceed the Facility No. 1 Commitment. If the Borrower exceeds this limit, the
Borrower will immediately pay the excess to the Bank upon the Bank’s demand.

2.2 Availability Period. The line of credit is available between the date of
this Agreement and December 8, 2011, or such earlier date as the availability
may terminate as provided in this Agreement (the “Facility No. 1 Expiration
Date”).
2.3 Conditions to Availability of Credit. In addition to the items required to
be delivered to the Bank under the paragraph entitled “Financial Information” in
the “Covenants” section of this Agreement, the Borrower will promptly deliver
the following to the Bank at such times as may be requested by the Bank:

(a)   A borrowing certificate, in form and detail satisfactory to the Bank,
setting forth the Acceptable Receivables and the Acceptable Inventory on which
the requested extension of credit is to be based.

(b)   Copies of the invoices or the record of invoices from the Borrower’s sales
journal for such Acceptable Receivables and a listing of the names and addresses
of the debtors obligated thereunder.

(c)   Copies of the delivery receipts, purchase orders, shipping instructions,
bills of lading and other documentation pertaining to such Acceptable
Receivables.

(d)   Copies of the cash receipts journal pertaining to the borrowing
certificate.

2.4 Repayment Terms.

(a)   The Borrower will pay interest on January 8, 2011, and then on the same
day of each month thereafter until payment in full of any principal outstanding
under this facility.

(b)   The Borrower will repay in full any principal, interest or other charges
outstanding under this facility no later than the Facility No. 1 Expiration
Date.

(c)   The Borrower may prepay the loan in full or in part at any time. The
prepayment will be applied to the most remote payment of principal due under
this Agreement.

2.5 Interest Rate.

(a)   The interest rate is a rate per year equal to the lesser of (i) the
maximum lawful rate of interest permitted under applicable usury laws, now or
hereafter enacted ( the “Maximum Rate”), or (ii) the BBA LIBOR Rate (Adjusted
Periodically) plus 3.75 percentage point(s).

(b)   The interest rate will be adjusted on the 8th day of every month (the
“Adjustment Date”) and remain fixed until the next Adjustment Date. If the
Adjustment Date in any particular month would otherwise fall on a day that is
not a banking day then, at the Bank’s option, the Adjustment Date for that
particular month will be the first banking day immediately following thereafter.

(c)   The BBA LIBOR Rate (Adjusted Periodically) is a rate of interest equal to
the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as selected by the Bank from time to time) as
determined for each Adjustment Date at approximately 11:00 a.m. London time two
(2) London Banking Days prior to the Adjustment Date, for U.S. Dollar deposits
(for

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    delivery on the first day of such interest period) with a term of one month,
as adjusted from time to time in the Bank’s sole discretion for reserve
requirements, deposit insurance assessment rates and other regulatory costs. If
such rate is not available at such time for any reason, then the rate for that
interest period will be determined by such alternate method as reasonably
selected by the Bank. A “London Banking Day” is a day on which banks in London
are open for business and dealing in offshore dollars.

3.   FACILITY NO. 2: VARIABLE RATE TERM LOAN AMOUNT AND TERMS

3.1 Loan Amount. The Bank agrees to provide a term loan to the Borrower in the
amount of One Million and No/100 Dollars ($1,000,000.00) (the “Facility No. 2
Commitment”).
3.2 Availability Period. The loan is available in one disbursement from the Bank
between the date of this Agreement and December 15, 2010 unless the Borrower is
in default.
3.3 Repayment Terms.

(a)   The Borrower will pay interest on January 8, 2011, and then on the same
day of each month thereafter until payment in full of any principal outstanding
under this facility.

(b)   The Borrower will repay principal in equal installments of Sixteen
Thousand Six Hundred Sixty Six and 67/100 Dollars ($16,666.67) beginning on
January 8, 2011, and on the same day of each month thereafter, and ending on
December 8, 2015 (the “Repayment Period”). In any event, on the last day of the
Repayment Period, the Borrower will repay the remaining principal balance plus
any interest then due.

(c)   The Borrower may prepay the loan in full or in part at any time. The
prepayment will be applied to the most remote payment of principal due under
this Agreement.

3.4   Interest Rate.

(a)   The interest rate is a rate per year equal to the lesser of (i) the
maximum lawful rate of interest permitted under applicable usury laws, now or
hereafter enacted ( the “Maximum Rate”), or (ii) the BBA LIBOR Rate (Adjusted
Periodically) plus 3.75 percentage point(s).

(b)   The interest rate will be adjusted on the 8th day of every month (the
“Adjustment Date”) and remain fixed until the next Adjustment Date. If the
Adjustment Date in any particular month would otherwise fall on a day that is
not a banking day then, at the Bank’s option, the Adjustment Date for that
particular month will be the first banking day immediately following thereafter.

(c)   The BBA LIBOR Rate (Adjusted Periodically) is a rate of interest equal to
the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as selected by the Bank from time to time) as
determined for each Adjustment Date at approximately 11:00 a.m. London time two
(2) London Banking Days prior to the Adjustment Date, for U.S. Dollar deposits
(for delivery on the first day of such interest period) with a term of one
month, as adjusted from time to time in the Bank’s sole discretion for reserve
requirements, deposit insurance assessment rates and other regulatory costs. If
such rate is not available at such time for any reason, then the rate for that
interest period will be determined by such alternate method as reasonably
selected by the Bank. A “London Banking Day” is a day on which banks in London
are open for business and dealing in offshore dollars.

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4.   FEES AND EXPENSES

4.1   Fees.

(a)   Loan Fee. For Facility No. 1, the Borrower agrees to pay a loan fee in the
amount of Twelve Thousand Five Hundred and No/100 Dollars ($12,500.00). For
Facility No. 2, the Borrower agrees to pay a loan fee in the amount of Ten
Thousand and No/100 Dollars ($10,000.00). These fees are due on the date of this
Agreement.

(b)   Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any
terms of this Agreement, the Borrower will, at the Bank’s option, pay the Bank a
fee for each waiver or amendment in an amount advised by the Bank at the time
the Borrower requests the waiver or amendment. Nothing in this paragraph shall
imply that the Bank is obligated to agree to any waiver or amendment requested
by the Borrower. The Bank may impose additional requirements as a condition to
any waiver or amendment.

(c)   Late Fee. To the extent permitted by law, the Borrower agrees to pay a
late fee in an amount not to exceed four percent (4%) of any payment that is
more than fifteen (15) days late. The imposition and payment of a late fee shall
not constitute a waiver of the Bank’s rights with respect to the default.

4.2 Expenses. The Borrower agrees to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees, and documentation fees.
4.3 Reimbursement Costs.

(a)   The Borrower agrees to reimburse the Bank for any expenses it incurs in
the preparation of this Agreement and any agreement or instrument required by
this Agreement. Expenses include, but are not limited to, reasonable attorneys’
fees, including any allocated costs of the Bank’s in-house counsel to the extent
permitted by applicable law.

(b)   The Borrower agrees to reimburse the Bank for the cost of periodic field
examinations of the Borrower’s books, records and collateral, and appraisals of
the collateral, at such intervals as the Bank may reasonably require. The
actions described in this paragraph may be performed by employees of the Bank or
by independent appraisers.

4.4 No Excess Fees.
Notwithstanding anything to the contrary in this Section 4, in no event shall
any sum payable under this Section 4 (to the extent, if any, constituting
interest under applicable laws), together with all other amounts constituting
interest under applicable laws and payable in connection with the credit
evidenced hereby, exceed the amount of interest computed at the Maximum Rate.

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5.   COLLATERAL

5.1 Personal Property. The personal property listed below now owned or owned in
the future by the parties listed below, will secure the Borrowers’ obligations
to the Bank under this Agreement. The collateral is further defined in security
agreement(s) executed by the owners of the collateral. In addition, all personal
property collateral owned by the Borrowers securing this Agreement shall also
secure all other present and future obligations of the Borrowers to the Bank
(excluding any consumer credit covered by the federal Truth in Lending law,
unless the Borrowers have otherwise agreed in writing or received written notice
thereof). All personal property collateral securing any other present or future
obligations of the Borrowers to the Bank shall also secure this Agreement.

(a)   Equipment and fixtures owned by each Borrower.   (b)   Inventory owned by
each Borrower.   (c)   Receivables owned by each Borrower.   (d)   All
instruments, notes, chattel paper, documents, certificates of deposit,
securities and investment property of every type owned by each Borrower.

   
Regulation U of the Board of Governors of the Federal Reserve System places
certain restrictions on loans secured by margin stock (as defined in the
Regulation). The Bank and the Borrower shall comply with Regulation U. If any of
the collateral is margin stock, the Borrower shall provide to the Bank a Form
U-1 Purpose Statement.

(e)   Deposit accounts with the Bank owned by each Borrower.   (f)   Patents,
trademarks and other general intangibles owned by each Borrower.

(g)   All such other personal property owned by a Borrower in which any such
Borrower shall have granted the Bank a security interest, including, but not
limited to, accounts, contract rights, chattel paper, deposit accounts, letter
of credit rights, and payment intangibles owned by the Borrower.

6.     DISBURSEMENTS, PAYMENTS AND COSTS

6.1   Disbursements and Payments.

(a)   Each payment by the Borrower will be made in U.S. Dollars and immediately
available funds by debit to a deposit account, as described in this Agreement or
otherwise authorized by the Borrower. For payments not made by direct debit,
payments will be made by mail to the address shown on the Borrower’s statement
or at one of the Bank’s banking centers in the United States, or by such other
method as may be permitted by the Bank.

(b)   The Bank may honor instructions for advances or repayments given by the
Borrower (if an individual), or by any one of the individuals authorized to sign
loan agreements on behalf of the Borrower, or any other individual designated by
any one of such authorized signers (each an “Authorized Individual”).

(c)   For any payment under this Agreement made by debit to a deposit account,
the Borrower will maintain sufficient immediately available funds in the deposit
account to cover each debit. If there are insufficient immediately available
funds in the deposit account on the date the Bank enters any such debit
authorized by this Agreement, the Bank may reverse the debit.

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(d)   Each disbursement by the Bank and each payment by the Borrower will be
evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrower to sign one or more promissory notes.

(e)   Prior to the date each payment of principal and interest and any fees from
the Borrower becomes due (the “Due Date”), the Bank will mail to the Borrower a
statement of the amounts that will be due on that Due Date (the “Billed
Amount”). The calculations in the bill will be made on the assumption that no
new extensions of credit or payments will be made between the date of the
billing statement and the Due Date, and that there will be no changes in the
applicable interest rate. If the Billed Amount differs from the actual amount
due on the Due Date (the “Accrued Amount”), the discrepancy will be treated as
follows:

  (i)   If the Billed Amount is less than the Accrued Amount, the Billed Amount
for the following Due Date will be increased by the amount of the discrepancy.
The Borrower will not be in default by reason of any such discrepancy.     (ii)
  If the Billed Amount is more than the Accrued Amount, the Billed Amount for
the following Due Date will be decreased by the amount of the discrepancy.

    Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The Bank will
not pay the Borrower interest on any overpayment.

6.2   Requests for Credit; Equal Access by all Borrowers. If there is more than
one Borrower, any Borrower (or a person or persons authorized by any one of the
Borrowers), acting alone, can borrow up to the full amount of credit provided
under this Agreement. Each Borrower will be liable for all extensions of credit
made under this Agreement to any other Borrower.

6.3   Telephone and Telefax Authorization.

(a)   The Bank may honor telephone or telefax instructions for advances or
repayments given, or purported to be given, by any one of the Authorized
Individuals.

(b)   Advances will be deposited in and repayments will be withdrawn from
account number ________owned by Security Systems, or such other accounts with
the Bank as designated in writing by the Borrowers.

(c)   The Borrowers will indemnify and hold the Bank harmless from all
liability, loss, and costs in connection with any act resulting from telephone
or telefax instructions the Bank reasonably believes are made by any Authorized
Individual. This paragraph will survive this Agreement’s termination, and will
benefit the Bank and its officers, employees, and agents.

6.4   Direct Debit.

(a)   The Borrowers agree that on the Due Date the Bank will debit the Billed
Amount from deposit account number ________ owned by Security Systems, or such
other of the Borrowers’ accounts with the Bank as designated in writing by the
Borrowers (the “Designated Account”).

(b)   The Borrowers may terminate this direct debit arrangement at any time by
sending written notice to the Bank at the address specified at the end of this
Agreement. If the Borrowers terminate this arrangement, then the principal
amount outstanding under this Agreement will at the option of the Bank bear
interest at a rate per annum which is the lesser of (i) the Maximum Rate or
(ii) 0.5 percentage point(s) higher than the rate of interest otherwise provided
under this Agreement.

6.5 Banking Days. Unless otherwise provided in this Agreement, a banking day is
a day other than a Saturday, Sunday or other day on which commercial banks are
authorized to close, or are in fact closed,

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in the state where the Bank’s lending office is located, and, if such day
relates to amounts bearing interest at an offshore rate (if any), means any such
day on which dealings in dollar deposits are conducted among banks in the
offshore dollar interbank market. All payments and disbursements which would be
due on a day which is not a banking day will be due on the next banking day. All
payments received on a day which is not a banking day will be applied to the
credit on the next banking day.
6.6 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid. For
the purpose of the Interest Act (Canada) and disclosure thereunder to the extent
that it is applicable, whenever interest to be paid hereunder is to be
calculated on the basis of a 360-day year or any other period of time that is
less than a calendar year, the yearly rate of interest to which the rate
determined pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by either 360 days or such other period of
time, as the case may be.
6.7 Default Rate. Upon the occurrence of any default or after maturity or after
judgment has been rendered on any obligation under this Agreement, all amounts
outstanding under this Agreement, including any interest, fees, or costs which
are not paid when due, will at the option of the Bank bear interest at a rate
which is the lesser of (i) the Maximum Rate or (ii) 6.0 percentage point(s)
higher than the rate of interest otherwise provided under this Agreement. This
may result in compounding of interest. This will not constitute a waiver of any
default.
6.8 Taxes. All payments by the Borrower to the Bank hereunder shall be made to
the Bank in full without set-off or counterclaim and free and clear of and
exempt from and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties, or charges of whatsoever
nature imposed by any government or any political subdivision or taxing
authority thereof. The Borrower shall reimburse the Bank for any taxes imposed
on or withheld from such payments (other than taxes imposed on the Bank’s
income, and franchise taxes imposed on the Bank, by the jurisdiction under the
laws of which the Bank is organized or any political subdivision thereof).
6.9 Overdrafts. At the Bank’s sole option in each instance, the Bank may do one
of the following:

(a)   The Bank may make advances under this Agreement to prevent or cover an
overdraft on any account of a Borrower with the Bank. Each such advance will
accrue interest from the date of the advance or the date on which the account is
overdrawn, whichever occurs first, at the interest rate described in this
Agreement. The Bank may make such advances even if the advances may cause any
credit limit under this Agreement to be exceeded.

(b)   The Bank may reduce the amount of credit otherwise available under this
Agreement by the amount of any overdraft on any account of the Borrower with the
Bank.

This paragraph shall not be deemed to authorize the Borrower to create
overdrafts on any of the Borrower’s accounts with the Bank.
6.10 Payments in Kind. If the Bank requires delivery in kind of the proceeds of
collection of the Borrower’s accounts receivable, such proceeds shall be
credited to interest, principal, and other sums owed to the Bank under this
Agreement in the order and proportion determined by the Bank in its sole
discretion. All such credits will be conditioned upon collection and any
returned items may, at the Bank’s option, be charged to the Borrower.
6.11 Judgment Currency. In the event of a judgment or order being rendered by
any court or tribunal for the payment of any amounts owing to the Bank under
this Agreement or for the payment of damages in respect of any breach of this
Agreement or under or in respect of a judgment or order of another court

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or tribunal for the payment of such amounts or damages, such judgment or order
being expressed in a currency (the ‘Judgment Currency”) other than the currency
payable hereunder or thereunder (the “Agreed Currency”), the party against whom
the judgment or order is made shall indemnify and hold the Bank harmless against
any deficiency in terms of the Agreed Currency in the amounts received by the
Bank arising or resulting from any variation as between (a) the exchange rate at
which the Agreed Currency is converted into the Judgment Currency for the
purposes of such judgment or order, and (b) the exchange rate at which the Bank
is able to purchase the Agreed Currency with the amount of the Judgment Currency
actually received by the Bank on the date of such receipt. The indemnity in this
Section shall constitute a separate and independent obligation from the other
obligations of the Borrower.
7. CONDITIONS
Before the Bank is required to extend any credit to the Borrower under this
Agreement, it must receive any documents and other items it may reasonably
require, in form and content acceptable to the Bank, including any items
specifically listed below.
7.1 Authorizations. If the Borrower or any guarantor is anything other than a
natural person, evidence that the execution, delivery and performance by the
Borrower and/or such guarantor of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.
7.2 Governing Documents. If required by the Bank, a copy of the Borrower’s
organizational documents.
7.3 Security Agreements. Signed original security agreements covering the
personal property collateral which the Bank requires.
7.4 Perfection and Evidence of Priority. Evidence that the security interests
and liens in favor of the Bank are valid, enforceable, properly perfected in a
manner acceptable to the Bank and prior to all others’ rights and interests,
except those the Bank consents to in writing. All title documents for motor
vehicles which are part of the collateral must show the Bank’s interest.
7.5 Payment of Fees. Payment of all fees and other amounts due and owing to the
Bank, including without limitation payment of all accrued and unpaid expenses
incurred by the Bank as required by the paragraph entitled “Reimbursement
Costs.”
7.6 Repayment of Other Credit Agreement. Evidence that the existing financing
agreements with Crossroads Debt, LLC and with Gulf Coast Bank and Trust Company
have been or will be repaid and cancelled on or before the first disbursement
under this Agreement.
7.7 Good Standing. Certificates of good standing for the Borrower from its state
of formation or jurisdiction of incorporation, and from any other state,
province, territory, or other jurisdiction in which the Borrower is required to
qualify to conduct its business.
7.8 Landlord Agreement. For any personal property collateral located on real
property which is subject to a mortgage or deed of trust or which is not owned
by the Borrower (or the grantor of the security interest), an agreement from the
owner of the real property and the holder of any such mortgage or deed of trust.
7.9 Insurance. Evidence of insurance coverage, as required in the “Covenants”
section of this Agreement.
7.10 Appraisals. Appraisals prepared by appraisers acceptable to the Bank with
respect to the liquidation value of the Borrower’s inventory and equipment.

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7.11 Environmental Information. A completed Bank form Environmental
Questionnaire.
8. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewal of these representations and
warranties as of the date of the request:
8.1 Formation. If the Borrower is anything other than a natural person, it is
duly formed and existing under the laws of the state, province, territory, or
other jurisdiction where organized.
8.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower’s powers, have been duly authorized, and do
not conflict with any of its organizational papers.
8.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
8.4 Good Standing. In each state, province, territory, or other jurisdiction in
which the Borrower does business, it is properly licensed, in good standing,
and, where required, in compliance with fictitious name statutes.
8.5 No Conflicts. This Agreement does not conflict with any law, agreement, or
obligation by which the Borrower is bound.
8.6 Financial Information. All financial and other information that has been or
will be supplied to the Bank is sufficiently complete to give the Bank accurate
knowledge of the Borrower’s (and any guarantor’s) financial condition, including
all material contingent liabilities. Since the date of the most recent financial
statement provided to the Bank, there has been no material adverse change in the
business condition (financial or otherwise), operations, properties or prospects
of the Borrower (or any guarantor). If the Borrower is comprised of the trustees
of a trust, the foregoing representations shall also pertain to the trustor(s)
of the trust.
8.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower’s
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.
8.8 Collateral. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others, except those which have been approved by the Bank in
writing.
8.9 Permits, Franchises. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights, copyrights, and fictitious name rights necessary to
enable it to conduct the business in which it is now engaged.
8.10 Other Obligations. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed in
writing to the Bank.
8.11 Tax Matters. The Borrower has no knowledge of any pending assessments or
adjustments of its income tax for any year and all taxes due have been paid,
except as have been disclosed in writing to the Bank.
8.12 No Event of Default. There is no event which is, or with notice or lapse of
time or both would be,

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a default under this Agreement.
8.13 Insurance. The Borrower has obtained, and maintained in effect, the
insurance coverage required in the “Covenants” section of this Agreement.
8.14 Merchantable Inventory; Compliance with FLSA. All inventory which is
included in the Borrowing Base is of good and merchantable quality and free from
defects, and has been produced in compliance with the requirements of the U.S.
Fair Labor Standards Act (29 U.S.C. §§201 et seq.) (“FLSA”). If any inventory
has been manufactured by third party contractors, the Borrower has monitored the
contractor’s operations for compliance with the FLSA, and, based upon that
monitoring, the Borrower has assured itself that the inventory has been produced
in compliance with the FLSA.
9. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
9.1 Use of Proceeds.

(a)   To use the proceeds of Facility No. 1 only for working capital.

(b)   The proceeds of the credit extended under this Loan Agreement may not be
used directly or indirectly to purchase or carry any “margin stock” as that term
is defined in Regulation U of the Board of Governors of the Federal Reserve
System, or extend credit to or invest in other parties for the purpose of
purchasing or carrying any such “margin stock,” or to reduce or retire any
indebtedness incurred for such purpose.

9.2 Financial Information. To provide the following financial information and
statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time. The Bank reserves the
right, upon written notice to the Borrower, to require the Borrower to deliver
financial information and statements to the Bank more frequently than otherwise
provided below, and to use such additional information and statements to measure
any applicable financial covenants in this Agreement.

(a)   Within 120 days of the fiscal year end, the annual financial statements of
American Locker. These financial statements must be audited (with an opinion
satisfactory to the Bank) by a Certified Public Accountant acceptable to the
Bank. The statements shall be prepared on a consolidated basis.

(b)   Within 45 days of the period’s end (including the last period in each
fiscal year), quarterly financial statements of American Locker, certified and
dated by an authorized financial officer. These financial statements may be
company-prepared. The statements shall be prepared on a consolidated basis.

(c)   Promptly, upon sending or receipt, copies of any management letters and
correspondence relating to management letters, sent or received by the Borrower
to or from the Borrower’s auditor. If no management letter is prepared, the Bank
may, in its discretion, request a letter from such auditor stating that no
deficiencies were noted that would otherwise be addressed in a management
letter.

(d)   Copies of the Form 10-K Annual Report, Form 10-Q Quarterly Report and Form
8-K Current Report for American Locker within 45 days after the date of filing
with the Securities and Exchange Commission.

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(e)   Within 45 days of the end of each fiscal year and within 45 days of the
end of each quarter, a compliance certificate of the Borrower, signed by an
authorized financial officer and setting forth (i) the information and
computations (in sufficient detail) to establish compliance with all financial
covenants at the end of the period covered by the financial statements then
being furnished and (ii) whether there existed as of the date of such financial
statements and whether there exists as of the date of the certificate, any
default under this Agreement applicable to the party submitting the information
and, if any such default exists, specifying the nature thereof and the action
the party is taking and proposes to take with respect thereto.

(f)   A detailed aging of the Borrower’s receivables by invoice or a summary
aging by account debtor, as specified by the Bank, within fifteen (15) days
after the end of each month.

(g)   Promptly upon the Bank’s request, such other books, records, statements,
lists of property and accounts, budgets, forecasts or reports as to the Borrower
and as to each guarantor of the Borrower’s obligations to the Bank as the Bank
may request.

(h)   A borrowing certificate setting forth the amount of Acceptable Receivables
and Acceptable Inventory as of the last day of each month within fifteen
(15) days after month end and, upon the Bank’s request, copies of the invoices
or the record of invoices from the Borrower’s sales journal for such Acceptable
Receivables, copies of the delivery receipts, purchase orders, shipping
instructions, bills of lading and other documentation pertaining to such
Acceptable Receivables, and copies of the cash receipts journal pertaining to
the borrowing certificate.

(i)   A summary aging by vendor of accounts payable within fifteen (15) days
after the end of each month.

(j)   If the Bank requires the Borrower to deliver the proceeds of accounts
receivable to the Bank upon collection by the Borrower, a schedule of the
amounts so collected and delivered to the Bank.

(k)   An inventory listing within fifteen (15) days after the end of each month.
The listing must include a description of the inventory, its location and cost,
and such other information as the Bank may require.

(l)   Promptly upon the Bank’s request, such other books, records, statements,
lists of property and accounts, budgets, forecasts or reports as to the Borrower
and as to each guarantor of the Borrower’s obligations to the Bank as the Bank
may request.

9.3 Funded Debt to EBITDA Ratio. With respect to American Locker, to maintain on
a consolidated basis a ratio of Funded Debt to EBITDA not exceeding the ratios
indicated for each period specified below:

          Period   Ratios
From the date of this Agreement through 3/31/2011
    4:1.0  
From 6/30/2011 and thereafter
    3.5:1.0  

“Funded Debt” means all outstanding liabilities for borrowed money and other
interest-bearing liabilities, including current and long term debt, less the
non-current portion of Subordinated Liabilities.
“EBITDA” means net income, less income or plus loss from discontinued operations
and extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization, plus non-recurring and unreimbursed
moving expenses up to a maximum of $300,000.00, and non-cash stock compensation
expense. This ratio will be calculated at the end of each reporting period for
which the

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Bank requires financial statements, using the results of the twelve-month period
ending with that reporting period.
“Subordinated Liabilities” means liabilities subordinated to the Borrower’s
obligations to the Bank in a manner acceptable to the Bank in its sole
discretion.
9.4 Basic Fixed Charge Coverage Ratio. With respect to American Locker, to
maintain on a consolidated basis a Basic Fixed Charge Coverage Ratio of at least
1.25:1.0.
“Basic Fixed Charge Coverage Ratio” means the ratio of (a) the sum of EBITDA
plus lease expense and cash paid for rent, minus cash paid for income tax, minus
dividends, withdrawals, and other distributions, to (b) the sum of interest
expense, lease expense, cash paid for rent, the current portion of long term
debt and the current portion of capitalized lease obligations.
“EBITDA” means net income, less income or plus loss from discontinued operations
and extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization, plus non-recurring and unreimbursed
moving expenses up to a maximum of $300,000.00, and non-cash stock compensation
expense.
This ratio will be calculated at the end of each reporting period for which the
Bank requires financial statements, using the results of the twelve-month period
ending with that reporting period. The current portion of long-term liabilities
will be measured as of the date twelve (12) months prior to the current
financial statement.
9.5 Bank as Principal Depository. To maintain the Bank or one of its affiliates
as its principal depository bank, including for the maintenance of business,
cash management, operating and administrative deposit accounts.
9.6 Other Debts. Not to have outstanding or incur any direct or contingent
liabilities or lease obligations (other than those to the Bank), or become
liable for the liabilities of others, without the Bank’s written consent. This
does not prohibit:

(a)   Acquiring goods, supplies, or merchandise on normal trade credit.

(b)   Endorsing negotiable instruments received in the usual course of business.

(c)   Obtaining surety bonds in the usual course of business.

(d)   Liabilities, lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank.

(e)   Additional debts and lease obligations for business purposes which do not
exceed a total principal amount of One Hundred Thousand and No/100 Dollars
($100,000.00) outstanding at any one time.

9.7 Other Liens. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property the Borrower now or later owns, except:

(a)   Liens and security interests in favor of the Bank.

(b)   Liens for taxes not yet due.

(c)   Liens outstanding on the date of this Agreement disclosed in writing to
the Bank.

(d) Additional purchase money security interests in assets acquired after the
date of this Agreement.

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9.8 Maintenance of Assets.

(a)   Not to sell, assign, lease, transfer or otherwise dispose of any part of
the Borrower’s business or the Borrower’s assets except in the ordinary course
of the Borrower’s business.

(b)   Not to sell, assign, lease, transfer or otherwise dispose of any assets
for less than fair market value, or enter into any agreement to do so.

(c)   Not to enter into any sale and leaseback agreement covering any of its
fixed assets.

(d)   To maintain and preserve all rights, privileges, and franchises the
Borrower now has.

(e)   To make any repairs, renewals, or replacements to keep the Borrower’s
properties in good working condition.

9.9 Investments. Not to have any existing, or make any new, investments in any
individual or entity, or make any capital contributions or other transfers of
assets to any individual or entity, except for:

(a)   Existing investments disclosed to the Bank in writing.

(b)   Investments in the Borrower’s current subsidiaries.

(c)   Investments in any of the following:

  (i)   certificates of deposit;     (ii)   U.S. treasury bills and other
obligations of the federal government;     (iii)   readily marketable securities
(including commercial paper, but excluding restricted stock and stock subject to
the provisions of Rule 144 of the Securities and Exchange Commission).

9.10 Loans. Not to make any loans, advances or other extensions of credit to any
individual or entity, except for:

(a)   Existing extensions of credit disclosed to the Bank in writing.

(b)   Extensions of credit to the Borrower’s current subsidiaries.

(c)   Extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business to non-affiliated entities.

9.11 Change of Management. Not to make any substantial change in the present
executive or management personnel of the Borrower.
9.12 Change of Ownership. Not to cause, permit, or suffer any change in capital
ownership such that American Locker ceases to own and control, directly and
indirectly, at least one hundred percent (100%) of the capital ownership of
Security Systems, Security Manufacturing and Canadian Locker.
9.13 Additional Negative Covenants. Not to, without the Bank’s written consent:

(a)   Enter into any consolidation, merger, amalgamation, or other combination,
or become a partner in a partnership, a member of a joint venture, or a member
of a limited liability company.

(b)   Acquire or purchase a business or its assets.

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(c)   Engage in any business activities substantially different from the
Borrower’s present business.

(d)   Liquidate or dissolve the Borrower’s business.

(e)   Voluntarily suspend its business for more than fifteen (15) days in any
annual (90) day period.

9.14 Notices to Bank. To promptly notify the Bank in writing of:

(a)   Any lawsuit over Fifty Thousand and No/100 Dollars ($50,000.00) against
the Borrower or any Obligor.

(b)   Any substantial dispute between any governmental authority and the
Borrower or any Obligor.

(c)   Any event of default under this Agreement, or any event which, with notice
or lapse of time or both, would constitute an event of default.

(d)   Any material adverse change in the Borrower’s or any Obligor’s business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit.

(e)   Any change in the Borrower’s or any Obligor’s name, legal structure,
principal residence (for an individual), state, province, territory, or other
jurisdiction of registration (for a registered entity), place of business, or
chief executive office if the Borrower or any Obligor has more than one place of
business.

(f)   Any actual contingent liabilities of the Borrower or any Obligor, and any
such contingent liabilities which are reasonably foreseeable, where such
liabilities are in excess of Fifty Thousand and No/100 Dollars ($50,000.00) in
the aggregate.

For purposes of this Agreement, “Obligor” shall mean any guarantor, any party
pledging collateral to the Bank, or, if the Borrower is comprised of the
trustees of a trust, any trustor.
9.15 Insurance.

(a)   General Business Insurance. To maintain insurance satisfactory to the Bank
as to amount, nature and carrier covering property damage (including loss of use
and occupancy) to any of the Borrower’s properties, business interruption
insurance, public liability insurance including coverage for contractual
liability, product liability and workers’ compensation, and any other insurance
which is usual for the Borrower’s business. Each policy shall provide for at
least thirty (30) days prior notice to the Bank of any cancellation thereof.

(b)   Insurance Covering Collateral. To maintain all risk property damage
insurance policies (including without limitation windstorm coverage, and
hurricane coverage as applicable) covering the tangible property comprising the
collateral. Each insurance policy must be for the full replacement cost of the
collateral and include a replacement cost endorsement. The insurance must be
issued by an insurance company acceptable to the Bank and must include a
lender’s loss payable endorsement in favor of the Bank in a form acceptable to
the Bank.

(c)   Evidence of Insurance. Upon the request of the Bank, to deliver to the
Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.

9.16 Compliance with Laws. To comply with the laws (including any fictitious or
trade name statute), regulations, and orders of any government body with
authority over the Borrower’s business. The Bank shall have no obligation to
make any advance to the Borrower except in compliance with all applicable laws
and regulations and the Borrower shall fully cooperate with the Bank in
complying with all such

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applicable laws and regulations.
9.17 ERISA Plans. Promptly during each year, to pay and cause any subsidiaries
to pay contributions adequate to meet at least the minimum funding standards
under ERISA with respect to each and every Plan; file each annual report
required to be filed pursuant to ERISA in connection with each Plan for each
year; and notify the Bank within ten (10) days of the occurrence of any
Reportable Event that might constitute grounds for termination of any capital
Plan by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any Plan.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Capitalized terms in this paragraph shall have the meanings
defined within ERISA.
9.18 Canadian Pension Plans. Promptly during each year to make and cause any
subsidiaries to make all contributions required to be made to the appropriate
funding agency in accordance with all applicable laws and the terms of, and to
fund in accordance with the terms of, each “pension plan” or “plan” which is
subject to the funding requirements of applicable pension benefits legislation
in any jurisdiction of Canada and is applicable to employees resident in Canada
of the Borrower, and each pension benefit plan or similar arrangement applicable
to employees of the Borrower (the “Canadian Pension Plan”).
9.19 Books and Records. To maintain adequate books and records.
9.20 Audits. To allow the Bank and its agents to inspect the Borrower’s
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrower’s properties, books or records are in
the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank’s requests for information concerning such
properties, books and records.
9.21 Perfection of Liens. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.
9.22 Cooperation. To take any action reasonably requested by the Bank to carry
out the intent of this Agreement.
10. HAZARDOUS SUBSTANCES
10.1 Indemnity Regarding Hazardous Substances.
The Borrower will indemnify and hold harmless the Bank from any loss or
liability the Bank incurs in connection with or as a result of this Agreement,
which directly or indirectly arises out of the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or
presence of a hazardous substance. This indemnity will apply whether the
hazardous substance is on, under or about the Borrower’s property or operations
or property leased to the Borrower. The indemnity includes but is not limited to
attorneys’ fees (including the reasonable estimate of the allocated cost of
in-house counsel and staff). The indemnity extends to the Bank, its parent,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns.
10.2 Compliance Regarding Hazardous Substances.
The Borrower represents and warrants that the Borrower has complied with all
current and future laws, regulations and ordinances or other requirements of any
governmental authority relating to or imposing liability or standards of conduct
concerning protection of health or the environment or hazardous substances.

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10.3 Notices Regarding Hazardous Substances.
Until full repayment of the loan, the Borrower will promptly notify the Bank in
writing of any threatened or pending investigation of the Borrower or its
operations by any governmental agency under any current or future law,
regulation or ordinance pertaining to any hazardous substance.
10.4 Site Visits, Observations and Testing.
The Bank and its agents and representatives will have the right at any
reasonable time, after giving reasonable notice to the Borrower, to enter and
visit any locations where the collateral securing this Agreement (the
“Collateral”) is located for the purposes of observing the Collateral, taking
and removing environmental samples, and conducting tests. The Borrower shall
reimburse the Bank on demand for the costs of any such environmental
investigation and testing. The Bank will make reasonable efforts during any site
visit, observation or testing conducted pursuant this paragraph to avoid
interfering with the Borrower’s use of the Collateral. The Bank is under no duty
to observe the Collateral or to conduct tests, and any such acts by the Bank
will be solely for the purposes of protecting the Bank’s security and preserving
the Bank’s rights under this Agreement. No site visit, observation or testing or
any report or findings made as a result thereof (“Environmental Report”)
(i) will result in a waiver of any default of the Borrower; (ii) impose any
liability on the Bank; or (iii) be a representation or warranty of any kind
regarding the Collateral (including its condition or value or compliance with
any laws) or the Environmental Report (including its accuracy or completeness).
In the event the Bank has a duty or obligation under applicable laws,
regulations or other requirements to disclose an Environmental Report to the
Borrower or any other party, the Borrower authorizes the Bank to make such a
disclosure. The Bank may also disclose an Environmental Report to any regulatory
authority, and to any other parties as necessary or appropriate in the Bank’s
judgment. The Borrower further understands and agrees that any Environmental
Report or other information regarding a site visit, observation or testing that
is disclosed to the Borrower by the Bank or its agents and representatives is to
be evaluated (including any reporting or other disclosure obligations of the
Borrower) by the Borrower without advice or assistance from the Bank.
10.5 Definition of Hazardous Substances.
“Hazardous substances” means any substance, material or waste that is or becomes
designated or regulated as “toxic,” “hazardous,” “pollutant,” or “contaminant”
or a similar designation or regulation under any current or future federal,
state, provincial, territorial, or local law (whether under common law, statute,
regulation or otherwise) or judicial or administrative interpretation of such,
including without limitation petroleum or natural gas.
10.6 Continuing Obligation.
The Borrower’s obligations to the Bank under this Article, except the obligation
to give notices to the Bank, shall survive termination of this Agreement and
repayment of the Borrower’s obligations to the Bank under this Agreement.
11. DEFAULT AND REMEDIES
If any of the following events of default occurs, the Bank may do one or more of
the following: declare the Borrower in default, stop making any additional
credit available to the Borrower, and require the Borrower to repay its entire
debt immediately and without prior notice. If an event which, with notice or the
passage of time, will constitute an event of default has occurred and is
continuing, the Bank has no obligation to make advances or extend additional
credit under this Agreement. In addition, if any event of default occurs, the
Bank shall have all rights, powers and remedies available under any instruments
and agreements required by or executed in connection with this Agreement, as
well as all rights and remedies available at law or in equity. If an event of
default occurs under the paragraph entitled “Bankruptcy,” below, with respect to
the Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.

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11.1 Failure to Pay. The Borrower fails to make a payment under this Agreement
when due.
11.2 Other Bank Agreements. Any default occurs under any other agreement the
Borrower (or any Obligor) or any of the Borrower’s related entities or
affiliates has with the Bank or any affiliate of the Bank. If, in the Bank’s
opinion, the breach is capable of being remedied, the breach will not be
considered an event of default under this Agreement unless the default remains
uncured for a period of ten (10) days following the occurrence thereof.
11.3 Cross-default. Any default occurs under any agreement in connection with
any credit the Borrower (or any Obligor) or any of the Borrower’s related
entities or affiliates has obtained from anyone else or which the Borrower (or
any Obligor) or any of the Borrower’s related entities or affiliates has
guaranteed if the default is not cured within ten (10) days following the
occurrence thereof.
11.4 False Information. The Borrower or any Obligor has given the Bank false or
misleading information or representations.
11.5 Bankruptcy. The Borrower, any Obligor, or any general partner of the
Borrower or of any Obligor files a bankruptcy petition, a bankruptcy petition is
filed against any of the foregoing parties, or the Borrower, any Obligor, or any
general partner of the Borrower or of any Obligor makes a general assignment for
the benefit of creditors. The default will be deemed cured if any bankruptcy
petition filed against the Borrower, any Obligor, or any general partner of the
Borrower or of any Obligor is dismissed within a period of forty-five (45) days
after the filing; provided, however, that such cure opportunity will be
terminated upon the entry of an order for relief in any bankruptcy case arising
from such a petition.
11.6 Receivers. A receiver, receiver-manager, or similar official is appointed
for a substantial portion of the Borrower’s or any Obligor’s business, or the
business is terminated, or, if any Obligor is anything other than a natural
person, such Obligor is liquidated or dissolved.
11.7 Lien Priority. The Bank fails to have an enforceable first lien (except for
any prior liens to which the Bank has consented in writing) on or security
interest in any property given as security for this Agreement (or any guaranty).
11.8 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or more trade
creditors against the Borrower or any Obligor in an aggregate amount of Fifty
Thousand and No/100 Dollars ($50,000.00) or more in excess of any insurance
coverage.
11.9 Judgments. Any judgments or arbitration awards are entered against the
Borrower or any Obligor, or the Borrower or any Obligor enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00)
or more in excess of any insurance coverage.
11.10 Death. If the Borrower or any Obligor is a natural person, the Borrower or
such Obligor dies or becomes legally incompetent; if the Borrower or any Obligor
is a trust, a trustor dies or becomes legally incompetent; if the Borrower or
any Obligor is a partnership, any general partner dies or becomes legally
incompetent.
11.11 Material Adverse Change. A material adverse change occurs, or is
reasonably likely to occur, in the Borrower’s (or any Obligor’s) business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit; or the Bank determines that it is insecure for any
other reason.
11.12 Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower’s or any Obligor’s financial
condition or ability to repay.
11.13 Default under Related Documents. Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other
document required by or delivered in

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connection with this Agreement or any such document is no longer in effect, or
any guarantor purports to revoke or disavow the guaranty.
11.14 ERISA Plans.
Any one or more of the following events occurs with respect to a Plan of the
Borrower subject to Title IV of ERISA, provided such event or events could
reasonably be expected, in the judgment of the Bank, to subject the Borrower to
any tax, penalty or liability (or any combination of the foregoing) which, in
the aggregate, could have a material adverse effect on the financial condition
of the Borrower:

(a)   A reportable event shall occur under Section 4043(c) of ERISA with respect
to a Plan.

(b)   Any Plan termination (or commencement of proceedings to terminate a Plan)
or the full or partial withdrawal from a Plan by the Borrower or any ERISA
Affiliate.

11.15 Canadian Pension Plans. Any one or more of the following events occurs
with respect to a Canadian Pension Plan of the Borrower, provided such event or
events could reasonably be expected in the judgment of the Bank, to subject the
Borrower to any tax, penalty, or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of the Borrower:

(a)   A contribution failure shall occur with respect to any Canadian Pension
Plan sufficient to give rise to a lien or charge under any applicable pension
benefits laws of any jurisdiction.

(b)   A condition exists or an event or transaction occurs with respect to any
Canadian Pension Plan which might result in the incurrence by the Borrower of
any fine or penalty in excess of $100,000.

(c)   A condition exists or an event or transaction occurs with respect to any
Canadian Pension Plan that has resulted or could reasonably be expected to
result in any Pension Plan having its registration revoked or refused for the
purposes of any applicable pension benefits or tax laws or being placed under
the administration of any relevant pension benefits regulatory authority or
being required to pay any taxes or penalties under any applicable pension
benefits or tax laws.

11.16 Other Breach Under Agreement. A default occurs under any other term or
condition of this Agreement not specifically referred to in this Article. This
includes any failure or anticipated failure by the Borrower (or any other party
named in the Covenants section) to comply with any financial covenants set forth
in this Agreement, whether such failure is evidenced by financial statements
delivered to the Bank or is otherwise known to the Borrower or the Bank.
12. ENFORCING THIS AGREEMENT; MISCELLANEOUS
12.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
12.2 Governing Law.
This Agreement is governed by and shall be interpreted according to federal law
and the laws of Texas. If state or local law and federal law are inconsistent,
or if state or local law is preempted by federal law, federal law governs. If
the Bank has greater rights or remedies under federal law, whether as a national
bank or otherwise, this paragraph shall not be deemed to deprive the Bank of
such rights and remedies as may be available under federal law. It is the
intention of the parties to comply with applicable usury laws. The parties agree
that the total amount of interest contracted for, charged, collected or received
by

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the Bank under this Agreement shall not exceed the Maximum Rate. To the extent,
if any, that Chapter 303 of the Texas Finance Code (the “Code”) is relevant to
the Bank for purposes of determining the Maximum Rate, the parties elect to
determine the Maximum Rate under the Code pursuant to the “weekly ceiling” from
time to time in effect, as referred to and defined in § 303.001-303.016 of the
Code; subject, however, to any right the Bank subsequently may have under
applicable law to change the method of determining the Maximum Rate.
Notwithstanding any contrary provisions contained herein, (a) the Maximum Rate
shall be calculated on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be; (b) in determining whether the
interest hereunder exceeds interest at the Maximum Rate, the total amount of
interest shall be spread throughout the entire term of this Agreement until its
payment in full; (c) if at any time the interest rate chargeable under this
Agreement would exceed the Maximum Rate, thereby causing the interest payable
under this Agreement to be limited to the Maximum Rate, then any subsequent
reductions in the interest rate(s) shall not reduce the rate of interest charged
under this Agreement below the Maximum Rate until the total amount of interest
accrued from and after the date of this Agreement equals the amount of interest
which would have accrued if the interest rate(s) had at all times been in
effect; (d) if the Bank ever charges or receives anything of value which is
deemed to be interest under applicable Texas law, and if the occurrence of any
event, including acceleration of maturity of obligations owing to the Bank,
should cause such interest to exceed the maximum lawful amount, any amount which
exceeds interest at the Maximum Rate shall be applied to the reduction of the
unpaid principal balance under this Agreement or any other indebtedness owed to
the Bank by the Borrower, and if this Agreement and such other indebtedness are
paid in full, any remaining excess shall be paid to the Borrower; and
(e) Chapter 346 of the Code shall not be applicable to this Agreement or the
indebtedness outstanding hereunder.
12.3 Successors and Assigns. This Agreement is binding on the Borrower’s and the
Bank’s successors and assignees. The Borrower agrees that it may not assign this
Agreement without the Bank’s prior consent. The Bank may sell participations in
or assign this loan, and may exchange information about the Borrower (including,
without limitation, any information regarding any hazardous substances) with
actual or potential participants or. If a participation is sold or the loan is
assigned, the purchaser will have the right of set-off against the Borrower.
12.4 Dispute Resolution Provision.
This paragraph, including the subparagraphs below, is referred to as the
“Dispute Resolution Provision.” This Dispute Resolution Provision is a material
inducement for the parties entering into this agreement.

(a)   This Dispute Resolution Provision concerns the resolution of any
controversies or claims between the parties, whether arising in contract, tort
or by statute, including but not limited to controversies or claims that arise
out of or relate to: (i) this agreement (including any renewals, extensions or
modifications); or (ii) any document related to this agreement (collectively a
“Claim”). For the purposes of this Dispute Resolution Provision only, the term
“parties” shall include any parent corporation, subsidiary or affiliate of the
Bank involved in the servicing, management or administration of any obligation
described or evidenced by this agreement.

(b)   At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U.S. Code) (the “Act”). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.

(c)   Arbitration proceedings will be determined in accordance with the Act, the
then-current rules and procedures for the arbitration of financial services
disputes of the American Arbitration Association or any successor thereof
(“AAA”), and the terms of this Dispute Resolution Provision. In the event of any
inconsistency, the terms of this Dispute Resolution Provision shall control. If
AAA is unwilling or unable to (i) serve as the provider of arbitration or
(ii) enforce any provision of this arbitration clause, the Bank may designate
another arbitration organization with similar procedures to serve as the
provider of arbitration.

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(d)   The arbitration shall be administered by AAA and conducted, unless
otherwise required by law, in any U.S. state where real or tangible personal
property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed Five Million Dollars ($5,000,000), upon the request of any party, the
Claims shall be decided by three arbitrators. All arbitration hearings shall
commence within ninety (90) days of the demand for arbitration and close within
ninety (90) days of commencement and the award of the arbitrator(s) shall be
issued within thirty (30) days of the close of the hearing. However, the
arbitrator(s), upon a showing of good cause, may extend the commencement of the
hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide
a concise written statement of reasons for the award. The arbitration award may
be submitted to any court having jurisdiction to be confirmed and have judgment
entered and enforced.

(e)   The arbitrator(s) will give effect to statutes of limitation in
determining any Claim and shall dismiss the arbitration if the Claim is barred
under the applicable statutes of limitation. For purposes of the application of
any statutes of limitation, the service on AAA under applicable AAA rules of a
notice of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable shall be
determined by the arbitrator(s), except as set forth at subparagraph (h) of this
Dispute Resolution Provision. The arbitrator(s) shall have the power to award
legal fees pursuant to the terms of this agreement.

(f)   This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or non-judicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.

(g)   The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.

(h)   Any arbitration or court trial (whether before a judge or jury) of any
Claim will take place on an individual basis without resort to any form of class
or representative action (the “Class Action Waiver”). The Class Action Waiver
precludes any party from participating in or being represented in any class or
representative action regarding a Claim. Regardless of anything else in this
Dispute Resolution Provision, the validity and effect of the Class Action Waiver
may be determined only by a court and not by an arbitrator. The parties to this
agreement acknowledge that the Class Action Waiver is material and essential to
the arbitration of any disputes between the parties and is nonseverable from the
agreement to arbitrate Claims. If the Class Action Waiver is limited, voided or
found unenforceable, then the parties’ agreement to arbitrate shall be null and
void with respect to such proceeding, subject to the right to appeal the
limitation or invalidation of the Class Action Waiver. The Parties acknowledge
and agree that under no circumstances will a class action be arbitrated.

(i)   By agreeing to binding arbitration, the parties irrevocably and
voluntarily waive any right they may have to a trial by jury in respect of any
Claim. Furthermore, without intending in any way to limit this agreement to
arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably
and voluntarily waive any right they may have to a trial by jury in respect of
such Claim. This waiver of jury trial shall remain in effect even if the Class
Action Waiver is limited, voided or found unenforceable. WHETHER THE CLAIM IS
DECIDED BY ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND
THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL
BY JURY TO THE EXTENT PERMITTED BY LAW.

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12.5 Severability; Waivers. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even if
it makes a loan after default. If the Bank waives a default, it may enforce a
later default. Any consent or waiver under this Agreement must be in writing.
12.6 Attorneys’ Fees. The Borrower shall reimburse the Bank for any reasonable
costs and attorneys’ fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, “workout” or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys’ fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code), the
Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act
(Canada), or any similar or successor statute, the Bank is entitled to recover
costs and reasonable attorneys’ fees incurred by the Bank related to the
preservation, protection, or enforcement of any rights of the Bank in such a
case. As used in this paragraph, “attorneys’ fees” includes the allocated costs
of the Bank’s in-house counsel.
12.7 Joint and Several Liability.

(a)   Each Borrower agrees that it is jointly and severally liable to the Bank
for the payment of all obligations arising under this Agreement, and that such
liability is independent of the obligations of the other Borrower(s). Each
obligation, promise, covenant, representation and warranty in this Agreement
shall be deemed to have been made by, and be binding upon, each Borrower, unless
this Agreement expressly provides otherwise. The Bank may bring an action
against any Borrower, whether an action is brought against the other
Borrower(s).

(b)   Each Borrower agrees that any release which may be given by the Bank to
the other Borrower(s) or any guarantor will not release such Borrower from its
obligations under this Agreement.

(c)   Each Borrower waives any right to assert against the Bank any defense,
setoff, counterclaim, or claims which such Borrower may have against the other
Borrower(s) or any other party liable to the Bank for the obligations of the
Borrowers under this Agreement.

(d)   Each Borrower waives any defense by reason of any other Borrower’s or any
other person’s defense, disability, or release from liability. The Bank can
exercise its rights against each Borrower even if any other Borrower or any
other person no longer is liable because of a statute of limitations or for
other reasons.

(e)   Each Borrower agrees that it is solely responsible for keeping itself
informed as to the financial condition of the other Borrower(s) and of all
circumstances which bear upon the risk of nonpayment. Each Borrower waives any
right it may have to require the Bank to disclose to such Borrower any
information which the Bank may now or hereafter acquire concerning the financial
condition of the other Borrower(s).

(f)   Each Borrower waives all rights to notices of default or nonperformance by
any other Borrower under this Agreement. Each Borrower further waives all rights
to notices of the existence or the creation of new indebtedness by any other
Borrower and all rights to any other notices to any party liable on any of the
credit extended under this Agreement.

(g)   The Borrowers represent and warrant to the Bank that each will derive
benefit, directly and indirectly, from the collective administration and
availability of credit under this Agreement. The Borrowers agree that the Bank
will not be required to inquire as to the disposition by any Borrower of funds
disbursed in accordance with the terms of this Agreement.

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(h)   Until all obligations of the Borrowers to the Bank under this Agreement
have been paid in full and any commitments of the Bank or facilities provided by
the Bank under this Agreement have been terminated, each Borrower (a) waives any
right of subrogation, reimbursement, indemnification and contribution
(contractual, statutory or otherwise), including without limitation, any claim
or right of subrogation under the Bankruptcy Code (Title 11, United States
Code), the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors
Arrangement Act (Canada), or any successor statute, which such Borrower may now
or hereafter have against any other Borrower with respect to the indebtedness
incurred under this Agreement; (b) waives any right to enforce any remedy which
the Bank now has or may hereafter have against any other Borrower, and waives
any benefit of, and any right to participate in, any security now or hereafter
held by the Bank.

(i)   Each Borrower waives any right to require the Bank to proceed against any
other Borrower or any other person; proceed against or exhaust any security; or
pursue any other remedy. Further, each Borrower consents to the taking of, or
failure to take, any action which might in any manner or to any extent vary the
risks of the Borrower under this Agreement or which, but for this provision,
might operate as a discharge of the Borrower.

12.8 Individual Liability. If the Borrower is a natural person, the Bank may
proceed against the Borrower’s business and non-business property in enforcing
this and other agreements relating to this loan. If the Borrower is a
partnership, the Bank may proceed against the business and non-business property
of each general partner of the Borrower in enforcing this and other agreements
relating to this loan.
12.9 Set-Off.

(a)   In addition to any rights and remedies of the Bank provided by law, upon
the occurrence and during the continuance of any event of default under this
Agreement, the Bank is authorized, at any time, to set off and apply any and all
Deposits of the Borrower or any Obligor held by the Bank against any and all
Obligations owing to the Bank. The set-off may be made irrespective of whether
or not the Bank shall have made demand under this Agreement or any guaranty, and
although such Obligations may be contingent or unmatured or denominated in a
currency different from that of the applicable Deposits.

(b)   The set-off may be made without prior notice to the Borrower or any other
party, any such notice being waived by the Borrower (on its own behalf and on
behalf of each Obligor) to the fullest extent permitted by law. The Bank agrees
promptly to notify the Borrower after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.

(c)   For the purposes of this paragraph, “Deposits” means any deposits (general
or special, time or demand, provisional or final, individual or joint) and any
instruments owned by the Borrower or any Obligor which come into the possession
or custody or under the control of the Bank. “Obligations” means all
obligations, now or hereafter existing, of the Borrower to the Bank under this
Agreement and under any other agreement or instrument executed in connection
with this Agreement, and the obligations to the Bank of any Obligor.

12.10 One Agreement. This Agreement and any related security or other agreements
required by this Agreement, collectively:

(a)   represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit;

(b)   replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and

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(c)   are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail. Any reference in any
related document to a “promissory note” or a “note” executed by the Borrower and
dated as of the date of this Agreement shall be deemed to refer to this
Agreement, as now in effect or as hereafter amended, renewed, or restated.
12.11 Indemnification. The Borrower will indemnify and hold the Bank harmless
from any loss, liability, damages, judgments, and costs of any kind relating to
or arising directly or indirectly out of (a) this Agreement or any document
required hereunder, (b) any credit extended or committed by the Bank to the
Borrower hereunder, (c) any claim, whether well-founded or otherwise, that there
has been a failure to comply with any law regulating the Borrower’s sales or
leases to or performance of services for debtors obligated upon the Borrower’s
accounts receivable and disclosures in connection therewith, and (d) any
litigation or proceeding related to or arising out of this Agreement, any such
document, any such credit, or any such claim. This indemnity includes but is not
limited to attorneys’ fees (including the allocated cost of in-house counsel).
This indemnity extends to the Bank, its parent, subsidiaries and all of their
directors, officers, employees, agents, successors, attorneys, and assigns. This
indemnity will survive repayment of the Borrower’s obligations to the Bank. All
sums due to the Bank hereunder shall be obligations of the Borrower, due and
payable immediately without demand.
12.12 Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrower, all notices required under this
Agreement shall be personally delivered or sent by first class mail, postage
prepaid, or by overnight courier, to the addresses on the signature page of this
Agreement, or sent by facsimile to the fax numbers listed on the signature page,
or to such other addresses as the Bank and the Borrower may specify from time to
time in writing. Notices and other communications shall be effective (i) if
mailed, upon the earlier of receipt or five (5) days after deposit in the U.S.
mail, first class, postage prepaid, or seven (7) days after deposit in mail in
Canada, first class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including telegram, lettergram
or mailgram), when delivered.
12.13 Headings. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this Agreement.
12.14 Counterparts. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.
12.15 Borrower Information; Reporting to Credit Bureaus. The Borrower authorizes
the Bank at any time to verify or check any information given by the Borrower to
the Bank, check the Borrower’s credit references, verify employment, and obtain
credit reports. The Borrower agrees that the Bank shall have the right at all
times to disclose and report to credit reporting agencies and credit rating
agencies such information pertaining to the Borrower and/or all guarantors as is
consistent with the Bank’s policies and practices from time to time in effect.
12.16 Disposition of Schedules and Reports. The Bank will not be obligated to
return any schedules, invoices, statements, budgets, forecasts, reports or other
papers delivered by the Borrower. The Bank will destroy or otherwise dispose of
such materials at such time as the Bank, in its discretion, deems appropriate.
12.17 Returned Merchandise. Until the Bank exercises its rights to collect the
accounts receivable as provided under any security agreement required under this
Agreement, the Borrower may continue its present policies for returned
merchandise and adjustments. Credit adjustments with respect to returned
merchandise shall be made immediately upon receipt of the merchandise by the
Borrower or upon such other disposition of the merchandise by the debtor in
accordance with the Borrower’s instructions. If a credit adjustment is made with
respect to any Acceptable Receivable, the amount of such adjustment

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shall no longer be included in the amount of such Acceptable Receivable in
computing the Borrowing Base.
12.18 Verification of Receivables. The Bank may at any time, either orally or in
writing, request confirmation from any debtor of the current amount and status
of the accounts receivable upon which such debtor is obligated.
12.19 Waiver of Confidentiality. The Borrower authorizes the Bank to discuss the
Borrower’s financial affairs and business operations with any accountants,
auditors, business consultants, or other professional advisors employed by the
Borrower, and authorizes such parties to disclose to the Bank such financial and
business information or reports (including management letters) concerning the
Borrower as the Bank may request.
12.20 Document Receipt Cut-Off Date. Unless this Agreement and any documents
required by this Agreement have been signed and returned to the Bank within ten
(10) days after the date of this Agreement (the “Document Receipt Cut-Off
Date”), the Bank shall have the right to notify the Borrower in writing that the
Bank’s commitment to extend credit under this Agreement has expired. If the
executed Agreement and accompanying loan documents are received after the
Document Receipt Cut-Off Date, the Bank shall have a reasonable period of time
after receipt of the executed Agreement and accompanying loan documents to
provide such notice.
12.21 Notice of Final Agreement.
THIS WRITTEN LOAN AGREEMENT AND THE LOAN DOCUMENTS EXECUTED IN CONNECTION
HEREWITH 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.
This Agreement is executed as of the date stated at the top of the first page.

                  Bank of America, N.A.   American Locker Group Incorporated    
 
               
By
  /s/ Tye McClure
 
  By   /s/ Paul Zaidins
 
    Typed Name: Tye McClure   Typed Name: Paul Zaidins     Title: Vice President
  Title: President and Chief Financial Officer    
 
                Address where notices to
the Bank are to be sent:   Address where notices to
the Borrower are to be sent:    
 
                500 West 7th Street, 2nd Floor
Fort Worth, Texas 76102
Facsimile: 1-800-210-1068   815 S. Main Street
Grapevine, Texas 76051
Telephone: 817-722-0131
Facsimile: 817-722-0100    

[Remainder of Page Intentionally Left Blank; Signatures Continue on Following
Page]

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  American Locker Security Systems, Inc.    
 
           
 
  By   /s/ Paul Zaidins         Typed Name: Paul Zaidins         Title:
President and Chief Financial Officer    
 
                Address where notices to
the Borrower are to be sent:    
 
                815 S. Main Street
Grapevine, Texas 76051
Telephone: 817-722-0131
Facsimile: 817-722-0100    
 
           
 
  Security Manufacturing Corporation    
 
           
 
  By   /s/ Paul Zaidins         Typed Name: Paul Zaidins         Title:
President and Chief Financial Officer    
 
                Address where notices to
the Borrower are to be sent:    
 
                815 S. Main Street
Grapevine, Texas 76051
Telephone: 817-722-0131
Facsimile: 817-722-0100    
 
           
 
  Canadian Locker Company Limited    
 
           
 
  By   /s/ Paul Zaidins         Typed Name: Paul Zaidins         Title:
President and Chief Financial Officer    
 
                Address where notices to
the Borrower are to be sent:    
 
                815 S. Main Street
Grapevine, Texas 76051
Telephone: 817-722-0131
Facsimile: 817-722-0100    

Federal law requires Bank of America, N.A. (the “Bank”) to provide the following
notice. The notice is not part of the foregoing agreement or instrument and may
not be altered. Please read the notice carefully.
          USA PATRIOT ACT NOTICE

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Federal law requires all financial institutions to obtain, verify and record
information that identifies each person who opens an account or obtains a loan.
The Bank will ask for the Borrower’s legal name, address, tax ID number or
social security number and other identifying information. The Bank may also ask
for additional information or documentation or take other actions reasonably
necessary to verify the identity of the Borrower, guarantors or other related
persons.

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