EXHIBIT 10.EE
LOAN AND SECURITY AGREEMENT
 
This Agreement is made this 20th day of April, 2010 by and among Crestmark Bank,
a Michigan banking corporation, whose address is 5480 Corporate Drive, Suite
350, Troy, Michigan 48098 ("Crestmark"), and Decorator Industries, Inc. a
Pennsylvania corporation ("Borrower") whose chief executive office is located at
10011 Pines Blvd., Pembroke Pines, FL 33024 and William Johnson with an address
at 11304 Port Street, Cooper City, FL 33026 and Michael Solomon with and address
at 1675 Lakeshore Circle, Weston, FL 33326 (collectively "Validity Guarantor").
 
BACKGROUND:
 
Borrower desires to borrow, from time to time, certain sums of money from
Crestmark on the terms and conditions set forth in this Agreement;
 
Crestmark is willing to lend such sums to Borrower, provided Borrower complies
with all of the terms and conditions set forth in this Agreement; and
 
The repayment of the Loan will be secured by a security interest in certain
personal property of Borrower.
 
NOW, THEREFORE, in consideration of the mutual promises and covenants and
subject to the terms and conditions of this Agreement, the parties agree as
follows:
 
1.    DEFINITIONS:
 
1.1 "Accounts Receivable" or "Account" has the meaning ascribed to such terms
under the UCC, and, without limiting the foregoing, will also mean and include
any and all other forms of obligations now owned or hereafter arising or
acquired by Borrower evidencing any obligation for payment for goods of any
kind, nature, or description sold or leased or services rendered, and all
proceeds of any of the foregoing.
 
1.2 "Account Debtor" means any party liable to Borrower for the payment of an
Account.
 
1.3 "Advance Formula" means an amount which is the lesser of:
 
(a) TWO MILLION AND NO/100 DOLLARS ($2,000,000) (the "Maximum Amount"); OR
 
(b) Up to EIGHTY-FIVE PERCENT (85%) of Eligible Accounts Receivable.
 
 
 

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The Advance Formula will be computed daily. Ineligible Accounts Receivable are
determined based on the most recent Accounts Receivable Aging Report and
Accounts Payable Aging Report received by Crestmark and at such times as
Crestmark deems necessary, but generally once per week, although they may be
determined more frequently
 
The amount that Borrower is otherwise entitled to borrow pursuant to this
formula may also be reduced by the reserve amount set forth in Section 2.7.
 
1.4 "Agreement" means this Loan and Security Agreement, and all amendments,
modifications, extensions and renewals hereof.
 
1.5 "Borrower" is defined in the preamble to this Agreement.
 
1.6 "Cash Collateral Account" is defined in Section 6.9.
 
1.7 "Collateral" means all of Borrower's, wherever located, and now owned or
hereafter acquired: (a) Accounts; (b) Goods; (c) Inventory; (d) Chattel Paper;
(e) Instruments, including Promissory Notes; (f) Documents; (g) Deposit
Accounts; (h) money (i) Letter of Credit Rights; (j) Supporting Obligations; and
(k) to the extent not listed above as original collateral, all proceeds and
products of the foregoing. Capitalized terms used in this paragraph or elsewhere
in this Agreement, but not otherwise defined herein, have the meanings given to
them under Article 9 of the UCC, or absent definition in Article 9, in any other
article of the UCC.
 
1.8 "Collateral Documents" means any and all documents, instruments, notes, and
agreements, referred to in this Agreement or executed in connection herewith,
now existing or hereafter arising, including the Note and all guaranties.
 
1.9 "Crestmark" is defined in the preamble to this Agreement.
 
1.10 "Default" means and exists upon the occurrence of any breach, omission,
violation, misstatement, non-observance or non-performance by Borrower or
Validity Guarantor of any representation, warranty, covenant, term, condition,
obligation, provision or undertaking under this Agreement or any of the
Collateral Documents, including, Borrower's failure to pay any Indebtedness
immediately on demand by Crestmark.-
 
1.11 "Eligible Account Receivable" means the face value stated on each Account
of Borrower that arises in the ordinary course of business and is represented by
an invoice of Borrower, which invoice is due and owing to Borrower, is free of
any dispute, offset or counterclaim and which invoice has all conditions
precedent thereto completely fulfilled. Excluded from an Eligible Account
Receivable is any Account which meets any of the following:
 
(a) any Account that is unpaid more than ninety (90) days after the date of the
invoice;
 
(b) any Account in which the Account Debtor is a parent, subsidiary or affiliate
of Borrower unless otherwise approved by Crestmark in its sole discretion,
determined in a commercially reasonable fashion.
 
(c) Accounts due from any one Account Debtor to the extent such Accounts are in
excess of the lesser of One Hundred Fifty Thousand Dollars and no/100 ($150,000)
or ten percent (10%) of the total outstanding Accounts of Borrower, however,
such limits may be increased for specified accounts upon the request of Borrower
subject to the reasonable consent of Crestmark.
 
(d) all Accounts due from any Account Debtor from whom twenty percent (20%) or
more of the total accounts of said Account Debtor remain unpaid more than ninety
(90) days after the date of the invoice;
 
(e) any Account in which the Account Debtor is the United States government, any
state of the United States, any city, town, or municipality, or any foreign
government, non-United States company, or a United States company located
outside of the United States except for Accounts from Account Debtor's located
in Canada ("Canada Accounts") from which payment shall be made in US Dollars and
the aggregate of such Canada Accounts shall not exceed five percent (5%) of the
total outstanding Eligible Accounts Receivable of Borrower without Crestmark's
prior consent.
 
(f) any Account arising as a result of a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, C.O.D., sale-and-return, sale-on-approval,
consignment or any other situation where payment by the Account Debtor may be
conditional;
(g) any Account which is a contra account or any Account from an Account Debtor
who is also Borrower's creditor or supplier, to the extent of the amount owing
by Borrower to the Account Debtor;
 
(h) any Account arising from tooling; and
 
(i) any Account or Account Debtor that is unacceptable to Crestmark in its sole
discretion, exercised in a commercially reasonable manner.
 
1.12 "GAAP" means generally accepted accounting principles as in effect in the
United States from time to time.
 
1.13 "Indebtedness" means all indebtedness of Borrower to Crestmark, now
existing r hereafter arising, including:
 
(a) the Loan, and all loans, indebtedness, expenses and liabilities of Borrower
and/or Validity Guarantor to Crestmark whether arising under this Agreement, any
of the Collateral Documents, or any other agreements or instruments of
whatsoever kind, nature and description, primary or secondary, direct, absolute
or contingent, due or to become due, and whether now existing or hereafter
arising and howsoever evidenced or acquired, and whether joint, several, or
joint and several;
 
(b) all advances made by Crestmark for the protection, maintenance or
preservation of the Collateral, including, advances for taxes, levies,
assessments, insurance or maintenance of the Collateral, and actual attorneys
fees;
 
 
 

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(c) all amounts owed under any modifications, renewals or extensions of any f
the foregoing;
 
(d) all costs and expenses, including actual attorneys' fees, incurred by
Crestmark in connection with or arising out of the Loan, the protection,
enforcement and collection of this Agreement, the Collateral Documents and the
Indebtedness and the disposition of the Collateral; and
 
(e) any of the foregoing that arises after the filing of a petition by or
against Borrower under the Bankruptcy Code, even if the obligations do not
accrue because of the automatic stay under Bankruptcy Code Section 362 or
otherwise.
 
1.14 "Loan" means the revolving line of credit loan as described in Section 2,
any Money Advances made thereunder, and the Note, collectively.
 
1.15 "Loan Account" means the account set up in Borrower's name on Crestmark's
books in connection with the Loan and in which all payments due to and from
Borrower will be reflected.
 
1.16 "Lockbox" is defined in Section 6.9.
 
1.17 "Money Advance" means a loan or disbursement of money by Crestmark, or any
other advance of credit by Crestmark, including, amounts for the payment of
interest, fees and expenses of Borrower under the Loan or any loan.
 
1.18 "Note" means the Promissory Note (Line of Credit) and any other note
executed by Borrower evidencing the Loan or a loan by Crestmark to Borrower,
including all renewals, extensions, amendments, modifications, restatements,
roll-overs or substitutions thereof, from time to time.
 
1.19 "Permitted Encumbrance" means any of the existing obligations set forth on
Exhibit "A," if any, without increase, amendment, or refinancing thereof. If
Exhibit "A" is left blank, no Permitted Encumbrances exist.
 
1.20 "Person" means and includes an individual, partnership, limited
partnership, corporation, limited liability company, trust, or governmental
agency.
 
1.21 "Subordinated Debt" means any and all indebtedness presently or in the
future incurred by Borrower to any creditor of Borrower entering into a written
subordination agreement with Crestmark.
 
1.22 "Tangible Net Worth" means, as of the date of determination, total assets
less total liabilities less the sum of (i) the aggregate amount of non-trade
Accounts Receivable, including Accounts Receivable from affiliated or related
Persons; (ii) prepaid expenses; (iii) deposits; (iv) goodwill; and (v) any other
asset which would be treated as an intangible asset (with the exception of
software) under GAAP plus Subordinated Debt.
 
1.23 "UCC" means the Uniform Commercial Code as currently in effect in Michigan
and as amended.
 
 
 

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1.24 "Validity Guarantor" is defined in the preamble to this Agreement.
 
1.25 "Working Capital Ratio" means as of the date of determination, current
assets divided by current liabilities. Current liabilities shall be reduced by
the existing debt due to Wachovia Bank ("Wachovia") included in current
liabilities.
 
1.26 Accounting Terms: Any accounting terms used in this Agreement unless
otherwise indicated, have the meanings customarily given to them in accordance
with GAAP.
 
2.    LOAN COMMITMENT:
 
2.1  Line of Credit Loan Commitment:
 
(a) Commitment to Lend: Subject to the terms and conditions contained in this
Agreement, and upon the condition that no Default exists or would result
therefrom, and further provided all conditions precedent have been met as of the
date of any request for a Money Advance, Crestmark agrees that it may, from time
to time, make Money Advances to Borrower pursuant to the terms of this
Agreement. Any Money Advances by Crestmark after a Default will not be a waiver
of the requirement that no Default exists, nor will Crestmark be prevented from
refusing any subsequent Borrower request for a Money Advance.
 
(b) Maximum Commitment: Notwithstanding the loan commitment made in Section
2.1(c), at no time will the total of all Money Advances outstanding exceed the
Advance Formula. Any Money Advances outstanding in excess of the Advance Formula
must be immediately repaid to Crestmark by Borrower.
 
(c) Repayment/Interest Rate: Interest on the Note will be paid monthly.
Crestmark may, in its sole discretion, exercised in a commercially reasonable
manner, collect any Indebtedness, including any principal, interest, fees and
expenses, due Crestmark by (a) directly applying any funds in the lockbox and
Cash Collateral Account, (b) directly applying funds from any reserve
established by Crestmark, whether or not a Default exists, (c) collecting such
amounts directly from Borrower, or (d) otherwise collecting such amounts due.
The interest rate on the Loan and the default interest rate are both set forth
in the Note.
 
(d)  Use of Proceeds: Borrower agrees to use the proceeds as working capital and
to reduce its debt to Wachovia.
 
(e) Due on Demand: This Note will be due in full on demand by Crestmark.

 
2.2  Borrowing Procedure: To request Money Advances, Borrower must furnish to
Crestmark a borrowing certificate, in form and substance satisfactory to
Crestmark (the "Borrowing Certificate"). The Borrowing Certificate must reflect
the Advance Formula and the Loan Account as of the certificate date. A Borrowing
Certificate may be submitted daily to Crestmark, but in all events, must be
submitted at least on a weekly basis. Borrower may request a Money Advance under
the Loan on any day Crestmark is open for business. Any Borrowing Certificate
submitted after 10:30 a.m. will be treated as having been submitted the
following business day. All activity occurring since the last Borrowing
Certificate must be supported by invoices, credit memos, a sales journal, cash
receipts journal, evidence of delivery of goods, proof of shipment, proof of
performance of services, time sheets and any other documentation Crestmark
requests in its sole discretion.  By submitting the Borrowing
 
 
 

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Certificate, Borrower is reaffirming that no Default exists to the best of its
knowledge after diligent inquiry as of the date of the requested borrowing and
remaking each of the representations and warranties set forth in this Agreement.
 
2.3 Disputes with Account Debtors: Borrower will immediately notify Crestmark of
any invoices that have been rejected or the amount thereof disputed, in whole or
in part, by any Account Debtor. These invoices will then be eliminated as an
Eligible Account Receivable. Borrower must also immediately inform Crestmark of
Borrower's receipt of written or verbal notice of the rejection of goods or
services by any Account Debtor, delays in delivery of goods, non-performance of
contracts or services, and of any assertion or threatened assertion of any
claims, offsets or counterclaims by Account Debtors. Borrower will also furnish
to, and inform Crestmark of, to the extent confirmed by Borrower, all material
adverse information relating to the financial condition of any Account Debtor.
 
2.4 Commitment Fee: At closing, Borrower will pay Crestmark a non-refundable
Commitment Fee in the aggregate amount of one percent (1 %) of the Maximum
Amount for the extension of the Loan, which fee has been fully earned by
Crestmark by its execution of this Agreement. On each one year anniversary of
this Agreement, if any Indebtedness is still outstanding, or this Agreement is
still in effect, Borrower will pay Crestmark a renewal fee of one percent (1%)
of the Maximum Amount, which fee will be fully earned by Crestmark on each
anniversary date. As a courtesy to Borrower, the Commitment Fee may be paid in
twelve (12) equal consecutive monthly payments commencing on date of execution
of this Agreement, or for any later Commitment Fee, the anniversary of the date
of execution of this Agreement, and continuing on the first day of each month
thereafter.
 
2.5 Monthly Maintenance Fee: Each month Borrower will pay Crestmark a monthly
maintenance fee of FOUR-TENTHS OF ONE PERCENT (0.40%) of the monthly average
principal balance of the Loan outstanding from the preceding month as a
maintenance fee commencing on the tenth (10th) day of May, 2010 and continuing
on the tenth (10th) day of each month thereafter until Borrower has no
Indebtedness outstanding and this Agreement is terminated. Notwithstanding the
foregoing, the foregoing maintenance fee will be a minimum of TWO-THOUSAND
FIVE-HUNDRED DOLLARS AND NO/100 ($2,500.00) per month until this Agreement is
terminated and Crestmark is repaid the Indebtedness in full, including any exit
fee contained in the Note.
 
2.6 Exit Fee: Borrower will pay Crestmark an exit fee as set forth in the Note.
 
 
 

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2.7      Reserves Against Availability: If Crestmark, in its sole reasonable
discretion, exercised in a commercially reasonable manner, believes that the
prospect for repayment of any Indebtedness is jmpaired, its Collateral margin is
insufficient, or any other issues, circumstances or facts have arisen that could
otherwise negatively impact Borrower, its business, financial condition or
assets, Crestmark may establish reasonable cash reserves and credit balances to
protect its interests and the repayment of the Indebtedness. In addition,
Crestmark may also establish a Dilution Reserve, as defined below. The reserve
may be funded by reducing the Advance Formula to achieve the target reserve
level, withholding monies due Borrower from any collections Crestmark receives,
from a cash payment from Borrower or any other method Crestmark chooses in its
reasonable discretion after notice to Borrower. The reserve will be in such
amounts as Crestmark, in its sole reasonable discretion, deems appropriate.
Money in the reserve account will not earn interest for Borrower, and Crestmark
may apply the funds in the Reserve to reduce the Indebtedness at any time
Crestmark elects, regardless of whether a Default exists.
 
"Dilution Reserve" means the Dilution Percentage less the Base Dilution. The
Dilution Percentage is defined as: (i) uncollectable sales (as determined by
Crestmark in its sole discretion, exercised in a commercially reasonable manner,
and including all sales subject to a customer dispute) divided by (ii) total
sales and (iii) stated as a percentage, as reasonably determined by Crestmark.
Base Dilution means: five percent (5%). Crestmark shall reserve the advance rate
for Eligible Accounts by one percent (1%) for each percentage point, or part
thereof, that Base Dilution exceeds 5%.
 
2.8 Late Reporting Fee: Borrower will pay Crestmark a fee ("Late Reporting Fee")
in an amount equal to One Hundred Fifty Dollars ($150.00) per business day for
any day in which any report, financial statement or schedule required by this
Agreement is delivered_late, unless Crestmark has specifically granted in
writing an extension of time within which to deliver said report, financial
statement or schedule.
 
2.9 Lockbox Fee. Each month the Borrower will pay all costs in connection with
the Lockbox and the Cash Collateral Account, as determined by Crestmark from
time to time. At present time, the Lockbox Fee is $250.00 per month.
 
2.10 Documentation Fee. In consideration of the extension of the Loan and the
execution of this Agreement, Borrower will pay Crestmark a documentation fee of
$1,250.00 which fee is fully earned as of the date hereof and is non-refundable.
 
2.11 Over Advance Fee. In the event Borrowers Indebtedness exceeds the Advance
Formula (the "Over Advance"), Crestmark may charge an Over Advance Fee of the
greater of Two-Hundred Fifty Dollars and no/100 ($250.00) or 0.0493% per day on
the amount of such Over Advance. Further such Over Advance Fee shall not
constitute a waiver of any rights Crestmark may have as a result of an Over
Advance.
 
 
 

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3.    LOAN ACCOUNT:
 
3.1 Loan Account: All Indebtedness under this Agreement will be charged to the
Loan Account. Crestmark will provide Borrower, a monthly statement of the Loan
Account, which will be deemed to be correct and accepted by and binding upon
Borrower and Validity Guarantor, unless Crestmark receives a written statement
of exception within ten (10) business days of mailing such statement.
 
3.2 Payments to Loan Account: Crestmark will debit the Loan Account the amount
of each Money Advance when made or incurred. Three (3) business days after the
occurrence of the last of the following (i) the collection of checks and other
credit instruments (and subject to final collection) in the Cash Collateral
Account and (ii) Borrower reporting the funds on its Borrowing Certificate,
Crestmark will credit Borrower's Loan Account the net amount of cash received by
Crestmark; provided, however, Crestmark will give Borrower immediate credit on
such funds for calculating availability under the Advance Formula. If any check
or other credit instrument for which Crestmark has granted Borrower credit is
not paid, any credit so given will be reversed, and the Indebtedness restored.
Notwithstanding the foregoing, Crestmark, in its sole discretion, exercised in a
commercially reasonable manner, may decide not to immediately credit the Advance
Formula if Crestmark determines that a particular check or credit instrument
might not be immediately collectible from the maker or paying bank. Crestmark
will have the right, in its sole discretion, exercised in a commercially
reasonable manner, to extend the holding periods set forth above based upon
concerns about the receipt of good funds.
 
4.    SECURITY INTEREST:
 
4.1Grant of Security Interest: Borrower grants to Crestmark a continuing
security interest in and first priority lien on the Collateral to secure the
payment of the Indebtedness and the performance of all of Borrower's obligations
under this Agreement and the Collateral Documents. Borrower acknowledges that
nothing contained in this Agreement or any other agreement will be (i) construed
as an agreement by Crestmark to resort to or look to a particular type of the
Collateral as security for the repayment of the Indebtedness or (ii) deemed to
limit or reduce any security interest in or lien upon any portion of the
Collateral for the Indebtedness.
 
4.2 Perfection of Security Interest:
 
(a) Filing of Financing Statement: Borrower irrevocably authorizes Crestmark, at
any time and from time to time, to file any initial financing statements and
amendments thereto describing the Collateral and perfecting Crestmark's security
interest therein. Borrower will pay all taxes and other costs of the filing and
any other costs associated therewith. Borrower also ratifies the filing of any
financing statement already filed by Crestmark prior to the date hereof.
 
(b) Possession: Borrower will have possession of the Collateral, except where
Crestmark chooses to perfect its security interest by possession in addition to
the filing of a financing statement. If the Collateral is in the possession of a
third party, Borrower will join with Crestmark in notifying the third party of
Crestmark's security interest and obtaining an acknowledgement from the third
party that it is holding the Collateral for the benefit of Crestmark.
 
 
 

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(c) Control: Borrower will cooperate with Crestmark in obtaining control with
respect to the Collateral consisting of: (i) Deposit Accounts; (ii) Investment
Property; (iii) Letter-of-Credit rights; and (iv) Electronic chattel paper;
 
(d) Marking of Chattel Paper: Borrower will not create any Chattel Paper without
placing a legend on the Chattel paper acceptable to Crestmark indicating that
Crestmark has a security interest in the Chattel Paper.
 
4.3 No Disposition of Collateral: Crestmark does not authorize, and Borrower
agrees not to (a) sell, transfer, lease or otherwise dispose of any of the
Collateral; (b) license any of the Collateral; or (c) grant any other lien,
encumbrance or security interest in any of the Collateral. Further, Borrower
agrees that it will not, without the prior written consent of Crestmark, grant a
security interest or lien in any of Borrower's Equipment, Investment Property,
General Intangibles and/or Commercial Tort Claims (as such terms are defined in
the UCC).
 
4.4 Borrower Remains Liable: Notwithstanding anything contained herein to the
contrary, except to the extent caused by Crestmark's gross negligence or willful
misconduct, (a) Borrower will remain liable for all damages, obligations, and
liabilities under the contracts and agreements included in the Collateral to
perform all of its duties and obligations to the same extent as if this
Agreement had not been executed, (b) the exercise by Crestmark of any of its
rights under this Agreement or the Collateral Documents will not release
Borrower from any of its duties or obligations under the contracts and
agreements included in the Collateral and (c) Crestmark will have no obligation
or liability under the contracts and agreements included in the Collateral, nor
will Crestmark be obligated to perform any of the obligations or duties of
Borrower thereunder or to take any action to collect or enforce any claim for
payment. Borrower will pay all taxes, levies, assessments and charges of any
kind upon or related to the Collateral, Borrower's business, income, revenues
and assets.
 
5.    REPRESENTATIONS AND WARRANTIES:
 
Borrower represents and warrants to Crestmark that:
 
5.1 Organization and Authority: Borrower is a corporation, duly organized and in
good standing under the laws of the State of Pennsylvania and has the power and
authority to own its assets and transact its business. The exact legal name of
Borrower is set forth on the first page of this Agreement. The Person executing
this Agreement has full power and complete authority to execute this Agreement
and all Collateral Documents on behalf of Borrower.
 
5.2 Transactions Legal and Authorized: The execution, delivery and performance
of this Agreement and the Collateral Documents have been duly authorized by all
necessary action of Borrower, and the execution, delivery and performance of
this Agreement and the Collateral Documents do not violate Borrower's formation
documents, or the terms of any contract, indenture, agreement or undertaking to
which Borrower is a party or by which it is bound.
 
5.3 Enforceability of Obligations: This Agreement and the Collateral Documents
are valid, binding upon, in full force and effect and fully enforceable against
Borrower, Validity Guarantor or any other party thereto in accordance with their
respective terms.
 
5.4 Litigation: No litigation or other proceeding before any court or
administrative agency is pending or to Borrower's knowledge after diligent
inquiry threatened. Furthermore,Borrower is not to Borrower's knowledge_after
diligent inquiryjn default with respect to any order, writ, injunction, or
demand of any court or governmental department or agency.
 
 
 

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5.5 Financial Statements/Reports/Certificates:
 
(a) Existing Financial Information/No Adverse Changes: The financial statements
furnished to Crestmark are true and correct and have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved. The
balance sheet fairly presents the condition of Borrower as of the date thereof,
and the profit and loss statement fairly presents the results of operations.
There have been no material adverse changes in the condition of Borrower,
financial or otherwise subsequent to the date of the most recent financial
statement furnished to Crestmark.
 
(b) Future Financial Information: All financial information, statements, reports
and certificates required by this Agreement are true and accurate.
 
(c) Projected Financial Information: The projected financial statements
furnished to Crestmark are based upon reasonable assumptions or facts then known
to Borrower, and fairly present, to the best knowledge of Borrower, the
projected condition of Borrower as therein set forth, and fairly presents, to
the best knowledge of Borrower, the projected results of operations.
 
5.6 Ownership of Collateral; No Liens: Borrower is the owner of and has good and
indefeasible title to all of the Collateral. The Collateral is not subject to
any liens, purchase options, mortgages, pledges, encumbrances, claims (legal or
equitable), or charges of any kind except Permitted Encumbrances. As of the date
hereof, Borrower has not sold any Collateral except in the ordinary course of
business. Crestmark's security interest in the Collateral is a first priority
security interest, and Borrower will defend and indemnify Crestmark against the
claims and demands of all other persons claiming an interest in the Collateral.
 
5.7 Personal Property: The Collateral will remain personal property at all
times. Borrower will not affix any of the Collateral to any real property in any
manner which would change its nature from that of personal property to real
property or a fixture.
 
5.8 Tax Returns/Taxes: Borrower has filed all federal, state, local and foreign
tax returns which are required to be filed and has paid all taxes, withholdings,
assessments and other government charges which have become due. Borrower does
not know of any proposed material additional tax assessment against it, or any
of its properties, or any basis therefore.
 
5.9 Non-Reliance: Crestmark has not advised Borrower with respect to the
adequacy of the Loan. The Loan is solely the decision of Crestmark as to the
type and amount of credit Crestmark is willing to extend and Borrower has made
the decision to take the Loan, exclusive of any statements of Crestmark.
 
5.10  Solvency: Borrower is solvent, able to pay its debts as they mature and
has assets the fair market value of which exceeds its liabilities. Borrower will
not be rendered insolvent, undercapitalized or unable to pay maturing debts as a
result of the execution of this Agreement or the Collateral Documents.
 
 
 

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5.11 Casualty Loss or Judgment: The Collateral has not suffered any loss,
substantial damage, or destruction and no attachment, lien, levy, garnishment or
commencement of any related proceeding has occurred against the Collateral.
 
5.12 No Material Adverse Change: No material adverse change has occurred in the
existing or prospective financial condition, business, assets or liabilities of
Borrower.
 
6.    AFFIRMATIVE COVENANTS:
 
Borrower covenants and agrees that until all Indebtedness due Crestmark is paid
in full and this Agreement is terminated, Borrower will:
 
6.1 Payments on Indebtedness: Pay all Indebtedness when due, whether by
acceleration or otherwise. Furthermore, Borrower will not have any Money
Advances outstanding under the Loan contrary to any provisions of the Loan
Agreement or the Collateral Documents, including any Money Advances in excess of
the Advance Formula which are not immediately repaid to Crestmark.
 
6.2 Performance of Obligations: Perform or cause to be performed, all of the
terms, conditions, obligations and covenants of Borrower or any other Person as
required by this Agreement, the Collateral Documents or any other agreement,
executed between Crestmark and Borrower and/or another Person, whether now
existing or hereafter created. Borrower will also take all action (or not take
any action, as appropriate) necessary to keep the representations and warranties
of Borrower under this Agreement true, accurate and complete.
 
6.3 Inspection: Grant Crestmark, or its representatives, access to the
Collateral and Borrower's premises, computer systems, books of account and
financial records in order to permit an inspection and examination thereof.
 
6.4 Notification of Disputes: Notify Crestmark promptly of any litigation, or
administrative or tax proceeding, or other action threatened or instituted
against Borrower or any property of Borrower or any other material matter which
could adversely impair Borrower's financial condition or its ability to conduct
its business. For the purposes of this Agreement, any single such claim other
than a claim that could interfere with the superiority of Crestmark's security
interest, in which the sum in dispute is in excess of One Hundred Thousand
Dollars ($100,000.00), or all such claims in which the aggregate sums in dispute
are Two Hundred Fifty Thousand Dollars ($250,000.00) or more, will be deemed to
be material and adverse.
 
6.5 Payment of Taxes: Pay when due all taxes, assessments, and other
governmental charges to which Borrower or its property is or will be subject
before such charges become delinquent, except that no such charge need be paid
so long as its validity or amount is being contested in good faith by
appropriate proceedings and Borrower has established a cash reserve with respect
thereto; provided, however, that any such tax, assessment, or charge shall be
paid forthwith (under protest) upon the filing of any lien securing the same,
commencement of levy, other form of execution, or any other collection action.
 
 
 

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6.6 Insurance: Maintain insurance in such form and amount as is satisfactory to
Crestmark, with lender loss payable clauses in favor of Crestmark and providing
that any losses under the policies are payable to Crestmark. If Borrower fails
to obtain or maintain any required policies, then Crestmark, without waiving any
Default by Borrower relating thereto, may (but without any obligation) at any
time thereafter make such payment or obtain such coverage and take such other
actions as Crestmark deems advisable. Borrower will not take out separate
insurance concurrent in form or contributing in the event of a loss. Borrower
will also maintain insurance pursuant to all applicable workers' compensation
laws, and liability insurance for damage to persons. All such insurance shall be
in such form, with such companies and in such amounts as shall be acceptable to
Crestmark and each policy shall provide that the insurance company will provide
at least thirty (30) days notice to Crestmark prior to any cancellation or
material alteration or amendment of any policy. In the event any proceeds are
payable to Borrower, or otherwise become available, as a result of a casualty to
any Collateral, all such proceeds are be the property of Crestmark, immediately
turned over to Crestmark and applied to the Indebtedness due Crestmark. Borrower
directs all insurers under such policies to pay all proceeds payable thereunder
directly to Crestmark. Borrower also irrevocably makes, constitutes and appoints
Crestmark (and all officers, employees or agents designated by Crestmark) as
Borrower's true and lawful attorney and agent-in-fact for the purpose of making,
settling and adjusting claims under such policies, endorsing the name of
Borrower on any check, draft, instrument or other item of payment for the
proceeds of such policies and for making all determinations and decisions with
respect to such policies.
 
6.7 Compliance with Laws: Continue at all times to comply with all laws,
ordinances, regulations or requirements of any governmental authority relating
to Borrower's business, property or affairs, including, limitation, all
environmental laws.
 
6.8 Preservation of Collateral: Maintain the Collateral in good repair, working
order and condition. With respect to Accounts, Borrower will pursue collections
diligently and present evidence thereof to Crestmark, if requested. Borrower
will, upon request, immediately deliver to Crestmark evidence of ownership
and/or certificates of title relative to the Collateral.
 
6.9  Dominion of Funds:
 
(a) The Loan is on dominion of funds. Borrower will direct all Account Debtors
to mail all payments due Borrower to a post office box at Crestmark (the
"Lockbox"). The Lockbox will be under the sole dominion and control of
Crestmark, and Borrower will have no rights with respect to this Lockbox. In
addition, Borrower agrees to change all remit to addresses and the like on all
of its invoices and Accounts to the Lockbox address provided by Crestmark.
Borrower will also take such other actions as Crestmark directs to facilitate
the provisions of this Section 6.9. Notwithstanding the forgoing, if Borrower so
chooses, the currently pending Federal tax income due to Borrower of
approximately $1,200,000 may be deposited by Borrower into any bank account of
Borrower, and may be used for any purpose not prohibited hereunder.
 
(b) Crestmark shall, at least once on each business day that Crestmark is open
for business, pick up, open and process the contents of the envelopes mailed to
the Lockbox. All payments will be deposited into a Cash Collateral Account owned
by Crestmark ("Cash Collateral Account"); Borrower will have no right to
withdraw any funds from the Cash Collateral Account, all of Borrower's funds
therein belong to Crestmark. All other documents included in the envelopes will
be delivered to Borrower. Crestmark will withdraw the funds deposited into the
Cash Collateral Account and, as provided in this Agreement, apply such funds
toward the payment of the Indebtedness, whether or not then due, in such order
of application as Crestmark determines. Borrower grants Crestmark and its
representatives an irrevocable power of attorney, coupled with an interest, to
endorse any checks or items, in Borrower's name, delivered or required to be
delivered to the Lockbox. If, notwithstanding Crestmark's instructions to an
Account Debtor, Borrower receives payments, whether in cash or otherwise, from
an Account Debtor, Borrower agrees not to commingle such remittances with any of
its other funds or property, and Borrower will hold the funds separate and apart
from its own funds or property, in trust for Crestmark, and immediately deliver
them to the Lockbox in the form received. Crestmark will process the envelope
and its contents as if they had been mailed directly to the Cash Collateral
Account by the Account Debtor. Borrower will instruct all Account Debtors
remitting payments electronically to remit funds to the Cash Collateral Account.
If Borrower receives any funds via electronic transfer, it will immediately wire
those funds to the Cash Collateral Account.
 
 
 

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(c) Borrower acknowledges that the maintenance of the Cash Collateral Account is
solely for Crestmark's convenience in facilitating its own operations pursuant
hereto, and that Borrower has not and will not have any right, title, or
interest in the Cash Collateral Account or in the amounts deposited therein at
any time.
 
(d) Borrower will reimburse Crestmark for any and all reasonable charges and
expenses imposed by or relating to the Lockbox and the Cash Collateral Account.
 
(e) Deposits in the Cash Collateral Account are owned by Crestmark and will
constitute payment on the Indebtedness when so applied by Crestmark. Crestmark
has no duty as to the collection or protection of checks or instruments or the
proceeds thereof, nor as to the preservation of any rights pertaining thereto,
beyond avoiding gross negligence or fraud in the custody and preservation of
items in the possession of Crestmark.

 
6.10Financial Covenants: Comply with the following financial covenants while any
Indebtedness is outstanding:
 
(a) A minimum Tangible Net Worth quarterly of at least $5,000,000.
 
(b) For each quarterly period, maintain a Working Capital Ratio of not less
than: 1.20:1.
 
(c) Excess availability at closing after reserving for accounts payable greater
 
than sixty (60) days past due plus any book overdraft.
 
6.11 Notice of Default: Immediately upon becoming aware of any Default under
this Agreement, give written notice thereof to Crestmark, specifying the nature
and period of existence thereof, but such notice will not cure the existence of
a Default or prohibit Crestmark from exercising its rights and remedies.
 
6.12 Verification of Accounts: Permit Crestmark or any of its officers,
employees and agents, including Financial Control Systems, to contact Account
Debtors, at any time, in the name of Crestmark, Financial Control Systems or
Borrower, to verify the validity, amount or any other matter relating to any
Account or the Collateral. Crestmark may choose to verify the Collateral and
Accounts by mail, email, telephone, customer website, fax or any other manner it
chooses and in any frequency Crestmark elects. In addition, upon request of
Crestmark, Borrower shall give Crestmark access to its customer's web based
information systems for invoice verification purposes.
 
6.13 Tax Deposit Evidence: Submit quarterly IRS forms 940 and 941 and copies of
monthly bank statements.
 
 
 

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6.14 Public Company Status: In connection with the Borrower's status as a
publicly traded company, the Borrower agrees to the following additional terms:
 
a. The Borrower will provide to Crestmark, promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports which
the Borrower or any subsidiary sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements which the
Borrower or any subsidiary files with the United States Securities and Exchange
Commission ("SEC") or any governmental authority which may be substituted
therefore, or with any national security exchange.
 
b. In the event that the SEC or any state securities authority takes or
threatens to take any action against the Borrower which would have a materially
adverse effect on Borrower's business, the ability of Borrower's common stock to
be traded on the American Stock Exchange or other national stock exchange or the
prospects for the repayment of the Indebtedness, it shall constitute a Default
hereunder.
 
c.    The foregoing notwithstanding, the Borrower may, in its sole discretion,
elect to change the exchange on which the Borrower's shares are traded, or take
any other action concerning its securities to the extent Borrower is legally
permitted to do so, provided, however, the foregoing shall: (i) not result in
Borrower no longer being a public company or (ii) not affect Borrower's
capitalization or capital structure, unless consented to in writing by Crestmark
which shall not be unreasonably withheld..
 
7.            NEGATIVE COVENANTS:
 
Borrower covenants and agrees that until all Indebtedness due Crestmark is paid
in full and this Agreement is terminated, Borrower will not:
 
7.1 No Changes: Change its state of incorporation or formation. Borrower will
also not change its name, adopt an assumed name, or move its chief executive
office without giving Crestmark at least sixty (60) days prior written notice.
 
7.2 Dividends: Declare or pay any dividend, or make any other distribution with
regard to its capital stock or other equity securities (other than distribution
of stock ownership interests or issuance of stock options in the Borrower, to
Employees or Directors)^or upon the exercise of validly issued stock options or
purchase or retire any of its capital stock or other equity securities,.
 
7.3 Loans/Liabilities: Make a loan, or incur or assume any obligations or
liabilities as guarantor, surety, indemnitor or otherwise with respect to any
indebtedness or other obligation of any Person.
 
7.4 Transactions with Affiliates/No Subsidiaries: Enter into any transaction
with any equity holders of Borrower or their affiliates, except on terms not
less favorable than would be usual and customary in similar transactions between
persons or entities dealing at arm's length. Borrower does not have and will not
organize or acquire any subsidiaries.
 
 
 

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7.5 Redemption/Issuance: Release, redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of its stock or other equity securities.
 
7.6 Default in Payment of Other Debt: Default in the payment of any indebtedness
owed to any Person for borrowed money; provided, however, that no default under
indebtedness to Wachovia will be considered a default of this covenant except if
Wachovia obtains a judgment against Borrower.
 
7.7 Judgment: Suffer or permit any judgment, decree or order not fully covered
by insurance to be entered by a court of competent jurisdiction against Borrower
or permit or suffer any writ or warrant of attachment or any similar process to
be filed against Borrower or against any property or asset of Borrower.
 
8.    BOOKS/RECORDS/FINANCIAL REPORTS/CERTIFICATES:
 
Borrower covenants and agrees that until all Indebtedness due Crestmark is paid
in full and this Agreement is terminated, it will keep proper books of accounts
in a manner satisfactory to Crestmark. Crestmark will have the right, at any
time, to verify any of the Collateral, documentation or books, whether such
documentation is furnished weekly, monthly or annually in whatever manner and in
whatever frequency Crestmark deems necessary, including through telephone
contact with customers or vendors.
 
8.1Quarterly Financial Statements and Reports: Borrower will deliver to
Crestmark quarterly management prepared financial statements, balance sheets,
and profit and loss statements for the quarter then ended, certified to by the
president or chief financial officer of Borrower. Such reports will set forth
the financial affairs and true condition of Borrower for each quarter and will
be delivered to Crestmark no later than forty-five (45) days after the end of
each quarter, except that the fiscal year statements shall be delivered within
ninety (90) days of the end of the Borrower's fiscal year. In addition, Borrower
will furnish to Crestmark the following certified to by the president or chief
financial officer of Borrower within the time periods set forth:
 
(a) Accounts Receivable Reports: Monthly detailed Accounts Receivable Aging
Reports no later than fifteen (15) days after the end of each month; and weekly
summary Accounts Receivable Aging Reports to be delivered with each Borrowing
Certificate;
 
(b) Accounts Payable Reports: Monthly detailed Accounts Payable Aging Reports no
later than fifteen (15) days after the end of each month; and
 
All financial and operating statements are and will be prepared in accordance
with GAAP applied on a consistent basis.
 
8.2Field Examinations: Borrower will permit Crestmark, from time to time, to
perform periodic field examinations of Borrower's books and records and assets
and liabilities to be performed by Crestmark's inspector, whether a Crestmark
officer or an independent party. Borrower will reimburse Crestmark for no more
than four (4) field examinations per year, with fees of $850 per day per
examiner, in an aggregate amount not to exceed $12,750 per year, plus reasonable
out-of-pocket expensesjo be paid by Borrower. The information compiled by the
field examination is for Crestmark's internal use, and Crestmark has no
obligation to share the field examination, in whole or in part, with Borrower.
Upon and after an event of Default, there shall be no limit to the number of
field examinations to be charged to and paid for by the Borrower and no
limitation on the aggregate amount of per diem man day costs.
 
 
 

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8.3 Annual Financial Statements/Projections: Each year Borrower will deliver to
Crestmark annual audited financial statements (including the notes and opinions
thereto), cash flow statements, balance sheets, and profits and loss statements
prepared by the president or chief financial officer of Borrower, including an
independent auditor's report. Such reports will set forth in detail Borrower's
true condition as of the end of Borrower's fiscal year no later than ninety (90)
days after the end of Borrower's fiscal years. Each year Borrower will also
deliver to Crestmark management prepared financial projections forecasting on a
quarterly basis the balance sheet, income statement and borrowing availability
for the coming year. Said projections for the next fiscal year shall be
submitted yearly within the last ninety (90) days of the Company's current
fiscal year.
 
8.4 Customer Lists: Upon Crestmark's request, Borrower will deliver to Crestmark
detailed customer lists showing the customer's name, address, phone number and
any other information Crestmark reasonably requests.
 
8.5 Guarantor's Financial Statements: Validity Guarantor will provide Crestmark
with annual statements of net worth on forms supplied by Crestmark. Such reports
will set forth a summary of financial condition of the Validity Guarantor, as of
the end of each calendar year and shall be delivered to Crestmark on the earlier
of April 30th or 120 days after the end of each calendar year.
 
8.6 Tax Returns: Borrower will provide Crestmark with current annual tax returns
prior to April 15 of each year or if an extension is filed, at the earlier of
(a) the filing thereof or (b) the extension deadline.
 
8.7 Other Information: Borrower will also deliver to Crestmark such other
financial statements, financial reports, documentation, tax returns and other
information as Crestmark reasonably requests from time to time.
 
9.    REMEDIES UPON DEFAULT:
 
Upon the occurrence of any Default, Crestmark can charge the default interest
rate on the Note, and Crestmark has all remedies available under this Agreement,
applicable law and equity, including the following rights and remedies. These
rights and remedies are cumulative and not exclusive.
 
9.1 General: Crestmark may pursue any remedy available at law (including those
available under the UCC), in equity or by agreement of the parties.
 
9.2 Acceleration: Crestmark can accelerate all or part of the Indebtedness
without notice or demand, and declare such amount to be immediately due and
payable, without presentation, notice or demand, notwithstanding the maturity or
due date, if any, therein to the contrary, all of which are expressly waived by
Borrower and Validity Guarantor.
 
 
 

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9.3 Additional Remedies: Crestmark has the right to pursue any of the following
remedies separately, successively or simultaneously: (i) file suit and obtain
judgment and, in conjunction with any action, Crestmark may seek any ancillary
remedies provided by law, including levy of attachment and garnishment; (ii)
take possession of any Collateral and any books and records of Borrower without
demand and without legal process; and (iii) without taking possession, sell,
lease or otherwise dispose of the Collateral at public or private sale in
accordance with the UCC. Upon Crestmark's demand, Borrower will assemble and
make the Collateral and books and records available to Crestmark as it directs.
Borrower grants to Crestmark the right, for this purpose, to enter into or on
any premises where the Collateral may be located.
 
9.4 Right of Offset: Crestmark may offset against the Indebtedness any funds (or
property) (i) of Borrower or Validity Guarantor deposited with or in the
possession or control of Crestmark, and (ii) of Borrower or Validity Guarantor
on deposit in any deposit account.
 
9.5 Accounts and/or Accounts Receivable:
 
(a) Crestmark may notify any and all Account Debtors to make payment directly to
Crestmark.
 
(b) Crestmark may in its own name or in the name of Borrower:
 
(i)   demand, collect, receive payment of, receipt for and give discharges and
releases, upon payment of all or any of the Accounts and any monies due or to
become due in respect thereof and to notify all Account Debtors of the Default
and to direct all Account Debtors to pay Crestmark directly;
 
(ii)   settle, compromise, compound, or adjust all or any of the Accounts which
are in dispute;
 
(iii)   commence, prosecute, settle and compromise any and all suits, actions,
or proceedings in law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Accounts or to enforce any
rights in respect thereof; and
 
(iv)   file any claim or take any other action or proceeding which Crestmark may
deem necessary or appropriate to protect and preserve and realize upon the
security interest of Crestmark in the Accounts and the proceeds thereof; and
 
(v)      generally to sell, assign, transfer, pledge, make any agreement with
respect to or otherwise reasonably deal with all or any of the Accounts as fully
and completely as though Crestmark were the absolute owner thereof for all
purposes. Borrower hereby waives any statutory rule or constitutional
restriction, prohibition, or procedure in connection with the rights granted
Crestmark in this subsection and gives Crestmark the right to peaceful
repossession of the Collateral without hearing or court order.
 
9.6 Sales as Credit: If after a Default, Crestmark sells any Collateral on
credit, Borrower will be credited only with payments actually made by the
purchaser, received by Crestmark and applied to the Indebtedness. If the
purchaser fails to pay for the Collateral, Crestmark may resell the Collateral
and Borrower will be credited with the proceeds of the sale.
 
 
 

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9.7 Waivers: To the extent permitted by applicable law, Borrower hereby
absolutely and irrevocably waives and relinquishes the benefits and advantages
of any valuation, stay, appraisement, extension or redemption laws now or
hereafter existing which, but for this provision, might be applicable to any
sale made under the judgment, order or decree of any court, or otherwise.
Borrower also waives any rights to compel Crestmark to pursue collection of any
Collateral or to collect any income on the Collateral prior to the exercise of
other remedies hereunder.
 
10.          STANDARDS FOR EXERCISING REMEDIES:
 
To the extent that applicable law imposes duties on Crestmark to exercise
remedies in a commercially reasonable manner, Borrower acknowledges and agrees
that it is not commercially unreasonable for Crestmark:
 
(a) Expenses: To fail to incur expenses deemed significant or uneconomical by
Crestmark to prepare, clean up or repair the Collateral or complete raw material
or work in process into finished goods or other finished products prior to
disposition;
 
(b) Consents: To fail to obtain third party consents for access to the
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain governmental or third party consents for the collection or
disposition of the Collateral;
 
(c) Pursuit of Third Parties; Liens: To fail to exercise collection remedies
against Account Debtors or other persons obligated on the Collateral or to
remove liens or encumbrances or adverse claims against the Collateral, and
Borrower waives any right it may have to require Crestmark to pursue any third
parties;
 
(d) Collection Specialists: To exercise collection remedies against Account
Debtors and other person obligated on the Collateral directly or through the of
collection agencies and other collection specialists;
 
(e) Advertising: To advertise dispositions of the Collateral through
publications or media of general circulations, whether or not the Collateral is
of a specialized nature;
 
(f)     Soliciting: To contact other persons, whether or not in the same
business as Borrower, for expressions of interest in acquiring all or any
portion of the Collateral;
 
(g) Auctioneers: To hire one or more professional auctioneers to assist in the
disposition of the Collateral, whether or not the Collateral is of a specialize
nature;
 
(h)  Wholesale Sales Permitted: To dispose of assets in wholesale rather than
retail markets;

(i)  Disclaimer of Warranties: To disclaim any warranties as to the Collateral,
including as to title;
 
(j) Insurance: To purchase insurance or credit enhancements to insure Crestmark
against risks of loss, collection or disposition of the Collateral or to provide
to Crestmark a guaranteed return from the collection or disposition of the
Collateral; or
 
 
 

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(k) Other Professionals: To the extent reasonably_deemed appropriate by
Crestmark, to obtain the services of other brokers, investment bankers,
consultants, attorneys and other professionals to assist Crestmark in the
collection or disposition of any of the Collateral.
 
Borrower acknowledges that the purpose of this Section 10 is to provide
non-exhaustive indications of what actions or omissions by Crestmark would not
be commercially unreasonable in Crestmark's exercise of remedies against the
Collateral and that other actions or omissions by Crestmark will not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 10. Without limitation upon the foregoing, nothing contained in this
section will be construed to grant any rights to Borrower or to impose any
duties on Crestmark that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this section.
 
Nothing contained in this Agreement will be construed to make Crestmark an agent
or trustee of Borrower or Validity Guarantor for any purpose whatsoever.
Crestmark will not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever the same may
be located and regardless of the cause thereof (except to the extent it is
determined by final judicial decision that Crestmark's act or omission
constituted gross negligence or willful misconduct). Crestmark will not, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Accounts, liquidation of the Collateral or any instrument
received in payment thereof or for any damage resulting therefrom (except to the
extent it is determined by a final judicial decision that Crestmark's error,
omission or delay constituted gross negligence or willful misconduct). Crestmark
does not, by anything herein or in any assignment or otherwise, assume any of
Borrower's or Validity Guarantor's obligations under any contract or agreement
assigned to Crestmark, and Crestmark shall not be responsible in any way for the
performance by Borrower or Validity Guarantor of any kind of the terms and
conditions thereof.
 
11.          APPLICATION OF PROCEEDS:
 
The proceeds of any sale or other disposition of the Collateral will be applied
by Crestmark, first to the payment of all expenses authorized by this Agreement,
the Collateral Documents or by law, including actual attorney's fees and
collection costs incurred by Crestmark; the balance of the proceeds of such sale
or other disposition will be applied to the payment of the Indebtedness, first
to fees, then interest, then to principal, then to other unpaid Indebtedness,
and the surplus, if any, shall be paid over to Borrower or to such other Person
or Persons as may be entitled thereto under applicable law. Borrower and
Validity Guarantor will remain liable for any deficiency, which Borrower and
Validity Guarantor will pay to Crestmark immediately upon demand. Validity
Guarantor's obligations in this paragraph are expressly limited pursuant to the
Validity Guaranty executed by such Validity Guarantors.
 
12.          EXPENSES:
 
Borrower will pay to Crestmark, on demand, any and all expenses, including
actual attorneys' fees and collection expenses, incurred or paid by Crestmark in
protecting or enforcing its rights under this Agreement, the Collateral
Documents or pursuant to any other document or agreement relating to the Loan.
 
 
 

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13.          NOTICE:
 
Any notice to Borrower, Validity Guarantor or Crestmark will be deemed effective
if it is written and sent by facsimile with confirmation of receipt, by
certified mail, return receipt requested, postage prepaid, or other expedited
mail service, or by other personal delivery service addressed to Borrower,
Validity Guarantor or Crestmark at the address set forth in this Agreement or at
such other address as is designated by each to the others in writing.
 
14.          TERMINATION:
 
Crestmark may terminate this Agreement upon demand, at its sole discretion,
exercised in a commercially reasonable manner, and absent the existence of a
Default. This Agreement shall continue in full force and effect until demand,
but if not sooner demanded, then for two (2) years from the date of this
Agreement (the "Maturity Date") and shall be automatically renewed for
consecutive two (2) year terms (each a "Renewal Term") unless terminated by
written notice by Borrower not later than sixty (60) days prior to the Maturity
Date or each Renewal Term, as the case may be. The expiration of each Renewal
Term shall also be called the Maturity Date. All of Borrower's and Validity
Guarantor's obligations, duties, promises, covenants, representations and
warranties under this Agreement and Collateral Documents will continue and
remain in full force and effect until the Indebtedness is irrevocably paid in
full in cash, including all exit fees under the Note. Borrower understands that
the entire Indebtedness is repayable on the demand of Crestmark, provided that
if there is no event of Default at the time of demand for payment or thereafter,
then notwithstanding anything herein or in the Note to the contrary, Borrower
shall have ninety (90) days after demand for payment to find replacement
financing or otherwise pay the Indebtedness in full and (i) Crestmark will
continue its discretionary financing during said ninety (90) day period and (ii)
Borrower shall not be in Default solely as a result of Borrower's non-payment of
demanded sums during such ninety (90) day periods.
 
15.          MISCELLANEOUS:
 
15.1 Binding Effect: This Agreement is binding upon and inures to the benefit of
Borrower, Validity Guarantor and Crestmark, and their respective successors and
assigns and will bind all persons who become bound as a debtor to this
Agreement. The foregoing, will not, however, authorize any assignment by
Borrower of its rights or duties hereunder, which assignment, in whole or in
part, by Borrower is not permissible. Crestmark may assign its rights and
interests under this Agreement and the Collateral Documents. If an assignment by
Crestmark is made, Borrower and Validity Guarantor will make all payments to and
render performance under this Agreement and the Collateral Documents to
Crestmark's assignee. Borrower and Validity Guarantor waive and will not assert
against any assignee any claims, defenses or set-offs which Borrower or Validity
Guarantor could assert against Crestmark except defenses which cannot be waived.
 
15.2 Participations: Crestmark shall have the right without the consent of or
notice to Borrower or Validity Guarantor to assign, sell, transfer, negotiate,
or grant participation in all or any part of, or any interest in, Crestmark's
obligations, rights and benefits hereunder, and Borrower and Validity Guarantor
agree that each shall execute, or cause to be executed, such documents,
including amendments to this Agreement and to any other documents, instruments
and agreements executed in connection herewith as Crestmark shall deem necessary
to effect the foregoing. In conjunction with such assignment or participation,
Borrower consents to the disclosure of any and all books, records, files, loan
agreements, notes, mortgages, deeds of trust, guaranties, financing statements,
assignments of leases, statements, ledger cards, signature cards, corporate
and/or partnership documents, financial statements, leases, appraisals,
environmental audits, hazard and liability insurance policies, title insurance
policies, loan payment histories, income tax returns, credit analyses, notes,
correspondence, internal memoranda, checks, deposit account records and other
documents relating to the Indebtedness to prospective assignees or participants.
 
 
 

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15.3 Delay/Waiver: No delay or failure of Crestmark in exercising any right,
remedy, power or privilege hereunder will affect such right, remedy, power or
privilege, nor will any single or partial exercise thereof preclude the exercise
of any other right, remedy, power or privilege. No delay or failure of Crestmark
at any time to demand strict adherence to the terms of this Agreement will be
deemed to constitute a course of conduct inconsistent with Crestmark's right at
any time to demand strict adherence to the terms of this Agreement or the
Collateral Documents.
 
15.4 Incorporation by Reference: The Collateral Documents are incorporated
herein by reference. In the event any provision of the Collateral Documents is
inconsistent with the provisions of this Agreement, then this Agreement will be
deemed paramount unless the rights and remedies of Crestmark would be adversely
affected or diminished thereby.
 
15.5 Applicable Law: This Agreement and the Collateral Documents will be
interpreted, and the rights of the parties hereunder will be determined, under
the laws of the State of Michigan (without regard to conflict of laws).
 
15.6 Further Assurances: Borrower and Validity Guarantor, from time to time,
upon Crestmark's request, will each make, execute, acknowledge and deliver all
such further and additional instruments and agreements and take all such further
action as may be required, to carry out the intent and purpose of this Agreement
or any part thereof.
 
15.7 Hold Harmless/Indemnity: Borrower assumes responsibility and liability for,
and holds harmless and indemnifies Crestmark from and against, any and all
liabilities, demands, obligations, injuries, costs, damages (direct, indirect or
consequential), awards, loss of interest, principal, or any portion of the
Indebtedness, charges, expenses, payments of monies and actual attorney fees,
incurred or suffered, directly or indirectly, by Crestmark and/or asserted
against Crestmark by any Person whatsoever, including Borrower or Validity
Guarantor, which arise in whole or in part out of this Agreement, or the
Collateral Documents, or the relationship herein set forth or the exercise of
any right or remedy including the realization, disposition or sale of the
Collateral, or any portion thereof, or the exercise of any right in connection
therewith even if the above are caused by the sole action, inaction, omission or
negligence of Crestmark, but Borrower or Validity Guarantor will not be liable
if the damages result solely from the fraud or gross negligence of Crestmark.
Borrower agrees to pay and save Crestmark harmless against any liability for
payment of any state documentary stamp taxes, intangible taxes or similar taxes
(including interest or penalties, if any) which may now or hereafter be
determined to be payable in respect of the execution, delivery or recording of
this Agreement or any Collateral Documents or the making of any advance, whether
originally thought to be due or not, and regardless of any mistake of fact or
law on the part of Crestmark or the Borrower with respect to the applicability
of such tax. The provisions of this section shall survive payment in full of the
Borrower's obligations under this Agreement and the Collateral Documents and
termination of this Agreement and/or the Collateral Documents.
 
 
 

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15.8 Limitation of Liability: Neither Crestmark nor any of its affiliates,
directors, officers, agents, attorneys or employees shall be liable to Borrower,
Validity Guarantor or any of Borrower's affiliates for any action taken, or
omitted to be taken, by it or them or any of them under this Agreement or any of
the Collateral Documents or in connection herewith or therewith, except that no
person shall be relieved of any liability imposed by law for gross negligence,
recklessness or fraud. Except for claims of gross negligence, recklessness or
fraud, no claim may be made by Borrower, Validity Guarantor or by any of
Borrower's affiliates, directors, officers, agents, attorneys or employees, for
any special, consequential, indirect or punitive damages in respect of any
breach or wrongful conduct (whether the claim is based on contract or tort or
duty imposed by law) arising out of or related to this Agreement or any other
Collateral Documents, or the transactions contemplated hereby or thereby, or any
act, omission or event occurring in connection herewith or therewith.
 
15.9 Survival and Continuation: All representations, warranties, covenants,
indemnifications, consents and agreements contained in this Agreement and/or any
of the Collateral Documents will survive the execution of this Agreement, the
Collateral Documents and any investigations by Crestmark and will be, and
continue at all times while any Indebtedness is outstanding, to be true and
accurate.

 
15.10 Rules of Construction: (a) No reference to "proceeds" in this Agreement
authorizes any sale, transfer, or other disposition of the Collateral by
Borrower; (b)"Includes" and "including" are not limiting; (c) "Or" is not
exclusive; and (d) "all includes "any" and "any includes "all".
 
15.11 Complete Agreement: This Agreement incorporates and/or contains the entire
agreement of the parties hereto with respect to its subject matter. None of the
parties to this Agreement will be bound by anything not expressed in writing.
This Agreement and the Collateral Documents may only be amended, modified or
extended by a written agreement executed by Crestmark and Borrower.
 
15.12 Severability: If any provision of this Agreement is in conflict with any
statute or rule of law or is otherwise unenforceable for any reason, then that
provision will be deemed null and void to the extent of the conflict or
unenforceability and will be deemed severable. The offending provision will not
invalidate any other provision of this Agreement.
 
15.13 Reinstatement: Borrower and Validity Guarantor further agrees that to the
extent Borrower or Validity Guarantor makes a payment or payments to Crestmark,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be satisfied
will be revived and continued in full force and effect as if said payment had
not been made.
 
 
 

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15.14 PAYABLE ON DEMAND: THE LOAN IS PAYABLE ON DEMAND. NOTHING CONTAINED IN
THIS AGREEMENT OR THE COLLATERAL DOCUMENTS, INCLUDING THE REFERENCE TO A
DEFAULT, WILL BE CONSTRUED TO PREVENT CRESTMARK FROM MAKING DEMAND, WITHOUT
NOTICE AND WITHOUT REASON, FOR IMMEDIAT PAYMENT OF ALL OR ANY PART OF THE LOAN
WHETHER OR NOT A DEFAULT HAS OCCURRED. DEMAND FOR REPAYMENT OF THE LOAN BY
CRESTMARK CAN BE MADE AT ANY TIME OR TIMES.
 
15.15CONSENT TO JURISDICTION; SERVICE OF PROCESS: BORROWER AND VALIDITY
GUARANTOR HEREBY (A) WAIVE ANY PLEA OF JURISDICTION OR VENUE ON THE GROUNDS THAT
BORROWER OR VALIDITY GUARANTOR ARE NOT RESIDENTS OF OAKLAND COUNTY, MICHIGAN,
AND (B) SPECIFICALLY AUTHORIZE, AT THE OPTION OF CRESTMARK, ANY ACTION TO
ENFORCE BORROWER'S AND/OR VALIDITY GUARANTOR'S OBLIGATIONS TO CRESTMARK
HEREUNDER TO BE INSTITUTED AND PROSECUTED IN EITHER THE CIRCUIT COURT OF OAKLAND
COUNTY, MICHIGAN, OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF MICHIGAN, UNLESS CRESTMARK IN ITS SOLE DISCRETION CHOOSES TO BRING
SUIT ON ITS OWN BEHALF IN SOME OTHER COURT OF COMPETENT JURISDICTION, AND
BORROWER AND VALIDITY GUARANTOR HEREBY SUBMIT TO THE JURISDICTION OF ANY SUCH
COURT. BORROWER AND VALIDITY GUARANTOR EXPRESSLY SUBMIT AND CONSENT TO SUCH
JURISDICTION AND VENUE AND SPECIFICALLY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO
CONTEST THE JURISDICTION AND/OR VENUE OF THE ABOVE MENTIONED FORUMS AND TO
DEMAND ANY OTHER FORUM. BORROWER AND VALIDITY GUARANTOR WAIVE PERSONAL SERVICE
OF ANY AND ALL LEGAL PROCESS UPON IT AND CONSENTS AND AGREES THAT ALL SUCH
SERVICE MAY BE MADE BY CERTIFIED MAIL DIRECTED TO BORROWER AND VALIDITY
GUARANTOR AT ITS ADDRESS(ES) IN THE OPENING PARAGRAPH OF THIS AGREEMENT OF THIS
AGREEMENT, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED AND EFFECTIVE
SERVICE OF PROCESS ON THE EARLIER OF THE DATE THE RETURN RECEIPT THEREFOR IS
SIGNED OR FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE UNITED
STATES MAIL, CERTIFIED AND POSTAGE PREPAID.
 
15.16Waiver of Jury Trial: BORROWER AND VALIDITY GUARANTOR DO EACH KNOWINGLY AND
VOLUNTARILY AND INTELLIGENTLY WAIVE THEIR CONSTITUTIONAL RIGHT TO A TRIAL BY
JURY WITH RESPECT TO ANY CLAIM, DISPUTE, CONFLICT OR CONTENTION, IF ANY, AS MAY
ARISE UNDER THIS AGREEMENT OR UNDER THE COLLATERAL DOCUMENTS, AND AGREE THAT ANY
LITIGATION BETWEEN THE PARTIES CONCERNING THIS AGREEMENT AND THE COLLATERAL
DOCUMENTS SHALL BE HEARD BY A COURT OF COMPETENT JURISDICTION SITTING WITHOUT A
JURY. BORROWER AND VALIDITY GUARANTOR HEREBY CONFIRM TO CRESTMARK THAT THEY HAVE
REVIEWED THE EFFECT OF THIS WAIVER OF JURY TRIAL WIT COMPETENT LEGAL COUNSEL OF
THEIR CHOICE, OR HAVE BEEN AFFORDED THE OPPORTUN ITY TO DO SO, PRIOR TO SIGN ING
TH IS AGREEMEN T AN D TH E COLLATERAL DOCUMENTS AND EACH ACKNOWLEDGE AND AGREE
THAT CRESTMARK IS RELYING UPON THIS WAIVER IN EXTENDING THE LOAN TO BORROWER.
 
 
 

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The parties have executed this Agreement as of the day and year first appearing
above.
 

CRESTMARK:   BORROWER:           Crestmark Bank,   Decorator Industries, Inc.,  
 a Michigan banking corporation   a Pennsylvania corporation                  
 /s/ Gayle Finger
 
/s/ William A. Johnson
 
Its: Vice President
 
Its: President
                      VALIDITY GUARANTOR:                       /s/ William A.
Johnson        William Johnson                       VALIDITY GUARANTOR:      
/s/ Michael K. Solomon         Michael Solomon  

 
 
 

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EXHIBIT A
 
PERMITTED ENCUMBRANCES
 
1. The following financing statements as reflected in the UCC lien search(es)
certified by the Pennsylvania Secretary of the Commonwealth as of April 20,
2010, without increase, amendment, modification, extension or refinancing.
 
UCC1 financing statement bearing file number 36390364 filed by Secured Party,
Keybank National Association dated 06/26/02
 
 
NOTE: As to the interests listed above, the listing thereof in this Loan and
Security Agreement shall not, in any manner whatsoever, be deemed to be an
acknowledgement by Crestmark as to the perfection, priority, validity or
enforceability thereof.
 
 
 
 
 
 

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PROMISSORY NOTE (LINE OF CREDIT)
 
 
Principal Amount: 
$2,000,000
  Troy, Michigan       Due Date:     ON DEMAND    Dated: April 20, 2010   

 
FOR VALUE RECEIVED, the undersigned, (the "Borrower") promises, ON DEMAND, and
if not sooner demanded, on the Maturity Date to pay to the order of Crestmark
Bank, a Michigan banking corporation (hereinafter referred to as "Crestmark"),
at its offices located at 850 East Long Lake Road, Troy, Michigan 48085, or at
such other place as Crestmark may designate in writing, the principal sum of up
to TWO MILLION AND NO/100 DOLLARS ($2,000,000), or so much thereof as may be
outstanding from time to time under the Loan Agreement (as defined below), plus
interest, fees and expenses as hereinafter provided, in lawful money of the
United States of America. All payments under this Note must be in immediately
available United States funds, without offset, deduction, setoff or
counterclaim. Capitalized terms used in this Note, but not defined in this Note,
have the meanings given to them in the Loan Agreement (as defined below).
 
The outstanding principal under this Note will bear interest on the basis of a
year of 360 days for the actual number of days elapsed at an interest rate equal
to THREE AND ONE-HALF PERCENT (3.50%) per annum in excess of the Wall Street
Journal Prime Rate (the "Effective Rate"). The term "Wall Street Journal Prime
Rate" means the interest rate reported daily in the Wall Street Journal, as the
Prime Rate, as such rate varies from time to time. If the Wall Street Journal
Prime Rate is decreased or increased, then the interest rate under this Note
will decrease or increase by a like amount effective the day of each increase or
decrease. If at any time Crestmark abandons the use of the Wall Street Journal
Prime Rate, or the paper ceases publishing it, then the new index will be the
prime commercial rate established or selected by Crestmark or its successor or
assign. Notwithstanding the foregoing, at no time will the Effective Rate be
less than six and three quarters percent (6.75%) per annum.
 
Interest on the Indebtedness must be paid monthly, in arrears, for each calendar
month and due on the first day of the following month for as long as any part of
this Note remains outstanding. The first payment due hereunder shall be due and
payable on April 1, 2010. Payments due and payable on a day on which Crestmark
is not open for business are due on the next business day. Crestmark may, in its
sole discretion, apply any payments it receives in the Cash Collateral Account
and any other funds of the Borrower in its possession to any outstanding
principal or other Indebtedness due Crestmark at any time, whether or not a
Default then exists. Acceptance by Crestmark of any payment in an amount less
than the amount then due will be deemed an acceptance on account only, and the
failure to pay the entire amount then due is a Default.
 
Any payment made by mail will be deemed tendered and received only upon actual
receipt by Crestmark. The Borrower expressly assumes all risk of loss resulting
from non-delivery or delay in delivery of any payment transmitted by mail or in
any other manner.
 
This Note is a note under which Money Advances, repayment and readvances may be
made from time to time. Money Advances and readvances will be made in accordance
with the provisions of the Loan Agreement.
 
 
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If Crestmark has not demanded payment on this Note, and the Borrower elects to
pay this Note, in full or in part, the Borrower may do so, but only upon the
simultaneous payment of the following exit fee, as liquidated damages and not as
a penalty: the sum of: (i) the monthly Maintenance Fee multiplied by the number
of months remaining from the date of the prepayment until the applicable
Maturity Date, plus (ii) any unpaid Commitment Fees due under the Loan
Agreement, plus (iii) (a) two (2.00%) percent of the Maximum Amount if
terminated during the first twelve months from the date of this Note, or (b)one
(1.00%) of the Maximum Amount if terminated at any time thereafter. No partial
prepayment will affect the Borrower's obligation to continue the regular
payments due under this Note. In the event that payment of the indebtedness
hereunder shall be accelerated after the occurrence of an event of default, the
exit fee in effect as of the date of such acceleration shall be paid and such
exit fee shall also be added to the outstanding balance of this Note in
determining the debt for the purposes of any judgment of foreclosure of any loan
documents give to secure the indebtedness hereunder.
 
Regardless of any provision contained in this Note, the Loan Agreement or any of
the Collateral Documents or any other document executed in connection herewith,
in no contingency or event whatsoever shall the aggregate of all amounts that
are contracted for, charged or received by Crestmark pursuant to the terms of
this Note, the Loan Agreement or any of the Collateral Documents and that are
deemed interest under applicable law exceed the highest rate permissible under
any applicable law. No agreements, conditions, provisions or stipulations
contained in this Note, the Loan Agreement or any of the Collateral Documents or
the exercise by Crestmark of the right to accelerate the payment or the maturity
of all or any portion of the obligations owing to Crestmark (collectively the
"Obligations"), or the exercise of any option whatsoever contained herein, in
the Loan Agreement or in any of the Collateral Documents, or the prepayment by
Borrower of any of the Obligations, or the occurrence of any contingency
whatsoever, shall entitle Crestmark to charge or receive in any event, interest
or any charges, amounts premiums or fees deemed interest by applicable law (such
interest, charges, amounts, premiums and fees referred to herein collectively as
"Interest") in excess of the maximum rate allowable under applicable law and in
no event shall Borrower be obligated to pay Interest exceeding such maximum
rate, and all agreements, conditions or stipulations, if any, which may in any
event or contingency whatsoever operate to bind, obligate or compel Borrower to
pay Interest exceeding the maximum rate allowable under applicable law shall be
without binding force or effect, at law or in equity, to the extent only of the
excess of Interest over such maximum rate. If any Interest is charged or
received in excess of the maximum rate allowable under applicable law
("Excess"), Borrower acknowledges and stipulates that any such charge or receipt
shall be the result of an accident and bona fide error, and such Excess, to the
extent received, shall be applied first to reduce the principal Obligations and
the balance, if any, returned to Borrower, it being the intent of the parties
hereto not to enter into a usurious or otherwise illegal relationship. The right
to accelerate the maturity of, or to make demand for repayment of any of the
Obligations does not include the right to accelerate any interest that has not
otherwise accrued on the date of such acceleration, and Crestmark does not
intend to collect any unearned interest in the event of any such acceleration.
Borrower recognizes that, with fluctuations in the rates of interest set forth
above and the maximum rate of interest allowable under applicable law, such an
unintentional result could inadvertently occur. All monies paid to Crestmark
hereunder or under the Loan Agreement or any of the Collateral Documents,
whether at maturity or by prepayment, shall be subject to any rebate of unearned
interest as and to the extent required by applicable law. By the execution of
this Note, Borrower covenants that (i) the credit or return of any Excess shall
constitute the acceptance by Borrower of such Excess, and (ii) Borrower shall
not seek or pursue any other remedy, legal or equitable, against Crestmark,
based in whole or in part upon contracting for, charging or receiving any
Interest in excess of the maximum rate allowable under applicable law. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Crestmark, all interest at any time contracted for,
charged or received from Borrower in connection with this Note and any other
agreement or document executed in connection herewith, the Loan Agreement or any
of the Collateral Documents shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread in equal parts throughout the full
term of the Obligations. Borrower and Crestmark shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this paragraph shall be
deemed to be incorporated into the Loan Agreement and all Collateral Documents
(whether or not any provision of this paragraph is referred to therein). All
such Loan Agreement and Collateral Documents and communications relating to any
Interest owed by Borrower and all figures set forth therein shall, for the sole
purpose of computing the extent of Obligations, be automatically recommitted by
Borrower, and by any court considering the same, to give effect to the
adjustments or credits required by this paragraph.
 
 
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Upon the occurrence of a Default, which includes failure to pay the indebtedness
under this Note on demand, Crestmark may declare all or part of this Note to be
immediately due and payable. During any period of a Default, the interest rate
on the outstanding Indebtedness will be the greater of ELEVEN AND THREE QUARTERS
PERCENT (11.75%) per annum in excess of the Wall Street Journal Prime Rate or
FIFTEEN PERCENT (15%) (the "Default Rate"). Furthermore, upon the occurrence of
a Default, Crestmark has all of the rights and remedies provided at law or
equity or by agreement, including, those under the Loan Agreement. All remedies
are cumulative and not exclusive.
 
No delay or failure by Crestmark in exercising any right, remedy, power or
privilege (collectively, a "right") will affect such right. No single or partial
exercise of a right will preclude the exercise of any other right. No delay or
failure of Crestmark at any time to demand strict adherence to the terms of this
Note will be deemed to constitute a course of conduct inconsistent with
Crestmark's right at any time to demand strict adherence to the terms of this
Note.
 
The Borrower acknowledges that this Note matures upon issuance and that
Crestmark, at any time, without notice and with or without reason, may demand
that this Note be immediately paid in full or in part. The demand nature of this
Note is not modified by reference to a Default in this Note or in the Loan
Agreement or Collateral Documents. To the extent that there is reference to a
Default, such reference is for the purpose of permitting Crestmark to accelerate
this Note not on a demand basis and/or to receive interest at the Default Rate
provided in this Note. It is expressly agreed that Crestmark may exercise its
demand rights under this Note whether or not a Default has occurred. Crestmark,
with or without reason and without notice, may from time to time make demand for
partial payments under this Note and these demands will not preclude Crestmark
from demanding at any time that this Note be immediately paid in full.
 
The Borrower hereby waives presentment for payment, demand, notice of
non-payment, notice of protest and protest of this Note, and all other notices
of any kind and diligence in collection or bringing suit. The liability of the
Borrower is absolute and unconditional, without regard to the liability of any
other party.
 
 
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This Note is executed pursuant to and secured by a Loan and Security Agreement
dated of even date herewith as the same may be amended, restated, modified or
altered from time to time (the "Loan Agreement") and the Collateral and
Collateral Documents therein defined and described. Reference is made to the
Loan Agreement and Collateral Documents for additional terms relating to this
Note and the security given for this Note.
 
The Borrower grants Crestmark a security interest in Crestmark's own
indebtedness or liability to the Borrower, if any, however evidenced, including
a security interest in all of the Borrower's deposit accounts, instruments,
negotiable documents and chattel paper which at any time are in the possession
or control of Crestmark as further security for repayment of the Indebtedness of
the Borrower.
 
The Borrower will reimburse Crestmark for all reasonable costs and expenses,
including actual attorneys' fees, incurred by Crestmark in enforcing its rights
under this Note and collecting the amounts due under this Note.

 
 

ADDRESS:   BORROWER:                10011 Pines Blvd. 
DECORATOR INDUSTRIES, INC., 
a Pennsylvania corporation
             
Pembroke Pines, FL 33024 
/s/ William Johnson     By: William Johnson     Its:  President  

 
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