Filed by Automated Filing Services Inc. (604) 609-0244 - K-Tronik International Corp. - Exhibit 10.2




 Exhibit 10.2: Credit Facility with the Trust Company of
  New Jersey

 

REVOLVING LOAN AND

  SECURITY AGREEMENT

 

      This Revolving Loan and
  Security Agreement ("Agreement") among THE TRUST COMPANY
  OF NEW JERSEY, having an office at 35 Journal Square, Jersey City, New
  Jersey 07306 ("Lender"); and K-TRONIK INTERNATIONAL CORP.,
  a Nevada Corporation and K-TRONIK N.A. INC., a Nevada Corporation,
  each having its chief executive office at 290 Vincent Avenue, Hackensack, New
  Jersey 07601 (jointly , severally and separately,
  "Borrower") is effective on June 30, 2003. 

	STATEMENTS
  
	A.

        	     The Borrower
        has requested financial accommodation(s) from Lender.

         

	B.

        	     Lender
        is willing to render the requested financial accommodation(s) to the Borrower
        in connection with the Borrower's business and on certain terms and conditions.

         

	C.

        	     To secure
        the financial accommodation(s), the Borrower is willing, among other things,
        to grant a first priority security interest to Lender in certain assets
        of the Borrower.

          



     NOW, THEREFORE,
  in consideration of the promises, covenants and understandings set forth in
  this Agreement and the benefits to be received from the performance of such
  promises, covenants and understandings, and for other good and valuable consideration,
  the receipt and sufficiency of which is hereby acknowledged, the parties agree
  as follows:

 DEFINITIONS 


   "Accounts" - as defined in Exhibit A 

   "Advance Limit" - as defined in Section 1.1(b) 

  "Affiliate" - as defined in Section 7.12 

  "Chattel Paper"  - as defined in Exhibit A 

  "Collateral" - as defined in Article 4 

  "Commercial Tort Claims"  - as defined in Exhibit A 

  "Debt" - as defined in Article 3 

   "Debt Service Coverage Ratio " - as defined in Section 7.18 

   "Default" - as defined in Section 9.1 








   "Delivered Financials" - as defined in Section 5.4(a) 

  "Deposit Accounts"  - as defined in Exhibit A 

  "Environmental Laws" - as defined in Section 5.15(c) 

  "Equipment" - as defined in Exhibit A 

  "ERISA" - as defined in Section 5.10 

  "General Intangibles" - as defined in Exhibit A 

  "Goods" - as defined in Exhibit A 

  "Guarantor" - as defined in Section 1.1(b)

   "Instruments"  - as defined in Exhibit A 

  "Inventory" - as defined in Exhibit A 

   "Investment Property"  - as defined in Exhibit A 

  "Letter of Credit Rights"  - as defined in Exhibit A 

   "Net Value of Qualified Inventory" - as defined in Section 1.1(e)
  

   "Operating Documents" - as defined in Section 5.1(c) 

  "OSHA" - as defined in Section 5.11 

  "Participant" - as defined in Section 2.4(b) 

  "Plan" - as defined in Section 5.10 

  "Prime Rate" - as defined in Section 1.2(f) 

  "Qualified Accounts" - as defined in Section 1.1(c) 

  "Qualified Inventory" - as defined in Section 1.1(d) 

  "Revolving Loan" - as defined in Section 1.1(a) 

  "Tangible Capital Funds"  - as defined in Section 7.16 



  





AGREEMENTS 

ARTICLE 1. THE LOAN

 Section 1.1 The Revolving Loan 


	     1.1(a)
        Lender agrees to provide, in its sole and absolute discretion, at one
        time or from time to time, at the request of the Borrower, loans to the
        Borrower in an aggregate amount up to but not in excess of the Borrower's
        Advance Limit on a revolving loan basis (the "Revolving Loan") during
        the term of this Agreement. The Revolving Loan is to be payable on the
        earlier of (i) three (3) years from the date of this Agreement; or (ii)
        in accordance with Article 14 hereof; or (iii) upon a Default as defined
        in this Agreement.

            1.1(b) The term "Advance
        Limit" means the loans or advances which Lender may make to the Borrower
        pursuant to this Agreement which are not in the aggregate at any time
        outstanding to exceed the lesser of $1,500,000 (which amount may be increased
        at the sole and absolute discretion of Lender to up to $3,000,000 in increments
        of $500,000 based upon (i) dollar for dollar equity infusion into the
        Borrower which is satisfactory to Lender and (ii) the prior written consent
        of Guarantor, Eiger Technology, Inc. for so long as Eiger Technology,
        Inc. remains a Guarantor; Eiger Technology Inc. and Robert Kim have executed
        instruments of Guaranty in connection with this Agreement and are collectively
        referred to as "Guarantor"), or the sum of (A), (B) and (C) below:

          

      

	 	 (A) 	 Up to eighty-five (85%) percent
        of the face amount of the Borrower's “Qualified Accounts”
        (less reserves determined by Lender for advertising allowances, warranty
        claims and other contingencies) as that term is defined in this Agreement;
        plus 

          

	 	(B) 	the lesser of (i) up to thirty
        (30%) percent of the "Net Value of Qualified Inventory" as that
        term is defined in this Agreement; or (ii) $1,000,000; or (iii) the amount
        actually advanced on account of the Accounts pursuant to Section 1.1(b)(A)
        hereof; less 

          

	 	(C) 	The full unpaid and outstanding balance
        of any letter of credit which Lender in its sole discretion may issue
        on account of the Borrower.

         



 Lender has the right, from time to time, in its sole and absolute
  discretion, to increase and/or decrease the amount or percentage of the Advance
  Limit . The Advance Limit set forth in this Agreement, or as may be hereafter
  set by Lender, is a basis upon which Lender has agreed to execute this Agreement.
  Such Advance Limit reflects Lender's reasonable estimate of the risk and valuation
  of the Collateral in the administration of this Agreement and market and other
  conditions. The Advance Limit is a mechanism for the monitoring by Lender of
  the Borrower and not an obligation on the part of Lender. 

      1.1(c) The term "Qualified Accounts"
  means the "Accounts" (as that term is defined on Exhibit A annexed hereto) as
  to which the Borrower has furnished to Lender adequate written information at
  such times and in such form as has been or, from time to time, may be requested
  by Lender, which, taken selectively or as a whole, meet all of the herein criteria
  until collected, are not unpaid for more than sixty (60) days from the due date
  of invoice, are fully covered by credit insurance pursuant to a policy satisfactory
  in form and substance to Lender and issued by an insurer acceptable to Lender
  and which are in all other respects acceptable to Lender in its sole discretion,
  and specifically exclude the following: 

	 	(A) 	Accounts with respect to which the account debtor
        is an officer, director, employee or agent of the Borrower or an Affiliate;
        

          

	 	(B) 	Accounts with respect to which goods are placed on
        consignment, pre-billed, guaranteed sale, bill-and-hold, repurchase or
        return, or other terms by reason of which the payment by the account debtor
        may be conditional; 

          










	 	(C)	Accounts arising from progress billings, invoices
        for deposits and rebills of amounts previously credited to the extent
        of credits issued more than fifteen (15) days prior to such rebill, or
        retainage; 

          

	 	(D)	Accounts with respect to which the account debtor
        is not domiciled in the United States of America unless such Account is
        (1) fully guaranteed and secured by an irrevocable letter of credit in
        form and substance satisfactory to Lender and drawn on a United States
        bank acceptable to Lender, or (2) is fully covered by foreign credit insurance
        pursuant to a policy satisfactory in form and substance to Lender and
        issued by an insurer acceptable to Lender;

          

	 	(E)	Accounts which arise from a lease or other extended
        payment basis;

          

	 	(F)	Accounts with respect to which the account debtor
        is the government of the United States or any subdivision or authority
        thereof; 

          

	 	(G)	All Accounts owing by any account debtor if twenty-five
        (25%) percent or more of the Accounts due from such account debtor are
        deemed not to be Qualified Accounts hereunder;

          

	 	(H)	Accounts with respect to which the account debtor
        is a subsidiary of, Affiliate of, or has common officers or directors
        with the Borrower;

          

	 	(I)	Accounts with respect to which the Lender does not
        for any reason have a perfected first priority security interest, or with
        respect to which the Accounts are subject to any existing or prospective
        claim, lien, security interest or financing statement of any persons or
        entities, including without limitation, the United States, or any agencies
        or instrumentalities thereof, except the security interest and financing
        statements in favor of Lender or except as otherwise approved in writing
        by Lender;

          

	 	(J)	Accounts with respect to which the Borrower is or
        may become liable to the account debtor for goods sold or services rendered
        by the account debtor to the Borrower, to the extent of the Borrower's
        existing or potential liability to such account debtor;

          

	 	(K)	Accounts with respect to which the account debtor
        has disputed any liability or the account debtor has made any claim with
        respect to any other Account due to the Borrower, or the Account is otherwise
        subject to any right of setoff, deduction, breach of warranty or other
        defense, dispute or counterclaim by the account debtor;

          

	 	(L)	that portion of the Accounts owed by any single account
        debtor which exceeds thirty (30%) percent of all of the Accounts;

          

	 	(M)	that portion of any Accounts representing late fees,
        service charges or interest, but only to the extent of such portion;










	 	(N) 	Accounts of an account debtor where the account debtor
        is located in a state which requires a Notice of Business Activities Report
        or similar report to be filed and the account debtor has not filed same
        for the current year, or where the account debtor is not otherwise authorized
        to transact business in said state, or where the account debtor is not
        in good standing in such state; 

          

	 	(O) 	Accounts owed by any account debtor which is insolvent
        or is the subject of an insolvency proceeding; 

          

	 	(P) 	that portion of any Accounts represented by contract
        rights, documents, instruments, chattel paper or general intangibles;
        

          

	 	(Q) 	any and all Accounts of an account debtor whose credit-worthiness
        is not satisfactory to Lender in its sole credit judgment based on information
        available to Lender; and 

          

	 	(R) 	Accounts deemed by Lender to constitute customer
        deposits, advanced payments or prepayments.



 References to percentages of all Accounts are based on dollar
  amounts of Accounts and not number of Accounts. Anything to the contrary notwithstanding,
  Lender has the right, in its sole and absolute discretion, to classify any Accounts
  as not being Qualified Accounts. 

      1.1(d) The term "Qualified Inventory" means
  the Inventory (as that term is defined on Exhibit A annexed hereto) as to which
  Borrower has furnished to Lender adequate written information at such times
  and in such form as has been, or from time to time, may be requested by Lender,
  which meet all of the following criteria on the date of any advances under the
  Revolving Loan and during the term of this Agreement, and which are in all other
  respects acceptable to Lender in its sole discretion: 

	 	(A) 	The Inventory consists of finished marketable goods
        stored at the addresses of the Borrower set forth on Schedule 2 or is
        Inventory in transit to the Borrower, provided that the Inventory in transit
        is FOB place of origin within the meaning of Uniform Commercial Code Section
        2-319 and is insured to the satisfaction of Lender; if stored at any other
        location, the Inventory is not Qualified Inventory unless it is approved
        by Lender, made subject to an acceptable landlord waiver or bailee waiver
        and is otherwise Qualified Inventory in the sole discretion of Lender.
        The Inventory is not (i) work in process, (ii) packaging, shipping or
        supply materials, (iii) subject to resale, or (iv) held for sale or consisting
        of a product line held for sale for longer than twelve (12) months; 

          

	 	(B) 	Borrower is the sole owner of the Inventory, none
        of the Inventory is being held by the Borrower on a consignment basis,
        and the Borrower has not sold, assigned, transferred, mortgaged or hypothecated,
        nor released all or any part of the Inventory from Lender's security interest
        created by this Agreement. The Inventory is otherwise not subject to any
        existing or prospective claim, lien, security interest or financing statement
        of any persons or entities, including without limitation the United States,
        or any agencies or instrumentalities thereof except the security interest
        and financing statements in favor of Lender; 

          

	 	(C) 	If any of the Inventory is represented or covered
        by documents of title, instruments or chattel paper, the Borrower is the
        owner of all such documents, instruments and paper, and (except as provided
        in this Agreement) none of it has

          










	 	 	been sold or transferred nor has any security interest
        been granted in all or any portion thereof, except in favor of Lender;
        

          

	 	(D) 	The Inventory is not obsolete, slow-moving, has not
        been rejected, returned or damaged; 

          

	 	(E) 	The Inventory, if purchased by Borrower, was purchased
        in the ordinary course of business; and 

          

	 	(F) 	Lender has not notified the Borrower that the Inventory
        is unsatisfactory. 

          



      1.1(e) The term "Net Value of
  Qualified Inventory" means the lower of the net cost to the Borrower or the
  market value, as determined by Lender in its sole and absolute discretion, of
  the Qualified Inventory in the actual or constructive possession of the Borrower
  at any time, exclusive of any transportation, processing or handling charges,
  and exclusive of such other value (including without limitation the value of
  partially finished goods, slow moving or not current goods) as Lender in its
  sole discretion desires to exclude. 

      1.1(f) Without limiting any
  other rights, terms, conditions or remedies of Lender, all loans, advances or
  financial accommodations made or otherwise available to Borrower is subject
  to Lender’s continuing right, in its sole and absolute discretion, to withhold
  from Borrower a reserve, and to increase and decrease such reserve from time
  to time, if and to the extent that, in Lender’s sole judgment, such reserve
  is necessary to protect the interests of Lender against possible non-payment
  of Accounts, for any reason, by account debtors, possible non-payment by Borrower
  of any indebtedness owed to, or liens held by, third parties, or to protect
  the interests of Lender against the possible adverse effect of any state of
  facts which does or would, with or without notice or passage of time, or both,
  constitute a Default hereunder. 


Section 1.2 Interest Rate and Other Provisions Relating to The Revolving Loan


      1.2(a) Interest accrues on the
  Revolving Loan at Lender's floating Prime Rate (as that term is defined in this
  Agreement) plus 1 3⁄4% per annum. 

     1.2(b) Each change in the floating
  interest rate is to take effect simultaneously with a corresponding change in
  the Prime Rate without notice to Borrower. Interest is to be calculated on a
  daily basis with each day representing 1/360th of a year. 

      1.2 (c) The Revolving Loan is
  to be evidenced by promissory note(s) (the "Note') in the form required by Lender.


      1.2(e) In the event of Default
  (as defined in this Agreement), interest accrues on the Revolving Loan and the
  Debt (as defined in this Agreement) at a rate equal to five (5%) percent above
  the interest rate otherwise payable hereunder. Borrower acknowledges that: (i)
  such additional rate is a material inducement to Lender to make the loans; (ii)
  Lender would not have made the loans in the absence of the agreement of the
  Borrower to pay such default rate; (iii) such additional rate represents compensation
  for increased risk to Lender that the loans will not be repaid; and (iv) such
  rate is not a penalty and represents a reasonable estimate of (a) the cost to
  Lender in allocating its resources (both personnel and financial) to the ongoing
  review, monitoring, administration and collection of the loans and (b) compensation
  to Lender for losses that are difficult to ascertain. 

      1.2(f) The Prime Rate of Lender
  means the fluctuating Prime Rate of interest established by Lender from time
  to time whether or not such rate shall be otherwise published. The Prime Rate
  is established for the convenience of Lender. It is not necessarily Lender's
  lowest rate. In 








 the event that there should be a change in the Prime Rate
  of Lender, such change shall be effective on the date of such change without
  notice to Borrower or any Guarantor, endorser or surety. Any such change will
  not effect or alter any other term or conditions of any promissory note or this
  Agreement. 

      1.2(g) Interest on the Revolving
  Loan is payable by the Borrower each month beginning on the first banking day
  of Lender in the month following the effective date of this Agreement, unless
  otherwise provided herein or in the Note. Lender may, at its sole and absolute
  discretion, charge unpaid interest or principal to any checking or other account
  of the Borrower or Guarantor, deduct unpaid interest or principal from any future
  advance to the Borrower, or apply any proceeds received by Lender to the payment
  of unpaid interest or principal. Any failure or delay by Lender in submitting
  an invoice(s) for interest payments does not discharge or relieve the Borrower
  of the obligation to render timely payments. Borrower is to maintain its main
  operating accounts with Lender and is to maintain sufficient balances therein
  at all times to enable Lender to directly charge all sums due to Lender. 

      1.2(h) In no event is the interest
  rate or other charges of this Agreement to exceed the highest rate permissible
  under law. If any provision of this Agreement or any other instrument executed
  in connection thereto be construed or held to permit the collection of or to
  require the payment of any amount of interest in excess of that permitted by
  applicable law, the provisions of this paragraph control and override any contrary
  or inconsistent provision of this Agreement or instrument. The intention of
  the parties is to conform strictly to the applicable laws relating to maximum
  rates of interest. This Agreement and each other instrument evidencing or relating
  to the Debt are to be held subject to reduction or rebate as to any amount paid
  by or on behalf of the Borrower in violation of any such law. 

 Section 1.3 Determination of Revolving Loan Balance 

      1.3(a) Borrower is to establish
  a system of lockbox and controlled bank accounts with respect to the collection
  of Accounts and the deposit of proceeds of Collateral acceptable to Lender in
  all respects. Such accounts are to be made subject to blocked account agreements
  (if requested by Lender), which are to be in form and substance satisfactory
  to Lender. The Borrower is to immediately (and not less frequently than daily)
  deliver, at its sole expense, to Lender, as agent for Lender and subject to
  the terms of this Agreement, all proceeds of the Collateral (as that term is
  defined in this Agreement), including but not limited to any checks, cash, credit
  card sales and receipts, notes or other instruments or property received by
  the Borrower for deposit into such lockbox or other controlled account(s) designated
  by Lender which is to be applied in determining the outstanding balance of the
  Revolving Loan. Borrower is to (i) indicate on all of its invoices that funds
  should be delivered to and deposited into such accounts; (ii) direct all of
  its account debtors to deposit any and all proceeds of Collateral into such
  accounts; (iii) irrevocably authorize and direct any banks which maintain the
  Borrower’s initial receipt of cash, checks and other items to promptly
  wire transfer all available funds to such accounts; and (iv) advise all such
  banks of Lender’s security interest in such funds. 

      1.3(b) The balance of the Revolving
  Loan will be determined as follows: 

	 	(A) 	Domestic checks received by Lender on or before 12:00
        Noon of any banking day are to be deemed received by Lender on such banking
        day; 

          

	 	(B) 	Domestic checks received by Lender after 12:00 Noon
        of any banking day are to be deemed received by Lender on the following
        banking day; 

          

	 	(C) 	Any other form of proceeds received by Lender is
        to be deemed received by Lender when the Lender has received notification
        of collection (if notice of

          










	 	 	collection is received on or before 12:00 Noon of
        any such banking day, such proceeds are to be deemed to have been received
        by the Lender on such banking day; if notice of collection is received
        after 12:00 Noon of any such banking day, such proceeds are to be deemed
        to have been received by the Lender on the following banking day);
 
      

	 	(D) 	Any credit(s) to the account of the Borrower are
        conditioned upon final payment to Lender at its office in cash or solvent
        credits; 

          

	 	(E) 	Any item(s) not collected or not paid are to be charged
        as a debit against the Revolving Loan or any account of the Borrower maintained
        with Lender.

          



     1.3(c) Interest will continue
  to accrue on the amount of: (i) any checks or other proceeds received by Lender
  for a period of three (3) banking days after receipt (as defined in this Section),
  and (ii) any federal funds transfer(s) for a period of one (1) banking day after
  receipt (as defined in this Section). 

 Section 1.4 Monthly Statement 

      Once each month Lender may render
  a statement of account to the Borrower reflecting the current status of the
  Revolving Loan. Such statement is to be deemed an accounting and an authenticated
  record within the meaning of the Uniform Commercial Code. If any statement indicates
  that the outstanding balance of the Revolving Loan exceeds the Advance Limit,
  the Borrower must immediately pay the excess balance to Lender. Such excess
  is not to be construed as a commitment or obligation of Lender to make advances
  in excess of the Advance Limit. Each statement of account is to be considered
  correct, accepted by the Borrower and conclusively binding upon the Borrower,
  unless the Borrower gives notice to Lender to the contrary in writing within
  ten (10) banking days after the sending of the statement by Lender. If the Borrower
  disputes the accuracy of Lender's statement, the Borrower's notice is to specify
  in detail the basis of the dispute. If the Borrower requests an accounting more
  frequently than once per six (6) month period, Lender may charge the Borrower
  for the cost of each additional accounting. 

 Section 1.5 Method of Advances 

      Advances under the Revolving
  Loan may be made through telephone requests from the Borrower from an individual
  purporting to be an authorized representative of the Borrower or other written
  notification means acceptable to Lender, by deposit of the amount requested
  pursuant to this Agreement in such controlled account(s) required by this Agreement.
  All such telephone requests, means of notification and writings are to be deemed
  conclusively binding upon the Borrower. In the event Lender honors a check of
  the Borrower resulting in the Borrower's checking account being deemed overdrawn,
  Lender is to be deemed to have made an advance to the Borrower in the amount
  overdrawn on the Lender's banking day immediately preceding the day on which
  the Borrower's check is tendered to Lender for collection (even if that amount
  is in excess of the Advance Limit). Notwithstanding, Lender has no obligation
  to honor any overdraft of the Borrower. 

 Section 1.6 Reimbursement of Increased Cost to Lender 

      If any law, regulation or guideline,
  or change in any law, regulation or guideline or in the interpretation thereof,
  or any order or ruling by any regulatory body, court or other governmental authority,
  or compliance by the Lender with any request or directive (whether or not having
  the force of law) of any such regulatory body, court or authority, imposes,
  modifies, or deems applicable to Lender any reserve, capital, special deposit
  or other requirement or condition in respect of the Debt, which results in an
  increased cost or reduced benefit to Lender (as determined by reasonable allocation
  of the aggregate of such increased costs or reduced benefits to Lender resulting
  from such 








 event), then Borrower is to pay to Lender from time to time
  upon demand additional amounts sufficient to compensate Lender for such increased
  costs or reduced benefits, together with interest on each such amount from a
  date ten (10) days after the date of such demand until payment in full thereof
  at the highest interest rate then applicable to any of the Debt. A certificate
  setting forth in reasonable detail such increased cost incurred or reduced benefit
  realized by Lender as a result of any such event is to be conclusive as to the
  amount thereof, absent manifest error. 

 Section 1.7 Conditions Precedent to the Revolving Loan 

      The discretion of Lender to
  make the Revolving Loan and the discretion by Lender to make any advances pursuant
  to this Agreement is further subject to the following conditions: 

     1.7(a) Such assurances (including
  certificates from representatives of the Borrower or Guarantor) that Lender
  requires that the representations and warranties of the Borrower and Guarantor
  set forth in this Agreement or relating to this Agreement are true, accurate
  and complete; 

     1.7(b) Such assurances (including
  certificates from representatives of the Borrower or Guarantor) that Lender
  requires that the proceeds of the Revolving Loan are to be utilized by the Borrower
  for the purposes set forth in this Agreement; 

     1.7(c) Such assurances (including
  certificates from representatives of the Borrower or Guarantor) that Lender
  requires that no event of Default defined in this Agreement or other documents
  relating to this Agreement exists, continues to exist, or would exist but for
  the lapse of time or notice; and 

     1.7(d) Such other terms and conditions,
  delivery of documents, guarantees, searches, origination fee, opinions of counsel
  or other matters that Lender may require, including those set forth in any conditional
  commitment made to the Borrower by Lender relating to the Revolving Loan, all
  in form and substance satisfactory to Lender. 

    

 ARTICLE 2. ADDITIONAL OBLIGATIONS OF THE BORROWER AND
  GUARANTOR 

 Section 2.1 Existing Obligations

      The Borrower agrees to pay and
  perform, when due, all other debts, liabilities and duties of every kind and
  character now existing to Lender regardless of whether such debts, liabilities
  and duties may be direct, indirect, or the result of any derivative transaction,
  primary or secondary, joint or several, fixed or contingent (regardless of form,
  existence of collateral therefor, whether guaranteed, or subject to a participation
  agreement). 


Section 2.2 Future Advances


      The Borrower agrees to pay and
  perform, when due, future advances, loans, debts, liabilities and duties to
  Lender whether direct or indirect, primary or secondary, joint or several, fixed
  or contingent whether or not relating to this Agreement or the Revolving Loan
  (regardless of form, existence of collateral therefor, whether guaranteed, or
  subject to a participation agreement). 


Section 2.3 Expenses in Preserving Interests of Lender


      The Borrower agrees to pay on
  demand, such advances made by Lender to or for the account of the Borrower or
  Guarantor, including advances for insurance, repairs to any Collateral, taxes,
  and such costs incurred by Lender (in its discretion and regardless as to whether
  any such advance increases the unpaid balance of the Revolving Loan or the Debt)
  in the discharge of any lien, security interest, encumbrance, lease, pledge
  or assignment.






 Section 2.4 Obligations to Lender Affiliates or Participants


      2.4(a) The Borrower agrees to
  pay and perform, when due, all other debts, liabilities and duties of every
  kind and character to any Affiliate or participants of Lender, whether such
  debts, liabilities and duties exist now or may exist in the future, and regardless
  of whether such debts, liabilities and duties may be direct or indirect, primary
  or secondary, joint or several, fixed or contingent (regardless of form, existence
  of collateral therefor, whether guaranteed, or subject to a participation agreement).


      2.4(b) The Borrower acknowledges
  that in the regular course of commercial banking business Lender may at any
  time and from time to time transfer or sell participating interest(s) in the
  Revolving Loan to other financial institutions (each such transferee or purchaser
  of a participating interest, a "Participant"). Each Participant may exercise
  all rights to payment (including without limitation rights of set-off) with
  respect to the interests held by it as determined by Lender provided that Borrower
  is not required to pay more than the amount which it would have been required
  to pay to Lender had Lender retained such interest. Borrower hereby grants to
  any Participant a continuing security interest in any deposits, moneys or other
  property actually or constructively held by such Participant as security for
  the Participant's interest in the Revolving Loan. 


Section 2.5 Expenses in Realizing Upon Security Interest


      The Borrower agrees to pay,
  on demand, all costs and expenses, including reasonable attorneys fees of both
  outside and in-house counsel, incurred by Lender to preserve, collect, protect,
  foreclose, sell, or otherwise realize upon its security interest in the Collateral
  identified in this Agreement or in any other security agreement executed by
  the Borrower or Guarantor of the Revolving Loan or other obligation of the Borrower
  or Guarantor to Lender. 

 Section 2.6 Expenses in Enforcing and Defending Rights 

      The Borrower agrees to pay,
  on demand, all costs and expenses, including reasonable attorneys fees of both
  outside and in-house counsel, incurred by Lender in the prosecution or defense
  of any action or proceeding relating to the subject matter of this Agreement
  or other agreement or instrument executed by the Borrower or Guarantor. 


Section 2.7 Costs of Lender


      The Borrower agrees to pay,
  on demand, to Lender all costs and expenses incurred by Lender in the preparation,
  execution and administration of this Agreement or other agreements including,
  but not limited to, attorneys fees, consultant and other professional fees,
  search fees and other out-of-pocket expenses. 

    

 ARTICLE 3. THE DEBT

 For purposes of this Agreement, the term "Debt" is defined
  as the Revolving Loan and those additional obligations of the Borrower and Guarantor
  defined in Article 1 and Article 2 of this Agreement. 





 ARTICLE 4. SECURITY INTEREST

      To secure the payment and performance
  by the Borrower and Guarantor of the Debt to Lender, the Borrower hereby pledges,
  sets over, assigns, delivers and grants a first priority security interest to
  Lender in all Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts,
  Equipment, General Intangibles, Goods, Instruments, Inventory, Investment Property,
  Letter of Credit Rights and all other Collateral more particularly described
  in Exhibit A annexed hereto and incorporated herein, in the guaranty of the
  Guarantor and in the insurance for the benefit of Lender described in Section
  6.13 of this Agreement. The Borrower pledges, sets over, assigns, delivers and
  grants such additional security interests set forth in such other security agreements
  and control agreements delivered in connection with this Agreement. The security
  interest pledged, set over, assigned and granted by the Borrower to Lender is
  to be a first and only priority security interest pursuant to applicable law
  (unless otherwise provided on Schedule 1 annexed hereto or in the other security
  or control agreements delivered) and the Borrower is to take all such action
  to create and perfect such security interest as Lender may require. The foregoing
  is, collectively, the "Collateral." 

   

 ARTICLE 5. REPRESENTATIONS AND WARRANTIES TO LENDER


     In order to induce Lender to execute this Agreement, the Borrower makes the following representations and warranties:


 Section 5.1 Organization and Standing

      5.1(a) The Borrower is a duly
  organized, validly existing registered organization organized in good standing
  under the laws of the state of Nevada. The spelling and identification of the
  Borrower in this Agreement is accurate in all respects and consistent with its
  registration. The Borrower is duly licensed or qualified to do business in each
  jurisdiction in which qualification is required by law, and is in good standing
  in all such jurisdictions. The Borrower has full power and authority to own
  its properties and to carry on business in all jurisdictions where it is doing
  business. All leases relating to the use by the Borrower of properties or assets
  are in full force and effect. 

      5.1(b) The Borrower possesses
  all licenses, permits, franchises, patents, copyrights, trademarks, and trade
  names, or rights thereto, to conduct its business substantially as now conducted
  and as presently proposed to be conducted, and is not in violation of rights
  of others with respect to any of the foregoing. 

      5.1(c) Lender has been provided
  with a true copy of the filed Certificate of Incorporation, operating and shareholder
  agreements, resolutions, bylaws and any amendments thereto (collectively and
  where applicable "Operating Documents") as the same are still in full force
  and effect. Lender may rely on the accuracy and integrity of the Operating Documents.
  Borrower has the authority to execute this Agreement and perform the undertakings
  set forth or referred to herein. 

      5.1(d) There has been no Certificate
  of Cancellation or Certificate of Dissolution filed on behalf of the Borrower,
  nor has the Borrower been de facto dissolved by any event such as the death,
  retirement, resignation, expulsion, bankruptcy or dissolution of any shareholder
  or any other event which would cause the dissolution of Borrower pursuant
  to applicable law. 5.1(e) The individual(s) executing this Agreement and related
  documents on behalf of the Borrower are authorized as
  officers to do so and to bind and obligate Borrower pursuant to the terms hereof.


      5.1(f) To the extent that the
  provisions of this Agreement are inconsistent with the provisions of the Operating
  Documents, the provisions of this Agreement will control. 








 Section 5.2 Power

      5.2(a) The Borrower has the
  power to execute, deliver and carry out this Agreement, and such other related
  documents and instruments executed by it. Its governing board has duly authorized
  and approved the terms of this Agreement and all related actions by it. No other
  action, whether by resolution, governmental entity, or otherwise, is necessary
  for the consummation of the transactions contemplated by this Agreement. Performance
  by the Borrower hereunder does not and will not constitute a breach or default
  of any agreement or law to which it is subject. 

      5.2(b) This Agreement and the
  documents relating thereto, upon execution and delivery, will constitute the
  Borrower's legal, valid and binding agreements enforceable in accordance with
  their terms. 

 Section 5.3 Litigation

      There are no judgments, lawsuits,
  judicial proceedings, investigations or complaints pending or threatened against
  Borrower relating to any aspect of its business or properties, including but
  not limited to environmental protection. The Borrower is not in default
  with respect to any judgment, order, injunction or assessment issued by any
  court or any governmental agency relating to any aspect of its business or properties
  or relating to its ability to consummate the transactions contemplated by this
  Agreement. 

 Section 5.4 Financial Statements and Solvency

      5.4(a) Prior to the execution
  of this Agreement, the Borrower has delivered to Lender its financial statements
  (the "Delivered Financials") requested by Lender. The Delivered Financials are
  accurate and complete, have been prepared in accordance with generally accepted
  accounting principles consistently applied ("GAAP"), and fairly and accurately
  present the assets, liabilities, results of operations and capital as at the
  dates thereof. The Delivered Financials reflect or provide for all fixed and
  contingent claims against debts and liabilities as of the dates thereof. There
  has not been any material change of financial condition between the date of
  the most recent of the Delivered Financials and the date of this Agreement.
  No fact or condition exists, is contemplated or threatened which may cause any
  such change at any time in the future. 

      5.4(b) Except as shown on the
  Delivered Financials, the Borrower has no other liabilities as of the date hereof
  which would materially or adversely affect its financial condition. 

      5.4(c) All books and records
  of account are accurate, complete and properly reflect all transactions purported
  to be documented thereby. 

      5.4(d) Borrower's assets, at
  a fair valuation, exceed Borrower's liabilities (including, without limitation,
  contingent liabilities). Borrower is paying its debts as they become due, and
  Borrower has capital and assets sufficient to carry on its business. 

 Section 5.5 Compliance with Law

      5.5 (a) The Borrower has, and
  at all times during the past has been, in compliance in all material respects
  with all laws, governmental rules and regulations applicable to its business
  and properties, including those relating to environmental protection. 

      5.5(b) The Borrower has, and
  at all times during the past has been in compliance with all requirements of
  the Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et seq., including,
  but not limited to, those regulations promulgated by the Architectural and Transportation
  Barrier Compliance Board at 36 CFR 1191 et seq., and by the Department of Justice
  at 28 CFR 36 et seq.





 Section 5.6 No Adverse Restrictions 

      The Borrower is not subject
  to any provision in its Operating Documents, any contract, mortgage, lease,
  judgment, court order, rule or regulation, or any other restriction of any kind
  which is now or could be in the future unduly burdensome or which could materially
  and adversely affect its business and properties, the results of its operations
  or its ability to fulfill any obligations in this Agreement or in any document
  relating thereto. No contract, instrument, understanding, judgment, statute,
  court order, rule or regulation to which it is a party or by which it is bound
  has been or will be violated or breached by the execution and performance of
  this Agreement. 

 Section 5.7 Taxes and Tax Returns 

      5.7(a) The Borrower has filed
  all tax returns which were required to be filed as of the date of this Agreement.


      5.7(b) The provisions for taxes
  shown in the Delivered Financials are sufficient to satisfy all taxes due and
  all assessments received for all periods ended on or prior to the dates thereof,
  without consideration as to whether Borrower is a Subchapter S corporation for
  Federal income tax purposes. 

      5.7(c) As of the date of this
  Agreement, no taxes are due from Borrower and no tax liabilities have been assessed
  or proposed against Borrower which either remain unpaid or are not otherwise
  provided for in the Delivered Financials. 

      5.7(d) The Borrower is not aware
  of any basis upon which any assessment for a material amount of additional taxes
  can be made against it. 

      5.7(e) The Borrower has not
  signed any extension agreement with the Internal Revenue Service or any governmental
  authority or given any waiver of a statute of limitations with respect to the
  payment of taxes. 

      5.7(f) The results of any governmental
  examination or audit of tax returns are properly reflected in the Delivered
  Financials. 

      5.7(g) All taxes which the Borrower
  is required by law to withhold or collect (the "Withholding Taxes") have been
  duly withheld and collected. To the extent required, the Borrower has paid over
  the Withholding Taxes to the proper governmental authorities on a timely basis
  or has reflected them as a liability in the Delivered Financials. 


Section 5.8 Title to Collateral


      The Borrower has good and marketable
  title to all of its tangible and intangible assets subject only to those liens,
  encumbrances, security interests, assignments, pledges, mortgages or leases
  set forth on the Delivered Financials. The Borrower has good and marketable
  title and rights to the Collateral except for the security interest granted
  to Lender by the Borrower, or except as provided on Schedule 1 or in the other
  security and control agreements delivered in connection with this Agreement.
  The Borrower has the right and power to grant the security interests in and
  to the Collateral provided by or referred to in this Agreement. Except as herein
  provided, none of the Collateral is or is about to become subject to any other
  assignment, mortgage, pledge, lien, security interest, lease or encumbrance
  by virtue of the execution or performance of this Agreement. 









Section 5.9 Use of Proceeds of the Revolving Loan


      5.9(a) The Borrower is not engaged
  in the business of extending credit for the purpose of purchasing or carrying
  margin stock within the meaning of Regulation U of the Board of Governors of
  the Federal Reserve System. The proceeds of the Revolving Loan are not intended
  by the Borrower to be used to purchase or carry any margin stock or to reduce
  or retire any indebtedness incurred for such purpose. If requested by Lender,
  the Borrower has furnished to Lender statements in conformity with the requirements
  of Federal Reserve Form U-1 referred to in Regulation U to the foregoing effect.


      5.9(b) The Borrower is a "United
  States person(s)" and does not intend to apply the proceeds of the Revolving
  Loan directly or indirectly to the "acquisition" of "stock" of a "foreign issuer"
  or "debt obligation" of a "foreign obligor", as such terms are defined in the
  United States Interest Equalization Tax Act, or to take or permit any other
  action which would subject Lender to the tax imposed by said Act. 

      5.9(c) The Borrower is not an
  "investment company", or an "affiliated person" of, or "promoter" or "principal
  underwriter" for, an "investment company", as such terms are defined in the
  Investment Company Act of 1940. The application of the proceeds and repayment
  thereof of the Revolving Loan by the Borrower and the performance of the transactions
  contemplated by this Agreement will not violate any provision of said Act, or
  any rule, regulation or order issued by the Securities and Exchange Commission
  thereunder. 

      5.9(d) The Revolving Loan has
  been requested by Borrower to repay its current lender, Business Alliance Capital
  Corp., and for working capital purposes. 


Section 5.10 ERISA.


      Borrower is in compliance in
  all material respects with the provisions of the Employee Retirement Income
  Security Act of 1974, as amended ("ERISA"), and the related provisions of the
  Internal Revenue Code, and with all regulations and published interpretations
  issued thereunder by the United States Treasury Department, the United States
  Department of Labor and the Pension Benefit Guaranty Corporation ("PBGC").Neither
  a reportable event as defined in Section 4043 of ERISA, nor a prohibited transaction
  as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code,
  has occurred and is continuing with respect to any employee benefit plan subject
  to ERISA established or maintained, or to which contributions have been or may
  be made, by Borrower or by any trade or business (whether or not incorporated)
  which together with Borrower would be treated as a single employer under Section
  4001 of ERISA (any such trade or business being referred to as an "ERISA Affiliate,"
  and any such employee benefit plan being referred to as a "Plan"). No notice
  of intention to terminate a Plan has been filed nor has any Plan been terminated;
  the PBGC has not instituted proceedings to terminate, or to appoint a trustee
  to administer, any Plan, nor do circumstances exist that constitute grounds
  for any such proceedings; and neither Borrower nor any ERISA Affiliate has completely
  or partially withdrawn from any multiemployer Plan described in Section 4001(a)
  (3) of ERISA. Borrower and each ERISA Affiliate has met the minimum funding
  standards under ERISA with respect to each of its Plans; no Plan of Borrower
  or of any ERISA Affiliate has an accumulated funding deficiency or waived funding
  deficiency within the meaning of ERISA; and no material liability to the PBGC
  under ERISA has been incurred by Borrower or any ERISA Affiliate. 


Section 5.11. OSHA


      Borrower has duly complied with,
  and its facilities, business, leaseholds, equipment and other property are in
  compliance in all material respects with, the provisions of the federal Occupational
  Safety and Health Act ("OSHA") and all rules and regulations thereunder and
  all similar state and local laws, rules and regulations; and there are no outstanding
  citations, notices or orders of non-compliance issued to Borrower or relating
  to its facilities, business, leaseholds, equipment or other property under any
  such law, rule or regulation.






 Section 5.12 Inventory 

      The Inventory of the Borrower
  consists of items of a quality and quantity usable or saleable in the ordinary
  course of its business and is in compliance with the Fair Labor Standards Act.
  The value of obsolete items, items below standard quality and items in the process
  of repair have been written down to realizable market value, or adequate reserves
  have been provided. The value of Inventory reflected on the Delivered Financials
  is set at the lower of cost or market in accordance with GAAP. 


Section 5.13 Accounts


      The most recent list of Accounts
  of the Borrower delivered to Lender is complete, and contains an accurate aging.
  All of the Accounts are collectible, are subject to no counterclaims or setoffs
  of any nature whatsoever, and require no further action to constitute such accounts
  as due and owing by the account debtors. None of the Accounts includes any conditional
  sales, consignments or sales on any basis other than that of an absolute sale
  in the ordinary and usual course of business, except as otherwise noted. No
  agreement has been made under which any deductions or discounts may be claimed
  except regular discounts in the usual course of business. 


Section 5.14 No Consents or Approvals Needed


      Under the state of the applicable
  law at the time of the signing of this Agreement, no approval, consent, authorization,
  or notice by or to any party, including a governmental entity, is required in
  connection with this Agreement and the consummation of the transactions and
  matters covered by this Agreement. 


Section 5.15 Environmental Compliance


      5.15(a) None of the Collateral
  or real or personal property owned or occupied by Borrower in the State of New
  Jersey has ever been used by previous owners or operators to refine, produce,
  store, handle, transfer, process or transport hazardous substances, hazardous
  wastes, pollutants or other related substances as those terms are defined by
  New Jersey or federal law. The Borrower has not nor does it intend to use any
  of its Collateral or real or personal property owned or occupied by it in the
  State of New Jersey for the purpose of refining, producing, storing, handling,
  transferring, processing or transporting such hazardous substances, hazardous
  wastes, pollutants or other related substances. 

      5.l5(b) No friable asbestos
  or any substance containing asbestos deemed hazardous by federal or state regulations
  has been installed in the Collateral. 

      5.15(c) Neither Borrower nor
  the Collateral or real or personal property owned or occupied by it in the State
  of New Jersey are in violation of or subject to any existing, pending, or, to
  its best knowledge, threatened investigation or inquiry or to any remedial obligations
  under any federal or state laws pertaining to health or the environment, including,
  but not limited to the Industrial Site Recovery Act f/k/a the Environmental
  Cleanup Responsibility Act ("ISRA") (N.J.S.A.13:1K-6 et seq., as amended), the
  Spill Compensation and Control Act (N.J.S.A.58:10 23.11 as amended), the Hazardous
  and Solid Waste Amendments of 1984 Pub. L98-616 (42 U.S.C. 699 et seq., as amended);
  a certain statute adopted by New Jersey for registration of underground storage
  tanks (N.J.S.A.58:10-21 et seq.,), the Resource Conservation and Recovery Act
  (42 U.S.C. 6901 et seq., as amended) and the Comprehensive Environmental Response,
  Compensation and Liability Act (42 U.S.C. 9601 et seq., as amended); (all such
  federal, state, county, municipal or other laws, ordinances or regulations are
  hereinafter collectively referred to as the "Environmental Laws").






      5.15(d) The Borrower has not
  obtained and is not required to obtain any permits, licenses or similar authorizations
  to construct, occupy, operate or use any buildings, improvements, fixtures and
  equipment by reason of any Environmental Laws. 

      5.15(e) None of the Collateral
  or real or personal property owned or occupied by Borrower in the State of New
  Jersey has, is now or is intended to be used as a major storage facility or
  for the operation of a hazardous substance or waste disposal facility as those
  terms are defined by any Environmental Laws. 

      5.15(f) No lien or claim has
  been attached to or made against Borrower, any revenues, the Collateral or any
  real or personal property owned or occupied by Borrower in the State of New
  Jersey by the State of New Jersey or the federal government for damages or cleanup
  and removal costs, as those terms are defined by any Environmental Laws arising
  from an intentional or unintentional act or omission of Borrower or any previous
  owner or operator of their real or personal property resulting in the releasing,
  spilling, pumping, pouring, emitting, emptying, discharging or dumping of hazardous
  substances, hazardous wastes, pollutants or other related substances as those
  terms are defined by any Environmental Laws. 

      5.15(g) Neither Borrower nor
  any occupant has taken any intentional or unintentional act or omission resulting
  in the releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging
  or dumping of hazardous substances, hazardous wastes, pollutants or related
  substances as those terms are defined by any Environmental Laws. 

      5.15(h) Borrower has conducted
  (and will, upon reasonable request by Lender, conduct) a complete and thorough
  on site inspection of all real property owned or occupied by it, including,
  but not limited to a geohydrological survey of soil and sub-surface conditions
  to determine the presence of hazardous substances, hazardous wastes, pollutants
  or related substances as those terms are defined by any Environmental Laws and
  has found no evidence of such presence. 

      5.15(i) Borrower has required
  that the seller of any real property acquired (either directly or indirectly,
  by such means as a stock transaction, for example) by it on or after January
  l, 1984 and all occupants of all real property owned by it since January 1,
  1984 comply with the provisions of ISRA and has provided evidence of such compliance
  to Lender. Borrower has otherwise complied with ISRA, will not take or fail
  to take such action which would render its representations or covenants made
  in this section to be untrue or incapable of performance, and has and will provide
  evidence of such compliance to Lender. 


Section 5.16 Identification of the Borrower


      5.16(a) Schedule 2 annexed hereto
  sets forth a complete and accurate list of all names by which the Borrower is
  known or under which the Borrower is conducting business, including, without
  limitation, its fictitious names, alternate names and trade names. Schedule
  2 sets forth all of the federal tax identification numbers of the Borrower and
  its organizational numbers (if any) assigned by the state of Nevada. 

      5.16(b) Schedule 2 annexed hereto
  sets forth a complete and accurate list of all offices and locations at which
  the Borrower conducts any of its business or operations, the locations of all
  Collateral and records relating to Collateral and the Borrower's chief executive
  office, if any. 








      5.16(c) The Borrower has not,
  within the six (6) year period immediately preceding the effective date of this
  Agreement, changed its name, been the survivor of a merger or consolidation,
  or acquired all or substantially all of the assets of any person or entity except
  as otherwise set forth in Schedule 2. 

      5.16(d) All of the issued and
  outstanding capital stock or other ownership interests of the Borrower is owned
  and registered as otherwise disclosed in writing by or on behalf of the Borrower.


      5.16(e) Schedule 2 annexed hereto
  sets forth the Standard Industrial Classification Codes applicable to the properties
  and operations of Borrower. 


Section 5.17 Duration and Effect of Representations and Warranties


      5.17(a) The representations
  and warranties made to Lender in this Article 5 are to be true, accurate and
  complete for the duration of the term of this Agreement. 

      5.17(b) None of the representations,
  warranties or statements made to Lender in this Agreement or in connection with
  this Agreement contain any untrue statement of a material fact, or omit to state
  a material fact necessary in order to make the statements made not misleading.
  

    

 ARTICLE 6. COVENANTS TO LENDER

      In order to induce Lender to
  execute this Agreement, the Borrower, makes the following affirmative
  covenants: 


Section 6.1 Payment of Debt


      Borrower is to pay all of its
  obligations, including the Debt to Lender, when due in accordance with such
  documents evidencing or documenting such obligations including but not limited
  to, this Agreement. 


Section 6.2 Change of Financial Conditions


      Any and all future substantial
  and material adverse changes in its financial condition are to be immediately
  brought to the attention of Lender. 


Section 6.3 Litigation


      Borrower is to immediately notify
  Lender if any judgments, lawsuits, losses, claims, judicial proceedings, investigations,
  complaints, notices, or citations including but not limited to, those relating
  to occupational health, safety, or environmental protection, are pending or
  threatened against the Borrower in an amount claimed of $50,000.00 or more,
  individually or in the aggregate. 

 Section 6.4 Organization and Standing 

      Borrower is to continue to be
  duly licensed or qualified to do business in each jurisdiction in which qualification
  is required by law, and to continue to be in good standing and to preserve legal
  existence. 


Section 6.5 Compliance with Law



     Borrower is to comply in all
  material respects with all laws, governmental rules and regulations applicable
  to its business and properties, including, but not limited to, ERISA, OSHA and
  Environmental Laws.






Section 6.6 Taxes


      Borrower is to make due and
  timely payment of all Federal, State and local taxes and assessments required
  by law and to execute and deliver to Lender, on demand, appropriate certificates
  attesting to the payment or deposit of any such taxes or assessments. 

 Section 6.7 Reports 

      Borrower is to provide to Lender,
  (for Lender, Participant, or governmental authority having jurisdiction) in
  form and substance satisfactory to Lender: 6.7(a) At the same time that the
  Borrower issues its annual Form 10K financial statement to the Securities Exchange
  Commission, a balance sheet as of the end of such year and statements of income,
  cash flows and changes in equity for such year (all in reasonable detail and
  with all notes and supporting schedules), prepared on a review basis by an independent
  certified public accountant satisfactory to Lender, and attested to by the President
  of Borrower, as presenting fairly Borrower's financial condition as of the dates
  and for the periods indicated and as having been prepared in accordance with
  GAAP, except as may be otherwise disclosed in such financial statements or the
  notes thereto, together with certified copies of current state and federal income
  tax returns and accompanied by an accountant's reliance letter acknowledging
  Lender's reliance upon such balance sheet and financial information. 

      6.7(b) At the same time that
  the Borrower issues its Form 10Q to the Securities Exchange Commission, a copy
  of Borrower’s Form 10Q for such quarter. 

      6.7(c) On or before the tenth
  (10th) day of each month, a detailed aging report setting forth the amount due
  and owing on Accounts on the Borrower's books as of the close of the preceding
  month, together with a reconciliation report satisfactory to Lender showing
  all sales, collections, payments and adjustments to Accounts, together with
  a current list of names and addresses of all account debtors on the Borrower's
  books as of the close of the preceding month. 

      6.7(d) On or before the tenth
  (10th) day of each month, a detailed aging report setting forth the amount due
  and owing on the Borrower's accounts payable on the Borrower's books as of the
  close of the preceding month, together with a reconciliation report satisfactory
  to Lender showing all purchases, payments and adjustments to accounts payable
  on the Borrower's books as of the close of the preceding month. 

      6.7(e) On or before the tenth
  (10th) day of each month, a certified statement of Inventory position
  of the Borrower showing Inventory on hand, Inventory represented or covered
  by warehouse receipts or bills of lading, Qualified Inventory on hand and Inventory
  in possession of bailees, including the names and addresses of such bailees.


      6.7(f) On a daily basis, in
  such form as may be required by Lender, a certificate or borrowing base (in
  such form required by Lender) of the Borrower either describing each Qualified
  Account, or, if Lender so elects, certifying the face amount of all Qualified
  Accounts in the aggregate. 








      6.7(g) On a daily basis, reports
  and supporting documents evidencing the Borrower's sales, credits, remittances,
  collections, invoices in excess of $2,000 and all other adjusting entries in
  form and substance satisfactory to Lender. 

      6.7(h) Immediately, notice of
  any change in the status of Inventory or an Account from one Qualified to one
  which is not. 

      6.7(i) Immediately, notice of
  the rejection of goods, delay in performance, or claims made in regard to Accounts.


      6.7(j) Immediately, notice,
  in such form acceptable to Lender, stating such information and attaching such
  pertinent documentation as to any and all claims, citations, demands, notices
  or events, the occurrence of which would make any representation, warranty or
  covenant to be untrue or incapable of performance. 

      6.7(k)Upon demand:

	 	 	(A) Certificates of insurance and loss payable endorsements
        for all policies of insurance to be maintained pursuant to this Agreement;
        

          

	 	 	(B) An estoppel certificate executed by an authorized
        representative indicating that there then exists no event of default and
        no event which, with the giving of notice or lapse of time, or both, would
        constitute an event of default under any material agreement to which Borrower
        is a party; 

          

	 	 	(C) All original and other documents evidencing right
        to payment or evidencing Accounts, including but not limited to invoices,
        original orders, shipping and delivery receipts; 

          

	 	 	(D) All information received by the Borrower affecting
        the financial status or condition of any account debtor; 

          

	 	 	(E) Assignments, in form acceptable to Lender, of
        all Qualified Accounts, and of the monies due or to become due on specific
        contracts; and

          



      6.7(n) From time to time and
  at the time of each advance, such information as Lender may reasonably request,
  including financial projections, cash flow analysis and information otherwise
  to be submitted in accordance with this Section. 

      6.7(o) Promptly after preparation
  or receipt:

	 	(A) 	Copies of all reports, including annual reports, and notices which the
      Borrower and its subsidiaries file with or receive under ERISA, OSHA or
      any occupational safety, pension or retirement, or Environmental Laws; 

        
	 	(B) 	Copies of any statement or report furnished to any other party pursuant
      to the terms of any indenture, loan, or credit or similar agreement and
      not otherwise required to be furnished to Lender pursuant to this Agreement;
      and 

        
	 	(C) 	Copies of all proxy statements, financial statements, and reports which
      the Borrower and its subsidiaries send to stockholders or owners, and copies
      of all regular, periodic, and special reports, and all registration statements
      which they file or receive with any national securities exchange or regulatory
      agency.

        











Section 6.8 Access to Records and Property


      At any time and from time to
  time, upon request by Lender, Borrower is to give any representatives of Lender
  or independent contractor selected by Lender access during normal business hours
  (and after Default at any time) to examine, audit, copy or make extracts from,
  any and all books, records and documents in its possession relating to its affairs
  and the Collateral, and to inspect any of its properties wherever located. In
  the absence of a Default, field examinations will be performed on a quarterly
  basis. In the event that an event of Default occurs, field examinations may
  be performed at any time at Lender’s discretion. In the event that during
  the term of this Agreement or any extension thereof, Lender deems it necessary
  to obtain a current appraisal of any Collateral, Lender may engage the services
  of an appraiser in providing the current appraisal which expense is to be paid
  by Borrower upon demand by Lender. 

 Section 6.9 Additional Collateral 

      The Borrower is to extend the
  security interest granted to Lender by this Agreement to such additional collateral
  as Lender may demand, or pay such amount to Lender as Lender may reasonably
  request, in the event of any loss, destruction or material diminution in the
  value of the Collateral. Borrower is to deliver to Lender, and pledge by means
  of a control agreement or documentation satisfactory to Lender, a $250,000 certificate
  of deposit issued by Lender (for a term of not less than one year, or longer
  if an event of Default occurs prior to the expiration of such one year period)
  in the event that the Advance Limit is adjusted following the date of this Agreement
  by reason of the equity infusion provided in Section 1.1(b) hereof. The additional
  collateral is to become part of the Collateral and subject to the terms and
  conditions of this Agreement. 

 Section 6.10 Preservation of Title to Collateral 

      Borrower is to immediately notify
  Lender of any material loss or damage to, or any occurrence which would adversely
  affect the security interest of Lender in and to the Collateral. The Collateral
  is to be free and clear of all assignments, mortgages, pledges, liens, security
  interests, leases, or encumbrances, except as provided on Schedule 1. The Borrower
  is to continue to maintain good and marketable title to the Collateral, except
  as provided in this Agreement, at the sole expense of the Borrower. 


Section 6.11 Financial Records and Location of Collateral


      Borrower is to maintain true,
  accurate and complete books, records, and accounts of its business affairs in
  accordance with GAAP. The Borrower is to keep accurate records of the Collateral,
  which records are at all times to be physically located at the address of the
  Borrower set forth on Schedule 2. All tangible Collateral is to be physically
  located at the address of the Borrower set forth on Schedule 2, unless otherwise
  agreed by Lender and documented to the satisfaction of Lender. 









Section 6.12 Condition of Buildings and Collateral


      All Collateral is to be used
  solely by the Borrower in connection with its business. The Borrower is to maintain
  the Collateral and Borrower is to maintain its buildings, plants, improvements
  and structures in good condition, repair and in compliance with all zoning laws,
  ordinances, and regulations of governmental authorities having jurisdiction.



Section 6.13 Insurance


      6.13(a) The Borrower (and its
  subsidiaries, if any) is to maintain in full force and effect on the Collateral
  (and on all of its other assets, if requested by Lender), the following insurance:


	 	(i) 	Comprehensive general public liability insurance
        in an amount not less than $3,000,000.00 in the aggregate and $1,000,000.00
        per occurrence; 

          

	 	(ii) 	"All-Risk" coverage policy of fire, pilferage, theft,
        burglary, loss in transit, title and extended coverage hazard insurance
        (together with vandalism and malicious mischief endorsements) in an aggregate
        amount not less than 100% of the agreed upon full insurable replacement
        value of the Collateral; 

          

	 	(iii) 	If the Collateral is required to be insured pursuant
        to the Flood Disaster Protection Act of 1973 or the National Flood Insurance
        Act of 1968, and the regulations promulgated thereunder, flood insurance
        in an amount not less than the outstanding principal balance of the Revolving
        Loan or the maximum limit of coverage available, whichever amount is less;
        

          

	 	(iv) 	Business interruption and/or loss of rental insurance
        sufficient to pay, during the period of interruption or loss, normal operating
        expenses in connection with the Collateral; 

          

	 	(v) 	Boiler and machinery insurance covering vessels,
        air tanks, boilers, machinery, pressure piping, heating, air conditioning
        and elevator equipment in such amounts as Lender requires from time to
        time, provided that such equipment is part of the Collateral; and

          



      6.13(b) Each insurance policy
  required under this Section 6.13 is to be written by insurance companies authorized
  or licensed to do business in New Jersey having an Alfred M. Best Company, Inc.
  rating of A+ or higher and a financial size category of not less than VII, and
  is to be on such forms and written by such companies as reasonably approved
  by Lender. 

      6.13(c) Each insurance policy
  required under this Section 6.13 providing insurance against loss or damage
  to property is to be written or endorsed so as to (i) contain a New Jersey standard
  mortgagee, secured party, or loss payee endorsement, as the case may be, or
  its equivalent, and (ii) make all losses payable directly to the Lender, without
  contribution. 

      6.13(d) Each insurance policy
  required under this Section 6.13 providing public liability coverage is to be
  written and endorsed so as to name the Lender as an additional insured, as its
  interest may appear. 






      6.13(e) Each insurance policy
  required under this Section 6.13 is to contain a provision to the effect that
  such policy is not to be canceled, altered or in any way limited in coverage
  or reduced in amount unless the Lender is notified in writing at least thirty
  (30) days prior to such change. At least thirty (30) days prior to the expiration
  of any such policy, the Borrower is to furnish evidence satisfactory to the
  Lender that such policy has been renewed or replaced or is no longer required
  by this Section. 

      6.13(f) Each insurance policy
  required under this Section 6.13 (except flood insurance written under the federal
  flood insurance program) is to contain an endorsement by the insurer that any
  loss is to be payable to Lender, as its interest may appear, in accordance with
  the terms of such policy notwithstanding any act or negligence or breach of
  any warranty of or by the Borrower which might otherwise result in forfeiture
  of said insurance and the further agreement of the insurer waiving all rights
  of setoff, counterclaim, deduction or subrogation against the Borrower (so as
  not to interfere with Lender's rights). 

      6.13(g) In the event of loss
  or damage to the Collateral, the proceeds of any insurance provided hereunder
  is to be applied as set forth in Section 6.13(k); except that if there is a
  public liability claim, the proceeds of any insurance provided hereunder is
  to be applied toward extinguishing or satisfying the liability and expense incurred
  in connection therewith. 

      6.13(h) The Borrower is not
  to take out any separate or additional insurance with respect to the Collateral
  which is contributing in the event of loss unless it is properly compatible
  with all of the requirements of this Section. 

      6.13(i) Borrower is to pay the
  premiums on the policies therefor as they become payable, and is to deliver
  to Lender such policies, with standard clauses in favor of Lender attached.


      6.13(j) Each insurance policy
  required under this Section 6.13 is to be written and endorsed to provide that
  the intentional actions of Borrower are not to affect the insurable interest
  of Lender or prevent payment of the proceeds of the policy to Lender. 

      6.13(k) Lender is entitled to
  receive all insurance proceeds, and, at its option, to apply the same on account
  of the Debt and/or to reimburse Borrower for the cost of the replacement or
  repair of the Collateral. 

      6.13(m) In no event is Lender required
  either to (i) ascertain the existence of or examine any insurance policy, or
  (ii) advise Borrower in the event such insurance coverage does not comply with
  the requirements of this Agreement. 

 Section 6.14 Payment of Proceeds 

      Upon receipt of any or all proceeds
  of the Collateral, the Borrower is to pay such proceeds directly to Lender.


 Section 6.15 Further Assurances 

      Borrower is to execute and/or
  hereby consents to the execution and filing by Lender of such further instruments
  and documents, including Uniform Commercial Code financing statements, as may
  be required by Lender in order to render effective the terms and conditions
  of this Agreement. Any such Uniform Commercial Code financing statements are
  to be filed in such locations as Lender may require, at Borrower's sole expense.
  If requested, the Borrower is to provide Lender with satisfactory evidence of
  such filing(s) prior to any advance under the Revolving Loan. The Borrower is
  to provide Lender with satisfactory evidence that any common law or statutory
  liens affecting any of the Collateral, including, but not limited to landlords
  lien or 





 

	materialman's lien, have been
        subordinated in favor of Lender's security interest or adequate reserves
        established in the discretion of Lender prior to any advance under the
        Revolving Loan. The Borrower is to provide Lender with true copies of
        all documents (negotiable or non-negotiable) which evidence bailments
        together with evidence that all bailees have acknowledged that they hold
        Collateral for the benefit of Lender if required by Lender.

      Section 6.16 Identification of Collateral

            If requested by Lender,
        the Borrower is to cause each unit of Collateral to be kept numbered and
        identified in order to protect the security interest of Lender in and
        to such Collateral.

       Section 6.17 Delivery of Documents

            If any of the Accounts
        are evidenced by notes, trade acceptances or instruments or documents,
        or if any Inventory is covered by documents of title or chattel paper,
        Borrower is to immediately endorse and deliver them to Lender in trust
        for Lender. The Borrower is to waive protest regardless of the form of
        the endorsement. If the Borrower fails to endorse any instrument or document,
        Lender is authorized to endorse it on behalf of the Borrower. Lender may
        establish reserves subject to Borrower's compliance with this Section.

       Section 6.18 Government Contracts

            If any of the Collateral
        arises out of contracts with the United States, or any of its departments,
        agencies or instrumentalities, the Borrower is to notify Lender and execute
        any necessary instruments or documents requested by Lender in order to
        insure that all monies due or to become due under such contracts are to
        be made payable to Lender and that proper notice of such assignment is
        given under applicable Federal law.

       Section 6.18 Trademarks, Patents and Copyrights

            If any of the Collateral
        consists of trademarks, patents or copyrights, the Borrower is to:

          

	 	(a)
   	comply with all applicable federal and
        state law regulating the maintenance and quality;

         

	 	(b)
   	execute such documents and take such
        other actions necessary to extend the Collateral to any newly issued trademarks,
        patents or copyrights;

         

	 	(c)
   	maintain the exclusive right to use
        the trademarks, patents and copyrights;

         

	 	(d)
   	execute such documents to permanently
        assign to Lender all of the Borrower's rights to the trademarks, patents
        and copyrights in the event of a Default. Among other things, the Borrower
        consents to the execution of the Assignments (if attached hereto as Exhibit
        "B") by Lender following a Default.

          



Section 6.19. Fees.

	 	(a)
   	Facility Fee. Borrower is to
        pay Lender a Facility Fee in the amount of $9,450.00, payable on the date
        hereof. The Facility Fee is deemed earned in full on the date when same
        is due and payable hereunder and is not subject to rebate or pro ration
        upon termination of this Agreement for any reason.

          








 

	 	(b)
   	Advance Limit Increase Fee. Borrower
        is to pay Lender an additional fee equal to 75 basis points upon and for
        each $500,000 increase in the Advance Limit approved by Lender.

         

	 	(c)
   	Field Examination Fees. Borrower is
        to pay Lender a field examination fee of $750 per man/day, together with
        out of pocket expenses.

          



 Section 6.20 Duration of Covenants

      The covenants made in this Article
  6 are to be true, accurate and complete as of the effective date of this Agreement
  and are to be true, accurate and complete for the duration of the term of this
  Agreement.

    

 ARTICLE 7. COVENANTS TO LENDER

  REGARDING PROHIBITED TRANSACTIONS

      In order to induce Lender to
  execute this Agreement, the Borrower, makes the following negative
  covenants: 

 Section 7.1 Merger or Consolidation 

      The Borrower is not to merge
  with, consolidate with, or acquire any assets of any other corporation, partnership,
  or entity except for the purchase of assets in the ordinary course of business,
  nor acquire all or substantially all of the assets or stock of any other corporation,
  partnership, or entity without the prior written consent of Lender. 

 Section 7.2 Sale of Assets 

      Other than the sale or lease
  of Inventory in the ordinary course of business, the Borrower is not to sell,
  transfer or encumber any of its property or assets without the prior written
  consent of Lender. 

 Section 7.3 Other Liens 

      The Borrower is not to incur,
  create or permit to exist any mortgage, assignment, pledge, hypothecation, security
  interest, lien or other encumbrance on any of its property or assets, whether
  now owned or hereafter acquired, except (a) liens for taxes not delinquent;
  (b) those liens in favor of Lender created by this Agreement and related documents;
  (c) those liens set forth on Schedule 1 annexed hereto; (d) those liens, such
  as carrier, warehousemen, unemployment or retirement liens arising by operation
  of law in the ordinary course of business if subordinated on terms acceptable
  to Lender or reserves established to the satisfaction of Lender; (e) easements,
  rights-of-way, restrictions and other similar encumbrances which, in the aggregate,
  do not materially interfere with the use or occupation of those properties or
  assets; and (f) purchase money security interests (and Borrower hereby grants
  Lender a right of first refusal with respect to each and every prospective purchase
  money financing) incurred in connection with the acquisition of fixed assets
  in the ordinary course of business in an aggregate amount not to exceed $25,000.00.


 Section 7.4 Other Liabilities


      The Borrower is not to incur,
  create, assume or permit to exist any indebtedness or liability on account of
  either borrowed money, the deferred purchase price of property, or the lease
  of assets or property for the conduct of business in excess of $50,000.00, except
  (a) the Debt to Lender; (b) indebtedness subordinated to payment of the Debt
  on terms approved by Lender in 








 writing; (c) those liabilities set forth on Schedule 1 or
  otherwise permitted by this Agreement; or (d) those leases already in effect
  as of the effective date of this Agreement as disclosed in the Delivered Financials.


 Section 7.5 Dividends and Capital Distributions 

      The Borrower is not to declare
  or pay any dividends or other distributions on its capital stock or ownership
  interests, nor effect any distribution, redemption or other acquisition of any
  of its capital stock or other ownership interests except (if the Borrower is
  an "S" Corporation for federal income tax purposes) distributions to shareholders
  during a given fiscal year in an amount no greater than such shareholders federal
  income tax expenditures arising from such shareholder status without the prior
  written consent of Lender. 

 Section 7.6 Guaranties 

      The Borrower is not to assume,
  guarantee, endorse, contingently agree to purchase or otherwise become liable
  upon the obligation of any person, firm or entity except (a) by the endorsement
  of negotiable instruments for deposit or collection or similar transactions
  in the ordinary course of business; or (b) contingent obligations under letters
  of credit in the ordinary course of business for the purchase of merchandise
  for resale. 


Section 7.7 Loans or Investments


      Borrower is not to make any
  advances or loans to the Borrower's officers, directors, partners or employees
  or any entity, including, without limitation, Eiger Technology, Inc., without
  the prior written consent of Lender. 


Section 7.8 Impairment of Title to Collateral


      The Borrower is not to sell,
  conditionally sell, sell on approval, consign, lease, encumber, transfer, remove
  from its premises set forth on Schedule 2 or otherwise dispose of any Collateral
  (other than Inventory in the ordinary course of business or other than Accounts
  for collection, without recourse, in the ordinary course of business) without
  the prior written consent of Lender. The Borrower is not to transfer or create
  Chattel Paper without placing a legend thereon indicating Lender's security
  interest. In the event of such prior written consent by Lender, the Borrower
  is to promptly deliver the proceeds or other value received by the Borrower
  to Lender to reduce the amount of the Debt applied in the discretion of Lender.


 Section 7.9 No Future Adverse Restrictions 

      The Borrower is not to change
  its status as a registered organization, its Operating Documents, the nature
  of its business, or execute any contract, mortgage, lease or other agreement
  which could be unduly burdensome or materially and adversely affect its business
  and properties, the results of its operations, or its ability to perform according
  to this Agreement or related documents. 


Section 7.10 Settlements


      The Borrower is not to compromise,
  settle or adjust any claims in a material amount relating to any of the Collateral,
  without the prior written consent of Lender. 









Section 7.11 Change of Location or Name


      Borrower is not to change the
  place where its books and records are maintained, change its name, change its
  location as the term is now or hereafter defined in the Uniform Commercial Code,
  change the nature of its business in any material respect, or transact business
  under any other name without the prior written consent of Lender. Within four
  (4) months of any permitted change, the Borrower is to authenticate or otherwise
  cooperate in any action deemed necessary by Lender to maintain its rights and
  security interests as provided in this Agreement. 

 Section 7.12 Affiliates 

      Borrower is not to enter into
  or be a party to any transaction with any Affiliate (defined as any business,
  person, corporation, partnership or entity affiliated by common ownership or
  interest, or familial lineage, and their successors and assigns) except in the
  ordinary course of and pursuant to the reasonable requirements of business and
  upon fair and reasonable terms which are fully disclosed to Lender and are not
  less favorable than would be obtained in an arms length transaction. 

 Section 7.13 Change of Accounting Practices. 

      The Borrower is not to change
  its present accounting principles or practices in any material respect, except
  as may be required by changes in generally accepted accounting principles. 


Section 7.14 Inconsistent Agreement.


      The Borrower is not to enter
  into any agreement containing any provision that would be violated by the performance
  of Borrower's obligations under this Agreement or under any document delivered
  or to be delivered by it in connection therewith. 


Section 7.15 Capital Expenditures.


      The Borrower is not to enter
  into any agreement to purchase or pay for, or become obligated to pay for, capital
  expenditures, long term leases, capital leases or sale lease-backs, in an amount
  aggregating in excess of $100,000.00 during any fiscal year. 


Section 7.16 Tangible Capital Funds.


      The Borrower is not to cause
  or permit its tangible capital funds to be less than $1,400,000.00 at each fiscal
  year end. The term "tangible capital funds" means the difference between (a)
  the sum of (i) the par value (or value stated on the books of Borrower) of the
  capital stock of all classes of Borrower, plus (or minus in the case of a deficit)
  (ii) the amount of Borrower's surplus, whether capital or earned, plus (iii)
  debt due to officers, directors, shareholders or Affiliate, subordinated on
  terms acceptable to Lender, less (b) the sum of treasury stock, unamortized
  debt discount and expense, good will, trademarks, trade names, patents, deferred
  charges and other intangible assets, and any write-up of the value of any assets,
  plus all debt due from officers, directors, shareholders or Affiliate, all determined
  in accordance with GAAP. 


Section 7.17 Ratio of Debt to Tangible Capital Funds


      The Borrower is not to cause
  or permit its ratio of indebtedness to tangible capital funds to exceed 1.8:1
  at each fiscal year end. The term "indebtedness" includes total debt of the
  Borrower, including, but not limited to, all items which should be and are included
  on the balance sheet in determining total liabilities whether demand, installment,
  contingent, secured, unsecured, guaranteed, endorsed or assumed in accordance
  with GAAP less debt due to officers, directors, 








 shareholders or Affiliate subordinated on terms acceptable
  to Lender. The term "tangible capital funds" is defined in Section 7.16. 

 Section 7.18 Debt Service Coverage Ratio 

 Deleted.


Section 7.19 No Violations of Environmental Statutes


      Borrower is not to cause or
  permit to exist a releasing, spilling, leaking, pumping, emitting, pouring,
  emptying, discharging, or dumping of a hazardous substance, hazardous wastes,
  pollutants or related substances as those terms are defined by any Environmental
  Laws, whether or not resulting in a lien or claim being attached or made against
  it for damages or cleanup costs by the State of New Jersey or the Federal government.



Section 7.20 Violation of Representations, Warranties and Covenants


      Borrower is not to take any
  action or omit to take any action which could render any of its representations,
  warranties or covenants to be untrue or incapable of performance. 


Section 7.21 Duration of Covenants Regarding Prohibited Transactions


      The covenants made in this Article
  7 are to remain in effect for the duration of the term of this Agreement. 

    

 ARTICLE 8. MISCELLANEOUS RIGHTS AND DUTIES OF LENDER

 Section 8.1 Charges Against Credit Balances 

      At any time prior to or following
  Default, Lender, without notice, in its sole and absolute discretion, may charge,
  setoff and withdraw from any credit balance, Collateral or property which Borrower
  or Guarantor may then have with Lender or any Affiliate, any amount(s) which
  become due to Lender or which are otherwise expended or advanced by Lender under
  this Agreement. 


Section 8.2 Collections; Modification of Terms


      At any time following Default,
  Lender, without notice, in its sole and absolute discretion, may make any compromises
  it deems desirable, or otherwise modify the terms or rights of the Borrower
  with respect to any of the Collateral without notice and without otherwise discharging
  or affecting the Debt. 


Section 8.3 Notification of Account Debtors


      At any time prior to or following
  Default, Lender, in its sole and absolute discretion, may require the Borrower
  to notify and obtain the acknowledgment of any account debtor or bailee of Lender's
  security interest in the Collateral. At any time prior to or following Default,
  Lender may, in its sole and absolute discretion, without notice: (1) notify
  any account debtors on any of the Accounts to make payment directly to Lender,
  and/or enforce the Borrower's rights of every type and nature as against any
  such account debtors or collateral which secures their obligations to Borrower;
  or (2) endorse all items of payment or Collateral received by Lender which are
  payable to the Borrower. In the event that Lender elects to foreclose a mortgage
  securing any such account debtors' obligations to Borrower, Lender may record
  a copy or abstract of this Agreement and an 








 affidavit of default in the public records where such mortgage
  is recorded. Until such time as Lender elects to exercise these rights, the
  Borrower is to act upon and protect the Collateral under the restrictions and
  terms of this Agreement only. 

 Section 8.4 Uniform Commercial Code 

      At all times prior to and following
  Default, Lender is entitled to all the rights and remedies of a secured party
  under the Uniform Commercial Code as now or hereafter enacted in New Jersey
  and any other jurisdiction where Collateral is located. 

 Section 8.5 Preservation of Collateral 

      At any time prior to and following
  Default, Lender, without notice, in its sole and absolute discretion, may take
  any and all action which, in its sole and absolute discretion, is necessary
  and proper to preserve the Collateral, or Lender's interests under this Agreement,
  including without limitation, those duties of the Borrower imposed by this Agreement.
  Any sums so expended by Lender are to be secured by the Collateral and added
  to the Debt. Such sums (including reasonable attorneys' fees) are to be payable
  on demand with interest at the highest interest rate set forth in this Agreement
  until repaid by Borrower. Lender may also demand that escrow accounts be established
  to fund anticipated future expenditures. 


Section 8.6 Mails


      Following Default, Lender, without
  notice, in its sole and absolute discretion, is authorized to (and the Borrower
  is to, upon request of Lender) notify the postal authorities to deliver all
  of the Borrower's mail, correspondence or parcels to Lender at such address
  as Lender may direct. 


Section 8.7 Test Verifications


      At any time prior to and following
  Default, Lender, without notice, in its sole and absolute discretion, may, in
  its name or in the name of others, make test verifications of any and all Accounts
  in any manner and through any medium Lender considers advisable with or without
  the assistance of the Borrower. 


Section 8.8 Power of Attorney


      Lender is hereby irrevocably
  appointed and authenticated by Borrower as its lawful attorney and agent in
  fact to file, authenticate or execute financing statements and other documents
  and agreements as Lender may deem necessary for the purpose of perfecting any
  security interests, mortgages or liens under any applicable law. The Borrower
  hereby grants a power of attorney to Lender to endorse the Borrower's name on
  checks, notes, acceptances, drafts and any other documents or instruments requiring
  the Borrower's endorsement, to change the address where the Borrower's mail
  should be sent and to open all mail and to do such other acts and things necessary
  to effectuate the purposes of this Agreement when so permitted by the terms
  of this Agreement. All acts by Lender or its designee are hereby ratified and
  approved, and neither Lender, nor its designee, is to be liable for any acts
  of omission or commission, or for any error of judgment or mistake unless the
  result of gross negligence or willful misconduct. The powers of attorney granted
  to Lender in this Agreement are coupled with an interest and are irrevocable
  during the term of this Agreement. Whenever Lender deems it desirable that any
  legal action be instituted with respect to any Collateral or that any other
  extraordinary action be taken in an attempt to effectuate collection of any
  Collateral, Lender may reassign the item in question to the Borrower (without
  recourse to Lender) 






 and require the Borrower to proceed with such legal or other
  action, at the Borrower's sole liability, cost and expense, in which event all
  amounts collected by the Borrower on such items are to, nevertheless, be treated
  as proceeds of Collateral. 

   

 ARTICLE 9. DEFAULT


Section 9.1 Definition of Default


      The Borrower is in default and
  the Debt becomes immediately due and payable, without notice, at the option
  of Lender upon the occurrence of any or all of the following events, circumstances
  or determinations ("Default") which are set forth for purposes of illustration
  and as a supplement, and not a limitation, to Lender's right to demand payment
  of the Debt if otherwise provided in any note or instrument evidencing the Debt:
  9.1(a) Upon the failure of the Borrower or the Guarantor to pay, when due, all
  or any part of Debt as set forth in any instrument, document, or agreement evidencing
  the Debt executed between the Borrower and Lender. 

      9.1(b) Upon the failure of the Borrower
  or the Guarantor to observe or perform any covenant, term or condition required
  by this Agreement or by any other instrument, document or agreement related
  thereto as executed among the Borrower or Guarantor and Lender. 

      9.1(c) Upon the occurrence of any
  event of default as defined with reference to any other obligation or indebtedness
  of the Borrower or Guarantor to any third parties so that the holder of such
  obligation or indebtedness declares or has the right to declare such obligation
  or indebtedness due prior to its date of maturity. 

      9.1(d) Upon any breach of representation
  or warranty in any material respect by the Borrower or Guarantor, or if any
  such representation or warranty is no longer true or capable of performance.


      9.1(e) Upon the submission to Lender
  of any materially false or fraudulent statement by the Borrower or Guarantor,
  whether or not in connection with this Agreement. 

      9.1(f) Upon any adverse and material
  change in the condition or affairs, financial or otherwise, of the Borrower
  or Guarantor which, in the opinion of Lender, impairs the interests of Lender.


      9.1(g) Upon the commencement, by,
  against or as to the Borrower or Guarantor, of any insolvency proceedings, bankruptcy
  proceedings, reorganization proceedings, assignment for the benefit of creditors,
  or proceedings of like character, or the appointment of a receiver, custodian
  or trustee as to any or all assets; in the event of any involuntary proceeding,
  if it has not been dismissed within thirty (30) days of the institution thereof.


      9.1(h) Upon the occurrence of any
  event of default otherwise defined in any separate instrument, document, or
  agreement existing now or in the future executed by or among the Borrower or
  Guarantor and Lender, any Participant, or their Affiliate. 





      9.1(i) Upon the entry of any judgment
  against the Borrower or Guarantor which remains unpaid, undischarged, unsatisfied,
  unbonded or undismissed following thirty (30) days after entry. 9.1(j) Upon
  the event that any or all of the assets of the Borrower or Guarantor, including,
  but not limited to the Collateral, are attached, distrained, levied upon or
  made subject to any lien not discharged or removed following thirty (30) days
  after attachment. 

      9.1(k) Upon the event of any material
  (as determined by Lender in its sole and absolute discretion) diminution in
  the value of any Equipment or any other fixed assets constituting a part of
  the Collateral. 

      9.1(l) Upon the event of any loss,
  repossession, reclamation, damage, theft, condemnation or destruction to any
  asset(s) of the Borrower or Guarantor whether or not covered by insurance. 

      9.1(m) Upon the event that Robert
  Kim is no longer either the chief operating officer or chief executive officer
  of the Borrower. 

     9.1(n) Upon the event that any indorser
  or Guarantor is determined, or seeks to determine that it is to be no longer
  liable for its obligations as contemplated by this Agreement or related documents.

     9.1(o) Upon the death of any Guarantor.


      9.1(p) Upon any investigation undertaken
  by any governmental entity or if any indictment, charge or proceeding is filed
  or commenced, whether criminal or civil, pursuant to Federal or State law against
  Borrower or Guarantor for which forfeiture of any of the property or assets
  of Borrower or Guarantor of the Debt is a penalty. 

     9.1(q) Upon the event that Borrower
  takes any action to authorize its liquidation or dissolution. 

      9.1(r) Upon the event that Borrower
  (a) becomes unable or fails to pay its debts generally as they become due, (b)
  admits in writing its inability to pay its debts, or (c) proposes or makes a
  composition agreement with creditors, a general assignment for the benefit of
  creditors, or a bulk sale. 

      9.1(s) In the event that, with respect
  to any Plan (as defined in Section 5.10 of this Agreement), there occurs or
  exists any of the events or conditions described in the following clauses (a)
  through (h) and such event or condition, together with all like events or conditions,
  could in the opinion of Lender subject Borrower to any tax, penalty or other
  liability that might, singly or in the aggregate, have a material adverse effect
  on the financial condition or the properties or operations of Borrower:(a) a
  reportable event as defined in Section 4043 of ERISA, (b) a prohibited transaction
  as defined in 






 Section 406 of ERISA or Section 4975 of the Internal Revenue
  Code, (c) termination of the Plan or filing of notice of intention to terminate,
  (d) institution by the Pension Benefit Guaranty Corporation of proceedings
  to terminate, or to appoint a trustee to administer, the Plan, or circumstances
  that constitute grounds for any such proceedings, (e) complete or partial withdrawal
  from a multiemployer Plan, or the reorganization, insolvency or termination
  of a multiemployer Plan, (f) an accumulated funding deficiency within the meaning
  of ERISA, (g) violation of the reporting, disclosure or fiduciary responsibility
  requirements of ERISA or the Internal Revenue Code, or (h) any act or condition
  which could result in direct, indirect or contingent liability to any Plan or
  the Pension Benefit Guaranty Corporation; or 9.1(ut) At any time Lender deems
  itself insecure.

   

 ARTICLE 10. REMEDIES OF LENDER UPON DEFAULT

 Section 10.1 Rights of Lender

      Upon the occurrence of any event
  constituting Default, Lender has the right, without notice: 

     10.1(a) Collection - To institute
  legal or deficiency proceedings or otherwise enforce its rights to collect the
  Debt against the Borrower or Guarantor of the Debt, all of which becomes immediately
  payable.

  If a judgment is entered in favor of Lender, the lien of the judgment relates
  back to the earliest date of perfection of the Lender's security interests hereunder.

      10.1(b) Set Off - To
  charge, setoff and withdraw from any credit balance which the Borrower or Guarantor
  may then have with Lender, Participant, or with any Affiliate thereof, such
  amounts as may be necessary to satisfy the Debt.

      10.1(c) Existing Commitments
  - To terminate and cancel any existing commitment to the Borrower or Guarantor
  for a line of credit, loan, or balance of the Revolving Loan.

      10.1(d) Assembly of Collateral
  - With or without judicial process, (i) to seize the Collateral or to require
  the Borrower to assemble the Collateral or (ii) to render the Collateral unusable
  without need for Lender to post a bond or security or (iii) to make the Collateral
  available at a Lender designated place for sale, lease, license or other disposition
  by Lender (and if such disposition is to Lender, at a public execution unless
  the Collateral is that customarily sold on a recognized market or the subject
  of widely distributed standard price quotations) to satisfy the Debt without
  any right of Borrower or Guarantor to adjourn such disposition. Any such sale,
  lease, license or other disposition may be made of the Collateral in its present
  condition or following any commercially reasonable preparation or processing
  at the expense of Borrower.





      10.1(e) Tax Notification
  - To sign the name of Borrower upon any local, state or federal agency information
  release form including, but not limited to, Tax Information Authorization Form
  8821 of the Internal Revenue Service; 

     10.1(f) Cumulative Rights
  - To exercise all rights and remedies set forth in this Agreement or otherwise
  provided by law or other agreement (whether or not referred to in this Agreement)
  on a cumulative or simultaneous basis and in any order selected by Lender; or


     10.1(g) Rights of Transferee
  - A transferee who purchases, leases, licenses or otherwise receives the benefits
  of a disposition of Collateral after Default takes free of all Borrower's rights
  and the rights of any subordinate security interest or lien. A transferee is
  entitled to the recording of a transfer statement to document public notice
  of such disposition. 


Section 10.2 Application of Proceeds of Disposition of Collateral


      The proceeds of any sale, lease,
  license or other disposition of the Collateral are to be applied to satisfy
  the following items in the following order: 

     10.2(a) First, to Lender's
  expenses in preserving its interests and rights hereunder, to expenses incurred
  by Lender in realizing upon security interests created or referred to herein,
  and expenses of Lender in enforcing and defending its rights as set forth in
  Article 2 and Article 8 of this Agreement. 

      10.2(b) Second, to the Debt
  as defined in this Agreement. 

      10.2(c) Third, any excess
  or amounts remaining are to be paid to any subordinate security interest or
  lien if the holder thereof supplies proof of its interest or lien and if the
  holder thereof makes an authenticated demand therefor before distribution and
  any balance thereafter is to be paid to Borrower unless Lender determines that
  reserves are warranted to implement the indemnification provisions of this Agreement.



Section 10.3 Redemption of Collateral


      In the event that the Borrower
  may elect to redeem any or all of the Collateral prior to the sale, lease, license
  or other disposition by Lender, the Borrower is to pay to Lender, in full, the
  Revolving Loan and that additional part of the Debt that Lender requires. 

 Section 10.4 Notice of Disposition of Collateral 

      If the Collateral is perishable,
  threatens to decline speedily in value, or is of a type customarily sold on
  a recognized market, Lender need not give notice of any intended disposition
  of the Collateral. In all other cases, Lender is to give authenticated reasonable
  notice to Borrower and any other party entitled thereto under applicable law
  of the time and place of a public sale, lease, license or other disposition
  of the Collateral. Authenticated notice is presumed to be reasonable (a) if
  given ten (10) days prior to such disposition unless a shorter period is warranted
  under the circumstances, (b) if sent to the chief executive office and, if none,
  to the address of the Borrower set forth on Schedule 2 annexed hereto in accordance
  with Section 11.5 hereof and (c) if it contains a statement of the Collateral
  and its intended disposition, the time and place of disposition and a statement
  that the Borrower is entitled to an accounting of such disposition. Lender may
  disclaim any warranties that may apply to any sale, lease, license or other
  disposition of the Collateral. 






 Section 10.5 Marshaling of Assets 

      Lender has no obligation whatsoever
  to proceed first against any of the Collateral or any Guarantor before proceeding
  against any other of the Collateral, other Guarantor or other collateral for
  the Debt. It is expressly understood and agreed that all of the Collateral stands
  as equal security for the Debt and that Lender has the right to proceed against
  or dispose of any/or all of the Collateral or other collateral in any order
  as Lender, in its sole discretion, determines. 

    

 ARTICLE 11. MISCELLANEOUS PROVISIONS 

 Section 11.1 Binding Effect 

      This Agreement is binding upon,
  inures to the benefit of and is enforceable by the heirs, personal representatives,
  successors and assigns of the parties, any Affiliate or Participant. This Agreement
  is not assignable by the Borrower without the prior written consent of Lender.


 Section 11.2 Non Waiver 

      Neither a course of dealing,
  nor a failure or delay on the part of Lender, or its successors and assigns,
  in the exercise of any right, power, or privilege is to operate as a waiver.
  A partial exercise of any right, power, or privilege by Lender is not to preclude
  any further right, power, or privilege, nor be deemed a waiver. Any waiver or
  modification to this Agreement or any other document, instrument, or agreement
  executed by the Borrower or Guarantor, is to be in a writing executed by Lender
  and them. Any written modification signed by Lender and them is to be deemed
  part of this Agreement. 

 Section 11.3 Non Liability of Lender 

      Lender has no duty to preserve
  or protect the Collateral, to preserve the rights of the Borrower or Guarantor
  against other parties, or to sell, lease, or otherwise dispose of any or all
  of the Collateral, or its proceeds, or in any priority, unless it elects to
  do so as provided in this Agreement. This Section is to be deemed an express
  waiver of the defense of impairment of Collateral. 


Section 11.4 Disclaimer by Lender on Documents


      Lender is not to be deemed to
  assume any liability or responsibility to the Borrower or any other party for
  the correctness, the validity, or the genuineness of any instruments or documents
  that may be executed in connection with this Agreement, or for the existence,
  character, quantity, quality, condition, value, or delivery of any Collateral
  purporting to be represented by any such documents. Lender, by accepting the
  security interest in the Collateral, or by releasing any Collateral to the Borrower,
  is not to be deemed to have assumed any obligation or liability to any supplier
  or debtor of the Borrower. The Borrower is to indemnify and hold Lender harmless
  with respect to any claim or proceeding arising out of such matters. 





 Section 11.5 Notices and Banking Days 

     11.5(a) Each demand, notice or
  other communication by Lender to the Borrower or by the Borrower to Lender is
  to be sent by certified mail, postage prepaid, return receipt requested, or
  recognized courier service for which a receipt is available. 

      11.5(b) Notices to Lender are
  to be directed to the following address: 

 THE TRUST COMPANY OF NEW JERSEY

  35 JOURNAL SQUARE

  JERSEY CITY NJ 07306

      11.5(c) Notices to the Borrower are to be directed
  to the following address: 

K-TRONIK INTERNATIONAL CORP. K-TRONIK N.A. INC.

  290 VINCENT AVENUE

  HACKENSACK NJ 07601

 A notice to the Borrower is presumed to be received by Guarantor.


      11.5(d) A banking day is any
  day that Lender designates or otherwise conducts business. A payment or duty
  which becomes due on a day not designated by Lender as a banking day automatically
  becomes due on the next day that is designated by Lender as a banking day. 

 Section 11.6 Captions

      The captions and titles appearing
  in this Agreement are inserted solely for the convenience of the parties and
  do not in any way define, limit or describe the terms and conditions of this
  Agreement. 

 Section 11.7 Entire Agreement 

      There are no understandings,
  agreements, representations, warranties or covenants, express or implied, which
  are not specified herein, or in the other written instruments, documents, or
  agreements referred to in this Agreement. All prior oral understandings, negotiations,
  or agreements are deemed to be superseded by the terms of this Agreement and
  such other written instruments, documents or agreements referred to in this
  Agreement. 

 Section 11.8 Severability

      In the event that any portion
  of this Agreement is deemed unenforceable by a Court of competent jurisdiction,
  such provision declared to be unenforceable is to be deemed to have been omitted
  from this Agreement, and all such remaining terms and conditions of this Agreement
  are to continue in full force and effect. 

 Section 11.9 Joint and Several Liability

      Each Borrower is jointly and
  severally liable without regard to which entity receives or has received the
  proceeds of the loans and advances made hereunder. Each such entity hereby acknowledges
  that it expects to derive economic advantage from each loan or advance made.
  Each Borrower hereby acknowledges and agrees that part or all of the proceeds
  for any given advance hereunder are transferred to such Borrower on an on-going
  basis, depending upon the relative needs of each Borrower at such time as the
  proceeds of such an advance are necessary to satisfy obligations of that Borrower
  arising in the ordinary course of the Borrower's business. Each Borrower further
  acknowledges and agrees that: (i) it conducts similar business operations and
  (ii) each Borrower's primary source of financing its operations is the proceeds
  received from the advances hereunder and from the business so financed.






 Section 11.10 Applicable Law and Consent to Jurisdiction

      This Agreement is to be interpreted
  and enforced in accordance with the laws of the State of New Jersey (without
  regard to the conflicts of law rules of New Jersey) except that the law of the
  State where the Borrower is located governs perfection and priority claims to
  the Collateral (except as otherwise provided in the Uniform Commercial Code).
  Borrower hereby irrevocably consents to the jurisdiction of the Courts of the
  State of New Jersey and to the jurisdiction of the United States District Court
  for the District of New Jersey, for the purpose of any suit, action or other
  proceeding arising out of or relating to this Agreement or the Debt, or the
  subject matter hereof or thereof. Borrower hereby waives, and agrees not to
  assert in any such suit, action or proceeding any claim that it is not personally
  subject to such jurisdiction, or any right to remove an action brought in State
  to Federal Court, or any claim that such suit, action or proceeding is in an
  inconvenient forum or that the venue thereof is improper. Borrower hereby consents
  that it may be served with process by the notification procedure set forth in
  this Agreement. 


Section 11.11 Consents


 The Borrower and its subsidiaries (if any), consents: 

      11.11(a) To any extension, postponement
  of time of payment, indulgence or to any substitution, exchange or release of
  Collateral. 

      11.11(b) To any addition to
  or release of any party or persons primarily or secondarily liable, or acceptance
  of partial payments on any Accounts or instruments and the settlement, comprising
  or adjustment thereof. 


Section 11.12. Waiver of Liability


      Lender is not liable due to
  any action or failure to act by Lender relating to this Agreement or the Debt
  except as a result of Lender's gross negligence or willful misconduct. This
  provision survives the termination or expiration of this Agreement or payment
  of the Debt. 

 SECTION 11.13 WAIVE JURY TRIAL 

      THE BORROWER, FOR ITSELF,
  ITS SUBSIDIARIES (IF ANY) AND LENDER HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY
  IN ANY LITIGATION RELATING TO THIS AGREEMENT OR THE DEBT AS AN INDUCEMENT TO
  THE EXECUTION OF THIS AGREEMENT. 


Section 11.14. Execution in Counterparts.


      This Agreement may be executed
  in any number of counterparts, each of which when so executed is deemed to be
  an original and all of which taken together constitute but one and the same
  agreement. 





 ARTICLE 12. INDEMNIFICATION

     As part of the Debt, Borrower
  agrees to and hereby indemnifies and holds Lender harmless from and against,
  and to reimburse Lender with respect to any and all claims, demands, causes
  of action, losses, damages, liabilities, costs and expenses (including consequential
  damages, attorneys' fees and court costs) of any and every kind or character,
  known or unknown, fixed or contingent, asserted against or incurred by Lender
  at any time and from time to time by reason of or arising out of: 

	 	(a) 	the breach of any representation, warranty or covenant
        of Borrower set forth in this Agreement; 

          

	 	(b) 	the failure of Borrower to perform any obligation
        herein required to be performed by Borrower; or

          

	 	(c) 	 the ownership, construction, occupancy, operation,
        use and maintenance of the Collateral.

          



 This covenant survives the date on which the Debt is paid
  and performed in full and notwithstanding whether Borrower or Guarantor has
  been released and discharged or whether Lender becomes the owner of the Collateral.
  

   

 ARTICLE 13. TERM

 This Agreement is to remain in effect for so long as the Debt remains unpaid.
  

   

 ARTICLE 14. TERMINATION OF AGREEMENT IN ABSENCE OF DEFAULT

 Section 14.1. Termination by Lender. 


 	This Agreement terminates, independent of Lender’s rights in the event of a Default, three (3) years from the date hereof, unless prior thereto Lender, in its sole discretion, sends a notice of termination to Borrower sixty (60) days prior to
any anniversary of the date of this Agreement. At the termination date: (a) all provisions for additional advances under this Agreement terminate, (b) the principal and interest of the Revolving Loan becomes immediately due and payable, and all
other Debt becomes immediately due and payable, all without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by Borrower, and (c) Lender is entitled to exercise forthwith (to the extent and in
such order as Lender may elect, in its sole discretion) any or all of the rights and remedies referred to in this Agreement as available following Default for the collection of such amounts.


 Section 14.2. Termination By Borrower. 

 Borrower may terminate this Agreement only upon:

	 	(i)	sending sixty (60) days' prior written notice to Lender of the intended
      termination date; 

        
	 	(ii)	paying to Lender in full the principal and interest of the Revolving Loan,
      and all other Debt; and

        
	 	(iii)	paying to Lender, as liquidated damages, the applicable amount stated
        below: 

      
        If the termination date is prior to the third anniversary
          of the effective date of this Agreement or if the Borrower's notice
          of termination is given less than sixty (60) days, a sum equal to one
          (1%) percent of the maximum amount of the Advance Limit in effect at
          the time of the termination date. Such sum is also payable if the Revolving
          Loan is prepaid as a result of a Default within such time. 

      










Section 14.3. Effect on Advance Limit


      Upon the sending of notice of
  termination pursuant to Section 14.1 or 14.2, the Advance Limit thereafter will
  not increase in excess of the principal balance of the Revolving Loan at the
  time of such notice. 

 Section 14.4. Mutual Release. 

      Upon full and final payment
  and performance of the Revolving Loan and all other Debt, Borrower, Guarantor
  and Lender thereupon automatically each are fully, finally and forever released
  and discharged from any and all claims, liabilities and obligations, whether
  in contract or tort, arising out of or relating in any way to this Agreement,
  the Revolving Loan, or any act or omission relating to any of the foregoing
  or to any of the Collateral, except as otherwise provided herein. 

   

 ARTICLE 15. CROSS DEFAULT/CROSS COLLATERAL

      All other existing and future
  agreements between or among Lender, any Participant and/or any Affiliate, Borrower
  and/or any Affiliate, are hereby amended so that a Default
  under this Agreement is a default under such other agreements and a default
  under such other agreements is a Default under this Agreement. Any collateral
  pledged under such other agreements between Lender or Participant and/or Affiliate
  and the Borrower and/or any Affiliate secures the Debt under this Agreement
  and the Collateral under this Agreement secures any and all obligations under
  such other agreements. 

   

 ARTICLE 16. FURTHER ACKNOWLEDGMENTS OF BORROWER AND LENDER

 Section 16.1. Representation by Counsel.

      Borrower and Lender acknowledge
  and agree that they (i) have independently reviewed and approved each and every
  provision of this Agreement, including the Exhibits and schedules attached hereto,
  the Guaranty of Guarantor and any and all other documents and items as they
  or their counsel have deemed appropriate, and (ii) have entered into this Agreement,
  and have executed the closing documents voluntarily, without duress
  or coercion, and have done all of the above with the advice of their legal counsel.


 Section 16.2. Waiver of Objection. 

      Borrower, the
  Lender acknowledge and agree that, to the extent deemed necessary by them or
  their counsel, they and their counsel have independently reviewed, investigated
  and/or have full knowledge of all aspects of the transaction and the basis for
  the transaction contemplated by this Agreement and/or have chosen not to so
  review and investigate (in which case, Borrower acknowledges and agrees that
  it has knowingly and upon the advice of counsel waived any claim or defense
  based on any fact or any aspect of the transaction that any investigation would
  have disclosed), including without limitation: 







	 	(i) 	the risks and benefits of the various waivers of
        rights contained in this Agreement, including but not limited to, the
        waiver of the right to a jury trial; 

          

	 	(ii) 	the adequacy of the consideration being transferred
        under this Agreement, including the adequacy of the consideration for
        the Mutual Release as set forth in Section 14.4 hereof. 

          




Section 16.3. No Reliance Upon Lender.


      Borrower acknowledges and agrees
  that it has made its own investigation or elected not to make such investigation
  as to all matters deemed material to this transaction and has not relied on
  any statement of fact or opinion, disclosure or non-disclosure of the Lender,
  and has not been induced by the Lender in any way, except for the consideration
  recited herein, in entering into this Agreement and executing the closing documents
  contemplated hereby, and further acknowledges that the Lender has not made any
  warranties or representations of any kind in connection with this transaction
  except as specifically set forth herein or in the documents executed in conjunction
  with this Agreement, and Borrower is not relying on any such representations
  or warranties. 


Section 16.4. All Material Matters Reviewed


      Borrower acknowledges and agrees
  that, after careful consideration, it does not deem any matter not reviewed
  or investigated by it to be material to this Agreement and the transactions
  contemplated hereby. 

      IN WITNESS WHEREOF,
  the Borrower, and Lender have executed this Agreement. 

	Attest/Witness:	K-TRONIK INTERNATIONAL CORP.
	 	A Nevada Corporation
	 	 
	“J.K. Lee”	 
	 	By: /s/ “Robert Kim”
	Print Name: J.K. Lee	Print Name: Robert Kim
	Title: Secretary	Title: President
	 	 
	Attest/Witness:	K-TRONIK N.A. INC.
	 	A Nevada Corporation
	 	 
	“Robert Kim”	By: /s/ “Robert Kim”
	Print Name: Robert Kim	Print Name: Robert Kim
	Title: Secretary	Title: CEO
	 	 
	 	THE TRUST COMPANY OF NEW JERSEY
	 	 
	“Paul Shur”	By: /s/ “Michael Rosen”
	Print Name: Paul Shur	Print Name: Michael Rosen
	Title: Witness	Title: Vice President



 







 SCHEDULE 1

 Other Liens

 

 NONE








 SCHEDULE 2

 A. LOCATIONS OF COLLATERAL


  
     290 Vincent Avenue 

      Hackensack NJ 07601 

    Gannet 

      475 Division Street 

      Elizabeth NJ 07207 

    FNS

      475 W Apra Street

      Dominguez Hills CA 90220

        

  



 B. NAMES, IDENTIFICATION NUMBERS, AND LOCATIONS OF OFFICES 


(i) Name of Borrower as registered:



  
     K-TRONIK INTERNATIONAL CORP. 

      K-TRONIK N.A. INC.  

  



(ii) Other names under which Borrower conducts business N/A



(iii) Locations where Borrower conducts business or operations, including chief
  executive office: 

	 	Chief Executive Office: 	290 Vincent Avenue 

        Hackensack NJ 07601

	 	 	 
	 	Other locations set forth in paragraph (A) above are warehouse
      locations only


 

C. ANY TRANSACTIONS


  
     None

  









 EXHIBIT A

 (i) "Accounts", which means, in addition to the definition
  now and hereafter contained in the Uniform Commercial Code, all accounts and
  any and all obligations of any kind at any time due and/or owing to the Borrower
  and all rights of the Borrower to receive payment or any other consideration,
  whether or not earned by performance, including without limitation, invoices,
  contract rights, Accounts, and all other debts, obligations and liabilities
  for property sold, leased, licensed, assigned or disposed of, for services rendered,
  for a policy of insurance issued or to be issued, for a secondary obligation,
  arising out of a credit card or for health-care insurance receivable, in whatever
  form, owing to Borrower from any person, firm, governmental authority, corporation
  or any other entity, all security therefor, all of which whether now existing
  or hereafter acquired. 

 (ii) "Chattel Paper", which means, in addition
  to the definition now and hereafter contained in the Uniform Commercial Code,
  all chattel paper and records that evidence both a monetary obligation and a
  security interest or lease in specific goods and software used in the goods,
  a lease of specific goods or a lease of specific goods and license of software
  used in the goods, including electronic chattel paper or whatever form, owing
  to Borrower or in which the Borrower has an interest, all of which whether now
  existing or hereafter acquired. 

 (iii) "Commercial Tort Claims", which means, in addition
  to the definition now and hereafter contained in the Uniform Commercial Code,
  all claims arising in tort in the course of the Borrower's business more specifically
  described on the attachment hereto (if any), all of which whether now existing
  or hereafter acquired. 

 (iv) "Deposit Accounts", which means, in addition to
  the definition now and hereafter contained in the Uniform Commercial Code, all
  deposit accounts, whether demand, time, savings, passbook or similar accounts
  maintained by the Borrower at any bank, all of which whether now existing or
  hereafter acquired. 

 (v) "Equipment", which means, in addition to the definition
  now and hereafter contained in the Uniform Commercial Code, all equipment, machinery,
  furniture and all other related goods, all replacements, repairs, modifications,
  alterations, additions, controls and operating accessories therefor, all substitutions
  and replacements therefor, all accessions and additions thereto of the Borrower,
  all of which whether now existing or hereafter acquired. 

 (vi) "General Intangibles," which means, in addition
  to the definition now and hereafter contained in the Uniform Commercial Code,
  all general intangibles and payment intangibles and any and all personal
  property, choses-in-action, and things in action, leases, income tax refunds,
  copyrights, licenses, rights, patents, patent rights, franchise rights, distributorship
  rights, trademarks, tradenames, service marks, trademark rights, formulae, customer
  lists and goodwill of the Borrower, all of which whether now existing or hereafter
  acquired. 

 (vii) "Goods," which means, in addition to the definition
  now and hereafter contained in the Uniform Commercial Code, all goods, fixtures,
  manufactured homes and embedded computer programs and all things and property
  of the Borrower which are not otherwise defined in this Exhibit A, all of which
  whether now existing or hereafter acquired. 

 (viii) "Instruments", which means, in addition to the
  definition now and hereafter contained in the Uniform Commercial Code, all instruments,
  negotiable instruments or other writings that evidence a right of the Borrower
  to payment of a monetary obligation that is transferrable in the ordinary course
  of the Borrower's business with any necessary endorsement or assignment, all
  of which whether now existing or hereafter acquired. 








 (ix) "Inventory", which means, in addition to the definition
  now and hereafter contained in the Uniform Commercial Code, all inventory and
  all goods, merchandise or other personal property held by the Borrower for sale
  or lease or under a contract of service or to be furnished under labels and
  other devices, names or marks affixed thereto for purposes of selling or identification,
  and all right, title and interest of the Borrower therein and thereto, all raw
  materials, packaging and shipping materials, work or goods in process or materials
  and supplies of every nature used, consumed or to be consumed in the Borrower's
  business, all of which whether now existing or hereafter acquired. 

(x) "Investment Property", which means, in addition
  to the definition now and hereafter contained in the Uniform Commercial Code,
  all of the Borrower's certificated or uncertificated securities, security entitlements,
  securities accounts, commodity contracts or commodity accounts whether now existing
  or hereafter acquired. 

 (xi) "Letter of Credit Rights", which means, in addition
  to the definition now and hereafter contained in the Uniform Commercial Code,
  all of the Borrower's rights to payment or performance under a letter of credit
  whether or not the beneficiary has demanded or is at the time entitled to demand
  payment or performance whether now existing or hereafter acquired. 

 (xii) All promissory notes, documents, software and supporting
  obligations (and security interests and liens securing them) of the Borrower
  as now and hereafter defined in the Uniform Commercial Code whether now existing
  or hereafter acquired. 

 (xiii) As to all of the foregoing (i) through (xii) inclusive,
  all cash proceeds, non-cash proceeds and products thereof, additions and accessions
  thereto, replacements and substitutions therefor.