AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

     This Amended AND RESTATED Loan and Security Agreement (this "Agreement") is
made as of May 17,  2001 by and between  LaSalle Bank National  Association,  a
national banking  association  (the "Bank"),  whose address is 135 South LaSalle
Street,  Chicago,  Illinois  60603  and  CFC  INTERNATIONAL,  INC.,  a  Delaware
corporation  ("Borrower"),  whose address is 500 State Street,  Chicago Heights,
Illinois 60411.

                              W I T N E S S E T H:

     WHEREAS,  Borrower and LaSalle  Northwest  National Bank (as predecessor in
interest  to Bank)  entered  into  that  certain  Amended  and  Restated  Credit
Agreement  dated as of March 31, 1992 and Bank and  Borrower  entered  into that
certain  Amended and Restated Loan Agreement  dated as of April 1, 1998 (each as
amended from time to time, and together forming the "Original Agreement"); and

     WHEREAS,  Borrower  and Bank have agreed to amend and restate the  Original
Agreement in its entirety as set forth herein.

     NOW, THEREFORE,  in consideration of the premises and the mutual agreements
hereinafter set forth, Borrower and Bank hereby agree as follows:

     1. DEFINITIONS.

     1.1 Defined  Terms.  For the  purposes  of this  Agreement,  the  following
capitalized words and phrases shall have the meanings set forth below.

     "Accounts" shall have the same meaning assigned to that term in the version
of the Uniform  Commercial  Code  currently  in effect in the State of Illinois,
wheresoever  located and whether now or hereafter  owned,  acquired,  arising or
existing,  including without limitation,  contract rights, any and all manner of
accounts receivable and all security agreements,  guaranties,  letters of credit
and any other collateral security for any or all of the foregoing.

     "Account  Debtor" shall have the same meaning  assigned to that term in the
version  of the  Uniform  Commercial  Code  currently  in effect in the State of
Illinois.

     "Accounts  Payable" shall mean, with respect to any balance sheet contained
in any of the  Financial  Statements,  the sum of those  liabilities  which,  in
accordance  with  GAAP,  should  be shown on such  balance  sheet as an  Account
payable.

     "Accounts  Payable  Aging  Reports"  shall mean those  reports  prepared by
Borrower  listing  Borrower's  Accounts Payable balances (and the number of days
each such Accounts  Payable  balance is  outstanding) as of the last day of each
month,  which balances  Borrower shall represent and warrant as being calculated
in  accordance  with  GAAP and  which  shall  be  presented  in an aging  format
acceptable to Bank.

     "Accounts  Receivable  Aging Reports" shall mean those reports  prepared by
Borrower listing Borrower's Accounts Receivable balances (and the number of days
each such Accounts Receivable balance is outstanding) as of the last day of each
month,  which balances  Borrower shall represent and warrant as being calculated
in accordance with GAAP (including a reasonable provision for  uncollectibility)
and which shall be  presented in an aging  format  acceptable  to Bank and shall
include  the  status  of  all  disputes,   lawsuits,   and  delinquent  Accounts
Receivable.

     "Adjusted LIBOR" shall mean LIBOR plus one and one-half percent (1.5%).

     "Affiliate"   shall  mean  (i)  any  shareholder  of  Borrower,   (ii)  any
corporation or any other Person that directly or indirectly, through one or more
intermediaries,  controls or is  controlled  by or is under common  control with
Borrower or (iii) any officer, director,  trustee, partner or shareholder of any
corporation or any other Person that directly or indirectly, through one or more
intermediaries,  controls  or is  controlled  by or is in  common  control  with
Borrower.

     "Agreement"  shall mean,  collectively,  this Amended and Restated Loan and
Security  Agreement,  together  with  any  and  all  exhibits,  attachments  and
amendments thereto and  modifications,  renewals,  extensions,  restatements and
substitutions thereof and therefor.

     "Banking  Day" shall mean any day other  than a  Saturday,  Sunday or legal
holiday in the State of Illinois.

     "Borrowing Base Certificate"  shall mean those reports prepared by Borrower
calculating  the Revolving Loan Borrowing Base and submitted to Bank pursuant to
Section 7.8(c), in the form of Exhibit F.

     "Business Day" shall mean any day other than a Saturday,  Sunday or a legal
holiday on which banks are  authorized  or required to be closed for the conduct
of commercial banking business in Chicago, Illinois.

     "Capital  Lease"  shall  mean,  as to any person or entity,  a lease of any
interest in any kind of property or asset,  whether real,  personal or mixed, or
tangible  or  intangible,  by such person or entity as lessee that is, or should
be, in accordance with Financial Accounting Standards Board Statement No. 13, as
amended from time to time,  or, if such  Statement  is not then in effect,  such
statement  of GAAP as may be  applicable,  recorded as a "capital  lease" on the
balance sheet of Borrower prepared in accordance with GAAP.

     "CFC  Europe  Reimbursement  Agreement"  means that  certain  Reimbursement
Agreement  dated as of March 19, 1999,  and amended as of July 6, 2000 and as of
the date hereof, by and between CFC Europe GmbH, a German corporation and wholly
owned subsidiary of Borrower,  and Bank,  pursuant to which Bank agreed to issue
an irrevocable  standby letter of credit in favor of ABN AMRO Bank (Deutschland)
AG on the terms and conditions provided therein in the amount of EUR 14,230,000.

     "Chattel  Paper" shall have the same  meaning  assigned to that term in the
version  of the  Uniform  Commercial  Code  currently  in effect in the State of
Illinois,  wheresoever located and whether now or hereafter existing, arising or
acquired, including, without limitation, all installment contracts and leases.

     "Code" shall mean the United  States  Bankruptcy  Code,  as now existing or
hereafter amended.

     "Collateral" shall mean any and all of Borrower's Accounts,  Chattel Paper,
Documents,   Equipment,   Fixtures,   Goods,  General  Intangibles,   Inventory,
Investment Property, monies, or Instruments, wheresoever located and whether now
or hereafter owned,  acquired,  arising or existing,  all proceeds of any of the
foregoing (including,  without limitation, all proceeds of insurance policies or
letters  of  credit  covering  or  related  to any of the  foregoing),  and  all
writings,  correspondence,  books, files,  invoices,  bills of lading,  purchase
orders,  computer  files and  program,  computer  tapes  and  discs  and  cards,
accounting records,  data,  information and other records relating to any of the
foregoing,  together  with all  monies,  deposits,  accounts,  credits  or other
property now or hereafter in the possession of Bank for the account of Borrower.

     "Compliance  Certificate" shall mean those reports prepared by Borrower and
submitted to Bank pursuant to Section 7.8(d), in the form of Exhibit G.

     "Default  Interest  Rate" shall mean the Prime Rate plus three percent (3%)
per annum.

     "Depreciation"   shall  mean  the  total  amounts  added  to  depreciation,
amortization, obsolescence, valuation and other proper reserves, as reflected on
Borrower's financial statement and determined in accordance with GAAP.

     "Documents"  shall  have  the same  meaning  assigned  to that  term in the
version  of the  Uniform  Commercial  Code  currently  in effect in the State of
Illinois,  wheresoever  located  and  whether  now owned,  acquired,  arising or
existing.

     "Eligible Accounts" shall mean such Accounts arising in the ordinary course
of Borrower's  business which are subject to Bank's perfected  security interest
and no other Lien,  encumbrance or security  interest other than Permitted Liens
and which are  evidenced  by an invoice.  In  addition,  no Account  shall be an
Eligible Account, if:

          (i) it  arises  out of a sale  made by  Borrower  to an  Affiliate  of
     Borrower or to a Person controlled by an Affiliate of Borrower; or

          (ii) it is due or unpaid more than ninety (90) days after the original
     invoice date; or

          (iii)  twenty-five  percent  (25%)  or more of the  Accounts  from the
     Account Debtor are not deemed Eligible Accounts hereunder; or

          (iv)  any  covenant,  representation  or  warranty  contained  in this
     Agreement with respect to such Account has been breached; or

          (v) the Account Debtor is also Borrower's creditor or supplier, or the
     Account Debtor has disputed its liability with respect to such Account,  or
     the Account Debtor has made any claim with respect to any other Account due
     from such Account  Debtor to Borrower,  or the Account  otherwise is or may
     become subject to any right of setoff by the Account Debtor, or the Account
     Debtor has filed a lawsuit against Borrower; or

          (vi) the  Account  Debtor has  commenced  a  voluntary  case under the
     federal bankruptcy laws, as now constituted or hereafter  amended,  or made
     an assignment for the benefit of creditors, or a decree or order for relief
     has been entered by a court having  jurisdiction in the premises in respect
     of the Account Debtor in an involuntary  case under the federal  bankruptcy
     laws, as now  constituted  or hereafter  amended,  or any other petition or
     other  application  for relief under the federal  bankruptcy  laws has been
     filed  against the  Account  Debtor,  or if the Account  Debtor has failed,
     suspended  business,  ceased to be solvent,  or  consented to or suffered a
     receiver,  trustee,  liquidator  or custodian to be appointed for it or for
     all or a significant portion of its assets or affairs; or

          (vii) the sale is to an Account Debtor outside the continental  United
     States or  Canada,  unless  the sale is on letter of  credit,  guaranty  or
     acceptance  terms, in each case acceptable to Bank in its sole  discretion;
     or

          (viii)  the  sale  to  the  Account  Debtor  is  on  a  bill-and-hold,
     guaranteed  sale,  sale-and-return,  sale on approval,  consignment  or any
     other repurchase or return basis or is evidenced by Chattel Paper; or

          (ix) Bank believes,  in its reasonable  judgment,  that  collection of
     such  Account is insecure or that such Account may not be paid by reason of
     the Account Debtor's inability to pay; or

          (x)  the  Account  Debtor  is the  United  States  of  America  or any
     department,  agency or instrumentality thereof, unless Borrower assigns its
     right to payment of such  Account to Bank  pursuant  to the  Assignment  of
     Claims Act of 1940, as amended (31 U.S.C. Sub-Section 203 et seq.); or

          (xi) the goods  giving rise to such  Account have not been shipped and
     delivered to and accepted by the Account Debtor or the services giving rise
     to such  Account  have not been  performed  by Borrower and accepted by the
     Account Debtor or the Account otherwise does not represent a final sale; or

          (xii) the Accounts of the Account  Debtor  exceed a reasonable  credit
     limit  determined  by Bank  in its  sole  discretion,  to the  extent  such
     Accounts exceed such limit; or

          (xiii)  the  Account is subject  to any  offset,  deduction,  defense,
     dispute, or counterclaim, or if the Account is contingent in any respect or
     for any reason; or

          (xiv)  Borrower has made any agreement with any Account Debtor for any
     deduction  therefrom,  except  for  discounts  or  allowances  made  in the
     ordinary course of business for prompt  payment,  all of which discounts or
     allowances  are  reflected  in the  calculation  of the face  value of each
     respective invoice related thereto.

     "Eligible  Inventory"  shall  mean  Borrower's  Inventory  located in the
United States and  maintained  either in Borrower's  possession or in warehouses
which have issued  receipts  therefor in the name of Bank, but excluding any
inventory constituting work in process.

     "Environmental Laws" shall mean all federal, state, district,  local and
foreign laws, rules,  regulations,  ordinances,  and consent decrees relating to
health, safety, hazardous substances,  pollution and environmental matters, as
now or at any time  hereafter in effect,  applicable to Borrower's  business or
facilities owned or operated by Borrower, including laws relating to emissions,
discharges, releases or  threatened  releases of  pollutants,  contamination,
chemicals  or hazardous, toxic or dangerous substances, materials or wastes in
the environment (including,  without  limitation,  ambient air,  surface water,
land surface or subsurface  strata)  or  otherwise  relating  to  the
generation,  manufacture, processing,  distribution,  use,  treatment,  storage,
disposal,  transport  or handling of Hazardous Materials.

     "Equipment" has the meaning  assigned in the Illinois  Uniform  Commercial
Code, wheresoever located, including,  without limitation, all equipment and
fixtures, office machines, tools, dyes, furniture, machinery, vehicles, trade
fixtures and all other tangible personal  property (other than Inventory),
together with any and all accessories,  parts and appurtenances thereto,
substitutions  therefore and replacements thereof,  wheresoever located,
whether not or hereafter owned, acquired, arising or existing.

     "ERISA"  shall mean the Employee  Retirement  Income  Security  Act of
1974,  as amended from time to time.

     "Event of Default"  shall mean an event or occurrence  described in Section
9 of this Agreement.

     "Financial  Statements" shall mean the balance sheets,  statements of
income and retained  earnings and  statements  of changes in cash flow of
Borrower for each fiscal year, quarter or month end, as the case may be.

     "Fixtures"  has the same  meaning  assigned  to that term in the  version
of the Uniform  Commercial  Code  currently  in effect in the  State of
Illinois,  all accessions,   parts  and   appurtenances   thereto  and  all
substitutions  or replacements  thereof,  wheresoever  located and whether now
or hereafter owned, acquired, arising or existing.


     "Foreign Exchange Sub-Facility" shall mean the credit facility described as
such in Section 2.1.3.

     "Funds" has the meaning set forth in Section 7.15(a).

     "FX Limit" shall mean $100,000.

     "FX Risk  Liability"  shall mean 8% of the  aggregate  of the Notional
Values  of  all  FX  Transactions   outstanding,   net  of  any  Offsetting
Transactions.

     "FX  Transaction(s)"  shall mean any  transaction  between the Bank and the
Borrower  pursuant to which the Bank has agreed to sell to or to  purchase  from
the  Borrower a Foreign  Currency of an agreed  amount at an agreed  price in US
dollars or such other agreed upon Foreign  Currency,  deliverable and payable on
an agreed date.

     "GAAP"  shall mean  generally  accepted  accounting  principles,  using the
accrual basis of accounting and consistently applied.

     "General  Intangibles" shall have the same meaning assigned to that term in
the version of the Uniform  Commercial  Code currently in effect in the State of
Illinois, including, without limitation, all choses in action, causes of action,
corporate or other business  records,  computer  programs,  customer lists,  tax
refund claims,  trademarks,  service marks, trade names, trade secrets, patents,
patent  applications,  designs,  inventions,  formulae for  coatings,  pigments,
solvents,  resins or other applications,  proprietary know-how,  specifications,
manufacturing processes, licenses, franchise rights, copyrights,  registrations,
goodwill and all rights under any real or personal property leases, permits, all
claims under guaranties, security interests or other security held by or granted
to Borrower to secure payment of any of the Accounts by an Account  Debtor,  all
rights to indemnification and all other intangible personal property of any kind
or nature (other than Accounts),  wheresoever located or arising and whether now
or hereafter owned, acquired, arising or existing.

     "Goods" shall have the same meaning assigned to that term in the version of
the Uniform  Commercial  Code currently in effect in the State of Illinois,  all
accessions,   parts  and   appurtenances   thereto  and  all   substitutions  or
replacements  thereof,  wheresoever  located and whether now or hereafter owned,
acquired, arising or existing.

     "Guaranty"  shall  mean  all  obligations  of  Borrower   guaranteeing  any
indebtedness,  dividend or other obligation,  including  without  limitation any
indebtedness,  dividend or other  obligation  which may be issued or incurred at
some future time, of any other person or entity (the  "primary  obligor") in any
manner,  whether directly or indirectly,  including obligations incurred through
an agreement, contingent or otherwise, by such person or entity:

     (a) to purchase such  indebtedness  or obligation or any property or assets
constituting security therefor;

     (b) to advance or supply  funds  either (i) for the  purchase or payment of
such  indebtedness or obligation,  or (ii) to maintain  working capital or other
balance sheet  condition or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;

     (c) to lease property or to purchase securities,  property or services with
the purpose or intent of assuring the owner of such  indebtedness  or obligation
of the ability of the primary  obligor to make  payment of the  indebtedness  or
obligation;

     (d) otherwise to assure the owner of the  indebtedness or obligation of the
primary obligor against loss in respect thereof; or

     (e) to induce the issuance of, or in  connection  with the issuance of, any
letter of credit.

     "Hazardous  Materials"  shall  mean  any  hazardous,   toxic  or  dangerous
substance,  materials and wastes,  including,  without limitation,  hydrocarbons
(including   naturally   occurring  or  man-made  petroleum  and  hydrocarbons),
flammable  explosives,  asbestos,  urea  formaldehyde  insulation,   radioactive
materials,   biological  substances,   polychlorinated  biphenyls,   pesticides,
herbicides  and any  other  kind  and/or  type  of  pollutants  or  contaminants
(including, without limitation, materials which include hazardous constituents),
sewage,  sludge,  industrial slag, solvents and/or any other similar substances,
materials or wastes that are or become  regulated  under any  Environmental  Law
(including,  without limitation,  any that are or become classified as hazardous
or toxic under any Environmental Law).

     "Indebtedness" shall mean at any time (a) all Liabilities of Borrower,  (b)
all Capital  Lease  obligations  of  Borrower,  (c) all other  debt,  secured or
unsecured,  created,  issued, incurred or assumed by Borrower for money borrowed
or for  the  deferred  purchase  price  of  any  fixed  or  capital  asset,  (d)
indebtedness secured by any mortgage, pledge, lien or security interest existing
on property owned by Borrower  whether or not the  Indebtedness  secured thereby
has been assumed,  and (e) all Guaranty  obligations of Borrower  whether or not
reflected on its balance sheet.

     "Indemnified  Party" and  "Indemnified  Parties" shall mean,  respectively,
each  of  Bank  and  any  parent   corporations,   affiliated   corporations  or
subsidiaries  of  Bank,  and  each  of  their  respective  officers,  directors,
employees, attorneys and agents, and all of such parties and entities.

     "Instruments"  shall  have the same  meaning  assigned  to that term in the
version  of the  Uniform  Commercial  Code  currently  in effect in the State of
Illinois,  wheresoever  located and whether now or  hereafter  owned,  acquired,
arising or existing.

     "Interest  Charges"  shall  mean,  for any  period,  the  sum  of:  (a) all
interest,  charges  and related  expenses  payable  with  respect to that fiscal
period to a lender in connection with and related  expenses payable with respect
to that  fiscal  period to a lender in  connection  with  borrowed  money or the
deferred  purchase  price of assets that are  treated as interest in  accordance
with GAAP,  plus (b) the  portion of rent  payable  with  respect to that fiscal
period  under  Capital  Leases that should be treated as interest in  accordance
with GAAP,  plus (c) all charges paid or payable  (without  duplication)  during
that period with respect to any Interest Rate Agreements.

     "Interest  Period"  shall mean,  with regard to any LIBOR Loan,  successive
one,  two or  three-month  periods as selected  from time to time by Borrower by
notice given to Bank not less than two  Business  Days prior to the first day of
each respective Interest Period; provided, however, that: (i) each such Interest
Period  occurring  after the  initial  interest  Period of any LIBOR  Loan shall
commence on the day on which the preceding  Interest  Period for such LIBOR Loan
expires (ii)  whenever the last day of any Interest  Period would be extended to
occur on the next succeeding  Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding  Business Day, provided,  that
if such extension  would cause the last day of such Interest  Period to occur in
the next following  calendar  month,  then the last day of such Interest  Period
shall occur on the immediately  preceding Business Day; (iii) whenever the first
day of any  Interest  Period  occurs on a day of an initial  calendar  month for
which there is not  numerically  corresponding  day in the  calendar  month that
succeeds such initial calendar month by the number of months equal to the number
of months in such Interest  Period,  such Interest  Period shall end on the last
Business Day of such  succeeding  calendar  month;  and (iv) the final  Interest
Period must be such that its expiration occurs on or before the Maturity Date.

     "Interest  Rate  Agreements"   shall  mean  any  interest  rate  protection
agreement,  interest rate swap or other interest rate hedge  arrangement  (other
than any interest rate cap or other similar agreement or arrangement pursuant to
which Borrower has no credit exposure to Bank) to or under which Borrower or any
subsidiary of Borrower is a party or beneficiary.

     "Inventory"  shall  have  the same  meaning  assigned  to that  term in the
version  of the  Uniform  Commercial  Code  currently  in effect in the State of
Illinois, all accessions,  parts and appurtenances thereto and all substitutions
or replacements thereof, wheresoever located and whether now or hereafter owned,
acquired,  arising  or  existing,  including  without  limitation,   goods,  raw
materials,  supplies,  work in process,  finished  goods, or inventory which has
been returned to or repossessed or stopped in transit.

     "Inventory  Reports" shall mean those reports  prepared by Borrower listing
Borrower's  Eligible  Inventory  balances as of the last day of each month which
balances  Borrower shall represent and warrant as being calculated in accordance
with GAAP and which shall be presented in a format acceptable to Bank.

     "Investment  Property" shall have the same meaning assigned to that term in
the version of the Uniform  Commercial  Code currently in effect in the State of
Illinois,  wheresoever  located and whether now or  hereafter  owned,  acquired,
arising or existing.

     "IRB  Reimbursement   Agreement"  shall  mean  that  certain  Reimbursement
Agreement dated as of June 1, 1996, between Borrower and Bank, pursuant to which
Bank  agreed to issue an  irrevocable  direct  pay  letter of credit in favor of
LaSalle National Bank, as trustee (the "Trustee") for the bondholders  under the
Indenture  of Trust dated as of June 1, 1996  between the  Illinois  Development
Finance  Authority and the Trustee in the amount of $4,064,253,  as amended from
time to time.

     "Letter(s)  of Credit"  shall mean each and all letters of credit issued by
Bank,  in its sole  discretion,  upon the execution and delivery by Borrower and
the acceptance by Bank of any application for Letter of Credit,  as set forth in
Section  2.1.2 of this  Agreement,  but shall  exclude that  certain  direct pay
letter of credit dated on or about June 6, 1996,  the  available  face amount of
which  as of  May 1,  2001  was  $3,252,416.44,  relating  to  the  indebtedness
described in Section 6.1(e).

     "Letter of Credit  Obligations" shall mean, at any time, an amount equal to
the aggregate of the original face amounts of all Letter of Credit minus the sum
of (i) the amount of any  reductions in the original face amounts of all Letters
of Credit  which did not result from a draw  thereunder,  (ii) the amount of any
payments  made by Bank with  respect  to any draws made under a Letter of Credit
for which Borrower has reimbursed Bank, (iii) the amount of any payments made by
Bank with  respect to any draws  made  under a Letter of Credit  which have been
converted  to a  Revolving  Loan as set  forth in  Section  2.1.2,  and (iv) the
portion of any issued but expired  Letter of Credit  which has not been drawn by
the beneficiary  thereunder.  For purposes of determining the outstanding Letter
of Credit  Obligations at any time,  Bank's  acceptance of a draft drawn on Bank
pursuant to a Letter of Credit shall constitute a draw on the applicable  Letter
of Credit at the time of such acceptance.

     "Liabilities"  shall  mean  all  obligations  of  the  Company  under  this
Agreement and under the IRB Reimbursement Agreement.

     "LIBOR"  shall  mean a rate of  interest  equal  to the per  annum  rate of
interest at which U.S. dollar deposits in an amount  comparable to the amount of
the relevant LIBOR Loan and for a period equal to the relevant  Interest  Period
are offered generally to the Lender (rounded upward of necessary, to the nearest
1/16 of 1.00%) in the London Interbank  Eurodollar  market at 11:00 a.m. (London
time) two Business days prior to the commencement of each Interest Period, or as
LIBOR is other wise determined by Bank in its sole and absolute discretion, such
rate to remain fixed for such Interest Period.  Bank's determination of LIBOR as
provided above shall be conclusive, absent manifest error.

     "LIBOR Loan(s)" shall mean that portion,  and collectively  those portions,
of the aggregate  outstanding principal balance of the Revolving Loans that bear
interest at Adjusted LIBOR, each of which must be in an amount equal to $100,000
or an integral multiple of $100,000 in excess thereof;  provided,  however, that
there  shall not be in excess of five (5)  LIBOR  Loans  outstanding  at any one
time.

     "Liens" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person  other  than the  owner of the  Property,  whether  such
interest is based on the common law, statute or contract,  and including but not
limited to the security  interest or lien arising from a mortgage,  encumbrance,
pledge,  conditional  sale or trust receipt or a lease,  consignment or bailment
for  security  purposes.  The term "Lien"  shall  include,  without  limitation,
reservations,  exceptions, encroachments,  easements, rights-of-way,  covenants,
conditions,  restrictments,  leases and other title  exceptions and encumbrances
affecting Property which interfere with the use thereof,  detract from the value
thereof or impair the  operations  thereof.  For the purpose of this  Agreement,
Borrower  shall be deemed to be the owner of any Property  which it has acquired
or holds subject to a conditional sale agreement or other  arrangement  pursuant
to which  title to the  Property  has been  retained  by or vested in some other
person for security purposes.

     "Loans" shall mean,  individually and collectively,  each and all Revolving
Loans,  the Term Loan, and the Second Term Loan made by Bank to Borrower and all
Letters of Credit  issued by Bank for the  benefit of Borrower  and  pursuant to
this Agreement.

     "Loan Documents" shall have the meaning set forth in Section 4.1.

     "Lockbox Account" has the meaning set forth in Section 7.15(a).

     "Make Whole  Premium  Amount"  has the  meaning set forth in Section  2.5.2
hereof.

     "Maximum  Letter  of  Credit  Obligation"  shall  mean the  Revolving  Loan
Commitment less (i) the aggregate  amount of all Revolving Loans  outstanding at
any  time  and  (ii)  the  aggregate  Notional  Amounts  of all FX  Transactions
outstanding at any time.

     "Monthly Payment Date" has the meaning set forth in Section 2.1.8.

     "Mortgage"  means (a) that certain that certain  Mortgage  dated as of June
10, 1987 between  Borrower (f/k/a The Coated Film Company) and Bank (as assignee
of LaSalle  National  Bank),  recorded in the office of the Recorder of Deeds of
Cook County,  Illinois (the "Recorder's Office) on June 11, 1986 as Document No.
86-236291  concerning  the real  property  commonly  known as 500 State  Street,
Chicago Heights,  Illinois (the  "Premises"),  as amended by (i) First Amendment
dated  May 4,  1987 and  recorded  in the  Recorder's  Office  on May 6, 1987 as
Document  No.  87-244769,  (ii) Second  Amendment  dated  December  16, 1988 and
recorded  in the  Recorder's  Office  on  December  21,  1988  as  Document  No.
88-587863,  (iii)  Third  Amendment  dated  March 31,  1992 and  recorded in the
Recorder's  Office  on May 5,  1992  as  Document  No.  92-305060,  (iv)  Fourth
Amendment  dated June 1, 1996 and recorded in the Recorder's  Office on June 21,
1996 as Document  No.  96-479606,  (v) Fifth  Amendment  dated April 1, 1998 and
recorded in the Recorder's  Office on November 9, 1998 as Document No. 08010241,
and (vi) Sixth  Amendment dated November 13, 1998 and recorded in the Recorder's
Office on July 20, 2000, as Document No. 00543598  (together,  the "Amendments")
and (b) that  certain  Assignment  of Rents and Leases dated as of June 10, 1986
between the Borrower  (f/k/a The Coated Film  Company) and the Bank (as assignee
of LaSalle National Bank) recorded in the Recorder's  Office on June 11, 1986 as
Document No. 86-236292, as amended by the Amendments.

     "Note(s)" shall mean the Revolving Note, the Term Note, and the Second Term
Note, and each one of them.

     "Notional Value" shall mean the US Dollar  equivalent of the price at which
the Bank agreed to purchase or sell to the Borrower a Foreign Currency.

     "Obligations"  shall mean (i) the obligations of Borrower to Bank under the
Loans,  as  evidenced by the Notes and the  Mortgage,  (ii) the  obligations  of
Borrower  to Bank  under the IRB  Reimbursement  Agreement,  (iii) all  interest
accrued  on the  Loans,  (iv) any fees due to Bank  hereunder  or under  the IRB
Reimbursement  Agreement,  (v) any expenses  incurred by Bank hereunder or under
the IRB  Reimbursement  Agreement  and (vi) any and all  other  liabilities  and
obligations of Borrower (and of any partnership in which Borrower is or may be a
partner) to Bank, howsoever created,  arising or evidenced, and howsoever owned,
held or  acquired,  whether  now or  hereafter  existing,  whether now due or to
become due,  direct or indirect,  absolute or contingent,  and whether  several,
joint or joint and several,  including,  but not limited to, any  Interest  Rate
Agreements or FX Transactions.

     "Offsetting Transaction" shall mean an FX Transaction to purchase a Foreign
Currency and an FX Transaction to sell the same Foreign Currency,  each with the
same Settlement Date and designated as an Offsetting  Transaction at the time of
entering into the FX Transaction.

     "Permitted Liens" shall mean Liens on the Collateral (i) provided for under
this  Agreement  or the Loan  Documents  in favor of Bank;  (ii)  arising out of
judgments  or  awards  in  respect  of which  Borrower  shall  in good  faith be
prosecuting an appeal or proceedings for review and in respect of which Borrower
shall  have  secured a  subsisting  stay of  execution  pending  such  appeal or
proceedings  for review,  provided  Borrower shall have set aside reserves which
Bank  reasonably  deems  adequate with respect to such judgment or award;  (iii)
purchase money security  interests in any Equipment  acquired by Borrower to the
maximum amount of $100,000;  and (iv) securing Borrower's  obligations under the
IRB Reimbursement Agreement.

     "Person" shall mean any  individual,  sole  proprietorship,  joint venture,
partnership,  limited  partnership,  association,  unincorporated  organization,
joint-stock company or association,  trust, corporation,  entity, institution or
government body.

     "Prime Loan(s)" shall mean that portion,  and collectively,  those portions
of the aggregate  outstanding principal balance of the Revolving Loans that will
bear interest at the Prime Rate.

     "Prime  Rate"  shall mean the rate per annum in effect from time to time as
set by Bank and called its Prime Rate.  The effective  date of any change in the
Prime  Rate shall for  purposes  hereof be the date the rate is changed by Bank.
Bank shall not be obligated to give notice of any change in the Prime Rate.

     "Property"  shall  mean any  interest  in any kind of  property  or  asset,
whether real, personal or mixed, or tangible or intangible.

     "Regulatory  Change" shall mean the  introduction  of, or any change in any
applicable law, treaty,  rule,  regulation or guideline or in the interpretation
or administration  thereof by any governmental  authority or any central bank or
other fiscal,  monetary or other authority having  jurisdiction over Bank or its
lending office.

     "Revolving Loan(s)" shall mean each and all direct advances made by Bank to
Borrower under and pursuant to this Agreement, as set forth in Section 2.1.1.

     "Revolving  Loan  Borrowing  Base" shall mean, at any time, the sum of: (a)
80% of the Eligible Accounts Receivable of Borrower; and (b) 50% of the Eligible
Inventory of Borrower,  less (i) the face amount of any  outstanding  Letters of
Credit and (ii) the Notional Value of any outstanding FX Transactions; provided,
however,  provided,  however that at no time shall more than  $3,000,000  of the
Revolving Loan Borrowing Base be attributable to Eligible Inventory.

     "Revolving Loan Commitment" shall mean $5,500,000.

     "Revolving Loan Maturity Date" shall mean April 1, 2003.

     "Revolving Note" shall mean a promissory note in the form of Exhibit A duly
executed by Borrower.

     "Second Term Loan" shall mean that certain second term loan made by Bank to
Borrower as more particularly described in Section 2.3.

     "Second Term Loan Maturity Date" shall mean May ___, 2006,  unless extended
by Bank  pursuant to any  modification,  extension  or renewal by  Borrower  and
accepted by Bank in its sole and absolute  discretion  in  substitution  for the
Second Term Note.

     "Second  Term Note" shall mean a  promissory  note in the form of Exhibit C
duly executed by Borrower.

     "Settlement  Date" shall mean the  Business  Day on which the  Borrower has
agreed to (a) deliver the required amount of Foreign Currency,  or (b) pay in US
dollars the agreed upon purchase price of the Foreign Currency.

     "Subsidiary" shall mean any corporation of which twenty-five  percent (25%)
or more of the outstanding  shares of capital stock having ordinary voting power
for the selection of directors is owned,  directly or indirectly by Borrower and
any Affiliates or Subsidiaries of Borrower.

     "Swap Rate" shall mean the rate of interest  equal to the per annum rate of
interest  at which Bank  determines  its cost of funds equal to the yield on the
five-year  United States Treasury Notes or Securities plus a corresponding  swap
spread as published in Bloomberg's Financial Markets Commodities News, in effect
from time to time, and in the absence of such publication, as determined by Bank
in its sole discretion.

     "Tangible  Assets" shall mean the total of all assets appearing  Borrower's
Financial Statements after deducting all proper reserves (including reserves for
Depreciation,  obsolescence  and  amortization)  less  the sum of (i)  goodwill,
patents,  trademarks,  prepaid  expenses,  deposits,  deferred charges and other
personal  property  (including,  without  limitation,  the  worldwide  rights to
manufacture  and market  certain  holographic  products  acquired  from  Applied
Holographics PLC) which is classified as intangible  property in accordance with
GAAP,  (ii)  deferred  income  tax  credits  and  (iii)  any  amounts  due  from
shareholders, Affiliates, officers or employees of Borrower.

     "Tangible  Net Worth"  shall mean at any time the total of Tangible  Assets
less Liabilities.

     "Term Loan" shall mean that  certain term loan  heretofore  made by Bank to
Borrower pursuant to the Original  Agreement as more  particularly  described in
Section 2.2.

     "Term Loan Maturity Date" shall mean November 1, 2003,  unless  extended by
Bank  pursuant  to any  modification,  extension  or renewal  note  executed  by
Borrower  and  accepted  by  Bank  in  its  sole  and  absolute   discretion  in
substitution for the Term Note.

     "Term Note" shall mean that certain Term Note dated as of November 13, 1998
in the original  principal amount of $2,625,000,  a copy of which is attached as
Exhibit B.

     1.2 Accounting Terms.

     Any accounting terms used but not otherwise defined herein shall have their
customary  meanings as defined in,  pursuant to, or in accordance with GAAP. All
other  terms used but not  otherwise  defined  herein  shall  have the  meanings
provided by the version of the Uniform  Commercial  Code  enacted in Illinois to
the extent such terms are used or defined therein.


<PAGE>


     2. COMMITMENT OF BANK.

     2.1 Revolving Loan Commitment.

     2.1.1  Revolving  Loans.  Subject  to the  terms  and  conditions  of  this
Agreement and the other Loan Documents, and in reliance upon the representations
and  warranties  of Borrower set forth  herein and in the other Loan  Documents,
Bank agrees to make such Revolving Loans at such times as Borrower may from time
to time request until, but not including,  the Revolving Loan Maturity Date, and
in such amounts as Borrower may from time to time  request,  provided,  however,
that the aggregate  principal  balance of all Revolving Loans outstanding at any
time shall not exceed the lesser of (i) the Revolving  Loan  Borrowing  Base and
(ii) the Revolving  Loan  Commitment,  in either case minus the Letter of Credit
Obligations  and the  Notional  Value of all FX  Transactions  outstanding,  and
provided  further,  that each  Revolving  Loan shall  equal at least  $10,000 or
multiples of $1,000 in excess thereof.  Revolving Loans are otherwise terminated
or extended as provided in this Agreement. The Revolving Loans shall support the
working  capital  requirements  of  Borrower.  Borrower  may  borrow,  repay and
reborrow hereunder, from the date hereof until the Revolving Loan Maturity Date,
either the full  amount of the  Revolving  Loan  Commitment  (less the Letter of
Credit  Obligations and the Notional Value of all FX Transactions  outstanding )
or any lesser sum in the minimum amounts referred to above. If, at any time, the
Revolving Loans exceed the Revolving Loan Commitment  (less the Letter of Credit
Obligations and the Notional Value of all FX Transactions outstanding), Borrower
shall immediately  notify Bank of the existence of and pay to Bank the amount of
such excess.

     2.1.2  Letters  of  Credit.  Subject  to the terms and  conditions  of this
Agreement and upon the execution and delivery by Borrower and the  acceptance by
Bank,  in its sole and  absolute  discretion,  of an  application  for Letter of
Credit, Bank agrees to issue for the account of Borrower, such Letters of Credit
on the standard from of Bank and  otherwise in form and substance  acceptable to
Bank, from time to time during the term of this Agreement, provided that (i) the
Letter of Credit  Obligations  may not at any time exceed the Maximum  Letter of
Credit Obligation,  (ii) no Letter of Credit shall have an expiration date later
than 120 days  after  the  Revolving  Loan  Maturity  Date and (iii) an Event of
Default  does not then exist or would not then be  created  thereby or any event
which  with the giving of notice or lapse of time or both  would  constitute  an
Event  of  Default  does  not  then  exist.  If any  Letters  of  Credit  remain
outstanding on the Revolving  Loan Maturity Date,  Borrower shall deposit into a
deposit  account  with Bank cash equal to the  aggregate  outstanding  Letter of
Credit Obligations on the Revolving Loan Maturity Date.

          (a) The amount of any payments made by Bank with respect to draws made
     by a beneficiary  under a Letter of Credit for which Borrower has failed to
     reimburse Bank upon the earlier of (i) Bank's demand for repayment, or (ii)
     five (5) days  from the date of such  payment  by Bank,  shall be deemed to
     have been  converted  to a Revolving  Loan as of the date such  payment was
     made by Bank to such  beneficiary.  Upon  the  occurrence  of an  Event  of
     Default and at the option of Bank, all Letter of Credit  Obligations  shall
     be converted to Revolving Loans, all without demand,  presentment,  protest
     or notice of any kind, all of which are hereby waived by Borrower. If there
     does not exist sufficient availability, Borrower hereby agrees to reimburse
     Bank,  immediately  upon demand,  for each payment or disbursement  made by
     Bank under or on account of any Letter of Credit,  honoring  any demand for
     payment made by the  beneficiary  thereunder  by Bank or any issuing  bank,
     with  interest  on the amount so paid or  disbursed  by Bank or any issuing
     bank,  from the  date a  demand  for  payment  is made by Bank to,  but not
     including the date Bank is reimbursed  therefor,  at a rate per annum equal
     to the interest rate payable  hereunder  with respect to Prime Loans at the
     time of demand for payment.  The  obligation of Borrower to reimburse  Bank
     for  payments  and  disbursements  made by Bank  under or on account of any
     Letter of Credit  honoring a demand  for  payment  made by the  beneficiary
     thereunder  shall  be  absolute  and   unconditional   under  any  and  all
     circumstances  and  irrespective of any setoff,  counterclaim or defense to
     payment  which  Borrower  may  have  or  have  had  against  Bank  or  such
     beneficiary,  including,  without  limitation,  any  defense  based  on the
     failure of such  demand for  payment to conform to the terms of such Letter
     of Credit or any  nonapplication  or  misapplication by such beneficiary of
     the  proceeds  of  such  demand  for  payment  or the  legality,  validity,
     regularity  or  enforceability  of such Letter of Credit or any document or
     contract  related to or  required to be  presented  under the terms of such
     Letter of Credit;  provided,  however, that Borrower shall not be obligated
     to reimburse  Bank for any wrongful  payment or  disbursement  made by Bank
     under or on  account  of such  Letter  of  Credit  as a  result  of acts or
     omissions  constituting  gross negligence or willful misconduct on the part
     of Bank or any of its officers, employees or agents.

          (b) Borrower  agrees that, upon the earlier of (i) an occurrence of an
     Event of Default or (ii) 120 days after the Revolving  Loan Maturity  Date,
     it will  immediately,  upon written  demand by Bank,  pay to Bank an amount
     equal to the amount of the then  aggregate  stated amount of all Letters of
     Credit issued and  outstanding  hereunder.  Any amounts so received by Bank
     pursuant to the  provisions of the foregoing  sentence shall be retained by
     Bank as collateral security for Borrower's Obligations  including,  without
     limitation, all Obligations of Borrower to Bank under or in connection with
     this Agreement, any Letter of Credit or any of the Loans.

          (c) Bank shall,  promptly  following its receipt thereof,  examine all
     documents  purporting to represent a demand for payment by the  beneficiary
     under any Letter Of Credit issued by Bank to ascertain that the same appear
     on their face to be in  conformity  with the terms and  conditions  of such
     Letter of Credit. If, after examination,  Bank shall have determined that a
     demand for  payment  under such  Letter of Credit  does not  conform to the
     terms and  conditions  of such  Letter of Credit,  Bank  shall,  as soon as
     reasonably  practicable,  give notice to the beneficiary to the effect that
     negotiation  was not in  accordance  with the terms and  conditions of such
     Letter of  Credit,  stating  the  reasons  therefor  and that the  relevant
     document  is being held at the  disposal  of such  beneficiary  or is being
     returned  to such  beneficiary,  as Bank may  elect.  The  beneficiary  may
     attempt to correct any such  nonconforming  demand for  payment  under such
     Letter of Credit if, and to the extent that,  such  beneficiary is entitled
     and able to do so. If Bank  determines that a demand for payment under such
     Letter of Credit  conforms  to the terms and  conditions  of such Letter of
     Credit,  then Bank shall make payment to the beneficiary in accordance with
     the terms of such Letter of Credit. Bank shall have the right,  provided it
     is not then in default  under such Letter of Credit by reason of its having
     wrongfully  failed to honor a demand  for  payment  previously  made by the
     beneficiary  under such  Letter of Credit,  to require the  beneficiary  to
     surrender  such Letter of Credit to Bank on the stated  expiration  date of
     such Letter of Credit.  Borrower  agrees,  if necessary,  and to the extent
     reasonably  feasible,  to cause the beneficiary to so surrender such Letter
     of Credit.

          (d) If reserve  requirements,  capital  adequacy  requirements  or any
     similar requirements or restrictions,  or any other requirements of law not
     presently applicable to Bank or any issuing bank are hereafter imposed upon
     or  determined  or held to be applicable to Bank or any issuing bank at any
     time and from time to time,  which would  materially  increase the costs to
     Bank of  continuing  letter of credit  financing  hereunder  or  materially
     affect the  profitability  (on an after-tax basis) to Bank of the letter of
     credit  transactions  contemplated  for Bank  hereby,  then  Bank will give
     written notice to Borrower of such  requirement  or restriction  and of the
     additional costs, or loss or prospective loss of  profitability,  resulting
     from the imposition or  application  of such  requirement or restriction to
     Bank,  and  Borrower  shall,  promptly  after  request  therefor  by  Bank,
     compensate  Bank for additional  costs,  or for any loss of  profitability,
     accruing to Bank from the date such  restriction  or requirement is imposed
     upon or determined  or held to be  applicable to Bank to the  expiration or
     final surrender of all Letters of Credit issued hereunder.

     2.1.3  Foreign  Exchange  Sub-Facility.   Bank  agrees  to  enter  into  FX
Transactions  with Borrower,  at Borrower's  request  therefor made prior to the
Revolving Loan Maturity Date,  provided  however,  that (i) at no time shall the
aggregate FX Risk Liability of Borrower  exceed the FX Limit,  (ii) the Notional
Values of all FX  Transactions  having the same Settlement Date shall not exceed
$300,000,  and (iii) at no time shall the aggregate FX Risk  Liability  combined
with the total  face  amount of all  Letters  of  Credit  outstanding,  less any
partial  draws paid by Bank,  together  with the total  principal  amount of all
outstanding  Revolving  Loans,  exceed the Revolving  Loan  Commitment.  Each FX
Transaction shall be used only to hedge Borrower's foreign exchange exposure.

          (a)  Requests.  Each  request  for a FX  Transaction  shall be made by
     telephone to Bank's Foreign Exchange Department ("Request"),  shall specify
     the Foreign  Currency to be purchased  or sold,  the amount of such Foreign
     Currency and the Settlement  Date.  Each Request shall be  communicated  to
     Bank no later than 4:00 p.m. Chicago,  Illinois time on the Business Day on
     which the FX Transaction is requested.

          (b) Tenor.  No FX  Transaction  shall have a Settlement  Date which is
     more than 365 days  after the date of entry into such FX  Transaction,  and
     provided  further,  no FX Transaction  shall expire on a date which is more
     than 365 days after the Revolving Loan Maturity Date.

          (c) Availability.  Bank may refuse to enter into a FX Transaction with
     Borrower  where  Bank,  in its  sole  discretion,  determines  that (1) the
     requested Foreign Currency is unavailable,  (2) Bank is not then dealing in
     the  requested  Foreign  Currency,  or (3) Bank would be  prohibited by any
     applicable  law,  rule,  regulation or order from  purchasing  such Foreign
     Currency,  (4) a Default or Event of Default has  occurred or would  result
     from such FX Transaction, or (5) such FX Transaction would cause any one of
     the conditions set forth in (i), (ii) or (iii) in Subsection 2.1.3.

          (d) Payment.  Payment is due on the Settlement Date of the relevant FX
     Transaction.  Bank is hereby  authorized  by  Borrower  to charge  the full
     settlement  price of any FX Transaction  against the depository  account or
     accounts  maintained by Borrower with Bank on the  Settlement  Date. In the
     event that Borrower fails to pay the settlement price of any FX Transaction
     on the  Settlement  Date  or the  balances  in the  depository  account  or
     accounts maintained with Bank are insufficient to pay the settlement price,
     without  limiting  the rights of Bank  hereunder  or  waiving  any Event of
     Default caused thereby,  Bank may, and Borrower hereby  authorizes Bank to,
     convert such amount to a Revolving Loan bearing  interest at the Prime Rate
     to pay the settlement price on the Settlement Date.

          (e) Increased Costs. Borrower shall promptly pay to and reimburse Bank
     for  all  costs  incurred  and  payments  made by  Bank  by  reason  of any
     assessment, reserve, deposit, capital maintenance or similar requirement or
     any  surcharge,  tax or fee  imposed  upon  Bank or as a result  of  Bank's
     compliance  with any directive or requirement  of any regulatory  authority
     pertaining or relating to any FX Transaction.

          (f)  Impossibility  of Performance  or Default.  In the event that (1)
     Bank cannot perform under an FX Transaction  due to force majeure or an act
     of State (2) it becomes unlawful or impossible to perform,  all in the good
     faith judgement of Bank, or (3) an Event of Default occurs hereunder,  then
     upon notice to Borrower,  Bank may require the close-out and liquidation of
     the affected FX  Transaction  in  accordance  with the  provisions  of this
     Agreement.

          (g) Other Agreements. The provisions of this Subsection 2.1.3 shall be
     subject to any additional terms,  conditions,  charges or fees provided for
     in Bank's standard foreign currency exchange transactions agreement.

     2.1.4  Revolving  Note.  The  Revolving  Loans  shall be  evidenced  by the
Revolving Note. At the time of the initial  disbursement of a Revolving Loan and
at each time an  additional  Revolving  Loan shall be  requested  hereunder or a
repayment  made in whole or in part thereon,  an  appropriate  notation  thereof
shall be made on the books and records of Bank.  All amounts  recorded shall be,
absent demonstrable error,  conclusive and binding evidence of (i) the principal
amount of the Revolving Loans advanced hereunder and the amount of all Letter of
Credit  Obligations,  (ii) any unpaid interest owing on the Revolving Loans, and
(iii)  all  amounts  repaid  on the  Revolving  Loans or the  Letter  of  Credit
Obligations.  The  failure to record any such  amount or any error in  recording
such amounts shall not,  however,  limit or otherwise  affect the obligations of
Borrower  under the Note to repay the principal  amount of the Revolving  Loans,
together with all interest accruing thereon.

     2.1.5 Manner of Borrowing - Revolving  Loans.  Each Revolving Loan shall be
made  available  to Borrower  upon its written  request,  from any person  whose
authority  to so act has not been  revoked by  Borrower  in  writing  previously
received  by Bank.  A request for a Prime Loan must be received by no later than
11:00 a.m. Chicago, Illinois time, two days before the day it is to be funded. A
request for a LIBOR Loan must be  received by no later than 11:00 a.m.  Chicago,
Illinois  time,  two days  before  the day it is to be  funded.  Notwithstanding
anything contained in this Agreement to the contrary, Borrower may not have more
than  five (5)  LIBOR  Loans  outstanding  at any one  time.  If for any  reason
Borrower  shall fail to select timely an Interest  Period for an existing  LIBOR
Loan, then such LIBOR Loan shall be immediately converted to a Prime Loan on the
last Business Day of the  then-existing  Interest  Period,  all without  demand,
presentment,  protest or notice of any kind,  all of which are hereby  waived by
Borrower.  The proceeds of each Prime Loan or LIBOR Loan shall be made available
at the office of Bank by credit to the  account of  Borrower  or by other  means
requested by Borrower and acceptable to Bank. Bank is authorized to rely on each
loan request  which Bank  believes is its good faith  judgment to emanate from a
properly authorized  representative of Borrower,  whether or not that is in fact
the case. Borrower does hereby irrevocably confirm,  ratify and approve all such
advances by Bank and does hereby  indemnify  Bank  against  losses and  expenses
(including  court costs,  attorneys' and  paralegals'  fees) and shall hold Bank
harmless with respect thereto. Each and every request for a Revolving Loan shall
constitute  Borrower's  representation  and warranty  that (i) as of the date of
said request,  no Event of Default (or event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default) has occurred and is
continuing,  (ii) no material  adverse  change has occurred in the operations or
financial  condition of Borrower  since the date of the most recent  fiscal year
for  which  Borrower's  Financial  Statements  have been  delivered  to Bank and
received thereby,  subject to Bank's reasonable  discretion to determine whether
such a material  adverse  change has  occurred,  (iii) the  representations  and
warranties of Borrower set forth within Section 5 are true and correct as of the
date of the request for a Revolving  Loan,  (iv) the  affirmative  and  negative
covenants set forth in Sections 6 and 7 are not currently being breached and are
inviolate  as of the date of such  request  for a  Revolving  Loan,  and (v) the
aggregate Revolving Loans, including the Revolving Loan requested, do not exceed
the Revolving Loan Commitment.

     2.1.6 Issuance of Letters of Credit.  Each Letter of Credit shall be issued
by Bank upon the  execution  by Borrower  and  acceptance  by Bank,  in its sole
discretion,  of Bank's standard application therefor and the payment by Borrower
of Bank's usual and customary fees in connection therewith.  All standby Letters
of Credit issued under and pursuant to this  Agreement  shall bear an annual fee
equal to 1% of the face amount of such standby Letter of Credit which fee, along
with any other applicable fees or interest,  shall be payable in accordance with
Bank's standard letter of credit fee schedule.  All Letters of Credit other than
standby  Letters of Credit  shall bear such fees and  interest  and contain such
other terms and set forth in Bank's standard letter of credit fee schedule.

     2.1.7 Interest Rate - Revolving Loans. The unpaid principal  balance of the
Revolving  Loans  outstanding  from time to time shall bear  interest  at a rate
selected by Borrower  and equal to the Prime Rate or  Adjusted  LIBOR.  Interest
shall be calculated  on the basis of a year  consisting of 360 days and shall be
paid for the actual number of days elapsed.  Any amount of principal or interest
on the Revolving Loans which is not paid when due,  whether at stated  maturity,
by  acceleration  or  otherwise,  shall bear  interest  payable on demand at the
Default Rate.

     2.1.8 Interest  Payments - Revolving Loans.  Accrued and unpaid interest on
the unpaid principal  balance of all Prime Loans  outstanding from time to time,
shall be due and payable  monthly,  in arrears,  commencing  on June 1, 2001 and
continuing on the first day of each calendar month thereafter  (each, a "Monthly
Payment  Date"),  and on the Revolving  Loan Maturity  Date.  Accrued and unpaid
interest on the unpaid principal  balance of the LIBOR Loans shall be payable on
the last Business Day of each Interest Period, commencing on the first such date
to occur after the date  hereof,  on the date of any  principal  repayment  of a
LIBOR Loan and on the Revolving Loan Maturity Date.  After maturity  (whether by
acceleration  or otherwise)  accrued and unpaid  interest on the Prime Loans and
the LIBOR Loans shall be payable on demand.

     2.1.9 Optional Prepayments of Revolving Loans. The principal balance of the
Prime  Loans may be prepaid in whole or in part at any time  without  premium or
penalty,  provided that any  prepayment  of a Prime Loan shall  include  accrued
interest  on such  Prime  Loans to the date of such  prepayment.  The  principal
balance  of the LIBOR  Loans may not be prepaid in whole or in part at any time.
If, for any reason,  a LIBOR Loan is paid prior to the last  Business Day of any
Interest  Period,  Borrower agrees to indemnify Bank against any loss (including
any loss on redeployment of the funds repaid),  cost or expense incurred by Bank
as a result of such prepayment.

     2.1.10 Mandatory  Prepayments of Revolving Loans. All Revolving Loans shall
be repaid by Borrower on the Revolving Loan Maturity Date, unless payable sooner
pursuant to the provisions of this Agreement.  In addition,  if Borrower chooses
not to convert any LIBOR Loan to a Prime Loan at the end of the  then-applicable
Interest  Period,  such LIBOR Loan shall be  immediately  due and payable on the
last  Business  Day of such  Interest  Period or on any  kind,  all of which are
hereby waived by Borrower.

     2.1.11 Provisions Applicable to LIBOR Loans.

          (a) If Bank  determines  in good faith (which  determination  shall be
     conclusive,  absent  manifest  error)  prior  to  the  commencement  of any
     Interest  Period that (i) U.S.  dollar  deposits of  sufficient  amount and
     maturity for funding any LIBOR Loan are not available to Bank in the London
     Interbank Eurodollar market in the ordinary course of business,  or (ii) by
     reason of circumstances  affecting the London Interbank  Eurodollar market,
     adequate and fair means do not exist for  ascertaining the rate of interest
     to be applicable to the relevant  LIBOR Loan,  Bank shall  promptly  notify
     Borrower  thereof  and,  so  long  as the  foregoing  conditions  continue,
     Revolving  Loans  may  not be  advanced  as a  LIBOR  Loan  thereafter.  In
     addition,   at  Borrower's  option,  each  existing  LIBOR  Loan  shall  be
     immediately  (y)  converted to a Prime Loan on the last Business Day of the
     then-existing  Interest Period, or (z) due and payable on the last Business
     Day  of  the  then  existing  Interest  Period,   without  further  demand,
     presentment,  protest or notice of any kind, all of which are hereby waived
     by Borrower.

          (b) If,  after the date  hereof,  a Regulatory  Change  shall,  in the
     reasonable  determination  of Bank,  make it  unlawful  for Bank to make or
     maintain  the LIBOR Loans,  then Bank shall  promptly  notify  Borrower and
     Revolving  Loans  may  not be  advanced  as a  LIBOR  Loan  thereafter.  In
     addition,   at  Borrower's  option,  each  existing  LIBOR  Loan  shall  be
     immediately  (i)  converted to a Prime Loan on the last Business Day of the
     then existing  Interest  Period or on such earlier date as required by law,
     or (ii) due and  payable  on the  last  Business  Day of the  then-existing
     Interest  Period or on such  earlier  date as required by law,  all without
     further  demand,  presentment,  protest or notice of any kind, all of which
     are hereby waived by Borrower.

          (c) If any Regulatory  Change (whether or not having the force of law)
     shall  (i)  impose,  modify or deem  applicable  any  assessment,  reserve,
     special deposit or similar  requirement against assets held by, or deposits
     in or for the account of or loans by, or any other  acquisition of funds or
     disbursements  by,  Bank;  (ii)  subject Bank or any LIBOR Loan to any tax,
     duty, charge,  stamp tax or fee or change the basis of taxation of payments
     to Bank of principal or interest due from Borrower to Bank hereunder (other
     than a change in the taxation of the overall net income of Bank);  or (iii)
     impose on Bank any other  condition  regarding  such  LIBOR  Loan or Bank's
     funding  thereof,  and Bank shall determine (which  determination  shall be
     conclusive,  absent  manifest error) that the result of the foregoing is to
     increase  the cost to Bank of making or  maintaining  such LIBOR Loan or to
     reduce the amount of principal or interest received by Bank hereunder, then
     Borrower  shall pay to Bank,  on demand,  such  additional  amounts as Bank
     shall,  from time to time,  determine  are  sufficient  to  compensate  and
     indemnify Bank for such increased cost or reduced amount.

     2.2 Term Loan.

     2.2.1 Existing Term Loan. The parties  acknowledge that Bank heretofore has
made a term loan  pursuant to the  Original  Agreement  to  Borrower  (the "Term
Loan"),  the principal amount of which as of May 1, 2001 is $2,463,986.94.  From
and  after the date  hereof,  the Term Loan  shall be  subject  to the terms and
conditions of this Agreement and the other Loan Documents.

     2.2.2 Term Note.  The Term Loan is  evidenced  by the Term Note,  a copy of
which is attached as Exhibit B hereto.  At the time of each repayment  under the
Term  Loan,  an  appropriate  notation  thereof  shall be made on the  books and
records of Bank.  All amounts  recorded  shall be,  absent  demonstrable  error,
conclusive  and binding  evidence of (i) the  principal  amount of the Term Loan
advanced  hereunder,  (ii) any unpaid  interest owing on the Term Loan and (iii)
all  amounts  repaid on the Term Loan.  The failure to record any such amount or
any error in  recording  such  amounts  shall not,  however,  limit or otherwise
affect the  obligations  of Borrower  under the Term Note to repay the principal
amount of the Term Loan, together with all interest accruing thereon.

     2.2.3  Term  Loan  Interest.   The  principal  amount  from  time  to  time
outstanding  under the Term Loan shall bear interest  calculated at a fixed rate
equal to seven and 5/100ths of one percent  (7.05%) (the "Term Interest  Rate").
Interest  shall be calculated on the basis of a year  consisting of 360 days and
shall be paid for the actual number of days elapsed.  Interest  shall be payable
as set forth in the following Section 2.2.4. Any amount of principal or interest
on the Term Loan  which is not paid when due,  whether  at stated  maturity,  by
acceleration or otherwise  shall bear interest  payable on demand at the Default
Rate.

     2.2.4 Principal and Interest Payments. The outstanding principal balance of
the Term Loan, including interest thereon,  shall continue to be repaid in equal
monthly  principal and interest  installments  of $20,431.00 on the first day of
each  month,  with a final  payment of all  outstanding  principal  and  accrued
interest due on the Term Loan Maturity  Date.  Principal  amounts  repaid on the
Term Note may not be borrowed again.

     2.3 Second Term Loan.

     2.3.1 Refinance of Second Term Loan. The parties  acknowledge that Bank has
heretofore  made a term loan to  Borrower  under  the  Original  Agreement,  the
outstanding  principal  amount  of  which as of May 1,  2001  was  approximately
$2,773,336.  Bank has agreed to increase the outstanding principal amount of the
Second Term Loan, the principal  amount of which, as of May ___, 2001,  shall be
$5,773,336 (the "Second Term Loan").  The increase of the Second Term Loan shall
constitute  a  refinancing  and  extension  of the "Second  Term Loan" under the
Original  Agreement,  and all  Collateral  securing the  Obligations  thereunder
continue  to  secure  the  Obligations  hereunder  with  the same  priority  and
effective  dates of recording or filing for the Original  Agreement.  The Second
Term Loan shall be subject to the terms and conditions of this Agreement and the
other Loan Documents.

     2.3.2 Second Term Note;  Repayment of  Principal.  In order to evidence the
Second  Term  Loan on the date  hereof,  Borrower  will  execute  and  deliver a
promissory note, in the form of Exhibit C (together with any and all amendments,
modifications,    supplements,    substitutions,   renewals,   extensions,   and
restatements,  thereof and  therefor,  the "Second  Term Note"),  repayable  and
maturing in accordance with and bearing  interest as set forth in this Agreement
and as set forth in the Second  Term Note.  Payments  of  principal  amounts due
under the  Second  Term Note  shall be made in  fifty-nine  (59)  equal  monthly
installments of principal,  each in the amount of Sixty One Thousand Two Hundred
Fifty  Dollars  ($61,250),  plus  interest,  commencing  on  June  1,  2001  and
continuing on the first day of each month  thereafter,  unless such day is not a
Business Day, then on the next succeeding Business Day, with a final installment
of the then  outstanding  principal  balance  together with all interest accrued
thereon on the Second Term Loan Maturity Date.  Principal  amounts repaid on the
Second Term Note may not be borrowed again.

     2.3.3  Second  Term Loan  Interest  Rate.  The Second  Term Loan shall bear
interest on the unpaid  principal  balance  thereof at a rate per annum equal to
the Swap Rate, plus two and one tenth percent (2.10%). Interest shall be payable
monthly in arrears,  commencing on June 1, 2001 and  continuing on the first day
of each month  thereafter,  unless such day is not a Business  Day,  then on the
next succeeding Business Day.

     2.4  Borrower's  Loan Account.  Bank shall  maintain a loan account  ("Loan
Account")  on its books in which shall be recorded (i) the Loans made by Bank to
Borrower  pursuant to this Agreement,  (ii) all payments made by Borrower on the
Loans,  and (iii) all other  appropriate  debits and credits as provided in this
Agreement, the Loan Documents or the Notes, including,  without limitation,  all
fees, charges,  expenses and interest provided for hereunder or thereunder.  All
advances  to Borrower  and all other  debits and  credits  provided  for in this
Agreement  or the  Notes,  shall be  evidenced  by  entries  made by Bank in its
internal data control systems,  in accordance with Bank's  customary  accounting
practices  as in effect from time to time,  showing the date,  amount and reason
for each such debit or credit.  Bank may send Borrower statements of all amounts
due  hereunder as  reflected  in the Loan  Account,  which  statements  shall be
considered  presumptively  correct  as to the  indebtedness  due  and  owing  by
Borrower to Bank unless Borrower notifies Bank within sixty (60) days of receipt
of any such statement that Borrower considers such statement to be incorrect and
Borrower specifically  identifies the items on such statement which it considers
to be  incorrect  and attaches any  evidence in its  possession  supporting  its
position.

     2.5 Prepayments; Application of Payments and Prepayments.

     2.5.1  Prepayment of Term Loan. The principal  balance of the Term Loan may
be prepaid in whole or in part at any time without premium or penalty,  provided
that any prepayment of the Term Loan (i) shall include  accrued  interest on the
amount of such  prepayment to the date of such prepayment and (ii) shall be in a
minimum amount $10,000 or a multiple of $1,000 in excess thereof.

     2.5.2  Prepayment of Second Term Loan. The principal  balance of the Second
Term Loan may be  prepaid  in whole or in part at any time  without  premium  or
penalty,  provided that any prepayment of the Second Term Loan (i) shall include
accrued interest on the amount of such prepayment to the date of such prepayment
and (ii) shall be in a minimum  amount $10,000 or a multiple of $1,000 in excess
thereof.  In connection with any prepayment,  in whole or in part, of the Second
Term Loan,  Borrower  shall pay to Bank as  provided  hereunder,  a "Make  Whole
Premium Amount" if the  "Reinvestment  Yield" (as  hereinafter  defined) is less
than Bank's  matched cost for the Loan being  prepaid.  The "Make Whole  Premium
Amount"  shall equal the  positive  difference  between two sums  determined  by
subtracting the second sum from the first sum, each sum  representing  the total
cumulative  present value of each payment of principal being prepaid.  The first
sum shall be calculated by  discounting  each such prepaid  amount  utilizing an
interest  factor equal to Bank's  matched cost for the Loan being  prepaid.  The
"Reinvestment  Yield"  shall be defined as the sum of 210 basis  points plus the
U.S. Treasury Rate for an issue with comparable  average life to that portion of
the  Second  Term Loan  being  prepaid  plus the  corresponding  swap  spread as
published in Bloomberg's  Financial Markets  Commodities News. In the absence of
material  error,  a  certificate  from Bank  specifying  such  losses,  costs or
expenses  shall be conclusive  and binding on all parties.  The Second Term Loan
shall be conclusively deemed to have been funded on behalf of Bank in the manner
specified by it in such  calculations  by the purchase of a matched fund deposit
corresponding in amount and maturity to such Second Term Loan.

     2.5.3  Application  of  Payments  and  Prepayments.  Any  payments  made by
Borrower  under this  Agreement,  the Notes or any of the other  Loan  Documents
shall be applied to Obligations owing as of the date of payment in the following
order:  (i) to any expenses of Bank incurred in connection  with this Agreement;
(ii) to  interest  accrued  pursuant  to the  terms of the  Notes;  (iii) to the
principal balance of the Revolving Loans; and (iv) to the principal  balances of
the Term Loan and Second Term Loan in inverse order of maturity.

     2.6 Fees and Expenses.

     2.6.1 Unused Line Fee.  Borrower agrees to pay to Bank a non-use fee in the
amount of  one-eighth  of one percent  (1/8%) per annum times the average  daily
amount of the  available  portion  of the  Revolving  Loan  Commitment,  payable
quarterly  in  arrears on the first day of each June,  September,  December  and
March.  The non-use fee shall be calculated on the basis of a year consisting of
360 days for actual days elapsed.

     2.6.2 Second Term Loan  Prepayment  Penalty.  Borrower shall pay to Bank on
the date hereof $75,000 as a Make Whole Premium Amount.

     2.6.3 Other Expenses.  Borrower shall reimburse Bank for all its reasonable
expenses incurred in connection with the preparation  (including due diligence),
negotiation,   documentation,   amendment,   modification,   administration   or
enforcement  of this  Agreement,  the  Notes  or any Loan  Documents,  including
reasonable attorney, paralegal and other professional fees.

     2.7 Default Interest.  In the event any amount of principal or interest due
hereunder or any other payment due under this Agreement or any of the other Loan
Documents  becomes  overdue,  such overdue  amount shall accrue  interest at the
Default Interest Rate from the due date through the date of payment.

     2.8 Compensating Balances.  Borrower shall maintain average daily available
demand deposit balances sufficient to cover all service costs at Bank plus "Free
Balances"  equal to $250,000,  calculated for each month at the end of each such
month. "Free Balances" are defined as available demand deposit balances over and
above those sufficient to cover the service costs on all of Borrower's  accounts
at Bank and are set forth in the monthly Analysis Statement provided to Borrower
by Bank and listed as "Current Period  Analyzed  Charges"  therein.  The monthly
balance  deficiencies with respect to this compensating balance requirement will
be totaled and charged on a quarterly  basis at the rate of interest  charged to
Borrower on the Prime Loans.

     2.9  Payment  to Bank.  All sums  payable to Bank  hereunder  shall be paid
directly  to Bank,  at the  address set forth in Section  11.8,  in  immediately
available funds. Principal payments submitted in funds not immediately available
shall  continue to bear interest until  collected.  If any payment to be made by
the Borrower  hereunder or under any Note shall become due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing any interest in respect of
such  payment.  Alternatively,  Bank may  charge  against  or debit any  deposit
account of  Borrower  all or any part of any amount due  hereunder  or under the
Notes.  Bank's right from time to time after the  occurrence  or happening of an
Event of Default  hereunder  (which has not been  waived in a writing  signed by
Bank) to setoff  Indebtedness  against  Borrower's  monies,  deposits,  credits,
accounts or other  property now or at any time in the  possession  or control of
Bank,  is hereby  acknowledged  and agreed to by Borrower.  For purposes of this
Agreement  and the other Loan  Documents,  payments to Bank with checks or other
similar drafts which shall be returned to Bank due to  insufficient  funds shall
be deemed not to have been paid to Bank in the first instance.

     2.10 Loans Constitute One Financing Transaction.  Notwithstanding  anything
to the contrary contained in this Agreement or in any of the Loan Documents, the
Loans shall be deemed to  constitute  one loan  transaction.  In  addition,  the
Collateral  supporting  each of the Revolving Loans the Term Loan and the Second
Term Loan shall be deemed  Collateral for all Loans made under this Agreement or
any Loan  Documents  and any Event of Default or event with which the passage of
time or giving  of notice or both  would  constitute  an Event of  Default  with
respect to any of the  Revolving  Loans,  the Term Loan or the Second  Term Loan
shall be deemed a default or Event of Default,  as  applicable,  with respect to
all Loans and shall give rise to all remedies therefor.


<PAGE>


     3.  SECURITY  FOR THE TERM LOAN.  The  parties  acknowledge  that  Borrower
heretofore has pledged to Bank for the Term Loan:

     3.1 Grant of  Security  Interest.  As  continuing  security  for the prompt
payment and performance of the Obligations and Indebtedness of Borrower to Bank,
including   all   refinancings,    renewals,   extensions,   modifications   and
substitutions thereof or therefor, to be retained by Bank, until the Obligations
and  Indebtedness  of Borrower are fully  satisfied,  Borrower  hereby  pledges,
assigns,  transfers,  delivers  and sets over to Bank all of  Borrower's  right,
title and  interest in and to, and grants Bank a Lien on and  security  interest
in, all of the  Collateral  and any and all amounts which may be owing from time
to time by Bank or any other financial  institution to Borrower in any capacity,
including without limitation, any balance or share belonging to Borrower, or any
monies, deposits, credits, accounts (including,  without limitation, the Lockbox
Account) or other Property in the  possession of Bank.  Except for the Permitted
Liens, the Liens and security interests under this subsection shall be first and
prior to any other Liens and security  interests in and on the  Collateral,  and
Borrower  shall permit no Liens,  except for Permitted  Liens,  to attach to the
Collateral.

     3.2 Perfection of Security Interests. Borrower hereby agrees to, and shall,
complete,  execute and deliver to Bank,  in form and substance  satisfactory  to
Bank, the Amendment to Mortgage,  all financing statements,  including,  without
limitation,  the financing  statements  described in Section 4.1(f) hereof,  all
amendments to and continuation statements for the foregoing, any schedules to be
attached  to the  foregoing  and forms or other  documents  to be  completed  in
connection  with the  foregoing,  and  hereby  agrees to and shall take all such
other action,  including noting Bank's security  interest and lien directly onto
the Collateral,  which Bank may request from time to time and which Bank, in its
sole and complete  discretion,  deems  necessary for the perfection or continued
perfection of the security  interests granted under Section 3.1 above.  Borrower
hereby agrees with Bank that a carbon,  photographic  or other  reproduction  of
this  Agreement may be filed in lieu of, and shall be sufficient as, a financing
statement.  Borrower hereby authorizes,  without requiring,  Bank to execute and
file  any  such  financing  statements,  amendments,   continuation  statements,
schedules,  forms or other  documents on behalf of and as the  attorneys-in-fact
for Borrower in order to perfect the security  interests  granted  under Section
3.1 above.  Borrower  hereby agrees to, and shall,  pay upon demand,  all costs,
taxes and  expenses  of  filing or  recording  the same in all  public  offices,
including those offices  described in Section 4.1(f) hereof,  which Bank, in its
reasonable  discretion,  deems  necessary  in  order  to  perfect  the  security
interests granted under Section 3.1 above.

     3.3 Notice to Account Debtors and Instrument Obligors. At any time and from
time to time,  after the occurrence of an Event of Default,  Bank shall have the
right to and may, in its sole and complete  discretion,  (i) contact any Account
Debtor of Borrower or obligor  under any of Borrower's  Instruments  in order to
verify the validity or amount or any other matter relating to any Account or any
Instrument;  and (ii) notify all Account  Debtors of Borrower  and all  obligors
under any of Borrower's  Instruments  that all Accounts and all  Instruments  of
Borrower have been assigned to Bank and Bank has a security interest therein.

     3.4   Appointment  as   Attorney-in-Fact.   Borrower   hereby   irrevocably
designates,  makes,  constitutes and appoints Bank as Borrower's true and lawful
attorney-in-fact,  which appointment is coupled with an interest, and authorizes
and empowers  Bank, in either  Borrower's or Bank's name,  upon the happening or
occurrence and during the continuation of an Event of Default hereunder, at such
time or  times  thereafter  as Bank  may in its  sole  and  complete  discretion
determine:  (i) to demand  payment of the  Accounts and overdue  Instruments  of
Borrower and direct all applicable  Account  Debtors and Instrument  obligors to
make payment thereon directly to Bank; (ii) to enforce payment and collection of
Borrower's  Accounts and overdue  Instruments by legal proceedings or otherwise;
(iii) to exercise  all of  Borrower's  rights and  remedies  with respect to the
collection or any proceedings to collect the Accounts and overdue Instruments of
Borrower; (iv) to sell or assign any Account or Instrument of Borrower upon such
terms, for such amount, and at such time or times as Bank deems advisable in its
sole and complete discretion,  reasonably  exercised;  (v) to settle,  adjust or
compromise  any  Account or  Instrument  of  Borrower  or any legal  proceedings
brought to collect such an Account or  Instrument;  (vi) to discharge or release
any  Account  or  Instrument  of  Borrower;  (vii)  to  prepare,  file  and sign
Borrower's  name on and to any  bankruptcy  proof of claim form or other similar
document against an Account Debtor or Instrument obligor of Borrower;  (viii) to
prepare,  file  and  sign  Borrower's  name on any  notice  of  lien,  claim  or
mechanic's  lien,  assignment or  satisfaction  or lien,  or mechanic's  lien or
similar  document in connection  with an Account or any  Instrument of Borrower;
(ix) to take  control in any manner of any cash or  non-cash  item of payment or
proceeds of any Account or Instrument of Borrower,  including without limitation
any rejected, returned, stopped-in-transit or repossessed goods relating to such
Accounts or  Instruments,  and endorse  Borrower's  name upon any of  Borrower's
Chattel Paper, Documents,  Instruments, invoice or similar document or agreement
relating to any such Account or Instrument or any goods pertaining thereto;  and
(x) to notify the Post Office  authorities to change the address for delivery of
Borrower's mail to an address  designated by Bank, access any lock box or postal
box into which any of Borrower's mail is deposited,  and open and dispose of all
mail addressed to Borrower.

     4.  CONDITIONS OF BORROWING.  Notwithstanding  any other  provision of this
Agreement,  Bank shall not be required to disburse or make all or any portion of
the Loans unless all of the following conditions shall have occurred.

     4.1 Loan Documents.  Borrower shall have executed and delivered to Bank the
following   documents   (collectively,   together  with  any   modifications  or
replacements  therefor and any other  documents  from time to time  delivered to
Bank to effectuate the transactions  contemplated herein, the "Loan Documents"),
all of which must be satisfactory to Bank and Bank's counsel in form,  substance
and execution:

          (a) this Agreement duly executed by Borrower;

          (b) Replacement Revolving Note in the form of Exhibit A, duly executed
     by Borrower;

          (c)  Replacement  Second  Term  Note  in the  form of  Exhibit  C duly
     executed by Borrower;

          (d)  Seventh  Amendment  to  Mortgage  in the form of  Exhibit  D duly
     executed by Borrower;

          (e) Resolutions of the board of directors of Borrower  authorizing the
     execution of this Agreement and the Loan Documents;

          (f) UCC-1  financing  statements  executed by Borrower for filing with
     the Office of the Illinois Secretary of State, the Office of the California
     Secretary of State,  the Office of the North  Carolina  Secretary of State,
     and such other financing statements or fixture filings as Bank, in its sole
     and complete  discretion may request from  Borrower,  in form and substance
     satisfactory to Bank in its sole and complete discretion;

          (g) Reaffirmation of Stock Pledge Agreement in the form of Exhibit E;

          (h) a Borrowing Base Certificate in the form of Exhibit F;

          (i) a Compliance Certificate in the form of Exhibit G; and

          (j) Reaffirmation of Guaranty in the form of Exhibit H;

          (k) a Security  Interest  and  Mortgage-Trademarks  and Patents in the
     form of Exhibit I;

          (l) a Master Letter of Credit  Agreement in the form of Exhibit J; and

          (l) such other documents as Bank reasonably shall require.

     4.2 No Event of Default.  No Event of Default or event or condition  which,
with notice or lapse of time, or both would constitute an Event of Default,  has
occurred and is continuing.

     4.3 No Adverse Change. Since the date of this Agreement, there has been, in
Bank's sole and complete discretion, no material adverse change in the financial
condition or affairs of Borrower.

     4.4 No  Litigation.  No  litigation  or  governmental  proceeding  has been
instituted against Borrower or any of its officers or shareholders which, in the
discretion of Bank reasonably  exercised,  shall materially adversely affect the
financial condition or continued operation of Borrower.

     4.5 Representations and Warranties True. All representations and warranties
of Borrower  contained herein or in any Loan Document are true and correct as of
the date of any advance as though  made on such date,  except to the extent such
representation or warranty expressly relates to an earlier date.

     5. REPRESENTATIONS AND WARRANTIES.

     5.1 Organization. Borrower is a corporation duly organized, existing and in
good  standing  under the laws of the State of Delaware,  with full and adequate
corporate power to carry on and conduct its business as presently conducted, and
is duly licensed or qualified in all foreign jurisdictions wherein the nature of
its activities require such qualification or licensing.

     5.2 Authorization;  Validity.  Borrower has full right, power and authority
to enter into this Agreement, to make the borrowings and execute and deliver the
Loan  Documents  as  provided  herein  and to  perform  all of  its  duties  and
obligations  under this  Agreement  and the Loan  Documents.  The  execution and
delivery  of this  Agreement  and the  Loan  Documents  will  not,  nor will the
observance or performance of any of the matters and things herein or therein set
forth,  violate  or  contravene  any  provision  of law or of  the  articles  of
incorporation  or bylaws of Borrower.  All necessary and  appropriate  corporate
action has been taken on the part of Borrower to  authorize  the  execution  and
delivery of this Agreement and the Loan  Documents.  This Agreement and the Loan
Documents  are  valid  and  binding   agreements   and  contracts  of  Borrower,
enforceable in accordance with their respective terms.

     5.3 Compliance With Laws. The nature and transaction of Borrower's business
and  operations and the use of its  properties  and assets,  including,  but not
limited  to any of the  Collateral  or any  real  estate  owned or  occupied  by
Borrower, do not and during the term of the Loans shall not, violate or conflict
with any applicable law, statute,  ordinance,  rule,  regulation or order of any
kind or nature, including,  without limitation, the provisions of the Fair Labor
Standards Act or any zoning, land use, building,  noise abatement,  occupational
health and safety or other laws, any building  permit or any  condition,  grant,
easement, covenant, condition or restriction, whether recorded or not.

     5.4  Environmental  Laws  and  Hazardous  Materials.  Borrower  represents,
warrants and agrees with Bank that (i) Borrower has not generated, used, stored,
treated,  transported,  manufactured.  handled,  produced  or  disposed  of  any
Hazardous  Materials on or off any of the  premises of Borrower  (whether or not
owned by it) in any manner which at any time violates any  Environmental  Law or
any license, permit, certificate,  approval or similar authorization thereunder,
(ii) the  operations  of  Borrower  comply  in all  material  respects  with all
Environmental Laws and all licenses, permits certificates, approvals and similar
authorizations  thereunder,  (iii) there has been no investigation,  proceeding,
complaint,  order,  directive,  claim,  citation  or notice by any  governmental
authority or any other  person or entity,  nor is any pending or, to the best of
Borrower's  knowledge,  threatened,  and Borrower shall immediately  notify Bank
upon becoming aware of any such  investigation,  proceeding,  complaint,  order,
directive,  claim,  citation or notice,  and shall take  prompt and  appropriate
actions to respond thereto, with respect to any noncompliance with, or violation
of the requirements of any Environmental  Law by Borrower or the release,  spill
or discharge, threatened or actual, of any Hazardous Material or the generation,
use, storage, treatment,  transportation,  manufacture,  handling, production or
disposal of any Hazardous Material or any other environmental,  health or safety
matter,  which  affects  Borrower or its  business,  operations or assets or any
properties  at  which  Borrower  has  transported,  stored  or  disposed  of any
Hazardous  Materials,  (iv)  Borrower has no material  liability,  contingent or
otherwise,  in  connection  with a release,  spill or  discharge,  threatened or
actual, of any Hazardous Materials or the generation,  use, storage,  treatment,
transportation,  manufacture,  handling, production or disposal of any Hazardous
Material,  and (v) without  limiting the generality of the  foregoing,  Borrower
shall,  following  determination  by Bank that  there is  noncompliance,  or any
condition  which  requires  any action by or on behalf of  Borrower  in order to
avoid any noncompliance, with any Environmental Law, at Borrower's sole expense,
cause an independent  environmental  engineer acceptable to Bank to conduct such
test of the relevant site as are  appropriate,  and prepare and deliver a report
setting forth the result of such tests, a proposed plan for  remediation  and an
estimate of the costs thereof.

     5.5 Absence of Breach.  The  execution,  delivery and  performance  of this
Agreement,  the Loan  Documents  and any other  documents or  instruments  to be
executed and delivered by Borrower in  connection  with the Loans shall not: (i)
violate  any  provisions  of law  or any  applicable  regulation,  order,  writ,
injunction or decree of any court or  governmental  authority,  or (ii) conflict
with,  be  inconsistent  with,  or result in any breach or default of any of the
terms, covenants,  conditions, or provisions of any indenture, mortgage, deed of
trust, instrument, document, agreement or contract of any kind to which Borrower
is a party or by which Borrower or any of its property or assets may be bound.

     5.6 Financial  Statements.  All Financial Statements submitted to Bank have
been  prepared in  accordance  with GAAP on a basis,  except as otherwise  noted
therein,  consistent  with the  previous  fiscal  year and truly and  accurately
reflect the financial  condition of Borrower and its  consolidated  subsidiaries
and the results of the operations for Borrower and its consolidated subsidiaries
as of such date and for the periods indicated. Since the date of the most recent
financial  statement  submitted by Borrower to Bank,  there has been no material
adverse  change in the financial  condition or in the assets or  liabilities  of
Borrower or its consolidated subsidiaries, or any changes except those occurring
in the ordinary course of business.

     5.7 Litigation and Taxes. There is no litigation or governmental proceeding
pending or, to the knowledge of Borrower after due inquiry,  threatened  against
Borrower,  which, if adversely determined,  would result in any material adverse
change in the  financial  condition or  properties,  business or  operations  of
Borrower. Borrower has duly filed all applicable income or other tax returns and
has  paid all  income  or other  taxes  when  due.  There is no  controversy  or
objection pending or, to the knowledge of Borrower after due inquiry, threatened
in respect of any tax returns of Borrower.

     5.8 Title and Liens. Except for the Permitted Liens, Borrower, has good and
marketable title to all of its respective  Property,  assets and the Collateral,
and the  Collateral  is not subject to any liens,  claims,  security  interests,
mortgages,  pledges,  charges or other encumbrance of any Person,  except,  with
respect to the Collateral, Bank and holders of the Permitted Liens.

     5.9 Account Warranties. With respect to the Accounts of Borrower scheduled,
listed or referred to from time to time on any Accounts Receivable Aging Reports
or Financial Statement,  Borrower warrants and represents to Bank that: (a) such
Accounts are genuine,  are in all respects  what they purport to be, and are not
evidenced  by a  judgment;  (b) such  Accounts  are  assignable  and a  security
interest may be granted  therein and such  Accounts are subject to the first and
prior  perfected  Lien and security  interest of Bank (except for any  Permitted
Liens); (c) such Accounts represent undisputed, bona fide transactions completed
in accordance with the terms and provisions of the documents  related thereto as
delivered to Bank if so requested; (d) the Equipment, Goods or Inventory sold or
leased,  or the  services  rendered,  which  resulted  in the  creation  of such
Accounts  have been  delivered  or  rendered to and  accepted by the  applicable
Account  Debtor;  (e) the amounts shown on Borrower's  books and records and all
invoices  and  statements  delivered  to Bank,  when and if so  requested,  with
respect to such  Accounts are actually and  absolutely  owing to the  applicable
Borrower and are not in any way contingent;  (f) no payments have been made upon
such Accounts; (g) there are no set-offs, counterclaims or disputes existing or,
to  Borrower's  best  knowledge,  asserted  with  respect to such  Accounts  and
Borrower has not made any agreement with any  applicable  Account Debtor for any
deduction  or  discount  from any such  Account,  except  discounts  allowed  by
Borrower in the ordinary course of its business for prompt  payment;  (h) to the
best knowledge of Borrower,  there are no facts,  events or occurrences which in
any way impair the validity or the  enforceability  of such  Accounts or tend to
reduce the amounts payable under such Accounts as shown on the books and records
of Borrower and the invoices and  statements  delivered to Bank,  when and if so
requested,  with respect thereto; (i) to the best knowledge of Borrower,  all of
the applicable  Account  Debtors with respect to such Accounts have the capacity
to  contract  and are  solvent;  (j) such  Accounts  and the  Equipment,  Goods,
Inventory sold or leased or the services  rendered  giving rise to said Accounts
are not  subject  to any lien,  security  interest,  claim,  charge or any other
encumbrance,  except for the first and prior perfected security interest of Bank
and  except  those  of  holders  of the  Permitted  Liens;  and (k) to the  best
knowledge of Borrower,  there are no proceedings or actions which are threatened
or pending  against any of the applicable  Account Debtors which might result in
any material adverse change in such Account Debtor's financial condition.

     5.10 Inventory and Equipment  Warranties.  (a) The current  address for the
chief executive offices of Borrower is set forth on Schedule 11.8 hereof ("Chief
Executive Office  Locations") and the Inventory and Equipment used in Borrower's
business is located at its Chief Executive  Office Location and at the locations
set forth on Schedule 7.11 hereof (the "Additional  Inventory  Locations");  (b)
all Inventory and Equipment is presently  owned and will continue to be owned by
Borrower, except as otherwise permitted pursuant to the terms of this Agreement,
free and  clear of all  liens  and  encumbrances,  other  than  Bank's  security
interest  hereunder and any Permitted Liens; (c) no Inventory has been consigned
to any Person;  and (d) no Inventory or Equipment is presently or at any time or
times  hereafter,  will be stored with a bailee,  warehouseman  or similar party
without Bank's prior written consent, and, if Bank gives such consent,  Borrower
will  concurrently  therewith cause any such bailee or warehouseman to issue and
deliver to Bank,  warehouse receipts therefor in Bank's name, in form acceptable
to Bank.

     5.11  Patents  and  Trademarks.   Borrower   possesses  those  patents  and
trademarks  listed  on  Schedule  5.11  hereto  which  are all of the  necessary
patents,  patent rights,  trademarks,  trademark rights, trade names, trade name
rights and  copyrights  to conduct the  business  of  Borrower as now  operated.
Borrower's patents,  patent rights,  trademarks,  trademark rights, trade names,
trade name rights and  copyrights do not, to the best of  Borrower's  knowledge,
infringe on the property rights of any other Person.

     5.12 Occupational Safety and Health.  Borrower has not received any notice,
citation,  claim,  assessment  or  proposed  assessment  as to or  alleging  any
material  violation  by  Borrower  from any  division  of any  Federal  or state
occupational safety and health administrations or agencies and no such violation
presently exists. Borrower is not a party to any pending dispute with respect to
Borrower's or any Affiliate's  compliance with any Federal or state occupational
safety and health laws.

     5.13 ERISA  Obligations.  Borrower has  promptly  paid and  discharged  all
obligations  and  liabilities,  if any,  arising  under of a character  which if
unpaid or  unperformed  might result in the  imposition of a lien against any of
its properties or assets.

     5.14  Lending  Relationship.  Borrower  acknowledges  and  agrees  that the
relationship  hereby  created with Bank is and has been conducted on an open and
arm's length basis in which no fiduciary  relationship  exists and that Borrower
has  not  relied  and is not  relying  on any  such  fiduciary  relationship  in
executing this Agreement and in consummating the Loans.  Bank represents that it
will receive the Note payable to its order as evidence of a bank loan.

     5.15 Business Loan. The Loans, including interest rate, fees and charges as
contemplated  hereby,  (i) are  business  loans  within the  purview of 815 ILCS
205/4(1)(c),  as amended  from time to time,  (ii) are an  exempted  transaction
under the Truth In Lending Act, 12 U.S.C.  1601 et seq., as amended from time to
time, and (iii) do not, and when disbursed shall not,  violate the provisions of
the Illinois usury laws, any consumer credit laws or the usury laws of any state
which may have  jurisdiction  over this  transaction,  Borrower or any  property
securing the Loans.

     5.16  Compliance with Regulation U. No portion of the proceeds of the Loans
nor any  Letter  of  Credit  shall be used by  Borrower,  or any  affiliates  of
Borrower,  either  directly  or  indirectly,  for the purpose of  purchasing  or
carrying any margin stock,  within the meaning of Regulation U as adopted by the
Board of Governors of the Federal Reserve System.

     5.17 Complete  Information.  This  Agreement and all financial  statements,
schedules,  certificates,   confirmations,   agreements,  contracts,  and  other
materials  submitted  to  Bank in  connection  with  or in  furtherance  of this
Agreement  by or on behalf of Borrower  fully and fairly  state the matters with
which  they  purport  to deal,  and  neither  misstate  any  material  fact nor,
separately or in the  aggregate,  fail to state any material  fact  necessary to
make the statements made not misleading.

     5.18 Places of Business. The principal place of business of Borrower is 500
State Street, Chicago Heights, Illinois.  Borrower promptly shall notify Bank of
any change in any such location.

     5.19 Subsidiaries. Set forth on Schedule 5.19 attached hereto is a complete
list of the subsidiaries of Borrower.

     5.20 Event of  Default.  No Event of Default and no event  which,  with the
lapse of time,  the  giving  of  notice or both,  would  constitute  an Event of
Default  under this  Agreement or any of the Loan  Documents has occurred and is
continuing. Borrower is not in default (without regard to grace or cure periods)
under any  contract  or  agreement  to which it is a party,  the effect of which
default shall  materially  adversely  affect the  performance by Borrower of its
obligations  pursuant to and as contemplated by the terms and provisions of this
Agreement.

     5.21 Adverse Circumstances. No condition,  circumstance,  event, agreement,
document,  instrument,  restriction,  litigation  or proceeding  (or  threatened
litigation or proceeding or basis therefor)  exists which could adversely affect
the  validity or priority of the liens and  security  interests  granted to Bank
under the Loan Documents, which could materially adversely affect the ability of
Borrower  to perform  its  obligations  under the Loan  Documents,  which  would
constitute a default under any of the Loan  Documents or which would  constitute
such a default with the giving of notice or lapse of time or both.

     5.22  Disclosure.  No  representation  or  warranty  by  Borrower  in  this
Agreement or any of the other Loan  Documents,  nor any  statement  furnished to
Bank by Borrower pursuant hereto or thereto, contains or will contain any untrue
statement of a material  fact,  or omits or will omit to state a material  fact,
necessary when made or while the  representation  or warranty is continuing,  to
make the statements contained herein or therein not misleading.

     6. NEGATIVE COVENANTS.

     6.1  Indebtedness.  Borrower  shall not,  either  directly  or  indirectly,
create,  assume, incur or have outstanding any Indebtedness  (including purchase
money indebtedness), or become liable, whether as endorser, guarantor, surety or
otherwise,  for any debt or obligation of any other person, firm or corporation,
except:

          (a) the Obligations;

          (b)  endorsement  for  collection or deposit of any  commercial  paper
     secured in the ordinary course of business;

          (c) obligations of Borrower for taxes, assessments, municipal or other
     governmental charges;

          (d) obligations of Borrower for accounts payable, other than for money
     borrowed, incurred in the ordinary course of business;

          (e)  indebtedness  to  the  Illinois   Development  Finance  Authority
     ("IDFA")  in  connection  with the bonds  issued by IDFA  secured by a Loan
     Agreement dated as of June 1, 1996 between Borrower and IDFA;

          (f)  obligations of Borrower  under that certain  Guaranty dated as of
     March 19, 2001 and  reaffirmed  as of the date hereof,  made by Borrower in
     favor  of ABN AMRO  Bank  (Deutchland)  AG  guaranteeing  a EUR  14,230,000
     obligation by CFC Europe,  GmbH, a wholly owned subsidiary of Borrower,  to
     ABN AMRO Bank (Deutchland) AG;

          (g) indebtedness to Applied Holographics PLC evidenced by that certain
     Promissory  Note  dated as of  October  1, 1998 in the  original  principal
     amount of $1,500,000 and maturing on September 1, 2002, with an outstanding
     principal balance as of May 1, 2001 of _____________;

          (h)  indebtedness  to  Northern  Bank  Note  Company,  a wholly  owned
     subsidiary of Borrower, evidenced by that certain Convertible Note dated as
     of  ____________  in the  original  principal  amount of  $___________  and
     maturing  on  September  30,  2006,  with a current  outstanding  principal
     balance of $2,000,000; and

          (i) obligations existing on the date hereof which are disclosed on the
     financial statements referred to in Section 7.8. -----------

     6.2  Encumbrances.  Borrower  shall not,  either  directly  or  indirectly,
create,  assume,  incur or  suffer or  permit  to exist  any  mortgage,  pledge,
encumbrance,  security  interest,  assignment,  lien or  charge  of any  kind or
character  upon any  asset of  Borrower,  whether  owned at the date  hereof  or
hereafter acquired except:

          (a) liens for taxes, assessments or other governmental charges not yet
     due or which are being  contested in good faith by appropriate  proceedings
     in such a manner as not to make the property forfeitable;

          (b) liens,  charges and encumbrances  incidental to the conduct of its
     business  or the  ownership  of its  property  and  assets  which  were not
     incurred in  connection  with the borrowing of money or the obtaining of an
     advance or credit,  and which do not in the  aggregate  materially  detract
     from the  value of its  property  or assets or  materially  impair  the use
     thereof in the operation of its business;

          (c) liens  arising out of judgments or awards  against  Borrower  with
     respect to which it shall  concurrently  therewith be  prosecuting a timely
     appeal or  proceeding  for review  and with  respect to which it shall have
     secured a stay of execution pending such appeal or proceedings for review;

          (d)  pledges  or  deposits  to  secure   obligations   under  worker's
     compensation laws or similar legislation;

          (e) good faith deposits in connection with lending contracts or leases
     to which Borrower is a party;

          (f) deposits to secure public or statutory obligations of Borrower;

          (g) liens  existing on the date hereof and  disclosed on the Financial
     Statements referred to in Section 7.8;

          (h)  liens  securing  indebtedness  permitted  under  Section  6.1(e);

          (i) liens and security interests granted to Bank.

     6.3 Investments. Borrower shall not, either directly or indirectly, make or
have  outstanding  any new  investments  (whether  through  purchase  of stocks,
obligations or otherwise) in, or loans or advances to, any other person, firm or
corporation, or acquire all or any substantial part of the assets or business of
any  other  person,  firm  or  corporation  except  (a)  investments  in  direct
obligations of the United States;  (b)  investments in  certificates  of deposit
issued  by Bank or any  bank  with  assets  greater  than  $100,000,000;  or (c)
investments in "prime commercial paper." For purposes hereof,  "prime commercial
paper means short-term unsecured promissory notes sold by large corporations and
rated Al/PI by Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.,
and Moody's Investment Service, Inc.

     6.4 Transfer;  Merger.  Borrower shall not,  either directly or indirectly,
merge, consolidate,  sell. transfer, lease, encumber or otherwise dispose of all
or any part of its  property or business or all or any  substantial  part of its
assets,  or sell or  discount  (with or  without  recourse)  any of its notes or
Accounts.

     6.5  Distributions.  Borrower  shall not,  either  directly or  indirectly,
purchase or redeem any shares of its stock,  declare or pay any dividends (other
than stock dividends),  whether in cash or otherwise, or set aside any funds for
any such purpose or make any distribution to its shareholders, unless previously
approved by Bank, which approval shall not be unreasonably withheld.

     6.6 Use of Proceeds.  Neither  Borrower nor any affiliate of Borrower shall
use any  portion  of the  proceeds  of the Loans  nor have any  Letter of Credit
issued,  either  directly  or  indirectly,  for the  purpose of  purchasing  any
securities  underwritten  or privately  placed by ABN AMRO Inc., an affiliate of
Bank.

     6.7 CFC Oeserwerk GmbH  Machinery and  Equipment.  Borrower shall not allow
any Lien to encumber any  equipment  or  machinery  which is the Property of CFC
Oeserwerk GmbH.

     6.8 CFC Oeserwerk GmbH Stock. Borrower shall not allow any Lien to encumber
the stock of CFC  Oeserwerk  GmbH,  which has been pledged to Bank by Borrower's
wholly owned subsidiary, CFC Europe GmbH, a German corporation, pursuant to that
certain  Stock  Pledge  Agreement  dated as of March 19,  1999,  as  amended  or
reaffirmed from time to time.

     7. AFFIRMATIVE COVENANTS.

     7.1  Payments.  The Borrower  shall pay, or cause to be paid,  when due all
principal and interest  under the Notes and all other  Obligations in respect of
this Agreement, the Notes and the Loan Documents.

     7.2  Compliance  with Bank  Regulatory  Requirements.  Upon demand by Bank,
Borrower shall reimburse Bank for Bank's  additional costs and/or  reductions in
the amount of principal  or interest  received or  receivable  by Bank if at any
time  after the date of this  Agreement  any law,  treaty or  regulation  or any
change in any law,  treaty or  regulation or the  interpretation  thereof by any
governmental  authority charged with the  administration  thereof or any central
bank or other fiscal,  monetary or other authority having jurisdiction over Bank
or the Loans,  whether or not having the force of law,  shall impose,  modify or
deem applicable any reserve (except reserve  requirements  taken into account in
calculating the Interest Rate) and/or special deposit  requirement against or in
respect of assets held by or deposits in or for the account of the Loans by Bank
or impose on Bank any other  condition  with  respect to this  Agreement  or the
Loans,  the result of which is to either  increase the cost to Bank of making or
maintaining the Loans or to reduce the amount of principal or interest  received
or receivable by Bank with respect to such Loans.  Said additional  costs and/or
reductions  will be those  which  directly  result from the  imposition  of such
requirement or condition on the making or  maintaining of such Loans.  All Loans
shall be deemed to be match funded for the purposes of Bank's  determination  in
the previous  sentence.  Notwithstanding  the  foregoing,  Borrower shall not be
required  to pay any such  additional  costs which could be avoided by Bank with
the exercise of reasonable conduct and diligence.

     7.3 Corporate Existence.  Borrower shall at all times preserve and maintain
its corporate  existence,  rights.  franchises and privileges,  and shall at all
times  continue as a going concern in the business  which  Borrower is presently
conducting.

     7.4 Maintain Property and Equipment.  Borrower shall at all times maintain.
preserve  and keep its plant,  Property and  Equipment  in good repair,  working
order and condition,  normal wear and tear excepted, and shall from time to time
make all needful  and proper  repairs,  renewals,  replacements.  and  additions
thereto so that at all times the efficiency thereof shall be fully preserved and
maintained.  Borrower  shall  permit  Bank to examine  and  inspect  such plant,
properties and equipment at all reasonable times. In the event Borrower fails in
the foregoing,  Borrower hereby authorizes,  without requiring,  Bank to perform
the same and to incur such  costs,  fees and  expenses in  connection  therewith
which shall be payable on demand by Borrower.

     7.5 Maintain Insurance. Borrower shall at all times insure and keep insured
in insurance  companies  acceptable to Bank, all insurable  property owned by it
which is of a character  usually  insured by  companies  similarly  situated and
operating  like  properties,  against  loss or damage  from fire and such  other
hazards  or risks as are  customarily  insured  against by  companies  similarly
situated and operating like properties;  and shall similarly insure  employers',
public and professional liability risks.

     7.6 Tax  Liabilities.  Borrower  shall at all times pay and  discharge  all
property and other taxes,  assessments  and  governmental  charges upon, and all
claims (including claims for labor,  materials and supplies) against Borrower or
any of its  properties,  Equipment  or  Inventory,  before the same shall become
delinquent and before  penalties  accrue thereon,  unless and to the extent that
the same are being  contested in good faith by appropriate  proceedings  and are
insured against or bonded over to the satisfaction of Bank.

     7.7  ERISA  Liabilities.  Borrower  shall  at all  times  promptly  pay and
discharge all ERISA obligations and liabilities, if any, of a character which if
unpaid or  unperformed  might result in the  imposition of a lien against any of
its properties or assets and will promptly  notify Bank of (i) the occurrence of
any reportable event (as defined in ERISA) which might result in the termination
by the Pension Benefit  Guaranty  Corporation  ("PBGC ") of any employee benefit
plan (the "Plan")  covering any officers or employees of Borrower,  any benefits
of which are, or are  required to be,  guaranteed  by PBGC,  (ii) receipt of any
notice from PBGC of its intention to seek termination of the Plan or appointment
of a trustee therefor, and (iii) its intention to terminate or withdraw from the
Plan. Borrower shall not terminate any such Plan or withdraw therefrom unless it
shall be in compliance  with all of the terms and  conditions of this  Agreement
after giving effect to any liability to PBGC resulting from such  termination or
withdrawal.

     7.8 Financial  Statements.  Borrower shall at all times maintain a standard
and modern system of  accounting.  on the accrual basis of accounting and in all
respects in accordance  with GAAP,  and shall furnish to Bank or its  authorized
representatives such information regarding the business affairs,  operations and
financial condition of Borrower, including, but not limited to:

          (a) as soon as available,  and in any event within one hundred  twenty
     (120) days  following  the end of each  fiscal  year,  a copy of the annual
     audited Financial Statements of Borrower and its consolidated subsidiaries,
     for the  fiscal  year then  ended  and such  other  information  (including
     nonfinancial  information)  as Bank  reasonably may request,  in reasonable
     detail,   prepared  and  certified  by  an  independent   certified  public
     accountant acceptable to Bank, containing an unqualified opinion;

          (b) as soon as available, and in any event within forty-five (45) days
     following  the end of each month,  a copy of the  Financial  Statements  of
     Borrower and its consolidated  subsidiaries  regarding such month, and such
     other information (including  nonfinancial  information) as Bank reasonably
     may request,  in reasonable  detail,  prepared and certified as accurate by
     Borrower;

          (c) as soon as  practicable,  and in any event within thirty (30) days
     following the end of each month,  (i) a Borrowing  Base  Certificate in the
     form of Exhibit F, (ii) an Accounts  Receivable Aging Report;  and (iii) an
     Inventory Report.

          (d) As soon as  practicable,  and in any event within  forty-five (45)
     days following the end of each fiscal quarter, a Compliance  Certificate in
     the form of Exhibit G reflecting  Borrowers'  compliance with the financial
     covenants set forth in Section 8 of this Agreement.

          (e)   immediately   upon  receipt   thereof   copies  of  interim  and
     supplemental   reports  if  any,   submitted  to  Borrower  by  independent
     accountants in connection  with any interim audit or review of the books of
     Borrower; and

          (f)  copies  of  all  reports  to the  U.S.  Securities  and  Exchange
     Commission.

No change with respect to such accounting principles shall be made by Borrower
without giving prior notification to Bank. Borrower represents and warrants to
Bank that the financial statements delivered to Bank at or prior to the
execution and delivery of this Agreement and to be delivered at all times
thereafter accurately reflect and will accurately reflect the financial
condition of Borrower. Bank shall have the right at all times during business
hours to inspect the books and records of Borrower and make extracts therefrom.
Borrower agrees to advise Bank immediately of any adverse change in the
financial condition, the operations or any other status of Borrower.

     7.9 Notice of  Proceedings.  Borrower  shall,  immediately  after knowledge
thereof  shall  have come to the  attention  of any  officer of  Borrower,  give
written  notice  to  Bank of all  threatened  or  pending  actions,  suits,  and
proceedings before any court or governmental  department,  commission.  board or
other  administrative  agency which may have a material  effect on the business,
property or operations of Borrower.

     7.10 Notice of Default.  Borrower shall. immediately after the commencement
thereof, give notice to Bank in writing of the occurrence of an Event of Default
or of any event  which,  with the lapse of time,  the  giving of notice or both,
would constitute an Event of Default.

     7.11  Collateral  Covenants.  Borrower shall maintain the Collateral at the
location  set  forth in  Section  11.8  hereof,  at the  locations  set forth on
Schedule 7.11 or at such other addresses as Bank shall be informed of by 30 days
prior written  notice.  Borrower  agrees to maintain books and records as to the
location of any Collateral that is in transit or otherwise is not located at the
location  set forth in Section  11.8  hereof or on  Schedule  7.11 and make such
books and records available to Bank upon request of Bank.

     7.12 Account  Covenants.  Borrower  agrees to promptly:  (i) inform Bank in
writing,  of  any  material  delay  in  Borrower's  performance  of  any  of its
obligations  to its Account  Debtors or any  assertion of any  material  claims,
offsets  or  counterclaims  by any of its  Account  Debtors;  (ii)  monitor on a
commercially  reasonable  basis, the financial  condition of its Account Debtors
and furnish to or inform Bank of all material  adverse  information  relating to
the financial  condition of any of its Account Debtors upon obtaining  actual or
constructive  knowledge of such  information;  and (iii) provide Bank,  upon the
reasonable request of Bank, with any invoices,  statements or other documents or
records with respect to its Accounts.

     7.13  Inventory  and  Equipment  Covenants.  Borrower  shall  maintain  its
Inventory and  Equipment on the premises at the  locations  described in Section
7.11 hereof or at such other  addresses  as Bank shall be  informed  pursuant to
Section 11.8 hereof.  Borrower shall at all times hereafter maintain a perpetual
inventory,  keeping  correct and accurate  records  itemizing and describing the
cost,  kind,  type,  quality,  and quantity of the Inventory and Equipment which
records shall be available during Borrower's usual business hours for the review
of Bank or its officers,  employees or agents at their  request.  Borrower shall
conduct a  physical  count of its  Inventory  and  Equipment  at least once each
fiscal year and,  promptly  following  such physical  count of its Inventory and
Equipment,  shall supply Bank with a report  concerning such physical count in a
form satisfactory to Bank with such specificity as may be requested by Bank.

     7.14  Instruments and Chattel Paper.  Borrower will stamp or otherwise mark
all Chattel  Paper and  Instruments  now owned or  hereafter  acquired by it, in
which Bank has a first and prior perfected  security  interest,  to reflect that
the same are subject to Bank's security interest and will immediately thereafter
deliver or cause such  Chattel  Paper and  Instruments  to be delivered to Bank,
with appropriate endorsement,  assignment or stock power transfer or assignment,
with full recourse to Borrower, to vest title and possession in Bank.

     7.15 Bank Deposits.

          (a) Borrower shall maintain a lockbox  account in Borrower's name with
     Bank, into which all monies,  checks,  notes, drafts and all other payments
     for and/or proceeds of the Collateral (the "Funds") shall be deposited (the
     "Lockbox  Account").  All Funds in the Lockbox  Account  shall be under the
     exclusive possession and control of Bank and Borrower hereby grants to Bank
     a Lien on and  security  interest in all Funds in the Lockbox  Account with
     such Funds becoming part of the Collateral. All cash Funds deposited in the
     Lockbox  Account will be applied to Borrower's  Obligations on Banking Days
     on which the cash Funds became  available for deposit.  All non-cash  Funds
     deposited in the Lockbox  Account  shall be applied on the next Banking Day
     after which such Funds become  available  for deposit.  Borrower  agrees to
     cooperate fully with Bank in taking all steps which Bank deems  appropriate
     to  insure  that  all  of  Borrower's   Funds  are  applied  to  Borrower's
     Obligations  on the  appropriate  Banking Day and that  Borrower's  Account
     Debtors  properly direct  payments on the Accounts to the Lockbox  Account.
     Borrower  agrees to pay all fees,  costs and expenses  which Bank incurs in
     connection  with opening and maintaining the Lockbox Account and depositing
     for collection by Bank any check or other item of payment  received by Bank
     on account of Borrower's Obligations.  All of such fees, costs and expenses
     shall be payable to Bank by Borrower upon demand,  and,  until paid,  shall
     bear interest at the rate then applicable hereunder.

          (b) Borrower will also transfer or establish all its primary operating
     accounts,  including depository and disbursement banking accounts,  at Bank
     and shall be responsible for all costs associated with such accounts as are
     customarily charged by Bank.

     7.16 Defense of Collateral.  Borrower shall pay, or cause to be paid,  when
due, all  Indebtedness,  claims or demands with respect to the Collateral which,
if unpaid,  might result in, or permit the creation of, any Lien or  encumbrance
on  the  Collateral,  including,  without  limitation,  all  claims  for  labor,
materials and  supplies,  and, in general,  do and cause to be done,  everything
reasonably  necessary to fully  preserve the rights and  interests of Bank under
this Agreement and the other Loan Documents. In addition,  Borrower shall at all
times defend Bank's rights and interests in and to the Collateral, and the first
priority position of said rights and interests against any and all claims of any
person  adverse  to Bank  (except  Permitted  Liens) and take all  necessary  or
appropriate  actions to give effect to Bank's  priority of rights and  interests
contemplated by this Agreement and the other Loan Documents.

     8. FINANCIAL COVENANTS.

     8.1 Tangible Net Worth. At all times,  Borrower shall maintain Tangible Net
Worth for Borrower and its consolidated  subsidiaries in an amount not less than
$15,000,000.

     8.2  Liabilities  to  Tangible  Net  Worth.  At all times,  Borrower  shall
maintain a ratio of  Liabilities  to  Tangible  Net Worth for  Borrower  and its
consolidated subsidiaries of not greater than 2.5 to 1.0.

     8.3 Profitability. Borrower and its consolidated subsidiaries shall have at
each fiscal year end, a Net Income (before taxes) of greater than $1,000.

     9. EVENTS OF DEFAULT. Borrower, without notice or demand of any kind except
as  otherwise  specifically  provided  herein,  shall be in  default  under this
Agreement upon the occurrence of any of the following  events (each an "Event of
Default").

     9.1 Nonpayment of Obligations. Any amount due and owing on the Notes or any
of the Obligations, whether by its terms or as otherwise provided herein, is not
paid within five (5) days of the due date thereof.

     9.2  Misrepresentation.   Any  warranty,  representation,   certificate  or
statement in this Agreement,  the Loan Documents or any other agreement  between
Borrower and Bank shall be false in any material respect.

     9.3   Nonperformance.   Borrower  fails  to  perform  or  defaults  in  the
performance of any covenant, condition or agreement contained in this Agreement,
the other Loan Documents, or any other agreement between Borrower and Bank, and,
only if such  failure or default  is  capable of cure,  such  failure or default
continues for a period of thirty (30) days beyond any  applicable  grace or cure
period after  Borrower  receives  notice or  knowledge  thereof from any source,
including, without limitation, Bank.

     9.4 Default under Loan  Documents.  A default occurs under any of the other
Loan  Documents,  the  covenants,  conditions and agreements of which are hereby
incorporated herein by express reference.

     9.5 Default under Other Agreements. (i) Borrower defaults in the payment of
principal or interest for any other obligation,  including,  without limitation,
any obligations arising under the IRB Reimbursement Agreement, beyond any period
of grace  provided  with respect  thereto,  or in the  performance  of any term,
condition or covenant contained in any agreement (including,  but not limited to
an agreement in connection  with the deferred  purchase price of property) under
which any such obligation is created, the effect of which default is to cause or
permit the holder of such  obligation  to cause  such  obligation  to become due
prior to its stated maturity or (ii)  Borrower's  wholly owned  subsidiary,  CFC
Europe GmbH, defaults in the payment of any obligation to Bank arising under the
CFC Europe  Reimbursement  Agreement,  beyond any period of grace  provided with
respect  thereto,  or in the  performance  of any term,  condition  or  covenant
contained.

     9.6  Assignment  for  Creditors.  Borrower,  any  guarantor,  accommodation
endorser,  third party  pledgor.  or any other party  liable with respect to the
Obligations  (each,  an  "Obligor"),  makes an  assignment  for the  benefit  of
creditors.  fails to pay, or admits in writing its inability to pay its debts as
they mature,  or a trustee of any substantial  part of the assets of any Obligor
is applied for or appointed,  and in the case of such trustee being appointed in
a proceeding brought against such Obligor, the Obligor, by any action or failure
to  act  indicates  its  approval  of,  consent  to,  or  acquiescence  in  such
appointment and such  appointment is not vacated,  stayed on appeal or otherwise
shall not have  ceased to continue  in effect  within  sixty (60) days after the
date of such appointment.

     9.7  Bankruptcy.  Any  proceeding  involving any Obligor is commenced by or
against  such  Obligor  under  any  bankruptcy,   reorganization,   arrangement,
insolvency,  readjustment of debt,  dissolution or liquidation law or statute of
the  federal  government  or any state  government,  and in the case of any such
proceeding  being  instituted  against such Obligor,  (i) such  Obligor,  by any
action or failure to act indicates its approval of,  consent to or  acquiescence
therein,  or (ii) an order  shall be  entered  approving  the  petition  in such
proceedings  and such order is not vacated,  stayed on appeal or otherwise shall
not have  ceased to continue  in effect  within  sixty (60) days after the entry
thereof.

     9.8 Judgments. Any judgment, decree, levy, attachment, garnishment or other
process is  entered or any lien is filed  against  any  Obligor  which is (i) in
excess of $100,000,  and (ii) not fully covered by insurance,  and such judgment
or other  process  shall not have  been,  within  sixty (60) days from the entry
thereof, appealed, vacated, or discharged.

     9.9  Change in  Control.  Roger  Hruby  ceases  to own,  both  legally  and
beneficially,  at  least  51% of the  issued  and  outstanding  voting  stock of
Borrower.

     10. REMEDIES.

     10.1 Bank's Rights. Upon the occurrence of an Event of Default,  Bank shall
have all rights,  powers and  remedies set forth in the Loan  Documents,  in any
written  agreement  or  instrument  (other  than  this  Agreement  or  the  Loan
Documents)  relating to any of the Obligations or any security  therefor,  or as
otherwise  provided at law or in equity.  Without limiting the generality of the
foregoing,  Bank may, at its option upon the  occurrence of an Event of Default.
declare its  commitments to Borrower to be terminated and all  Obligations to be
immediately due and payable,  provided,  however, that upon the occurrence of an
Event of Default under Section 9.6, "Assignment for Creditors",  or Section 9.7,
"Bankruptcy",   all  commitments  of  Bank  to  Borrower  shall  be  immediately
terminated  and all  Obligations  shall be  automatically  due and payable,  all
without  demand,  notice or further  action of any kind  required on the part of
Bank.  Borrower  hereby  waives  any  and all  presentment,  demand.  notice  of
dishonor,  protest,  and all other  notices and demands in  connection  with the
enforcement of Bank's rights under the Loan Documents.

     10.2 UCC and Offset Rights.  Bank may exercise,  from time to time, any and
all  rights  and  remedies  available  to it under  the UCC or under  any  other
applicable  law in  addition  to, and not in lieu of,  any  rights and  remedies
expressly  granted in this  Agreement  or in any other  agreements  between  any
Obligor and Bank, and may, without demand or notice of any kind. appropriate and
apply  toward  the  payment  of  such of the  Obligations,  whether  matured  or
unmatured,  including costs of collection and attorneys' and  paralegals'  fees,
and in such order of  application  as Bank may,  from time to time,  elect.  any
indebtedness of Bank to any Obligor, however created or arising,  including, but
not limited to, balances,  credits, deposits, accounts or moneys of such Obligor
in the possession,  control or custody of, or in transit to Bank.  Borrower,  on
behalf of itself and each  Obligor,  hereby  waives the  benefit of any law that
would  otherwise  restrict or limit Bank in the exercise of its right,  which is
hereby acknowledged,  to appropriate at any time hereafter any such indebtedness
owing from Bank to any Obligor.

     10.3 No Waiver;  Election of Remedies.  No Event of Default shall be waived
by Bank except in writing. No failure or delay on the part of Bank in exercising
any right,  power or remedy  hereunder shall operate as a waiver of the exercise
of the same or any other  right at any  other  time;  nor  shall  any  single or
partial  exercise  of any such  right,  power or  remedy  preclude  any other or
further  exercise  thereof or the exercise of any other  right,  power or remedy
hereunder.  There shall be no  obligation  on the part of Bank to  exercise  any
remedy  available  to Bank in any order.  The  remedies  provided for herein are
cumulative  and not  exclusive  of any  remedies  provided  at law or in equity.
Borrower  agrees that in the event that  Borrower  fails to perform,  observe or
discharge any of its  Obligations  or  liabilities  under this  Agreement or any
other  agreements  with Bank, no remedy of law will provide  adequate  relief to
Bank,  and further agrees that Bank shall be entitled to temporary and permanent
injunctive  relief in any such case  without  the  necessity  of proving  actual
damages.

     10.4 Sale of Collateral.  Upon an Event of Default and the declaration that
the Second Term Note is due and payable,  Bank may  immediately,  with only such
demand or notice to  Borrower  as may be  required by the version of the Uniform
Commercial  Code  currently  enacted in  Illinois,  all of such other or further
demand or notice hereby  expressly waived by Borrower to the extent permitted by
law, and without  advertisement  except as may be required by the version of the
Uniform  Commercial  Code  currently  enacted in Illinois  (or other  applicable
jurisdiction), lease, sell or otherwise dispose of or realize upon, at public or
private  auction or sale in Chicago,  Illinois or elsewhere,  the whole or, from
time to time,  any part of the  Collateral  of  Borrower or any  interest  which
Borrower  may  have  therein.  Borrower  agrees  to  assemble,  or  cause  to be
assembled,  at its own expense,  the  Collateral at such place or places as Bank
shall  reasonably  designate and Bank may, in its sole and complete  discretion,
reasonably  exercised,  cause the Collateral of Borrower to remain on Borrower's
premises at Borrower's expense, pending sale, lease or other disposition of said
Collateral.  Bank  shall  have the right to  conduct  such  sales on  Borrower's
premises  at  Borrower's  expense  or  elsewhere.   Any  sale,  lease  or  other
disposition  of the  Collateral  of  Borrower  may be for  cash,  credit  or any
combination  thereof and Bank may purchase all or any part of the Collateral and
in lieu of actual payment of such purchase price, may set off the amount of such
purchase  price  against the  Obligations  of  Borrower,  free from any right of
redemption  on the part of Borrower,  which right is hereby waived and released.
After  deducting  from the proceeds of the sale,  lease or other  disposition of
said Collateral all expenses incurred by Bank in connection therewith (including
reasonable   attorneys  fees),  Bank  shall  apply  such  proceeds  towards  the
satisfaction of the  Obligations of Borrower,  and shall account to Borrower for
any surplus of such proceeds. Borrower shall remain jointly and severally liable
for any  deficiencies.  Any notice required to be given by Bank of a sale, lease
or other disposition or other intended action by Bank with respect to any of the
Collateral  of  Borrower  shall be mailed by Bank,  ten (10) days  prior to such
sale,  lease or other  disposition or other intended  action by depositing  such
notice in the United States mail, postage prepaid and duly addressed to Borrower
at the  addresses  specified  in  Section  11.8  hereof  and such  notice  shall
constitute,  and Borrower  agrees that such notice  constitutes  reasonable  and
seasonable  notice of such sale,  lease or other  disposition  or other intended
action.

     11. MISCELLANEOUS.

     11.1 Entire Agreement. This Agreement (i) is valid, binding and enforceable
against  Borrower and Bank in accordance  with its  provisions and no conditions
exist as to its legal  effectiveness;  (ii)  constitutes  the  entire  agreement
between the parties;  and (iii) is the final  expression  of the  intentions  of
Borrower and Bank.  No promises,  either  expressed  or implied,  exist  between
Borrower and Bank.  unless  contained  herein.  This  Agreement  supersedes  all
negotiations,  representations,  warranties,  commitments, offers, contracts (of
any kind or nature,  whether oral or written) prior to or  contemporaneous  with
the execution hereof.

     11.2  Amendments;   Waivers.  No  amendment,   modification,   termination,
discharge or waiver of any provision of this Agreement or of the Loan Documents,
or  consent  to any  departure  by  Borrower  therefrom,  shall in any  event be
effective  unless the same shall be in writing and signed by Bank, and then such
waiver or consent  shall be effective  only for the  specific  purpose for which
given.

     11.3 WAIVER OF DEFENSES.  BORROWER WAIVES EVERY PRESENT AND FUTURE DEFENSE,
CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH BORROWER MAY NOW HAVE OR HEREAFTER
MAY HAVE TO ANY ACTION BY BANK IN ENFORCING THIS AGREEMENT.  BORROWER WAIVES ANY
IMPLIED  COVENANT OF GOOD FAITH AND RATIFIES AND CONFIRMS  WHATEVER  BANK MAY DO
PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR BANK GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER.

     11.4 WAIVER OF JURY TRIAL.  BANK AND BORROWER.  AFTER  CONSULTING OR HAVING
HAD THE  OPPORTUNITY TO CONSULT WITH COUNSEL,  EACH  KNOWINGLY,  VOLUNTARILY AND
INTENTIONALLY WAIVE IRREVOCABLY.  THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
LEGAL  PROCEEDING  BASED HEREON,  OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER OBLIGATIONS, OR ANY OTHER AGREEMENT
EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION  WITH THIS AGREEMENT,  OR
ANY  COURSE OF CONDUCT  OR COURSE OF  DEALING  IN WHICH  BANK AND  BORROWER  ARE
ADVERSE PARTIES.  THIS PROVISION IS A MATERIAL  INDUCEMENT FOR BANK GRANTING ANY
FINANCIAL ACCOMMODATION TO BORROWER.

     11.5  LITIGATION.  TO INDUCE BANK TO MAKE THE LOANS,  BORROWER  IRREVOCABLY
AGREES  THAT ALL  ACTIONS  ARISING,  DIRECTLY  OR  INDIRECTLY,  AS A  RESULT  OR
CONSEQUENCE OF THIS AGREEMENT,  THE NOTE, ANY OTHER AGREEMENT WITH BANK SHALL BE
INSTITUTED  AND  LITIGATED  ONLY IN COURTS  HAVING SITUS IN THE CITY OF CHICAGO,
ILLINOIS.  BORROWER HEREBY CONSENTS TO THE EXCLUSIVE  JURISDICTION  AND VENUE OF
ANY STATE OR  FEDERAL  COURT  HAVING  ITS SITUS IN SAID  CITY,  AND  WAIVES  ANY
OBJECTION BASED ON FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY CERTIFIED MAIL, RETURN RECEIPT  REQUESTED,  DIRECTED TO BORROWER AS SET FORTH
HEREIN IN THE MANNER  PROVIDED  BY  APPLICABLE  STATUTE,  LAW,  RULE OF COURT OR
OTHERWISE.

     11.6  Assignability.  Bank may at any time  assign  Bank's  rights  in this
Agreement, the Note, the Obligations, or any part thereof. In addition, Bank may
at any time sell one or more participations in the Loans.  Borrower may not sell
or assign  this  Agreement,  or any  other  agreement  with Bank or any  portion
thereof,  either  voluntarily or by operation of law,  without the prior written
consent of Bank.  This  Agreement  shall be binding  upon Bank and  Borrower and
their respective legal representatives and successors.  A11 references herein to
Borrower shall be deemed to include any successors, whether immediate or remote.
In the case of a joint  venture or  partnership,  the term  "Borrower"  shall be
deemed to include all joint  venturers or partners  thereof who shall be jointly
and severally liable hereunder.

     11.7  Confidentiality.  Borrower and Bank hereby agree and acknowledge that
any and all information  relating to Borrower which is (i) furnished by Borrower
to Bank (or to any  affiliate  of Bank),  and (ii)  nonpublic,  confidential  or
proprietary in nature,  shall be kept  confidential by Bank or such affiliate in
accordance with applicable law,  provided,  however.  that such  information and
other credit information relating to Borrower may be distributed by Bank or such
affiliate  to  Bank's  or  such  affiliate's  directors,   officers.  employees,
attorneys, affiliates, auditors and regulators, and upon the order of a court or
other governmental  agency having  jurisdiction over Bank or such affiliate,  to
any other  party.  Borrower  and Bank further  agree that this  provision  shall
survive the termination of this Agreement.

     11.8 Notices.  Except as otherwise  provided  herein,  Borrower  waives all
notices  and  demands  in  connection  with the  enforcement  of  Bank's  rights
hereunder. All notices,  requests, demands and other communications provided for
hereunder  shall be in writing,  sent by certified or registered  mail,  postage
prepaid,  by  facsimile,  telegram or  delivered  in person,  and  addressed  as
follows:

         If to Borrower:   CFC International, Inc.
                           500 State Street
                           Chicago Heights, Illinois 60441
                           Attention: Dennis Lakomy

         If to Bank:       LaSalle Bank N.A.
                           4747 West Irving Park Road
                           Chicago, Illinois 60641
                           Attention: Deborah Grudzien

or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party complying as to delivery with the
terms of this Section. No notice to or demand on Borrower in any case shall
entitle Borrower to any other or further notice or demand in similar or other
circumstances.

     11.9  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed and  delivered  shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.

     11.10  Facsimile  Signatures.  Bank is hereby  authorized  to rely upon and
accept as an original any Loan Documents or other communication which is sent to
Bank by  facsimile,  telegraphic  or  other  electronic  transmission  (each,  a
"Communication")  which Bank in good faith  believes has been signed by Borrower
and has  been  delivered  to Bank by a  properly  authorized  representative  of
Borrower,  whether  or  not  that  is in  fact  the  case.  Notwithstanding  the
foregoing,  Bank shall not be obligated to accept any such  Communication  as an
original and may in any instance require that an original  document be submitted
to Bank in lieu of, or in addition to, any such Communication.

     11.11 Governing Law. This Agreement.  the Loan Documents and the Note shall
be delivered and accepted in and shall be deemed to be contracts  made under and
governed by the  internal  laws of the State of Illinois  (but giving  effect to
federal  laws  applicable  to national  banks),  and for all  purposes  shall be
construed in accordance  with the laws of such State.  without  giving effect to
the choice of law provisions of such State.

     11.12 Enforceability.  Wherever possible,  each provision of this Agreement
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law, but if any provision of this Agreement  shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction,  be severable and be ineffective to the extent of such prohibition
or invalidity,  without  invalidating the remaining provisions of this Agreement
or  affecting  the  validity or  enforceability  of such  provision in any other
jurisdiction.

     11.13  Survival of Borrower  Representations.  All  covenants,  agreements,
representations  and warranties made by Borrower  herein shall,  notwithstanding
any  investigation by Bank, be deemed material and relied upon by Bank and shall
survive the making and execution of this  Agreement  and the Loan  Documents and
the issuance of the Notes, and shall be deemed to be continuing  representations
and warranties  until such time as Borrower has fulfilled all of its Obligations
to  Bank,  and  Bank  has  been  paid in  full.  Bank,  in  extending  financial
accommodations  to Borrower,  is expressly  acting and relying on the  aforesaid
representations and warranties.

     11.14 Indemnification. Borrower agrees to defend (with counsel satisfactory
to Bank),  protect,  indemnify and hold harmless each Indemnified Party from and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions, judgments, suits, claims, costs, expenses and distributions of any kind
or nature (including,  without limitation,  the disbursements and the reasonable
fees of counsel for each  Indemnified  Party thereto,  which shall also include,
without  limitation,  attorneys'  fees and time charges of attorneys  who may be
employees of Bank, any parent  corporation  or affiliated  corporation of Bank),
which may be imposed on, incurred by, or asserted against, any Indemnified Party
(whether  direct,  indirect or  consequential  and whether based on any federal,
state or local laws or regulations,  including, without limitation,  securities,
Environmental  Laws and commercial laws and regulations,  under common law or in
equity,  or based on contract or otherwise) in any manner relating to or arising
out of this  Agreement  or any of the  Loan  Documents,  or any  act,  event  or
transaction  related  or  attendant  thereto,  the  preparation,  execution  and
delivery of this Agreement and the Loan  Documents,  including,  but not limited
to, the making or issuance and management of the Loans or any Letters of Credit,
the use or intended  use of the  proceeds of the Loans or any Letters of Credit,
the  enforcement  of Bank's rights and remedies under this  Agreement,  the Loan
Documents, the Note, any other instruments and documents delivered hereunder, or
under  any  other  agreement  between  Borrower  and  Bank  including,   without
limitation,  Bank's possession,  use, operation,  control, sale, disposition, or
collection of any of the Collateral;  provided, however, that Borrower shall not
have any obligations  hereunder to any Indemnified Party with respect to matters
caused by or resulting from the willful  misconduct or gross  negligence of such
Indemnified  Party. To the extent that the undertaking to indemnify set forth in
the preceding  sentence may be unenforceable  because it is violative of any law
or public policy,  Borrower shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability,  obligation,  loss, damage, penalty,
cost or expense  covered  by this  indemnity  shall be paid to each  Indemnified
Party on demand,  and,  failing  prompt  payment,  shall  together with interest
thereon at the Default  Rate from the date  incurred by each  Indemnified  Party
until paid by Borrower, be added to the Obligations of Borrower. Borrower hereby
releases  Bank from any and all claims or causes of action  which  Borrower  may
have,  now or hereafter,  relating to the  foregoing,  except those arising from
Bank's gross negligence or reckless or intentional misconduct. The provisions of
this Section shall survive the satisfaction and payment of the other Obligations
and the termination of this Agreement.

     11.15  Construction.  As used  herein,  all  provisions  shall  include the
masculine,  feminine,  neuter, singular and plural thereof, wherever the context
and facts require such  construction and in particular the word "Borrower" shall
be so construed.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


<PAGE>



     IN WITNESS  WHEREOF,  Borrower  and Bank have  executed  this  Amended  and
Restated Loan Agreement as of the date first above written.

CFC INTERNATIONAL, INC.             LASALLE BANK NATIONAL ASSOCIATION

By: ___________________________     By:___________________________
Its:____________________________    Its:___________________________





<PAGE>


                             SCHEDULES AND EXHIBITS

Schedules:
---------

Schedule 5.11              Patents and Trademarks
Schedule 5.19              Subsidiaries
Schedule 7.11              Locations of Collateral


Exhibits:
--------

Exhibit A                  Form of Revolving Note
Exhibit B                  Copy of Term Note
Exhibit C                  Form of Second Term Note
Exhibit D                  Form of Amendment to Mortgage
Exhibit E                  Form of Reaffirmation of Stock Pledge
Exhibit F                  Form of Borrowing Base Certificate
Exhibit G                  Form of Compliance Certificate
Exhibit H                  Form of Reaffirmation of Guaranty
Exhibit I                  Form of Security Agreement and Mortgage
                              - Patents and Trademarks
Exhibit J                  Form of Master Letter of Credit Agreement



<PAGE>


                                  SCHEDULE 5.11

                             Patents and Trademarks
                             ----------------------




<PAGE>


                                  SCHEDULE 5.19

                                  Subsidiaries
                                  ------------

Subsidiary                                                  % Owned
----------                                                  -------

CFC International, Ltd. (UK)                                  100%

CFC Management, Inc. *                                        100%

CFC Northern Bank Note Company, LLC*                          100%

CFC Europe GmbH                                               100%

CFC Oeserwerk GmbH                                            100%

CFC Oeser France SARL                                         100%


* Consolidated



<PAGE>


                                  SCHEDULE 7.11

                             Locations of Collateral
                             -----------------------

CFC Holographics
2001 Palma Drive
Ventura, CA 93003


CFC International
1030 Industrial Drive
Matthews, NC 28105


CFC International
1655 Union Street
Unit 109
Chicago Heights, IL 60411


<PAGE>



EXHIBIT A (FORM OF REVOLVING NOTE)

                                 REVOLVING NOTE

$5,500,000                                                         May __, 2001

     CFC International, Inc., a Delaware corporation (the "Borrower"), for value
received,  hereby  promises  to  pay to  the  order  of  LaSalle  Bank  National
Association,  a national banking association (the "Bank"), on April 1, 2003, the
principal sum of Five Million Five Hundred  Thousand  Dollars  ($5,500,000),  or
such lesser amount of all of the then  outstanding  advances made by the Bank to
the Borrower  pursuant to Section 2.1 of the "Loan  Agreement"  (as  hereinafter
defined),  together  with interest on any and all  principal  amounts  remaining
unpaid  hereunder from time to time from the date hereof until paid at the rates
and payable as provided in the Loan Agreement.

     Any amount of  interest  or  principal  hereof  which is not paid when due,
whether on a Monthly Payment Date (as defined in the Loan Agreement),  at stated
maturity, by acceleration or otherwise, shall bear interest payable on demand at
the "Default Rate" (as defined in the Loan Agreement).

     All  payments of  principal  and  interest on this Note shall be payable in
lawful  money of the United  States of America.  In no event shall the  interest
payable exceed the highest rate  permitted by law.  Principal and interest shall
be paid to the Bank at its office at 135 South LaSalle Street, Chicago, Illinois
60603 or at such other place as the holder of this Note may designate in writing
to the Borrower.  The Bank may charge any deposit or other account maintained by
the Borrower with the Bank or any of the Bank's affiliates  amounts equal to all
payments of principal,  accrued interest and fees from time to time as they come
due and payable hereunder or under any agreement pursuant to which this Note was
issued.  All  payments  hereunder  shall  be  applied  as  provided  in the Loan
Agreement.  In determining the Borrower's  liability to the Bank hereunder,  the
books and records of the Bank shall be controlling absent manifest error.

     This Note  evidences  certain  indebtedness  incurred under the Amended and
Restated Loan Agreement,  dated as of the date hereof,  between the Borrower and
the Bank  (the  "Loan  Agreement"),  to which  reference  is  hereby  made for a
statement of the terms and  conditions  under which the due date of this Note or
any payment thereon may be accelerated or is automatically accelerated, or under
which this Note may be prepaid or is  required to be  prepaid.  All  capitalized
terms used herein shall,  unless otherwise defined herein, have the meanings set
forth in the Loan  Agreement.  The holder of this Note is entitled to all of the
benefits  provided in said Loan  Agreement  and the Loan  Documents  referred to
therein.  The Borrower agrees to pay all reasonable  costs of collection and all
reasonable  attorneys'  fees paid or  incurred  in  enforcing  any of the Bank's
rights  hereunder  promptly on demand of the Bank and as more fully set forth in
the Loan Agreement.

     This Note is secured by,  among other  things,  a security  interest in the
Collateral granted to Bank pursuant to the Loan Agreement.

     Upon the  occurrence of an Event of Default under the Loan  Agreement,  the
outstanding  indebtedness  evidenced  by this Note,  together  with all  accrued
interest,  shall be due and  payable  in  accordance  with the terms of the Loan
Agreement,  without  notice to or  demand  upon the  Borrower,  and the Bank may
exercise all of its rights and remedies  reserved to it under the Loan Agreement
or applicable law.

     The  Borrower,   endorsers  and  all  other  parties  to  this  Note  waive
presentment,  demand,  notice,  protest  and all other  demands  and  notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note and the Loan  Agreement.  In any action on this Note,  the Bank or its
assignee need not file the original of this Note, but need only file a photocopy
of this Note  certified  by the Bank or such  assignee  to be a true and correct
copy of this Note.

     No delay on the part of the Bank in  exercising  any right under this Note,
any security agreement, guaranty or other undertaking affecting this Note, shall
operate as a waiver of such right or any other right under this Note,  nor shall
any  omission  in  exercising  any right on the part of the Bank under this Note
operate as a waiver of any other rights.

     If any  provision of this Note or the  application  thereof to any party or
circumstance  is held invalid or  unenforceable,  the remainder of this Note and
the application of such provision to other parties or circumstances  will not be
affected  thereby and the provisions of this Note shall be severable in any such
instance.  All references to the singular shall be deemed to include the plural,
and vice versa, where the context so requires.

     THE BORROWER HEREBY WAIVES ANY RIGHT THE BORROWER MAY NOW OR HEREAFTER HAVE
TO SUBMIT  ANY  CLAIM,  ISSUE OR DEFENSE  ARISING  HEREUNDER  OR UNDER THE OTHER
DOCUMENTS RELATING TO THIS NOTE TO A TRIAL BY JURY.

     This Note  constitutes a renewal and  restatement  of, and  replacement and
substitution  for, the  Revolving  Note dated  September 5, 2000 of the Borrower
made payable to the order of Bank in the  principal  amount of Four Million Five
Hundred Thousand Dollars ($4,500,000.00) (the "Original Note"). The indebtedness
evidenced by the Original Note is continuing  indebtedness,  and nothing  herein
shall be deemed to constitute a payment,  settlement or novation of the Original
Note, or to release or otherwise adversely affect any lien, mortgage or security
interest  securing  such  indebtedness  or any  rights of the Bank  against  any
guarantor,  surety or other  party  primarily  or  secondarily  liable  for such
indebtedness.

     This Note shall be deemed to have been made under and shall be  governed in
accordance with the internal laws and not the conflict of law rules of the State
of Illinois.


                                            CFC INTERNATIONAL, INC.



                                            By:
                                            Title:




<PAGE>


EXHIBIT B (TERM NOTE COPY)





<PAGE>


EXHIBIT C (FORM OF SECOND TERM NOTE)

                                SECOND TERM NOTE

$5,773,336.00                                                      May __, 2001

     CFC International, Inc., a Delaware corporation (the "Borrower"), for value
received,  hereby  promises  to  pay to  the  order  of  LaSalle  Bank  National
Association,  a national banking association (the "Bank"),  the principal sum of
Five Million  Seven  Hundred  Seventy Three  Thousand  Three Hundred  Thirty Six
Dollars   ($5,773,336),   in  fifty-nine  (59)  equal  monthly  installments  of
principal,  each in the amount of Sixty One Thousand Two Hundred  Fifty  Dollars
($60,138.92),  plus  interest  accrued  thereof,  commencing on June 1, 2001 and
continuing on the first day of each month  thereafter,  unless such day is not a
Business Day (as defined in the Loan Agreement (defined hereunder)), then on the
next succeeding  Business Day, with a final  installment of the then outstanding
principal balance together with all interest accrued thereon on May __, 2006.

     Any and all principal  amounts remaining unpaid hereunder from time to time
shall bear  interest  from the date hereof until paid,  computed on the basis of
actual number of days elapsed over a 360-day  year,  payable on the first day of
each month  commencing June 1, 2001, at a fixed rate per annum equal to the Swap
Rate (as defined in the Loan Agreement), plus two and one tenth percent (2.10%),
calculated on the basis of actual days elapsed over a 360-day year.

     This Note may be prepaid in whole or in part in  accordance  with the terms
of the Loan Agreement.

     Any amount of  interest  or  principal  hereof  which is not paid when due,
whether on the first day of the month,  at stated  maturity,  by acceleration or
otherwise,  shall bear interest payable on demand at the "Default Rate" (as such
term is defined in the Loan Agreement).

     All  payments of  principal  and  interest on this Note shall be payable in
lawful  money of the United  States of America.  In no event shall the  interest
payable exceed the highest rate  permitted by law.  Principal and interest shall
be paid to Bank at 135 South LaSalle Street, Chicago, Illinois 60603, or at such
other  place as the holder of this Note may  designate  in writing to  Borrower.
Borrower  authorizes Bank to charge its account  maintained with Bank in amounts
equal to all payments of principal, accrued interest, and fees from time to time
as they come due and payable hereunder or under any agreement  pursuant to which
this Note was issued. All payments hereunder shall be applied as provided in the
Loan Agreement.  In determining Borrower's liability to the Bank hereunder,  the
books and records of the Bank shall be controlling absent arithmetic or manifest
error.

     This Note  evidences  certain  indebtedness  incurred  under  that  certain
Amended  and  Restated  Loan  Agreement,  dated  as of the date  hereof  between
Borrower and Bank (as heretofore or hereafter amended, the "Loan Agreement),  to
which reference is hereby made for a statement of the terms and conditions under
which the due date of this Note or any payment  thereon may be accelerated or is
automatically  accelerated,  or  under  which  this  Note may be  prepaid  or is
required  to be  prepaid.  All  capitalized  terms  used  herein  shall,  unless
otherwise defined herein, have the meanings set forth in the Loan Agreement. The
holder of this Note is  entitled  to all of the  benefits  provided in said Loan
Agreement and the Loan Documents referred to herein.  Borrower agrees to pay all
costs of  collection  and all  reasonable  attorneys'  fees paid or  incurred in
enforcing any of the Bank's rights hereunder  promptly on demand of the Bank and
as more fully set forth in the Loan Agreement.

     Except  as set forth in the Loan  Agreement,  Borrower,  endorsers  and all
other parties to this Note waive presentment,  demand,  notice,  protest and all
other  demands  and  notices  in  connection  with  the  delivery,   acceptance,
performance,  default or enforcement of this Note and the Loan Agreement. In any
action on this Note, the Bank or its assignee need not file the original of this
Note,  but need only file a photocopy of this Note certified by the Bank or such
assignee to be a true and correct copy of this Note.

     This is the Second Term Note referred to in the Loan  Agreement.  This Note
is secured by, among other things a security interest in the Collateral  granted
to the Bank pursuant to the Loan Agreement and the other Loan Documents.

     No delay on the part of the Bank in  exercising  any right under this Note,
any security agreement, guaranty or other undertaking affecting this Note, shall
operate as a waiver of such right or any other right under this Note,  nor shall
any  omission  in  exercising  any right on the part of the Bank under this Note
operate as a waiver of any other rights.

     Upon the  occurrence  and  during the  continuation  of an Event of Default
under the Loan  Agreement  and the  expiration of any  applicable  grace or cure
periods under the Loan Agreement, the outstanding indebtedness evidenced by this
Note, together with all accrued interest, shall be due and payable in accordance
with the terms of the Loan  Agreement,  without  notice  to or  demand  upon any
Borrower except as otherwise set forth in the Loan  Agreement,  and the Bank may
exercise all of its rights and remedies  reserved to it under the Loan Agreement
or applicable law.

     If any  provision of this Note or the  application  thereof to any party of
circumstance  is held invalid or  unenforceable,  the remainder of this Note and
the application of such provision to other parties or circumstances  will not be
affected  thereby and the provisions of this Note shall be severable in any such
instance.

     This Note shall be in replacement of and in  substitution  for that certain
Second Term Note dated  September 5, 2000, in the original  principal  amount of
$3,200,000.00,  made by Borrower and payable to the order of Bank (the "Original
Note").   The  indebtedness   evidenced  by  the  Original  Note  is  continuing
indebtedness,  and  nothing  herein  shall be deemed to  constitute  a  payment,
settlement  or  novation  of the  Original  Note,  or to  release  or  otherwise
adversely  affect  any  lien,   mortgage  or  security  interest  securing  such
indebtedness  or any rights of the Bank against any  guarantor,  surety or other
party primarily or secondarily liable for such indebtedness.

     BORROWER HEREBY WAIVES ANY RIGHT SUCH BORROWER MAY NOW OR HEREAFTER HAVE TO
SUBMIT  ANY  CLAIM,  ISSUE OR  DEFENSE  ARISING  HEREUNDER  OR UNDER  THE  OTHER
DOCUMENTS RELATING TO THIS NOTE TO A TRIAL BY JURY.

     This Note shall be deemed to have been made under and shall be  governed in
accordance with the internal laws and not the conflict of law rules of the State
of Illinois.

                                           CFC INTERNATIONAL, INC.



                                           By:
                                           Title:




<PAGE>


EXHIBIT D (FORM OF SEVENTH AMENDMENT TO MORTGAGE)

AFTER RECORDING RETURN TO:

Donald A. Ensing, Esq.
Jenner & Block, LLC
One IBM Plaza
Chicago, Illinois 60611

PERMANENT INDEX NUMBER:

3216203013
3216203014

PROPERTY ADDRESS:

500 State Street
Chicago Heights, Illinois 60411

 -------------------------------------------------


                        SEVENTH AMENDMENT TO MORTGAGE AND
                         ASSIGNMENT OF RENTS AND LEASES

     THIS SEVENTH AMENDMENT TO MORTGAGE AND ASSIGNMENT OF RENTS AND LEASES dated
as of May __, 2001 is between CFC  INTERNATIONAL,  INC. (the  "Mortgagor"),  and
LASALLE BANK NATIONAL  ASSOCIATION  (f/k/a LaSalle  Northwest  National Bank), a
national banking association (the "Mortgagee").

                                R E C I T A L S:

     A. The Mortgagor  executed a Mortgage (the "Mortgage")  dated June 10, 1986
and  recorded  on June 11, 1986 as  Document  No.  86236291 in the Office of the
Recorder  of  Deeds  of  Cook  County,   Illinois  (the  "Recorder's   Office"),
encumbering  certain  property  commonly  known  as 500  State  Street,  Chicago
Heights,  Illinois  and as more  particularly  described  in  Exhibit A attached
hereto (the "Premises").

     B.  The  Mortgagor   executed  an  Assignment  of  Rents  and  Leases  (the
"Assignment" and, together with the Mortgage, the "Collateral  Documents") dated
as of June 10, 1986 and  recorded on June 11, 1986 as Document  No.  86236292 in
the Recorder's Office and relating to the Premises.

     C. The Collateral Documents were amended pursuant to:

          (i) First  Amendment  dated May 4, 1987 and recorded in the Recorder's
     Office on May 6, 1987 as Document No. 87244769;

          (ii) Second  Amendment  dated  December  16, 1988 and  recorded in the
     Recorder's Office on December 21, 1988 as Document No. 88587863;

          (iii)  Third  Amendment  dated  March  31,  1992 and  recorded  in the
     Recorder's Office on May 5, 1992 as Document No. 92305060;

          (iv)  Fourth  Amendment  dated  June  1,  1996  and  recorded  in  the
     Recorder's Office on June 21, 1996 as Document No. 96479606;

          (v) Fifth Amendment dated April 1, 1998 and recorded in the Recorder's
     Office on November 9, 1998 as Document No. 08010241; and

          (vi) Sixth  Amendment  dated  November  13,  1998 and  recorded in the
     Recorder's Office on July 20, 2000, 1998 as Document No. 00543598.

     D.  Mortgagee  has  previously  extended to the  Mortgagor a term loan (the
"Term  Loan"),  pursuant to that certain  Amended and Restated Loan and Security
Agreement  dated as of April 1, 1998,  as  amended,  the  outstanding  principal
amount  of which  was  $2,463,966.94  as of May 1,  2001.  The Term  Loan  bears
interest  at a fixed rate per annum  equal to seven and  5/100ths of one percent
(7.05%).  The Term Loan is evidenced by that certain Replacement Term Note dated
November 13, 1998 (the "Term Note").

     E. Contemporaneously herewith, the Mortgagor and the Mortgagee have entered
into that certain  Amended and Restated Loan Agreement  (the "Loan  Agreement"),
pursuant  to which the  Mortgagee  has  extended to the  Mortgagor,  among other
things, (i) a revolving loan (the "Revolving  Loan"), the outstanding  principal
amount of which is not to exceed $5,500,000, bearing interest as provided in the
Loan Agreement and evidenced by that certain Revolving Note dated as of the date
hereof (the  "Revolving  Note");  and (ii) a second term loan (the  "Second Term
Loan") in the original principal amount of $5,773,336 bearing interest at a rate
per annum equal to the Swap Rate (as defined in the Loan Agreement) plus two and
one tenth percent  (2.10%) and evidenced by that certain  Second Term Note dated
as of the date hereof (the "Second Term Note,"  together  with the Term Note and
the Revolving Note, the "Notes").

     F. The  Mortgagor  and the  Mortgagee  have agreed to amend the  Collateral
Documents as more particularly set forth herein.

     NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree
as follows:

     1. "Indebtedness Hereby Secured".  Whenever in the Collateral Documents the
term  "Indebtedness  Hereby  Secured"  is used,  it shall be  deemed to mean the
indebtedness  evidenced  by the Notes,  including  the  principal of each of the
foregoing and interest and premium,  if any,  thereon,  and any  extensions  and
renewals  thereof,  in whole or in part, and any and all other sums which may be
at any time due or owing or required to be paid as herein or in any of the Notes
provided.

     2. "Note".  All  references  in the  Collateral  Documents to the "Note" or
"Notes" shall be deemed to be a reference to the Term Note,  the Revolving  Note
and the Second  Term Note as  defined  herein and any  extensions  and  renewals
thereof in whole or in part.

     3.  "Agreement".   All  references  in  the  Collateral  Documents  to  the
"Agreement"  shall be deemed to be a reference to the Loan  Agreement as defined
herein.

     4. Continuing  Effect.  The Collateral  Documents are hereby amended in all
other respects to include and give effect to the foregoing  amendments.  All the
terms of the Collateral  Documents are hereby  incorporated by reference herein,
and the Collateral  Documents,  except as hereby modified,  shall remain in full
force and effect in all respects. The Mortgagor, by execution of this Amendment,
hereby  reaffirms,  assumes and binds itself to all of the obligations,  duties,
rights,  covenants,  terms and  conditions  that are contained in the Collateral
Documents.

     IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.

LASALLE BANK N.A.                           CFC INTERNATIONAL, INC.

By:___________________________              By:___________________________
Its:___________________________             Its:___________________________

This Document Prepared by:

Donald A. Ensing, Esq.
Jenner & Block, LLC
One IBM Plaza
Chicago, Illinois 60611


<PAGE>


STATE OF ILLINOIS    )
                     )       SS
COUNTY OF COOK       )

     I, the  undersigned,  a Notary Public in and for said County,  in the State
aforesaid do hereby certify that ______________ of CFC INTERNATIONAL,  INC., who
is personally  known to me to be the same person whose name is subscribed to the
foregoing  instrument  as such ,  appeared  before  me this  day in  person  and
acknowledged that he/she signed and delivered the said instrument as his/her own
free and voluntary  act and as the free and  voluntary act of said  corporation,
for the uses and purposes therein set forth.

     GIVEN under my hand and notarial seal this  ___________day of ____________,
2001.

                                                --------------------
                                                     Notary Public

SEAL:



<PAGE>


STATE OF ILLINOIS    )
                     )       SS
COUNTY OF COOK       )

     I, the  undersigned,  a Notary Public in and for said County,  in the State
aforesaid,  do hereby certify that  ___________________ of LASALLE BANK NATIONAL
ASSOCIATION,  who is personally  known to me to be the same person whose name is
subscribed to the foregoing instrument as such  _____________________,  appeared
before me this day in person and  acknowledged  that he/she signed and delivered
the said  instrument  as his/her own free and  voluntary act and as the free and
voluntary act of said Bank, for the uses and purposes therein set forth.

     GIVEN  under  my hand  and  notarial  seal  this  _________________  day of
_____________, 2001.

                                                  ------------------------
                                                        Notary Public

SEAL:



<PAGE>


                   EXHIBIT A TO SEVENTH AMENDMENT TO MORTGAGE
                               (Legal Description)

THOSE PARTS OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 35
NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE EAST AND WEST CENTER LINE OF SECTION 16, TOWNSHIP 35
NORTH,  RANGE  14,  EST OF THE  THIRD  PRINCIPAL  MERIDIAN,  50 FEET  WESTWARDLY
MEASURED  ALONG SAID CENTER LINE FROM THE SOUTHEAST  CORNER OF THE NORTHEAST 1/4
OF SECTION  16;  THENCE  CONTINUING  WESTWARDLY  ALONG SAID EAST AND WEST CENTER
LINE,  557.73  FEET;  THENCE  NORTHWARDLY  PARALLEL  WITH THE EAST  LINE OF SAID
SECTION 16, A DISTANCE OF 162.00 FEET; THENCE EASTWARDLY PARALLEL WITH SAID EAST
AND WEST CENTER LINE, 92.00 FEET; THENCE NORTHWARDLY PARALLEL WITH THE EAST LINE
OF SAID SECTION 16, A DISTANCE OF 161.00 FEET; THENCE  EASTWARDLY  PARALLEL WITH
SAID EAST AND WEST CENTER LINE, 48.50 FEET; THENCE NORTHWARDLY PARALLEL WITH THE
EAST LINE OF SAID  SECTION 16, A DISTANCE  OF 230.30  FEET;  THENCE  EASTWARDLY,
PARALLEL WITH SAID EAST AND WEST CENTER LINE,  417.23 FEET;  THENCE  SOUTHWARDLY
PARALLEL WITH THE EAST LINE OF SAID SECTION 16, A DISTANCE OF 553.30 FEET TO THE
POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.

         P.I.N. #: 3216-203013

COMMENCING  AT A POINT 1N THE EAST AND WEST CENTER LINE OF SECTION 16,  TOWNSHIP
35 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL MERIDIAN, 607.73 FEET WESTWARDLY
MEASURED  ALONG SAID EAST AND WEST CENTER LINE FROM THE SOUTHEAST  CORNER OF THE
NORTHEAST 1/4 OF SAID SECTION 16; THENCE NORTHWARDLY PARALLEL WITH THE EAST LINE
OF SAID SECTION 16, A DISTANCE OF 162.00 FEET; THENCE  EASTWARDLY  PARALLEL WITH
SAID EAST AND WEST CENTER LINE, 92.00 FEET;  THENCE  NORTHWARDLY,  PARALLEL WITH
THE EAST LINE OF SAID  SECTION  16, A  DISTANCE  OF 161.00  FEET TO THE POINT OF
BEGINNING  OF THE  HEREINAFTER  DESCRIBED  PARCEL  OF  LAND;  THENCE  EASTWARDLY
PARALLEL  WITH SAID EAST AND WEST CENTER LINE, A DISTANCE OF 48.50 FEET;  THENCE
NORTHWARDLY PARALLEL WITH THE EAST LINE OF SAID SECTION 16, A DISTANCE OF 230.30
FEET; THENCE WESTWARDLY  PARALLEL WITH THE EAST AND WEST CENTER LINE, A DISTANCE
OF 48.50 FEET;  THENCE  SOUTHWARDLY  PARALLEL WITH THE EAST LINE OF SAID SECTION
16, A  DISTANCE  OF  230.30  FEET TO THE  POINT OF  BEGINNING,  IN COOK  COUNTY,
ILLINOIS.

         P.I.N. #:3216203-014


<PAGE>



EXHIBIT E (FORM OF REAFFIRMATION OF STOCK PLEDGE AGREEMENT)

                     REAFFIRMATION OF STOCK PLEDGE AGREEMENT

     This Reaffirmation of Stock Pledge Agreement (this "Reaffirmation"),  dated
as of May ___,  2001,  is  executed  by CFC Europe  GmbH,  a German  corporation
("Pledgor"),  in favor of LaSalle Bank National  Association  ("Bank"),  and has
reference to the following facts and circumstances:

     A.  Pledgor and ABN AMRO Bank  (Deutschland)  AG ("ABN  AMRO") are party to
that certain Letter Agreement dated as of March 15, 1999, as amended,  (the "ABN
Loan  Agreement")  pursuant to which ABN AMRO made  available  to Pledgor  among
other  loans,  a DM  7,500,000  line of credit (the "Line of  Credit")  and a DM
11,000,000  term loan (the "Term Loan",  together  with the Line of Credit,  the
"Loans").

     B. In order to secure the  obligations of Pledgor to ABN AMRO under the ABN
Loan  Agreement,  Pledgor  and Bank  entered  into  that  certain  Reimbursement
Agreement  dated as of March 19,  2001 by and  between  Bank and  Pledgor  f/k/a
Sesvenna  20.  Vermogensverwaltungs  GmbH,  as  amended  from  time to time (the
"Reimbursement  Agreement"),  pursuant to which Bank agreed to issue in favor of
ABN AMRO on the terms and conditions  provided  therein an  irrevocable  standby
letter of credit  (such  letter of credit,  as amended,  modified  or  otherwise
supplemented from time to time, is referred to herein as the "Letter of Credit")
in an amount not exceeding DM 19,425,000 (the "Stated Amount").

     C. As a  condition  to  Bank's  agreement  to issue the  Letter of  Credit,
Pledgor  granted Bank a security  interest in its shares of CFC  Oeserwerk  GmbH
pursuant to that certain Share Pledge  Agreement  dated as of March 26, 1999, as
amended or reaffirmed from time to time (the "Pledge Assignment").

     D. Pledgor  intends to enter into an  amendment  to the ABN Loan  Agreement
with ABN AMRO to  increase  the  amount  available  under the Line of Credit and
increase the outstanding  principal balance of the Term Loan, and as a condition
of such amendment,  ABN AMRO has required Pledgor to enter into amendment to the
Reimbursement Agreement to increase the Stated Amount of the Letter of Credit to
EUR 14,230,000 (the "Amendment").

     E. Bank is willing to enter into the Amendment only upon the condition that
Pledgor execute and deliver this Reaffirmation in favor of Bank.

     NOW, THEREFORE, in consideration of the foregoing, Pledgor hereby agrees as
follows:

     1. The preambles to this  Reaffirmation are hereby  incorporated  herein by
this reference thereto.

     2.  Pledgor  does  hereby  expressly  ratify,  confirm  and affirm  without
condition,  all liens and security interests granted to the Bank pursuant to the
Pledge  Assignment,  and such liens and  security  interests  shall  continue to
secure the  obligations  and  liabilities of Pledgor to Bank,  including but not
limited to, all advances made on behalf of Pledgor by Bank to ABN AMRO under the
Letter of Credit.

     3. This Reaffirmation  constitutes the valid and legally binding obligation
of Pledgor, fully enforceable against Pledgor, in accordance with its terms.

     4. This  Reaffirmation  shall inure to the benefit of Bank,  its successors
and assigns and be binding upon Pledgor, his representatives and heirs.

     IN WITNESS WHEREOF, the Pledgor has executed this Reaffirmation on the date
above set forth.

                                    CFC International, Inc.


                                    By: _______________________________
                                    Print Name:
                                    Its:



<PAGE>


EXHIBIT F (FORM OF BORROWING BASE CERTIFICATE)






<PAGE>


EXHIBIT G (FORM OF COMPLIANCE CERTIFICATE)






<PAGE>


EXHIBIT H (FORM OF REAFFIRMATION OF GUARANTY)

                            REAFFIRMATION OF GUARANTY

     This Reaffirmation of Guaranty (this "Reaffirmation"),  dated as of the ___
day of May, 2001, is executed by CFC International, Inc. ("Guarantor"), in favor
of  LaSalle  Bank  National  Association  ("Bank"),  and  has  reference  to the
following facts and circumstances:


     A. CFC Europe GmbH f/k/a Sesvenna 20.  Vermogensverwaltungs  GmbH, a German
corporation and wholly owned  subsidiary of Guarantor  ("Borrower") and ABN AMRO
Bank  (Deutschland) AG ("ABN AMRO") are party to that certain Agreement dated as
of March 15, 1999, as amended,  (the "ABN Loan Agreement") pursuant to which ABN
AMRO made  available to  Borrower,  among other  loans,  a DM 7,500,000  line of
credit (the "Line of Credit")  and a DM  11,000,000  term loan (the "Term Loan",
together with the Line of Credit, the "Loans").

     B. In order to secure the obligations of Borrower to ABN AMRO under the ABN
Loan  Agreement,  Borrower  and Bank  entered  into that  certain  Reimbursement
Agreement  dated as of March  19,  2001 by and  between  Bank and  Borrower  (as
amended from time to time,  the  "Reimbursement  Agreement"),  pursuant to which
Bank agreed to issue in favor of ABN AMRO on the terms and  conditions  provided
therein an  irrevocable  standby  letter of credit  (such  letter of credit,  as
amended,  modified or otherwise  supplemented  from time to time, is referred to
herein as the "Letter of Credit") in an amount not exceeding DM 19,425,000  (the
"Stated Amount").

     C. As a  condition  to  Bank's  agreement  to issue the  Letter of  Credit,
Guarantor  executed that certain Guaranty in favor of Bank dated as of March ___
1999 (the "Guaranty")  pursuant to which Guarantor guaranteed the obligations of
Borrower to Bank under the Reimbursement Agreement.

     D.  Borrower  intends to enter into an amendment to the ABN Loan  Agreement
with ABN AMRO to  increase  the  amount  available  under the Line of Credit and
increase the outstanding  principal balance of the Term Loan, and as a condition
of such amendment, ABN AMRO has required Borrower to enter into amendment to the
Reimbursement  Agreement to increase  the Stated  Amount of the Letter of Credit
(the "Amendment").

     E. Guarantor is a subsidiary of and is financially interested in Borrower.

     F. Guarantor desires that Bank enter into the Amendment.

     G. Bank is willing to enter into the Amendment only upon the condition that
Guarantor execute and deliver this Reaffirmation in favor of Bank.

     NOW, THEREFORE, in consideration of the foregoing,  Guarantor hereby agrees
as follows:

     1. The preambles to this  Reaffirmation are hereby  incorporated  herein by
this reference thereto.

     2. Guarantor hereby  expressly  reaffirms and assumes (on the same basis as
set forth in the Guaranty as amended hereby) all of Guarantor's  obligations and
liabilities  to Bank  as set  forth  in the  Guaranty,  and  all  reaffirmations
thereof,  and agrees to be bound by and abide by and operate  and perform  under
and pursuant to and comply fully with all of the terms, conditions,  provisions,
agreements,  representations,  undertakings, warranties, guarantees, indemnities
and  covenants  contained in the  Guaranty,  in so far as such  obligations  and
liabilities may be increased or amended by the Amendment.

     3. This  Reaffirmation  shall inure to the benefit of Bank,  its successors
and assigns and be binding upon Guarantor, its successors and assigns.

                                      CFC INTERNATIONAL, INC.


                                      By:      _____________________________
                                      Title:   ____________________________



<PAGE>


EXHIBIT I (FORM OF SECURITY AGREEMENT AND MORTGAGE - PATENTS AND TRADEMARKS)

                        SECURITY AGREEMENT AND MORTGAGE -
                             TRADEMARKS AND PATENTS


     THIS  AGREEMENT  is  made  this  ____  day  of  May,   2001,   between  CFC
INTERNATIONAL,  INC., a Delaware corporation  ("Debtor") having an office at 500
State Street, Chicago Heights,  Illinois, and LASALLE BANK NATIONAL ASSOCIATION,
a national banking  association (the "Secured  Party"),  having an office at 135
South LaSalle Street, Chicago, Illinois 60603.

     WHEREAS,  Debtor has adopted the terms and designs  described in Schedule A
annexed hereto and made a part hereof;

     WHEREAS, Debtor is the owner and holder of the patents listed on Schedule B
hereto and made a part hereof;

     WHEREAS,  Debtor and Secured  Party are parties to an Amended and  Restated
Loan and Security  Agreement dated as of May ___, 2001, as such may be hereafter
amended (the  "Amended and Restated  Loan and Security  Agreement")  pursuant to
which Secured Party intends to make loans and advances to Debtor;

     WHEREAS,  as a condition to the Secured  Party making any loans or advances
to Debtor pursuant to the Amended and Restated Loan and Security Agreement,  the
Secured  Party has  required  that  Debtor  execute and  deliver  this  Security
Agreement and Mortgage (this "Agreement");

     NOW,  THEREFORE,  IT IS AGREED that, for and in  consideration of the loans
and advances to be made in the discretion of Secured Party under the Amended and
Restated Loan and Security Agreement, and other good and valuable consideration,
the receipt of which is hereby acknowledged,  and as collateral security for the
full and prompt  payment and  performance  of all  Obligations,  as  hereinafter
defined,  Debtor does hereby mortgage to and pledge with the Secured Party,  and
grant to the Secured Party a security  interest in, and all of its right,  title
and interest in and to (i) each of the Trademarks (as hereinafter defined),  the
goodwill of the business symbolized by each of the Trademarks,  and all customer
lists and other  records of Debtor  relating  to the  distribution  of  products
bearing the  Trademarks and each of the  registrations  described in Schedule A;
(ii) each of the Patents,  as  hereinafter  defined,  on Schedule B hereto;  and
(iii) any and all proceeds of the foregoing,  including, without limitation, any
claims by Debtor against third parties for past, present and future infringement
of the Trademarks or the Patents (collectively, the "Collateral").


<PAGE>


     1. Terms used in this Agreement and not otherwise defined herein shall have
the meaning set forth in the Amended and Restated  Loan and Security  Agreement.
As used in this Agreement, unless the context otherwise requires:

     "Trademarks"  shall mean (i) all  trademarks,  trade names,  trade  styles,
service marks,  prints and labels on which said trademarks,  trade names,  trade
styles  and  service  marks  have  appeared  or  appear,   designs  and  general
intangibles of like nature,  now existing or hereafter adopted or acquired,  all
right,  title and  interest  therein and thereto  acquired  under  common law or
statute,  and  whether  by  use  or  registration,  and  all  registrations  and
recordings thereof, and applications  therefor,  including,  without limitation,
applications,  registrations  and  recordings  in the United  States  Patent and
Trademark  Office or in any similar office or agency of the United  States,  any
State thereof, or any other country or any political  subdivision  thereof,  all
whether now owned or hereafter  acquired by Debtor,  including,  but not limited
to,  those  described in Schedule A annexed  hereto and made a part hereof,  but
expressly excluding any Intent-to-Use applications and (ii) all renewals thereof
and all licenses thereof.

     "Patents"  shall mean (i) all  letters  patent of the United  States or any
other  country,  all right,  title and  interest  therein and  thereto,  and all
registrations  and recordings  thereof,  and applications  therefor,  including,
without  limitation,  applications,  registrations  and recordings in the United
States  Patent and  Trademark  Office or in any similar  office or agency of the
United  States,  any  State  thereof  or any  other  country  or  any  political
subdivision  thereof,  all  whether now owned or  hereafter  acquired by Debtor,
including,  but not limited to, those described in Schedule B annexed hereto and
made  a  part  hereof,   and  (ii)  all  reissues,   divisions,   continuations,
continuations-in-part or extensions thereof and all licenses thereof.

     "Obligations"  shall mean all  indebtedness,  obligations,  liabilities and
agreements of any kind of Debtor to Secured Party,  including without limitation
the Amended and Restated Loan and Security Agreement,  now existing or hereafter
arising, direct or indirect (including participations or any interest of Secured
Party in obligations of Debtor to others), acquired outright,  conditionally, or
as collateral security from another,  absolute or contingent,  joint or several,
secured  or  unsecured,  due or not,  contractual  or  tortious,  liquidated  or
unliquidated, arising by operation of law or otherwise, and all loan agreements,
documents and instruments  evidencing any of the foregoing  obligations or under
which any of the foregoing obligations may have been issued, created, assumed or
guaranteed,  and  all  extensions,   renewals,   refundings,   replacements  and
modifications of the foregoing.

     2. Debtor hereby represents, warrants, covenants and agrees as follows:

          (a)  Debtor  has the  sole,  full and  clear  title  to the  Trademark
     registrations in the United States, and to the best of Debtor's  knowledge,
     Debtor  has sole,  full and clear  title to the  Trademarks  in the  United
     States for the goods and services on which they are used by Debtor, and the
     registrations  thereof  are  valid  and  subsisting  and in full  force and
     effect.

          (b) Debtor will perform all acts and execute all documents, including,
     without  limitation,  assignments  for security in form suitable for filing
     with the  United  States  Patent and  Trademark  Office and state and local
     governments in the United States and in other  countries,  substantially in
     the  forms of  Exhibits  1 and 2  hereof,  respectively,  requested  by the
     Secured  Party at any  time to  evidence,  perfect,  maintain,  record  and
     enforce the Secured  Party's  interest in the  Collateral  or  otherwise in
     furtherance  of  the  provisions  of  this  Agreement,  and  Debtor  hereby
     authorizes  the  Secured  Party to execute  and file one or more  financing
     statements  (and similar  documents) or copies thereof or of this Agreement
     with respect to the Collateral signed only by the Secured Party.

          (c) Nothing  contained  herein shall  prohibit  Debtor from failing to
     renew or otherwise  abandoning any Trademark or Patent if, in Debtor's good
     faith  judgment,  the retention of such Trademark or Patent is not material
     to the proper  conduct of Debtor's  business,  except that Debtor shall not
     permit the expiration of registrations of Trademarks or Patents in the U.S.
     Patent and  Trademark  Office,  listed in  Schedule A or Schedule B hereto,
     without the prior written consent of Secured Party, which consent shall not
     be unreasonably withheld.

          (d)  Debtor  has  the  sole,  full  and  clear  title  to  each of the
     registered  Patents  shown on  Schedule B hereto,  subject to the  security
     interest granted  hereunder,  and the same are subsisting and in full force
     and effect, and, to the best of Debtor's knowledge,  are valid. None of the
     Patents has been  abandoned,  disclaimed  or dedicated in whole or in part,
     and,  except (i) as set forth in paragraph 2(c) and (ii) to the extent that
     the Secured  Party,  upon prior  written  notice by Debtor,  shall  consent
     (which consent shall not be unreasonably withheld),  Debtor will not do any
     act, or omit to do any act,  whereby  the Patents may become so  abandoned,
     disclaimed or dedicated and shall notify the Secured Party  immediately  if
     it knows of any  reason  or has  reason  to know  that any such  Patent  or
     application may become so abandoned, disclaimed or dedicated.

          (e) Debtor will  promptly pay the Secured  Party for any and all sums,
     costs,  and expenses  which the Secured Party may pay or incur  pursuant to
     the  provisions  of this  Agreement or in enforcing  the  Obligations,  the
     Collateral or the security interest granted hereunder,  including,  but not
     limited to, all filing or recording fees, court costs,  collection charges,
     travel, and reasonable attorneys' fees, all of which together with interest
     at the highest  rate then payable on the  Obligations  shall be part of the
     Obligations and be payable on demand.

          (f) Debtor shall provide Secured Party quarterly with a listing of all
     new  Patents  and  Trademarks  together  with a listing of the  issuance of
     registrations  on any  previous  application.  Upon  request of the Secured
     Party,   Debtor  shall  execute  and  deliver  any  and  all   assignments,
     agreements,  instruments,  documents  and papers as the  Secured  Party may
     request  to  evidence  the  Secured  Party's  interest  in such  Patent  or
     Trademark  and the  goodwill  and general  intangibles  of Debtor  relating
     thereto or represented  thereby and Debtor hereby  constitutes  the Secured
     Party its  attorney-in-fact  to execute and file all such  writings for the
     such  purposes,  all  acts of  such  attorney  being  hereby  ratified  and
     confirmed;  such power being coupled with an interest is irrevocable  until
     the Obligations are paid in full.

          (g)  Debtor  has the right and  power to grant the  security  interest
     herein  granted;  and the  Collateral is not now, and at all times will not
     be, subject to any liens,  mortgages,  assignments,  security  interests or
     encumbrances of any nature whatsoever,  except for those granted under this
     Agreement,  and  except  in  favor  of the  Secured  Party  and to the best
     knowledge of Debtor none of the Collateral is subject to any claim.

          (h) Except to the extent that the Secured  Party,  upon prior  written
     notice of Debtor,  shall consent,  Debtor will not assign,  sell, mortgage,
     lease, transfer, pledge, hypothecate,  grant a security interest in or lien
     upon, encumber,  grant an exclusive or non-exclusive  license, or otherwise
     dispose of any of the  Collateral,  and nothing in this Agreement  shall be
     deemed  a  consent  by the  Secured  Party  to any such  action  except  as
     expressly permitted herein.

          (i)  As  of  the  date  hereof  Debtor  has  no  Patent  or  Trademark
     registrations  in, or the  subject of pending  applications  in, the United
     States Patent and Trademark  Office or any similar  office or agency in any
     state of the  United  States,  or in any  other  country  or any  political
     subdivision thereof other than those described in Schedules A and B hereto.
     It is expressly understood that applications based on Intent to Use are not
     listed on Schedule A and Secured  Party takes no security  interest in such
     applications until they are registered.

          (j) Debtor will take all necessary steps in any proceeding  before the
     United States Patent and Trademark  Office or any similar  office or agency
     in any other country or any political subdivision thereof, to maintain each
     Patent and each application and registration of the Trademarks and Patents,
     including,  without limitation, if applicable,  paying of maintenance fees,
     applications for reissues or extensions,  filing of renewals, affidavits of
     use, and  affidavits of  incontestability,  interference  and  cancellation
     proceedings  (except as otherwise  permitted under paragraphs 2(c) and 2(d)
     hereof).

     3. Upon the  occurrence  of an Event of Default  (as defined in the Amended
and Restated Loan and Security Agreement) (whenever used herein, the term "Event
of Default"  having such meaning),  in addition to all other rights and remedies
of the Secured  Party,  whether  under law,  the Amended and  Restated  Loan and
Security Agreement or otherwise,  all such rights and remedies being cumulative,
not exclusive  and  enforceable  alternatively,  successively  or  concurrently,
without  (except as  provided  herein)  notice to, or consent  by,  Debtor,  the
Secured Party shall have the following rights and remedies: (a) Debtor shall not
make any use of the  Patents  or the  inventions  to which  they  pertain or the
Trademarks  or any mark  similar  thereto  for any  purpose;  (b) to the  extent
permitted by law, the Secured Party may, at any time and from time to time, upon
ten (10) days'  prior  notice to Debtor,  license,  whether on an  exclusive  or
nonexclusive basis, any of the Patents or Trademarks,  anywhere in the world for
such term or terms, on such conditions, and in such manner, as the Secured Party
shall in its sole discretion determine;  (c) to the extent permitted by law, the
Secured Party may (without assuming any obligations or liability thereunder), at
any time,  enforce (and shall have the exclusive  right to enforce)  against any
licensee or  sublicensee  all rights and remedies of Debtor in, to and under any
one or more  license  agreements  with  respect to the  Collateral,  and take or
refrain from taking any action under any thereof, and Debtor hereby releases the
Secured Party from,  and agrees to hold the Secured Party free and harmless from
and against any claims  arising out of, any action  taken or omitted to be taken
with respect to any such license  agreement;  (d) the Secured  Party may, at any
time and from time to time, upon ten (10) days' prior notice to Debtor,  assign,
sell, buy, or otherwise  dispose of, the Collateral or any of it, either with or
without  special or other  conditions  or  stipulations,  and with power also to
execute  assurances,  and do all  other  acts  and  things  for  completing  the
assignment,  sale or  disposition  which the Secured  Party  shall,  in its sole
discretion, deem appropriate or proper; and (e) in addition to the foregoing, in
order  to  implement  the  assignment,  sale  or  other  disposal  of any of the
Collateral  pursuant to subparagraph 3(d) hereof,  the Secured Party may, at any
time, pursuant to the authority granted in the Power(s) of Attorney described in
paragraph 4 hereof  (such  authority  becoming  effective on the  occurrence  or
continuation  as  hereinabove  provided  of an Event of  Default),  execute  and
deliver  on behalf of  Debtor,  one or more  instruments  of  assignment  of the
Patents or Trademarks, in form suitable for filing, recording or registration in
any country.  Debtor agrees to pay when due all reasonable costs incurred in any
such  transfer  of the  Patents or  Trademarks,  including  any taxes,  fees and
reasonable   attorneys'  fees,  and  all  such  costs  shall  be  added  to  the
Obligations. The Secured Party may apply the proceeds actually received from any
such license,  assignment, sale or other disposition to the reasonable costs and
expenses thereof, including, without limitation,  reasonable attorneys' fees and
all legal, travel and other expenses which may be incurred by the Secured Party,
and then to the  Obligations,  in such order as to  principal or interest as the
Secured  Party may  desire;  and  Debtor  shall  remain  liable and will pay the
Secured Party on demand any deficiency remaining, together with interest thereon
at a rate equal to the  highest  rate then  payable on the  Obligations  and the
balance of any expenses  unpaid.  Nothing herein contained shall be construed as
requiring the Secured Party to take any such action at any time. In the event of
any such license,  assignment,  sale or other disposition of the Collateral,  or
any of it, after the occurrence or  continuation  as hereinabove  provided of an
Event of Default,  Debtor shall supply its tooling and know-how  relating to the
manufacture and sale of the products  covered by the Trademarks or Patents,  and
its customer  lists and other records  relating to the Trademarks or Patents and
to the distribution of said products, to the Secured Party or its designee.

     4. Concurrently with the execution and delivery hereof, Debtor is executing
and delivering to the Secured Party, in the form of Exhibit 3 hereto,  three (3)
originals  of  a  Power  of  Attorney,   coupled  with  an  interest,   for  the
implementation  of the assignment,  sale or other disposal of the Trademarks and
Patents  pursuant to paragraphs  3(d) and (e) hereof and Debtor hereby  releases
the  Secured  Party from any  claims,  causes of action and  demands at any time
arising out of or with  respect to any  actions  taken or omitted to be taken by
the  Secured  Party,  under the powers of  attorney  granted  herein  other than
actions  taken or omitted to be taken  through the gross  negligence  or willful
misconduct of the Secured Party.

     5. No provision  hereof shall be modified,  altered or limited  except by a
written  instrument  expressly  referring to this  Agreement and executed by the
party to be charged.  The  execution  and  delivery of this  Agreement  has been
authorized  by the Board of  Directors  of Debtor and by any  necessary  vote or
consent of  stockholders  thereof.  This  Agreement  shall be  binding  upon the
successors,  assigns  or other  legal  representatives  of  Debtor,  and  shall,
together with the rights and remedies of the Secured Party  hereunder,  inure to
the  benefit of the  Secured  Party,  its  successors,  assigns  or other  legal
representatives.  This Agreement,  the  Obligations and the Collateral  shall be
governed in all  respects  by the laws of the United  States and the laws of the
State of Illinois. Debtor hereby submits to the nonexclusive jurisdiction of the
state  courts of the State of  Illinois  and the  federal  courts of the  United
States of America  located in such  State in any  action or  proceeding  arising
under this Agreement. If any term of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall in no way
be affected thereby.

     6.  Secured  Party  shall  release  its  security  interest  in  all of the
Collateral  upon the repayment of the  Obligations  and the  termination  of the
Amended and Restated Loan and Security Agreement.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>


     IN WITNESS WHEREOF, Debtor and the Secured Party have caused this Agreement
to be executed by their respective  officers thereunto duly authorized as of the
day and year first above written.

                                            CFC INTERNATIONAL, INC.

                                            By:_______________________

                                            Name:

                                            Title:______________________


                                            LASALLE BANK NATIONAL ASSOCIATION

                                            By:_______________________

                                            Name:_____________________

                                            Title:______________________

<PAGE>


                                  SCHEDULE A TO
                               SECURITY AGREEMENT

                                   TRADEMARKS

                             CFC INTERNATIONAL, INC.
                              Registered Trademarks

------------------ --------------------- ---------------------- ----------------
 Registration No.   Description of Mark   Date of Registration  State or Country
------------------ --------------------- ---------------------- ----------------




                             TRADEMARK APPLICATIONS

----------------- ----------------------- ---------------------- ---------------
 Application No.   Description of Mark     Date of Application  State or Country
----------------- ----------------------- ---------------------- ---------------





<PAGE>


                                  SCHEDULE B TO
                               SECURITY AGREEMENT

                                     PATENTS

--------------- ----------------- ---------------------- ---------------
 Patent Number   Title of Patent    Date Patent Issued     Country
--------------- ----------------- ---------------------- ---------------




                               PATENT APPLICATIONS

----------------- --------------------- --------------- ----------- -----------
  Serial Number      Title of Patent      Filing Date     Country     Inventor
----------------- --------------------- --------------- ----------- -----------





<PAGE>


Exhibit 1 to
Security Agreement



                           SECURITY INTEREST AGREEMENT

                                    (PATENTS)


     WHEREAS,  CFC INTERNATIONAL,  INC., a Delaware corporation (herein referred
to as  "Grantor"),  owns the letters  patent,  and/or  applications  for letters
patent,  of the United  States,  more  particularly  described  on Schedule  1-A
annexed hereto as part hereof (the "Patents");

     WHEREAS, Grantor is obligated to LaSalle Bank National Association, (herein
referred to as "Secured Party"),  and has entered into a Security  Agreement and
Mortgage-Trademarks and Patents (the "Agreement") in favor of Secured Party;

     WHEREAS, pursuant to the Agreement,  Grantor has granted to Secured Party a
security interest in, and mortgage on, all right,  title and interest of Grantor
in and to the Patents, and all proceeds thereof, including,  without limitation,
any and all causes of action which may exist by reason of  infringement  thereof
for the full term of the Patents, to secure the prompt payment,  performance and
observance of the Obligations, as defined in the Agreement;

     NOW, THEREFORE,  for good and valuable  consideration,  receipt of which is
hereby  acknowledged,  Grantor  does  hereby  further  grant to Secured  Party a
security interest in, and mortgage on, the Patents to secure the prompt payment,
performance and observance of the Obligations.

     Grantor  does  hereby  further  acknowledge  and affirm that the rights and
remedies of Secured Party with respect to the security  interest in and mortgage
on the  Patents  made  and  granted  hereby  are  more  fully  set  forth in the
Agreement,  the terms and provisions of which are hereby  incorporated herein by
reference as if fully set forth herein.

     IN WITNESS  WHEREOF,  Grantor has caused this Agreement to be duly executed
by its officer thereunto duly authorized as of the ___ day of May, 2001.

                                        CFC INTERNATIONAL, INC.

                                        By:_______________________
                                        Name:
                                        Title:


<PAGE>


STATE OF ILLINOIS    )
                     ) ss.
COUNTY OF COOK       )

     On  this   ___  day  of  May,   2001,   before   me   personally   appeared
_________________,  to me known, who, being by me duly sworn, did depose and say
that he is the  _________________  of CFC  INTERNATIONAL,  INC., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.


                                   -------------------------------
                                             Notary Public

                                   My commission expires:

                                   -------------------------------
<PAGE>


                   SCHEDULE 1-A TO SECURITY INTEREST AGREEMENT

                                     PATENTS

----------------- ------------------- ---------------------- ----------------
  Patent Number     Title of Patent     Date Patent Issued     Country
----------------- ------------------- ---------------------- ----------------


                               PATENT APPLICATIONS

----------------- ------------------- --------------- ----------- -------------
  Serial Number     Title of Patent     Filing Date     Country     Inventor
----------------- ------------------- --------------- ----------- -------------




<PAGE>


Exhibit 2 to
Security Agreement

                           SECURITY INTEREST AGREEMENT

                                  (TRADEMARKS)



     WHEREAS,  CFC INTERNATIONAL,  INC., a Delaware corporation (herein referred
to as "Grantor"),  has adopted,  used and is using the trademarks  listed on the
annexed  Schedule 2-A,  which  trademarks  are  registered or applied for in the
United States Patent and Trademark Office (the "Trademarks");

     WHEREAS,  Grantor is obligated to LaSalle Bank National Association (herein
referred to as "Secured Party"),  and has entered into a Security  Agreement and
Mortgage-Trademarks and Patents (the "Agreement") in favor of Secured Party;

     WHEREAS, pursuant to the Agreement,  Grantor has granted to Secured Party a
security interest in, and mortgage on, all right,  title and interest of Grantor
in and to the Trademarks,  together with the goodwill of the business symbolized
by the Trademarks and all proceeds thereof,  including,  without limitation, any
and all causes of action which may exist by reason of infringement  thereof,  to
secure the payment, performance and observance of the Obligations, as defined in
the Agreement;

     NOW, THEREFORE,  for good and valuable  consideration,  receipt of which is
hereby  acknowledged,  Grantor  does  hereby  further  grant to Secured  Party a
security  interest  in, and  mortgage  on, the  Trademarks  to secure the prompt
payment, performance and observance of the Obligations.

     Grantor  does  hereby  further  acknowledge  and affirm that the rights and
remedies of Secured Party with respect to the security  interest in and mortgage
on the  Trademarks  made and  granted  hereby  are more  fully  set forth in the
Agreement,  the terms and provisions of which are hereby  incorporated herein by
reference as if fully set forth herein.

     IN WITNESS  WHEREOF,  Grantor has caused this Agreement to be duly executed
by its officer thereunto duly authorized as of the ___ day of May, 2001.

                                       CFC INTERNATIONAL, INC.

                                       By:______________________
                                       Name:
                                       Title:

<PAGE>


STATE OF ILLINOIS     )
                      ) ss.
COUNTY OF COOK        )


     On  this   ___  day  of  May,   2001,   before   me   personally   appeared
_______________,  to me known,  who, being by me duly sworn,  did depose and say
that he is the  ________________  of CFC  INTERNATIONAL,  INC., the  corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.



                                         -------------------------------
                                                  Notary Public

                                         My commission expires:

                                         -------------------------------


<PAGE>


                   SCHEDULE 2-A TO SECURITY INTEREST AGREEMENT

                                   TRADEMARKS

                             CFC INTERNATIONAL, INC.

                              Registered Trademarks

------------------ --------------------- ---------------------- ----------------
 Registration No.   Description of Mark   Date of Registration   State or County
------------------ --------------------- ---------------------- ----------------



                             TRADEMARK APPLICATIONS

----------------- ----------------------- ---------------------- ---------------
 Application No.    Description of Mark     Date of Application  State or County
----------------- ----------------------- ---------------------- ---------------




<PAGE>


Exhibit 3 to
Security Agreement

               SPECIAL POWER OF ATTORNEY COUPLED WITH AN INTEREST


STATE OF ILLINOIS     )
                      ) ss.
COUNTY OF COOK        )


     KNOW ALL MEN BY THESE PRESENTS,  THAT CFC  INTERNATIONAL,  INC., a Delaware
corporation  with its  principal  office at 500 State Street,  Chicago  Heights,
Illinois 60411  (hereinafter  called  "Grantor") hereby appoints and constitutes
LaSalle Bank National Association (hereinafter called "Secured Party"), its true
and lawful attorney,  with full power of  substitution,  and with full power and
authority to perform the following acts on behalf of Grantor:

     1. For the purpose of  assigning,  selling or  otherwise  disposing  of all
right,  title and interest of Grantor in and to any letters patent of the United
States or any other  country,  and all pending  applications  therefor,  and all
reissues,   divisions,   continuations,   continuations-in-part  and  extensions
thereof,  and for the purpose of the filing and prosecution of, or accomplishing
any other  formality with respect to, the foregoing,  to execute and deliver any
and all  agreements,  documents,  instruments  of  assignment  or  other  papers
necessary or advisable to effect such purpose;

     2. For the purpose of  assigning,  selling or  otherwise  disposing  of all
right,  title and  interest of Grantor in and to any  trademarks,  trade  names,
trade styles and service marks, and all  registrations,  recordings and renewals
thereof,  and all  pending  applications  therefor,  and for the  purpose of the
recording,  registering,  filing and prosecution of, or accomplishing  any other
formality  with  respect to, the  foregoing,  to execute and deliver any and all
agreements,  documents,  instruments of assignment or other papers  necessary or
advisable to effect such purpose; and

     3. To execute  any and all  documents,  statements,  certificates  or other
papers necessary or advisable in order to obtain the purposes described above as
Secured Party may in its sole discretion determine.

     This  power of  attorney  is made  pursuant  to a  Security  Agreement  and
Mortgage - Trademarks and Patents,  dated the date hereof,  between  Grantor and
Secured Party and takes effect  solely for the purposes of  paragraphs  3(d) and
(e) thereof and is subject to the conditions set forth in the Loan Agreement and
may not be revoked until the payment in full of all  "Obligations" as defined in
such Security Agreement and Mortgage.


Dated: May ___, 2001


                           CFC INTERNATIONAL, INC.


                           By:_______________________

                           Name:

                           Title:





<PAGE>


STATE OF ILLINOIS     )
                      ) ss.
COUNTY OF COOK        )




     On  this   ___  day  of  May,   2001,   before   me   personally   appeared
_________________,  to me known, who, being by me duly sworn, did depose and say
that he is the  ___________________ of CFC INTERNATIONAL,  INC., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.


                                       -------------------------------
                                                  Notary Public

                                       My commission expires:

                                       --------------------------------



<PAGE>


EXHIBIT J (FORM OF MASTER LETTER OF CREDIT AGREEMENT)

Insert LaSalle's Master form here.