Document:

Exhibit
      10.2

    

    

    Amendment
      No. 2 to 

    Research
      and Development Agreement

    

    This
      Amendment No. 2 (this
      “Amendment No. 2”) to
      that
      certain Research and Development Agreement
      dated
      August 11, 2006, as amended effective August 14, 2006 (collectively, the
“R&D Agreement”) by and among NuWay Medical, Inc., BioLargo Life
      Technologies, Inc, IOWC Technologies, Inc. and Kenneth Reay Code. Capitalized
      terms used herein without definitions shall have the same meanings as defined
      in
      the R&D Agreement.

     

    1.
      The
      Parties agree that the term of the R&D Agreement shall be extended from
      December 31, 2006 to March 31, 2007. 

     

    2.
      Except
      as further modified by this Amendment No. 2, the R&D Agreement is, and
      remains, in full force and effect in accordance with its terms.

     

    In
      Witness Whereof, the Parties have executed this Amendment No. 2 as of December
      20, 2006.

      

    
      	
              IOWC
                TECHNOLOGIES, INC.

            	
               

            	
               

            
	
               

               

            	
               

               

            	
               

               

            
	
              By: 
                /s/ Kenneth R. Code       
                                       
                

                       President

            	
                     
                 

            	
              /s/
                Kenneth R.
                Code          
                  
                                            
                

              KENNETH
                REAY CODE

            
	
               

            	
               

            	
               

            
	
              NUWAY
                MEDICAL, INC.

            	
              BIOLARGO
                LIFE 

            
	
               

            	
              TECHNOLOGIES,
                INC.

            
	
               

            	
               

            
	
              By:
                /s/
                Dennis Calvert          
                                             

            	
              By:
                /s/
                Dennis Calvert     
                                         

            
	
                  
                President

            	
                 
                PresidentUnassociated Document

     

    SECOND
      AMENDMENT TO LOAN AND SECURITY AGREEMENT

    

    

    THIS
      SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the “Second Amendment”) is
      executed and entered into this 18th
      day of
      December, 2006 by and between CTI Industries Corporation, an Illinois
      corporation and CTI Helium, Inc., an Illinois corporation (collectively the
      “Borrower”) and Charter One Bank, N.A., a national banking association (“Bank”)
      and amends, as of the effective date hereof, the Loan and Security Agreement
      between the parties dated February 1, 2006, as amended by the First Amendment
      to
      Loan and Security Agreement dated June 28, 2006 (collectively the “Loan
      Agreement”). Capitalized terms used herein without definition shall have the
      meanings ascribed to them in the Loan Agreement.

    

    For
      and
      in consideration of the mutual covenants and agreements set forth herein, and
      other good and valuable consideration, the receipt and sufficiency of which
      is
      hereby acknowledged, the Loan Agreement is hereby amended as
      follows:

    

    1. The
      definition of “Borrowing Base Amount” in Section
      1
      of the
      Loan Agreement shall be amended in its entirety to read as follows:

    

    “Borrowing
      Base Amount”
shall
      mean:

    

    (a) an
      amount
      equal to eighty-five percent (85%) of the net amount (after deduction of such
      reserves and allowances as the Bank deems proper and necessary including
      reasonable reserves for royalty fees payable by Borrower and for dilution)
      of
      all Eligible Accounts other than Eligible Foreign Accounts; plus

    

    (b) the
      lesser of (i) an amount equal to ninety percent (90%) of the net amount (after
      deduction of such reserves and allowances as the Bank deems proper and
      necessary) of all Eligible Foreign Accounts; and (ii) One Million and No/100
      Dollars ($1,000,000.00); plus

    

    (c) the
      lesser of (i) an amount equal to sixty percent (60%) of the lower of cost or
      market value (after deduction of such reserves and allowances as the Bank deems
      proper and necessary) of all Eligible Inventory; and (ii) Three Million Five
      Hundred Thousand and No/100 Dollars ($3,500,000.00); plus 

    

    (d) during
      the period beginning on December 18, 2006 and ending on January 31, 2007
      only, an amount equal to Four Hundred Thousand and No/100 Dollars ($400,000.00)
      (the “Excess Borrowing Base Amount”). The Excess Borrowing Base Amount shall be
      used solely to purchase raw materials related to the Dollar Store’s Valentine’s
      Day balloon order.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. The
      definition of “Revolving Loan Commitment” in Section
      1
      of the
      Loan Agreement shall be amended in its entirety to read as follows:

    

    “Revolving
      Loan Commitment”
shall
      mean Seven Million and No/100 Dollars ($7,000,000.00).

    

    3. Section
      10.4
      of the
      Loan Agreement shall be amended in its entirety to read as follows:

    

    10.4 Fixed
      Charge Coverage.
      As of
      the end of each fiscal quarter, the Borrower and its Subsidiaries shall maintain
      a ratio of (a) the total for the Computation Period (as defined below) ending
      on
      the last day of such fiscal quarter of EBITDA minus
      the sum
      of all income taxes paid in cash by the Borrower and its Subsidiaries and all
      Capital Expenditures which are not financed with Funded Debt (but excluding
      Capital Expenditures approved by Bank in advance which are funded through the
      Contribution to Capital of Cornell Capital), to (b) the sum for such Computation
      Period of (i) Interest Charges plus
      (ii)
      required payments of principal of Borrower’s Funded Debt (including the Term
      Loan and Mortgage Loan, but excluding the Revolving Loans) for such period,
      of
      not less than 1.15 to 1.00. The “Computation Period” as used herein shall mean
      six months for the quarter ending June 30, 2006, nine months for the quarter
      ending September 30, 2006 and twelve months.

    

    4. The
      effectiveness of this Second Amendment is subject to the satisfaction of all
      of
      the following conditions precedent:

    

    (a) Bank
      shall have accepted this Second Amendment in the spaces provided for that
      purpose below.

    

    (b) The
      Guaranties shall have been amended and reaffirmed by the
      Guarantors.

    

    (c) The
      Bank
      shall have received from the Borrower a new Revolving Note in the amount of
      up
      to $7,000,000.00.

    

    (d) The
      Borrower shall be in full compliance with the terms of the Loan Documents and
      no
      Event of Default or Unmatured Event of Default shall have occurred or be
      continuing after giving effect to this Second Amendment.

    

    (e) Borrower
      shall have paid Bank a commitment fee of $2,500.00.

    

    (f) Borrower
      shall have delivered certified copies of Board of Director resolutions
      authorizing this Second Amendment.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g) All
      other
      legal matters incident to the execution and delivery hereof contemplated hereby
      and to the transaction contemplated hereby (including the delivery of ancillary
      documentation requested by Bank) shall be satisfactory to Bank and its
      counsel.

    

    Upon
      the
      date all of the foregoing conditions precedent have been satisfied, this Second
      Amendment shall take effect. Thereupon, the Bank shall cancel and return to
      the
      Borrower the existing Revolving Note in the amount of
      $6,500,000.00.

    

    5. To
      the
      extent the terms of this Second Amendment conflict with the terms of the Loan
      Agreement, the terms hereof shall be controlling. Except as specifically amended
      hereby, the Loan Agreement shall remain unchanged and in full force and effect.
      The Loan Agreement, as amended hereby, and all rights and powers created thereby
      and thereunder are in all respects ratified and confirmed. This Second Amendment
      may be executed in any number of counterparts and by different parties hereto
      on
      separate counterparts and each such counterpart shall be deemed an original,
      but
      all such counterparts together shall constitute but one and the same Second
      Amendment. This Second Amendment shall be binding upon and inure to the benefit
      of the Bank and the Borrower, and their respective successors and assigns.
      This
      Second Amendment shall be governed by and construed in accordance with the
      laws
      of the State of Illinois.

    

    

    IN
      WITNESS WHEREOF the parties hereto have caused this Second Amendment to be
      duly
      executed and delivered by their duly authorized officers as of the date first
      set forth above.

    

    
      	BORROWER: 	 	 
	 	 	 
	CTI Helium, Inc. 	CTI Industries Corporation 	 
	 	 	 
	By:
              /s/ Howard W. Schwan 	By:
              /s/ Howard W. Schwan 	 
	Title:
              President 	Title: President 	 
	 	 	 
	 	 	BANK 
	 	 	 
	 	 	Charter One Bank, N.A. 
	 	 	 
	 	 	By:
              /s/ Erica A. Scully 
	 	 	Title: Vice
              President   

    

     

     

    
      
        
        

      

      
      

      
        

      

    

    
      
      

    

    [Second
      Amendment to Loan and Security Agreement]

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