Document:

exv10w11

Exhibit 10.11

Loan Agreement

     THIS LOAN AGREEMENT is made as of the date below (the “Effective Date”) by and between
F.F.F.C., Inc., a Texas corporation (“Lender”), and American Locker Group Incorporated, a
Delaware corporation (“Borrower”). For valuable consideration, the parties agree as
follows:

     1. Representations and Warranties. Borrower represents and warrants to Lender
that the following statements are true and correct and will remain true and correct until the
Indebtedness has been repaid in full:

          a. Title Issues.

               (1) Title. Borrower owns good, indefeasible, and insurable fee simple title to the
real property described on Exhibit A, free and clear of all liens, options and other
encumbrances other than the matters shown on the Lender’s title policy, which are deemed permitted
liens, and other than any matters set forth in any notice from the City of Grapevine regarding
condemnation.

               (2) Mechanics’ Liens. There are no mechanics’ or similar liens or claims (and no
rights are outstanding that under law could give rise to any such liens) affecting the Property.

               (3) Ownership of FF&E. Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment used in connection with the operation of the Property, free and
clear of any and all leases, ownership interests, security interests, liens or encumbrances.

               (4) Separate Tax Parcel. The Property is assessed for real estate tax purposes as one
or more wholly independent tax lots, separate from any adjoining land or improvements not
constituting a part of such lot or lots, and no other land or improvements is assessed and taxed
together with the Property or any portion thereof.

               (5) Taxes; Special Assessments. All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, and ground rents, if any, due and owing in respect of
the Property have been paid or will be paid at the funding of the Loan.

          b. Status of the Property.

               (1) Permits; Compliance with Laws; Encroachments. Borrower has all necessary
certificates, licenses, permits and other approvals, governmental and otherwise, necessary for the
operation of the Property. The Property and the present and contemplated use, occupancy, and
operation thereof are and will remain in full compliance with all applicable licenses, permits,
approvals and Legal Requirements, including, without limitation, all zoning and building
requirements and all requirements of Access Laws, land use and environmental laws and other similar
laws. None of the Improvements lie or will lie outside of the boundaries of the Land or the
applicable building restriction lines. No improvements on adjoining properties materially encroach
upon the Land.

               (2) Utilities. The Property is served by all utilities required for the current and
contemplated use thereof. All utility service is provided by public utilities and the Property has
accepted or is equipped to accept such utility service. The Property is served by public water and
sewer systems. All of the foregoing utilities are located in the public right-of-way abutting the
Property, and all such utilities are connected so as to serve the Property either (a) without
passing over other property or, (b) if such utilities pass over other property, they do so pursuant
to valid written easements which appear of record, are for the benefit of the Property and are
insured under the Title Policy.

 

 

               (3) Access. All public roads and streets necessary for service of and access to the
Property for the current or contemplated use thereof have been completed, are serviceable and are
physically and legally open for use by the public. If the Property does not abut and have
sufficient legal and physical access to one or more public roads or streets for the use of the
Property, perpetual right-of-way easements have been recorded over abutting parcels so as to
provide such access from such public roads and streets and such easement or easements are insured
under the Lender’s title policy.

               (4) Condition of Property. The Property is in good condition and repair and is free
from any damage that would materially and adversely affect the value of the Property as security
for the Loan or the intended use of the Property. All building systems contained therein are in
good working order in all material respects, subject to ordinary wear and tear.

     2. Easements, Assessments, Etc. Without Lender’s prior written consent, Borrower will
not cause or otherwise consent to: (a) the creation of any new easement, covenant or the like with
respect to the Property; (b) the formation of any assessment district or community facilities
district that includes all or any part of the Property; or (c) the levying of special taxes or
assessments against the Property.

     3. Insurance Coverage. Borrower will insure and keep insured all improvements now or
hereafter created upon the Property against loss or damage by fire and windstorm and any other
hazard or hazards, as may be reasonably required from time to time by Lender in accordance with the
requirements of the Deed of Trust. Borrower must deliver to Lender the insurance policies, with
the mortgage indemnity clause as Lender shall direct. Borrower must deliver renewals of such
policies to Beneficiary at least ten (10) days before any such insurance policies shall expire.
Any proceeds which Lender may receive under any such policy, or policies, may be applied by Lender,
at its option, to reduce the indebtedness hereby secured, whether then matured or to mature in the
future, and in such manner as Lender may elect; or Lender may permit Borrower to use said proceeds
to repair or replace all improvements damaged or destroyed and covered by said policy.

     4. Insurance and Condemnation Proceeds.

          (a) Casualty. In the event the Property is damaged or destroyed by an insured peril
or otherwise, Lender will have the sole right and authority to make, settle and compromise any and
all insurance claims and other claims in connection therewith and to apply all casualty proceeds to
repayment of the Note and the other obligations secured by the loan documents.

          (b) Condemnation. As used in this Agreement, term “Condemnation” means any
taking or proposed taking of all or any part of the Property or any rights with respect thereto
under the exercise of the power of eminent domain, or in lieu of such exercise. In the event of a
Condemnation, all such proceedings relating to the Condemnation will be subject to the control of
Borrower but subject to the approval of Lender, as provided below. Lender’s only requirement for
approval of the final Condemnation award and release of its liens on the Property is that the
condemnation proceeds be
sufficient to pay the Note and all sums due under the loan documents, and be assigned and paid to
Lender for application to repayment of the Note and the other obligations secured by the loan
documents.

          (c) Conflicts Among Documents. To the extent of any inconsistency between the
provisions of this Section and the provisions of the loan documents regarding the settlement,
collection and application of casualty proceeds and condemnation proceeds, the provisions of this
Agreement will govern such matters.

     5. Required Notices. Borrower will notify Lender within five (5) business days from
the occurrence of any event known to Borrower (or the receipt of any notice by Borrower) that could
have a

 

 

material adverse effect on Borrower or the Property, or any portion thereof, including,
without limitation: (a) the assertion, recording or filing of any material lien, claim or dispute
affecting Borrower or the Property; (b) the filing of any material action or proceeding affecting
Borrower or the Property; (c) the occurrence of any material damage to the Property; (d) only upon
an Event of Default beyond the applicable notice period and the expiration of any applicable cure
period, any condemnation offer or action affecting the Property; or (e) any notice regarding
violation of any laws affecting Borrower or the Property.

     6. Compliance With Access Laws. Borrower will maintain the improvements on the
Property in strict accordance and full compliance with all laws.

     7. Right to Contest. Borrower will have the right to contest in good faith any
claim, charge, demand, levy or assessment payable to a party other than Lender, the non-payment of
which would constitute an Event of Default under this Agreement, but only with Lender’s prior
written consent. If Lender grants such consent, such non-payment will not constitute an Event of
Default so long as such consent remains effective. Lender will not withhold its consent
unreasonably, provided that Lender has been furnished a bond satisfactory to it in its sole but
reasonable discretion to discharge such claim, charge, etc. in full in the event Borrower should
not prevail in such contest. Lender may withdraw such consent at any time if: (a) Borrower fails
to prosecute such contest diligently, in full compliance with all conditions to Lender’s consent
and in a manner not prejudicial to Lender or its rights hereunder or to the Property, or (b)
Lender, in its sole but reasonable discretion, determines that such contested claim, charge, etc.,
has a material adverse effect on the Property or Lender.

     8. Events of Default. Any of the following shall constitute an “Event of
Default” as that term is used in the loan documents (and the term “Default” shall mean any of
the following, whether or not any requirement for notice or lapse of time has been satisfied):

          (a) Any default under the Note and the expiration of the applicable grace period.

          (b) Any representation or warranty made by Borrower to or for the benefit of Lender herein or
elsewhere in connection with the Loan, including but not limited to any representation in
connection with the security therefor, proves to have been incorrect or misleading in any material
respect.

          (c) Borrower becomes unable or admits in writing its inability to pay its debts as they become
due, or file, or has filed against it, a voluntary or involuntary petition in bankruptcy, or makes
a general assignment for the benefit of creditors, or becomes the subject of any other receivership
or insolvency proceeding, provided that if such petition or proceeding is not filed or acquiesced
in by Borrower or the subject thereof, it shall constitute an Event of Default only if it is not
dismissed within sixty (60) days after it is filed or if prior to that time the court enters an
order substantially granting the relief sought therein.

          (d) Borrower defaults in the performance of any covenant or agreement contained in any
mortgage, deed of trust or similar security instrument encumbering the Property, or the note or any
other agreement evidencing or securing the indebtedness secured thereby, which default continues
beyond any applicable notice and cure period.

 

 

     9. Remedies.

          (a) After the occurrence and during the continuance of an Event of Default, all or any one or
more of the rights, powers and other remedies available to Lender under this Agreement, the Note,
or the loan documents, or at law or in equity, may be exercised by Lender at any time and from time
to time, without notice or demand, whether or not all or any portion of the Indebtedness has been
declared due and payable, and whether or not Lender has commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the loan documents with
respect to the Property. Any such actions taken by Lender will be cumulative and concurrent and
may be pursued independently, singly, successively, together or otherwise, at such time and in such
order as Lender may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth in this Agreement or the other loan documents.

          (b) After the occurrence and during the continuance of any Event of Default, Lender may, at
its sole option, declare all sums owing to Lender under the Note, this Agreement and the other loan
documents immediately due and payable. Upon such acceleration, Lender may, in addition to all
other remedies permitted under this Agreement and the other loan documents and at law or equity,
apply any sums any and all accounts maintained by Borrower with Lender to the sums owing under the
loan documents.

          (c) Any and all funds expended by Lender in the exercise of its rights or remedies under this
Agreement and the other loan documents will be payable to Lender upon demand, together with
interest at the rate applicable to the principal balance of the Note from the date the funds were
expended.

          (d) All Lender’s rights and remedies provided in this Agreement and the other loan documents,
together with those granted by law or at equity, are cumulative and may be exercised by Lender at
any time. Lender’s exercise of any right or remedy will not constitute a cure of any Default
unless all sums then due and payable to Lender under the loan documents are repaid and Borrower has
cured all other Defaults. No waiver will be implied from any failure of Lender to take, or any
delay by Lender in taking, action concerning any Default or failure to satisfy a condition
precedent under the loan documents, or from any previous waiver of any similar or unrelated Default
or failure to satisfy a condition precedent. Any consent, waiver or approval under any of the loan
documents must be in writing and will be limited to its specific terms.

     10. Financial Reporting.

          (a) Borrower will keep adequate books and records of account in accordance with generally
accepted accounting principles, consistently applied and will furnish to Lender the financial
reports that Lender may reasonably request and in the possession of Borrower or Borrower’s agent.

          (b) Borrower agrees that all financial statements to be delivered to Lender will: (1) be
complete and correct in all material respects; (2) present fairly the financial condition of the
party in all material respects; and (3) disclose all liabilities that are required to be reflected
or reserved against. Borrower will be deemed to warrant and represent that, as of the date of
delivery of any such financial statement, there has been no material adverse effect since the date
of the financial statement, except national general economic conditions, nor have any assets or
properties been sold, transferred, assigned, mortgaged, pledged or encumbered since the date of
such financial statement, except as disclosed by Borrower in a writing delivered to Lender;
provided, however that Borrower has notified Lender that it has entered into a contract to sell its
property in Ellicottville, New York.

 

 

     11. General Provisions.

          (a) Except as otherwise specifically provided in this Agreement, all notices, consents and
other communications provided for in this Agreement must be in writing and mailed, faxed or
otherwise transmitted or delivered to Lender or Borrower, as applicable, at their respective notice
addresses as set forth in the Note, or at such other address as a party may designate for itself in
a written notice to the other party or parties. All such notices, consents and communications will
be effective: (a) if mailed, three (3) business days following deposit in the United States mail,
certified or registered postage prepaid; (b) if delivered by recognized overnight delivery service
(such as Federal Express), upon delivery; and (c) if transmitted by fax, when transmitted and
electronic confirmation of transmission is received.

          (b) Borrower will immediately pay Lender upon demand all reasonable costs and expenses
incurred by Lender in connection with: (a) the preparation of the loan documents; (b) the
enforcement or satisfaction by Lender of any of Borrower’s obligations under the other loan
documents; (c) appraisals and inspections of the Property required by Lender as a result of an
Event of Default; (d) appraisals and inspections of the Property required by applicable law,
including, without limitation, federal or state regulatory reporting requirements; (e) any acts
performed by Lender at Borrower’s request or wholly or partially for the benefit of Borrower
(including, without limitation, the preparation or review of amendments, assumptions, waivers,
releases, reconveyances, estoppel certificates or statements of amounts owing under any
Indebtedness); and (f) Lender’s out-of-pocket costs for administration of the Loan.

          (c) BORROWER AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER AND THE OTHER INDEMNIFIED
PARTIES FOR, FROM AND AGAINST ANY CLAIM, LOSS, DAMAGE, COST, EXPENSE OR LIABILITY DIRECTLY OR
INDIRECTLY ARISING OUT OF: (A) THE MAKING OF THE LOAN, EXCEPT FOR VIOLATIONS OF BANKING LAWS OR
REGULATIONS BY THE INDEMNIFIED PARTIES; (B) THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS; (C) THE
EXECUTION OF THIS AGREEMENT OR THE PERFORMANCE OF ANY ACT REQUIRED OR PERMITTED HEREUNDER OR BY
LAW; (D) ANY FAILURE OF BORROWER TO PERFORM BORROWER’S OBLIGATIONS UNDER THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS; (E) ANY ALLEGED OBLIGATION OR UNDERTAKING ON THE INDEMNIFIED PARTIES’ PART TO
PERFORM OR DISCHARGE ANY OF THE REPRESENTATIONS, WARRANTIES, CONDITIONS, COVENANTS OR OTHER OBLIGATIONS OF BORROWER CONTAINED IN
ANY OTHER DOCUMENT RELATED TO THE PROPERTY; OR (F) ANY ACT OR OMISSION BY BORROWER OR ANY
CONTRACTOR, SUBCONTRACTOR, ARCHITECT, SUPPLIER, AGENT, EMPLOYEE OR REPRESENTATIVE OF BORROWER WITH
RESPECT TO THE PROPERTY. THE FOREGOING TO THE CONTRARY NOTWITHSTANDING, THIS INDEMNITY WILL NOT
INCLUDE ANY CLAIM, LOSS, DAMAGE, COST, EXPENSE OR LIABILITY DIRECTLY OR INDIRECTLY ARISING OUT OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY MEMBER OF THE INDEMNIFIED PARTIES. THIS
INDEMNITY WILL INCLUDE, WITHOUT LIMITATION, (I) ANY CLAIM, LOSS, DAMAGE, COST, EXPENSE OR LIABILITY
DIRECTLY OR INDIRECTLY ARISING OUT OF THE ORDINARY NEGLIGENCE OF ANY MEMBER OF THE INDEMNIFIED
PARTIES, AND (II) ALL COURT COSTS AND REASONABLE ATTORNEYS’ FEES (INCLUDING, WITHOUT LIMITATION,
EXPERT WITNESS FEES) PAID OR INCURRED BY LENDER OR ANY OF THE OTHER INDEMNIFIED PARTIES. BORROWER
WILL PAY IMMEDIATELY UPON LENDER’S DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY TOGETHER WITH
INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST APPLICABLE TO THE
PRINCIPAL BALANCE OF THE NOTE AS SPECIFIED THEREIN. BORROWER AGREES TO USE LEGAL COUNSEL
REASONABLY ACCEPTABLE TO LENDER

 

 

AND THE OTHER INDEMNIFIED PARTIES IN ANY ACTION OR PROCEEDING
ARISING UNDER THIS INDEMNITY. THE PROVISIONS OF THIS SECTION WILL SURVIVE THE RELEASE OR
FORECLOSURE OF THE SECURITY INSTRUMENT.

          (d) Borrower acknowledges and agrees that Lender’s acceptance or approval of any action of
Borrower or any other matter requiring Lender’s approval, satisfaction, acceptance or consent
pursuant to this Agreement or the other loan documents, including any other agreement, report,
certificate, financial statement, appraisal or insurance policy, will not be deemed a warranty or
representation by Lender of the sufficiency, legality, effectiveness or other import or effect of
such matter.

          (e) If any attorney is engaged by Lender to enforce or defend any provision of the loan
documents, or as a consequence of any Event of Default under the loan documents, with or without
the filing of any legal action or proceeding, and including, without limitation, any fees and
expenses incurred in any bankruptcy proceeding, then Borrower will immediately pay to Lender, upon
demand, the amount of all attorneys’ fees and expenses and all costs incurred by Lender in
connection therewith, together with interest thereon from the date paid by Lender until repaid by
Borrower to Lender at the rate of interest applicable to the principal balance of the Note as
specified therein.

          (f) This Agreement is between and for the sole benefit of Borrower and Lender, and Lender’s
successors and assigns, and, except as expressly provided with respect to certain indemnities in
favor of other Indemnified Parties, creates no rights whatsoever in favor of any other Person and
no other Person will have any rights to rely hereon.

          (g) Time is of the essence of each of Borrower’s obligations under this Agreement. The waiver
by Lender of any Default under this Agreement or the other loan documents will not be deemed a
waiver of any other Default.

          (h) This Agreement will be binding upon and inure to the benefit of Borrower and Lender and
their respective heirs, executors, administrators, successors and assigns; provided however
Borrower may not assign its rights or interests in this Agreement without the prior written consent
of Lender, which may be withheld in Lender’s sole discretion. Borrower acknowledges that Lender
would not make the Loan except in reliance on Borrower’s expertise, reputation and prior experience
in developing and constructing commercial real property, Lender’s knowledge of Borrower, and Lender’s
understanding that this Agreement is more in the nature of an agreement involving personal services
than a standard loan where Lender would rely on security that already exists.

          (i) This Agreement may be executed in counterparts, each of which will be deemed an original,
and such counterparts when taken together will constitute but one agreement.

          (j) Wherever Lender’s consent, approval, acceptance or satisfaction is required under any
provision of this Agreement or any of the other loan documents, such consent, approval, acceptance
or satisfaction must be in writing and will not unreasonably be withheld, conditioned or delayed by
Lender unless such provision expressly so provides.

          (k) This Agreement, together with the other loan documents, constitutes the entire agreement
of the parties with respect to the Loan, and supersedes any prior negotiations or agreements, any
loan application submitted by Borrower to Lender and any commitment for the Loan delivered by
Lender to Borrower. No consent, modification, extension, discharge, termination or waiver of any
provision of this Agreement or the other loan documents will be effective unless in writing, signed
by the

 

 

Person against whom enforcement is sought, and will be effective only in the specific
instance for which it is given.

          (l) The Loan will be deemed to have been made in the State of Texas. This Agreement and the
other loan documents will be governed by and construed and enforced in accordance with the laws of
Texas without regard to its conflicts of laws principles. Borrower and Lender each unconditionally
and irrevocably waives any right to assert that the law of any other jurisdiction governs this
Agreement and the other loan documents. Venue is proper in Dallas County, Texas.

          (m) If a court of competent jurisdiction finds any provision of this Agreement or the other
loan documents to be invalid or unenforceable as to any Person or circumstance in any jurisdiction,
such finding will not render that provision invalid or unenforceable as to any other Person or
circumstance or in any other jurisdiction. Where permitted by applicable law, any provision found
invalid or unenforceable will be deemed modified to the extent necessary to be within the limits of
enforceability or validity; however, if such provision cannot be deemed so modified, it will be
deemed stricken and all other provisions of this Agreement in all other respects will remain valid
and enforceable.

          (n) Borrower and Lender intend that the relationship created under this Agreement and the
other loan documents be solely that of borrower and lender. Nothing is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender
nor to grant to Lender any interest in the Property other than that of mortgagee (or in the case of
a deed of trust, beneficiary) or secured party.

          (o) Borrower hereby waives, to the extent permitted by applicable law, the right to assert any
counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against
Borrower by Lender under any of the loan documents.

          (p) The headings and captions of various sections of this Agreement are for convenience of
reference only and are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.

          (q) As used in this Agreement, singular terms include the plural and plural terms include the
singular as the context may require.

          (r) All references to any agreement or contract in this Agreement refer to such agreement or
contract as currently in effect and as it may be amended, supplemented or replaced in accordance
with the terms of this Agreement and the other loan documents.

          (s) All terms not defined herein are defined in the Deed of Trust Note, dated of even date by
Borrower, as Maker, and Lender, as Lender (the “Note”), or the Deed of Trust, Security Agreement,
and Financing Statement, of even date, from Alterco Incorporated, as Grantor, to Kevin M. Kerr, as
Trustee, for the benefit of Lender (the “Deed of Trust”), as the case may be.

     12. Interest Reserve. Borrower agrees to deposit $60,000.00 with Lender as an Interest
Reserve (herein so called) on the date hereof. Borrower agrees to deposit an additional $5,000.00
with each payment on the Note until the total Interest Reserve balance totals $120,000.00. Lender
agrees to apply the Interest Reserve funds to the final six (6) interest payments on the Note. The
Interest Reserve will accrue interest, and Lender will hold it without bond in escrow. Upon the
occurrence of an Event of Default, after any applicable notice and the failure to cure within any
applicable grace period, Lender may, at its option, apply the Interest Reserve to any obligation
evidenced by the Note or any loan

 

 

document. All bank fees due to the Interest Reserve account will
be paid from by Lender from the Interest Reserve.

     DATED as of March 19, 2009.

	 	 	 	 	 
	 	LENDER:

F.F.F.C., INC.

 	 
	 	By  	/s/ John Femrite
 	 
	 	 	      John Femrite, President 	 
	 	 	 	 
	 
	 	BORROWER:

AMERICAN LOCKER GROUP INCORPORATED

 	 
	 	By  	/s/ Paul Zaidins
 	 
	 	 	      Paul Zaidins, Presidentexv10w12

Exhibit 10.12

GULF COAST BUSINESS CREDIT

RECEIVABLES PURCHASE

AGREEMENT

RECOURSE

     THIS RECEIVABLES PURCHASE AGREEMENT (this “Agreement”), made and executed this 28th
day of July, 2009, by and between AMERICAN LOCKER GROUP INCORPORATED (the “Company”)
(Delaware Org. No. 0530801); and GULF COAST BANK AND TRUST COMPANY (“GCBC”).

     1. Definitions. Capitalized terms used in this Agreement shall have the meanings
assigned to them in Schedule A attached hereto. All capitalized terms not herein defined shall
have the meaning set forth in the Uniform Commercial Code.

     2. Sale and Acceptance of Receivables.

          2.1 Company agrees during the term of this Agreement to sell to GCBC as absolute owner, with
full recourse against Company, such of Company’s Receivables as are listed from time to time on
Schedules of Accounts, or otherwise offered for sale to GCBC by the Company. The sale of a
Factored Receivable shall include all rights related to such Receivable and the proceeds thereof,
including any letter of credit or other assurance or guaranty, all rights and remedies arising in
connection therewith, any security interest or lien accessory thereto, all proceeds of insurance
and any returned inventory or merchandise in connection with the Factored Receivable.

          2.2 Each Schedule of Accounts shall be accompanied by such documentation supporting and
evidencing the Receivables as GCBC shall from time to time request. Unless otherwise approved by
GCBC, the invoice for a Receivable must set forth, as the sole address for payment, the Lockbox
Address, or if payment is to be by wire transfer, by ACH transfer to a controlled account at GCBC,
with notation of the invoice number being paid. In addition, except as otherwise may be agreed in
writing by GCBC, the payment terms of any Receivable offered for purchase must be NET 30 DAYS.

          2.3 GCBC may, but need not purchase from Company, such Receivables as may be offered for sale
to GCBC. The election to purchase any Receivable offered for sale shall be in GCBC’s sole and
absolute discretion. GCBC shall have no obligation to purchase any Receivable from Company,
regardless of any course of conduct or past purchases of Receivables by GCBC.

          2.4 The purchase price for each Receivable purchased hereunder shall consist of and be paid by
the Initial Payment and any Residual Payment due under Section 3.2 after any deductions for
Discounts and other amounts payable with respect to such Factored Receivable or other Obligations
as herein provided. The sale of each Factored Receivable shall be deemed perfected and absolute
upon the payment by GCBC of the Initial Payment therefor. GCBC’s books and records shall be
conclusive evidence of such payment, absent manifest error.

          2.5 Subject to the terms and conditions of this Agreement, GCBC is authorized to purchase
Receivables upon telephonic, facsimile or other instructions received from anyone purporting to be
an officer, employee or representative of Company.

     3. Payment of Purchase Price.

          3.1 The Initial Payment for each Factored Receivable shall be paid to the Company by check, by
electronic transfer or deposit to a Company operating account, or by debit to the Reserve Account.
The amount of any Initial Payment may be reduced by set off against any Obligations then due and
payable (including charge back items hereunder, such as Repurchase Price payments, Discounts and
fee assessments).

          3.2 A Residual Payment for a Factored Receivable shall be payable by GCBC to Company unless
otherwise provided herein, on the third (3rd) Business Day following the date GCBC
receives and deposits the proceeds of collection of the subject Receivable in a collected amount
equal to or greater than the GCBC Investment. No Residual Payment shall be payable on Factored
Receivables unless and until GCBC has collected from the Account Debtor, or from Company if
obligated to repurchase, an amount equal to the GCBC Investment. GCBC may charge back to Company’s
Reserve Account or other deposit accounts the amount of any Residual Payment for which credit has
been given where the check given in payment of the Factored Receivable is not honored in full upon
presentment. GCBC shall be entitled to withhold payment to the Company of the Residual Payment for
a Factored Receivable if an Event of Default exists, if it is determined that it is an Ineligible
Receivable or if GCBC in its sole and absolute discretion believes that such balance should be held
in the Reserve Account to provide adequate available balances for existing or potential charges
against the Reserve Account.

          3.3 The parties agree that, without the prior written consent of GCBC, the GCBC Investment in
Factored Receivables hereunder (exclusive of discounts, fees, interest and other compensation)
shall not exceed the Facility Limit, and any such excess shall be paid by Company to GCBC on demand
so as to reduce the total GCBC Investments (excluding Discounts and fees) to an amount not in
excess of the Facility Limit.

     4. Reserve Account.

          4.1 GCBC shall establish in the Company’s name an internal accounting account, referred to
herein as the Reserve Account, and shall furnish the Company with advices of all credits and debits
entered in the Reserve Account. The Company’s Reserve Account may be charged by GCBC from time to
time, and at its sole and absolute discretion, without notice, and whether or not an Event of
Default exists, for any Obligation directly or indirectly owing by the Company to GCBC, including
without limitation any Discount, fee, Repurchase Price or indemnity payment or other liability.

          4.2 Upon termination of this Agreement GCBC may retain the Reserve Account (i) for
ninety (90) days thereafter to be applied to payment of any Obligations that were unknown to GCBC
at the time of termination, and (ii) on a continuing basis thereafter until such time as Company
has executed and delivered to GCBC a general release in the form of Schedule C hereto.

 

 

     5. Fees and Discounts.

          5.1 Company will pay to GCBC an amount equal to the Fixed Discount in connection with each
purchase of a Factored Receivable. Such amount is non-refundable, fully earned upon the purchase
of a Factored Receivable, and is not subject to reimbursement, regardless of any retransfer or
repurchase of the Receivable following its original sale to GCBC. The Fixed Discount shall be
payable on the Accrual Termination Date, unless the Factored Receivable is declared by GCBC to be
an Ineligible Receivable. In such a case, the Fixed Discount is payable on the Repurchase Due
Date.

          5.2 Company shall pay to GCBC a Variable Discount, which shall accrue on each Factored
Receivable for each day in the period beginning on the Initial Payment Date up to and including the
date that is two (2) business days following the date on which GCBC has collected, in cash, from
the Account Debtor, or been paid by the Company (by Reserve Account adjustment, Company
reimbursement or otherwise) an amount equal to the GCBC Investment (the final accrual date for a
Receivable, the “Accrual Termination Date”). Discharge of a Receivable in any bankruptcy
proceeding shall not constitute payment for purposes of this Section 5.2, and Variable Discounts
shall continue to accrue until GCBC has been paid an amount equal to the GCBC Investment. In the
case of Receivables that are repurchased by the Company, the Accrual Termination Date shall be the
date that is three (3) business days following the date on which the Repurchase Price is paid by
the Company. The daily Variable Discount that accrues on a Factored Receivable shall equal the
Initial Payment times the applicable Daily Variable Discount Rate. The Variable Discount on each
Factored Receivable shall be payable on the earlier to occur of (i) the Accrual Termination Date,
or (ii) the Repurchase Due Date.

          5.3 Each Schedules of Accounts, along with all required supporting documentation, shall be
submitted to GCBC no later than 10:30 A.M. Central Time. In the event that Company submits a
Schedule of Accounts later than 10:30 A.M. Central Time and requests same day processing, the
Company shall pay to GCBC a late scheduling fee, as determined by GCBC in its sole discretion, in
an amount no less that $100.00 per late schedule, up to one percent (1%) of the Gross Amount of the
Receivables on such schedule. In the event that the processing of the Schedule of Accounts is held
until the following business day, either at the request of the Company or at the discretion of
GCBC, no late scheduling fee shall apply. Company shall pay to GCBC the out-of -pocket expenses
directly incurred by GCBC in the administration of this Agreement such as wire transfer fees,
postage, lockbox and audit fees.

          5.4 In the event that Company fails to deliver to GCBC any payment or proceeds that it may
receive with respect to any Receivable, within the three (3) Business Day delivery deadline
provided herein, Company will pay to GCBC a Misdirected Payment Fee equal to fifteen (15%) percent
of the misdirected payment or proceeds, payable immediately upon its failure to timely deliver such
item. Company’s agreement to pay such a fee and GCBC’s acceptance of such a fee shall not be
deemed a waiver or acquiescence by GCBC of Company’s obligation to promptly deliver to Lender’s
possession all collections on all Receivables no later than the next Business Day.

          5.5 The Company will be assessed a fee (the “Late Repurchase Fee”), in the amount set
forth in the definition of Late Repurchase Fee, with respect to any Factored Receivable that either
(i) is not repurchased in full by Company on or before the ninetieth day following the Initial
Payment Date, or (ii) that has not been paid in cash and in full by the Account Debtor, on or
before the ninetieth day following the Initial Payment Date. The Late Repurchase Fee may be
assessed, at GCBC’s election, by charge back to the Reserve Account.

     6. Repurchase of Receivables; Charge Rights Against Reserve Account.

          6.1 GCBC may require that Company repurchase any of the following Factored Receivables, by
payment of a price equal to the amount of the GCBC Investment in the related Factored Receivable,
less the amount of any collections received by GCBC from the Account Debtor (such amount, the
“Repurchase Price”), on demand at any time on or after the Repurchase Due Date, in cash, or, at
GCBC’s option, by GCBC’s charge to the Reserve Account. GCBC’s election to charge the Reserve
Account for such payment shall be deemed to be its election to require such repurchase. Such
Factored Receivables include:

               6.1.1 Any Factored Receivable, the payment of which has been disputed by the Account Debtor
obligated thereon, GCBC being under no obligation to determine the bona fides of such dispute;

               6.1.2 Any Factored Receivable for which Company has breached its warranty under Section 11
hereunder;

               6.1.3 Any Factored Receivable owing from an Account Debtor which, in GCBC’s reasonable credit
judgement, has become insolvent;

               6.1.4 All Factored Receivables upon the occurrence of an Event of Default, or upon the
termination date of this Agreement; and

               6.1.5 Any Factored Receivable for which GCBC has not received from the Account Debtor payment
in cash equal or greater than the GCBC Investment on before the Repurchase Due Date

(all such Factored Receivables described in 6.1.1 through 6.1.5, herein, “Ineligible Receivables”).
In addition to the other payment methods provided above, GCBC, at its sole option and discretion,
may effect payment of any Repurchase Price payment by reducing the amount of any Initial Payment
paid for any future purchase price due to the Company in connection with the purchase by GCBC of
other Factored Receivables.

          6.2 GCBC shall retain its security interest in any Receivable that has been repurchased by
Company. Repurchase shall not be deemed to have occurred until the Repurchase Price has been
paid in full, and GCBC shall remain the owner of such Receivable until that time.

          6.3 Any repurchase of a Receivable under this Agreement shall be without recourse to GCBC, and
without any warranty or representation, express or implied, and Company waives in connection with
any retransfer any and all such warranties, including any warranties of presentment, transfer or
otherwise, any warranty concerning the solvency of any Account Debtor, the existence of any right
or the absence of any defenses to payment, under the Uniform Commercial Code, the laws of the State
of Texas, or otherwise.

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     7. Authorizations to GCBC.

          7.1 Company hereby irrevocably authorizes GCBC at Company’s expense, to exercise at any time
any of the
following powers until all of the Obligations have been paid in full: (a) receive, take,
endorse, assign, deliver, accept and deposit, in the name of GCBC or Company, any and all cash,
checks, commercial paper, drafts, remittances and other instruments and documents relating to any
Factored Receivables, other Receivables or the proceeds thereof, (b) take or bring, in the name of
GCBC or Company, all steps, actions, suits or proceedings deemed by GCBC necessary or desirable to
effect collection of or other realization upon the Receivables, (c) pay any sums necessary to
discharge any lien or encumbrance which is senior to GCBC’s security interest in the Collateral,
which sums shall be included as Obligations hereunder, (d) file in the name of Company or GCBC or
both, (1) mechanics lien or privileges or related notices or (2) claims under any payment bond, in
connection with goods or services sold by Company , (e) notify any Account Debtor obligated with
respect to any Receivable, that the underlying Receivable has been assigned to GCBC by Company and
that payment thereof is to be made to the order of and directly and solely to GCBC, and (f)
communicate directly with Company’s Account Debtors to verify the amount and validity of any
Receivable created or acquired by Company. Company further hereby irrevocably authorizes GCBC at
Company’s expense at any time following an Event of Default to exercise any of the following powers
until all of the Obligations have been paid in full: (f) change the address for delivery of mail to
Company and to receive and open mail addressed to Company, and (g) extend the time of payment of,
compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any
and all Receivables and discharge or release any Account Debtor or other obligor (including filing
of any public record releasing any lien granted to Company by such Account Debtor), without
affecting any of the Obligations.

          7.2 The Company authorizes GCBC at any time and from time to time to file any initial
financing statements and amendments thereto that (a) describes the Collateral; (b) contain any
other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment; (c) contain a notification that the Company
has granted a negative pledge to GCBC, and agreed not to assign or encumber its Collateral, and
that any subsequent lienor or claimant may be tortuously interfering with GCBC’s rights; and (d)
advises third parties that any notification of Company’s Account Debtors will interfere with GCBC’s
collection rights.

          7.3 Company authorizes GCBC to accept, indorse and deposit on behalf of Company any checks
tendered by an account debtor “in full payment” of its obligation to Company. Company shall not
assert against GCBC any claim arising therefrom, irrespective of whether such action by GCBC
effects an accord and satisfaction of Company’s claims, under §3-311 of the Uniform Commercial
Code, or otherwise.

          7.4 In order to satisfy any Obligations, GCBC is hereby authorized by Company to initiate
electronic debit or credit entries through the ACH system to any deposit account maintained by
Company wherever located.

     8. Security Interest.

          8.1 As collateral securing the Obligations, Company grants to GCBC a continuing first priority
security interest in and to the Collateral.

          8.2 Notwithstanding the creation of the above security interest, the relationship of the
parties with respect to the Factored Receivables (until the completion of any repurchase thereof by
Company and the payment of the Repurchase Price therefor) shall be that of purchaser and seller of
the Factored Receivables, and not that of lender and borrower.

     9. Financial Statements.

          9.1 At all times during the term of this Agreement, Company will, unless GCBC shall otherwise
consent in writing, furnish to GCBC:

               9.1.1 Financial Statements. Within ninety (90) days after the last day of each fiscal
year of Company an internally prepared statement of income and a statement of cash flows of Company
for such fiscal year, and a balance sheet of Company as of the last day of such fiscal year.
Within forty five (45) days after the last day of each fiscal quarter of Company, an internally
prepared statement of income and statement of cash flows of Company for such fiscal quarter, and an
internally prepared balance sheet of Company as of the last day of such fiscal quarter. Company
represents and warrants that each such statement will fairly present, in all material respects, the
results of operations and the financial condition of Company as of the date set forth therein, all
in accordance with generally accepted accounting principles.

               9.1.2 If requested by GCBC, an accounts receivable report, specifying the names, addresses,
face value, dates of invoices and due dates for each Account Debtor obligated on a Receivable.

               9.1.3 Copies of Company’s and each Guarantor’s state and federal income tax returns within
thirty days of filing, including copies of its Form 941 returns and evidence of payment of all
amounts due thereunder.

               9.1.4 If applicable, updated financial statements on each Guarantor of Company on an annual
basis so that no financial statement for any Guarantor is more than thirteen months old.

               9.1.5 The Company shall also execute promptly upon GCBC’s request an Internal Revenue Service
form 8821 or its equivalent in order to authorize GCBC to obtain information directly from, and
communicate with, the Internal Revenue Service about the Company and the status of its taxes owing
to the Internal Revenue Service.

     10. Covenants By Company.

          10.1 Company shall not, without the prior written consent of GCBC in each instance, (a) grant
any extension of time for payment of any of the Factored Receivables, (b) compromise or settle any
of the Factored Receivables for less than the full amount thereof, (c) release in whole or in part
any Account Debtor under a Factored Receivable, or (d) grant any credits, discounts, allowances,
deductions, return authorizations or the like with respect to any of the Factored Receivables.
Notwithstanding the foregoing, Company shall have the right to compromise or settle any Factored
Receivable up to a maximum amount of five percent (5.00%) of the face amount of such Factored
Receivable.

          10.2 From time to time as requested by GCBC, at the sole expense of Company, GCBC or its
designee shall have access, during reasonable business hours if prior to an Event of Default and at
any time if on or after an Event of

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Default, to all premises where Collateral is located for the
purposes of inspecting (and removing copies, if after the occurrence of an Event of Default) any of
the Collateral, including Company’s books and records, and Company shall permit GCBC or its
designee to make copies of such books and records or extracts therefrom as GCBC may request.
Without expense to GCBC,
GCBC may use any of Company’s personnel, equipment, including computer equipment, programs,
printed output and computer readable media, supplies and premises for the collection of accounts
and realization on other Collateral as GCBC, in its sole discretion, deems appropriate. Company
hereby irrevocably authorizes all accountants and third parties to disclose and deliver copies to
GCBC at Company’s expense all financial information, books and records, work papers, management
reports and other information in their possession relating to Company.

          10.3 Before sending any invoice to an Account Debtor, Company shall mark same with a notice of
assignment as may be required by GCBC.

          10.4 Company shall pay when due all payroll and other taxes.

          10.5 Company shall not create, incur, assume or permit to exist any lien upon or with respect
to any Collateral now owned or hereafter acquired by Company other than in favor of GCBC.

          10.6 Company shall indemnify GCBC from any loss arising out of the assertion of any
Avoidance Claim and shall pay to GCBC on demand the amount thereof. Company shall notify GCBC
within two Business Days of it becoming aware of the assertion of an Avoidance Claim. This
provision shall survive termination of this Agreement.

          10.7 The invoices related to all of the Receivables (whether or not Factored Receivables)
shall set forth the Lockbox Address as its sole address for payment. Company shall establish a
lock box (the “Lock Box”) with GCBC under GCBC’s exclusive control using the Lockbox Address and
shall request in writing or otherwise take reasonable steps to ensure that all payments be sent
directly to such Lock Box. Company agrees that it will deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock Box) into the Lock
Box, or in the case of ACH wire transfers that it may receive, to immediately transfer such funds
by wire transfer to a controlled account designated by GCBC. With respect to collections on
Receivables that are not Factored Receivables (including repurchased Receivables) and for which no
amounts are owing to GCBC, GCBC is irrevocably authorized and empowered to apply any and all
proceeds of collection of such Receivables received by GCBC (at GCBC’s option, without obligation
to do so) to the outstanding principal amount of, interest on, and other amounts owing in
connection with the Obligations (in any order selected by GCBC). Company acknowledges and agrees
(a) that all proceeds of collection of such Receivables by GCBC will not be segregated by GCBC and
may be commingled with GCBC’s other funds, and (b) that GCBC shall have no duty (fiduciary or
otherwise) with respect to the proceeds of collection of such Receivables except as specifically
provided for in this Agreement. If GCBC either elects not to apply the proceeds of such
collections to the Company’s Obligations, GCBC may retain possession of such collections as
additional Collateral; provided, however, that if no Event of Default has occurred, GCBC shall
release such collections to Company at the written request of Company within (3) Business Days
following the clearance of such payment item and its receipt of Company’s request.

          10.8 Company shall not, without the prior written consent of GCBC in each instance, (a) change
its legal name, or (b) merge or consolidate with any other entity.

11. Representations and Warranties.

     11.1 Company expressly warrants, represents and covenants as follows:

               11.1.1 the Company shall immediately notify GCBC in writing (i) upon it acquiring knowledge of
any facts that would cause a Factored Receivable to become an Ineligible Receivable, (ii) of any
material adverse change in Company’s financial condition or its businesses, and (iii) of any
litigation or claims against Company which could materially affect the Company or its business
operations, financial condition or prospects;

               11.1.2 the Company has good and indefeasible clear title to the Collateral, will convey clear
title to all Factored Receivables to GCBC, and has the right, power and authority, subject to all
applicable governmental regulations, to sell Factored Receivables hereunder, and to grant a
security interest in the Collateral to GCBC, to sell Factored Receivables hereunder, and to
grant a first priority security interest in the Collateral to GCBC;

               11.1.3 the Collateral is not subject to, and is free and clear of, any lien, claim, pledge,
security interest or encumbrance of any kind, other than those granted to GCBC hereunder;

               11.1.4 the Company is properly licensed and authorized to operate its business under all
applicable state and federal laws in the name designated for Company on the signature page of this
Agreement;

               11.1.5 the Company will not assign, pledge, subordinate, give a security interest in or
otherwise transfer any Collateral to any entity other than GCBC or its assigns;

               11.1.6 this Agreement is binding upon Company as well as upon Company’s successors,
representatives and assigns, and is legally enforceable in accordance with its terms;

               11.1.7 The Company has conducted business under no name in the last five (5) years other than
its name indicated herein, and uses no trade name or assumed name, excepts as follows: NONE;

               11.1.8 Company has not filed any petition under the Bankruptcy Code of the United States nor
has any petition in bankruptcy been filed against Company; no application for appointment of a
receiver or trustee for all or a substantial part of Company’s property is pending; and Company has
made no assignment for the benefit of creditors; and

               11.1.9 Company shall not (a) be or become subject at any time to any law, regulation, or list
of any government agency (including, without limitation, the U.S. Office of Foreign Asset Control
list) that prohibits or limits Bank

4

 

from making any advance or extension of credit to Company or
from otherwise conducting business with Company, or (b) fail to provide documentary and other
evidence of Company’s identity as may be requested by Bank at any time to enable Bank to verify
Company’s identity or to comply with any applicable law or regulation, including, without
limitation, Section 326 of the USA
Patriot Act of 2001, 31 U.S.C. Section 5318.

          11.2 The foregoing representations, covenants and warranties will run to the benefit of GCBC’s
successors and assigns and will be continuing in nature and will remain in full force and effect
until all obligations and sums owing to GCBC by Company have been fully performed, paid and
satisfied, whether or not this Agreement is canceled or terminated. Company does hereby bind
itself, its successors and assigns, to indemnify and hold GCBC (and its successors and assigns)
harmless from any and all cost incurred by GCBC and its successors and assigns, including
attorney’s fees and court costs, for breach of any warranty expressed in this Section.

     12. Representations Concerning Factored Receivables.

          12.1 Company represents and warrants that the Factored Receivables are and will remain:

               12.1.1 bona fide existing obligations created by the sale and delivery of goods or the
rendition of services in the ordinary course of Company’s business;

               12.1.2 unconditionally owed and will be paid to GCBC without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation;

               12.1.3 Not sales to an entity which is affiliated with Company or in any way not an “arms
length” transaction.

          12.2 Company also represents and warrants that Company has not received notice of actual or
imminent bankruptcy, insolvency, or material impairment of the financial condition of any
applicable Account Debtor regarding Factored Receivables.

     13. Default.

          13.1 Company will be in default of this Agreement upon the happening of any Event of Default.

          13.2 Waiver of Notice. COMPANY WAIVES ANY REQUIREMENT THAT GCBC INFORM COMPANY BY AFFIRMATIVE
ACT OR OTHERWISE OF ANY ACCELERATION OF COMPANY’S OBLIGATIONS HEREUNDER. FURTHER, GCBC’S FAILURE
TO CHARGE OR ACCRUE INTEREST OR FEES AT ANY “DEFAULT” OR “PAST DUE” RATE SHALL NOT BE DEEMED A
WAIVER BY GCBC OF ITS CLAIM THERETO.

          13.3 Effect of Default

               13.3.1 Upon the occurrence of any Event of Default, in addition to any right GCBC has under
this Agreement or applicable law, GCBC may immediately terminate this Agreement, at which time all
Obligations shall immediately become due and payable without notice and all Factored Receivables
shall become Ineligible Receivables which Company is obligated to repurchase. Company hereby
waives demand for payment of any Obligations, notice of nonpayment of any Obligations, notice that
GCBC is making all Obligations immediately due, as well as all other notices, demands or
presentations for payment.

               13.3.2 GCBC may commence and effect collection of any and all Collateral by whatever means
GCBC deems reasonable and necessary, subject to applicable law, without recourse to judicial
proceedings against Company.

     14. Survival. All representations, warranties and agreements herein contained on the
part of Company shall be effective so long as Obligations remain outstanding.

     15. Severability of Provisions. In the event any one or more of the provisions
contained in this Agreement is held to be invalid, illegal or unenforceable in any respect, then
such provision shall be ineffective only to the extent of such prohibition or invalidity, and the
validity, legality, and enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby.

     16. Conflict. Unless otherwise expressly stated in any other agreement between GCBC
and Company, if a conflict exists between the provisions of this Agreement and the provisions of
such other agreement, the provisions of this Agreement shall control.

     17. Amendment. Neither this Agreement nor any provisions hereof may be changed,
waived, discharged or terminated, nor may any consent to the departure from the terms hereof be
given, orally (even if supported by new consideration), but only by an instrument in writing signed
by all parties to this Agreement. Any waiver or consent so given shall be effective only in the
specific instance and for the specific purpose for which given.

     18. No Waiver. No failure to exercise and no delay in exercising any right, power, or
remedy hereunder shall impair any right, power, or remedy which GCBC may have, nor shall any such
delay be construed to be a waiver of any such rights, powers, or remedies, or any acquiescence in
any breach or default hereunder, nor shall any waiver of any breach or default of Company hereunder
be deemed a waiver of any default or breach subsequently occurring. All rights and remedies
granted to GCBC hereunder shall remain in full force and effect notwithstanding any single or
partial exercise of, or any discontinuance of action begun to enforce, any such right or remedy.
The rights and remedies specified herein are cumulative and not exclusive of each other or of any
rights or remedies which GCBC would otherwise have. Any waiver by GCBC of any breach or default
hereunder must be in writing and shall be effective only to the extent set forth in such writing
and only as to that specific instance.

     19. Headings. Section headings and numbers have been set forth for convenience only.

     20. Waiver Of Trial By Jury. IN RECOGNITION OF THE HIGHER COSTS AND DELAY THAT MAY
RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,

5

 

DEMAND,
ACTION OR CAUSE OF ACTION (A) ARISING HEREUNDER, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT
ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.

     21. Costs and Expenses; Interest.

          21.1 Company agrees to reimburse GCBC for all costs and expenses, including attorneys’ fees,
which GCBC has incurred or may incur in negotiating, preparing, administering or enforcing this
Agreement and any documents prepared in connection herewith; in protecting, monitoring, preserving
or enforcing any lien, security interest or other right granted by Company to GCBC (including
travel expenses of GCBC’s employees and agents), or arising under applicable law, whether or not
suit is brought; in connection with any federal or state insolvency proceeding commenced by or
against Company, including those (i) arising out the automatic stay, (ii) seeking dismissal or
conversion of the bankruptcy proceeding or (iii) opposing confirmation of Company’s plan
thereunder; and in connection with Company’s sale of the Factored Receivables and the grant of a
security interest in and to the Collateral (and other Receivables) to GCBC, filing fees, public
records searches, and other expenses directly related to the sale of the Factored Receivables and
the perfection of the security interests of GCBC.

          21.2 Company acknowledges that the occurrence of an Event of Default will cause GCBC to expend
substantial employee time in monitoring such default, and supervising any remedial action that may
be taken by GCBC in connection therewith. Company agrees to reimburse GCBC for its reasonable
internal costs in connection with an Event of Default, as determined and assessed by GCBC.

          21.3 All of the aforementioned costs and expenses which have been incurred on or prior to the
execution hereof shall be paid contemporaneously with the execution hereof. Any such costs and
expenses incurred subsequent to the execution hereof shall become part of the Obligations incurred,
and payable on demand, and if not paid when due, shall accrue interest for each day outstanding at
the rate equal to the lesser of the Prime Rate plus six percent or the highest nonusurious rate
allowed by applicable law.

     22. Term; Effective Date

          22.1 This Agreement shall take effect on the Effective Date set forth on the signature page
hereto and shall remain in full force for a period of twelve (12) months (the “Initial Term”). The
Agreement shall be automatically extended and renewed for successive one (1) year periods following
the Initial Term unless terminated by GCBC or the Company as hereinafter provided (each such one
(1) year period, a “Renewal Term”). This Agreement may be terminated: (a) by Company at any time
upon the giving of not less than ninety (90) days prior written notice of termination to GCBC, or
(b) by GCBC at anytime upon thirty (30) days prior written notice of termination to Company, or,
without notice by GCBC to Company if an Event of Default shall occur.

          22.2 Upon the effective date of termination, Company shall be obligated to repurchase all
Factored Receivables for a repurchase price equal to the aggregate GCBC Investment on the date of
repurchase, and all Obligations of Company to GCBC shall become immediately due and payable without
further notice or demand irrespective of any maturity dates established prior thereto. No
termination of this Agreement will in any way affect or impair any right of GCBC arising prior
thereto or by reason thereof, nor will any such termination relieve Company of any duty to GCBC
under, nor deny GCBC any benefit from, this Agreement or otherwise until all of Obligations have
been fully discharged and all Factored Receivables have been repurchased or paid in the full amount
of the GCBC Investment therein. In recognition of the GCBC’s right to have its attorneys’ fees
and other expenses incurred in connection with this Agreement secured by the Collateral, as well as
all indemnities of Company with respect to dishonored payment items and Avoidance Claims,
notwithstanding payment in full of all Obligations by Company, GCBC shall not be required to record
any terminations or satisfactions of any of GCBC’s liens on the Collateral unless and until Company
has executed and delivered to GCBC a general release in the form of Schedule C hereto. Company
understands that this provision constitutes a waiver of its rights under §9-513 of the UCC.

          22.3 In the event that (i) this Agreement is terminated by the Company prior to the lapse of
the Required Termination Period, or (ii) written notice of termination by the Company is received
by GCBC outside of a Voluntary Termination Period (whether or not the ninety day Required
Termination Period has occurred), or (iii) by GCBC at any time following an Event of
Default, Company will pay to GCBC a termination penalty equal to the total Discounts accruing
under this Agreement for the ninety day period prior to the date of termination.

     23. Indemnification and Release.

          23.1 The Company shall indemnify, defend and hold GCBC and its successors and assigns harmless
from and against all loss, claims and damages arising from (i) any breach of any warranty or
representation hereunder; (ii) any action or inaction or liability of the Company with respect to
any Receivable, including any collection action, usury claim, violation of consumer credit, truth
in lending, equal credit opportunity or unfair trade practice laws; or (iii) the manufacture, sale,
possession or use of, or otherwise relating to, goods, or the performance of services, associated
with or relating to any Receivable. Nothing herein shall constitute an assumption by GCBC of any
liability of the Company under any Receivable, including any liability to deliver goods, render
services, or to answer for any deficiencies with respect thereto, and Company shall remain fully
liable therefor.

          23.2 Company hereby releases and exculpates GCBC, its officers, employees and designees, from
any liability arising from any acts under this Agreement or in furtherance thereof whether of
omission or commission, and whether based upon any error of judgment or mistake of law or fact,
except for willful misconduct. In no event will GCBC have any liability to Company for lost
profits or other special or consequential damages. Without limiting the generality of the
foregoing, Company releases GCBC from any claims which Company may now or hereafter have arising
out of GCBC’s endorsement and deposit of checks issued by Company’s customers stating that they
were in full payment of an account, but issued for less than the full amount which may have been
owed on the account.

          The provisions of this Section 23 shall survive the termination of this Agreement and the
payment in full of the Obligations.

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     24. State Law; Jurisdiction. This Agreement is accepted, made and will be governed by
the laws of the State of Texas without regard to conflict of laws principles. Unless otherwise
elected by GCBC, venue and jurisdiction will be exclusively in the state or federal district courts in Harris County, Texas.

     25. Miscellaneous. This Agreement sets forth the entire agreement and
understanding between the parties relating to the subject matter herein and merges all prior
discussion between them. Company may not assign any of its rights or obligations hereunder without
the prior written consent of GCBC; however, GCBC may assign any of its rights and remedies. GCBC
may assign its rights and remedies including assignments for financing and/or collateralization
purposes and may grant participation interests to assignees, without further notice to or consent
by Company, all rights to receive such notice being hereby waived. Company consents to GCBC or its
assignees conducting a comprehensive due diligence review and financial history investigation
relating to Company.

     26. Notice.

          26.1 All notices required to be given to any party shall be deemed given upon the
first to occur of (i) deposit thereof in a receptacle under the control of the United States Postal
Service, (ii) transmittal by electronic means to a receiver under the control of such party; or
(iii) actual receipt by such party or an employee or agent of such party.

          26.2 For the purposes hereof, notices hereunder shall be sent to the following addresses,
or to such other addresses as each such party may in writing hereafter indicate:

	 	 	 	 	 	 	 
	 

	 	(a)
	 	If to GCBC:
	 	Gulf Coast Business Credit
	 

	 	 	 	 	 	200 St. Charles Avenue, Fourth Floor
	 

	 	 	 	 	 	New Orleans, Louisiana 70130
	 

	 	 	 	 	 	Phone No. 504-412-2029
	 

	 	 	 	 	 	Facsimile No. 504-412-2040
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	If to the Company:
	 	American Locker Group Incorporated
	 

	 	 	 	 	 	815 S. Main Street
	 

	 	 	 	 	 	Grapevine, Texas 76051
	 

	 	 	 	 	 	Phone No. 817-329-1600
	 

	 	 	 	 	 	Facsimile No. 817-481-3993

     27. Determination of Initial Payment and Residual Payment. The Purchase
Price of the Factored Receivables has been approved and verified by the Company and represents the
fair market value of an “account purchase transaction” as that term is defined in the Texas Finance
Code. The parties acknowledge that the purchase of Factored Receivables by GCBC constitutes an
outright conveyance and sale by Company to GCBC. Nothing herein, or any course of dealing in the
future, with respect to any transactions consummated pursuant to this Agreement shall be construed
to be anything other than an outright purchase and sale of the applicable Factored Receivables.
All right, title and interest of Company in any Factored Receivables will be conveyed to GCBC
immediately upon the payment of the Initial Payment therefor, and the payment of the Initial
Payment therefor will constitute consideration for the sale of the applicable Factored Receivables
and under no circumstances shall such transaction be construed as a loan and no consideration
herein set forth is for the use, forbearance or detention of money.

     28. Provision Regarding Usury. Nothing herein shall be construed as to require the
payment of interest except as specifically provided in Section 21.3; however, should a court of
competent jurisdiction rule that any consideration paid hereunder is in fact or in law to be
treated as interest, in no event shall Company be obligated to pay that interest at a rate in
excess of the maximum amount permitted by law, and all agreements, conditions, or stipulations
contained herein, if any, which may in any event or contingency whatsoever operate to bind,
obligate, or compel Company to pay a rate of interest exceeding the maximum rate of interest
permitted by law shall be without binding force or effect at law or in equity to the extent only of
the excess of interest over such maximum rate of interest permitted by law. Also in such event,
GCBC may “spread” all charges characterized as interest over the entire term of all transactions
with Company and will refund to Company the excess of any payments made over the highest lawful
rate. It is the intention of the parties hereto that in the construction and interpretation of
this Agreement, the foregoing sentence shall be given precedence over any other agreement,
condition, or stipulation herein contained which is in conflict with same.

     29. USA Patriot Act Notification. The following notification is provided to
Company pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government
fight the funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that identifies each person
or entity that opens an account, including any deposit account, treasury management account,
loan, other extension of credit, or other financial services product. This will affect the
Company in several ways. When Company opens an account, if Company is an individual, Bank
will ask for Company’s name, taxpayer identification number, residential address, date of
birth, and other information that will allow Bank to identify Company, and, if Company is
not an individual, Bank will ask for Company’s name, taxpayer identification number,
business address, and other information that will allow Bank to identify Company. Bank may
also ask, if Company is an individual, to see Company’s driver’s license or other
identifying documents, and, if Company is not an individual, to see Company’s legal
organizational documents or other identifying documents.

     30. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all signatures were
upon the same instrument. Delivery of an executed counterpart of the signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this
Agreement, and any party delivering such an executed counterpart of the signature page to this
Agreement by facsimile to any other party shall thereafter also promptly deliver a manually
executed counterpart of this Agreement to such other party, provided that the failure to deliver
such manually executed counterpart shall not affect the validity, enforceability, or binding effect
of this Agreement.

7

 

     IN WITNESS WHEREOF, the respective authorized officers of the parties have executed this
Agreement effective as of the Effective Date set forth below.

	 	 	 
	GCBC:
	 	 
	GULF COAST BANK AND TRUST COMPANY
	 	 
	D/B/A GULF COAST BUSINESS CREDIT
	 	 
	 
	 	 
	/s/ Wade Hladky
 

By: Wade Hladky

	 	 
	Title: Senior Vice President
	 	 
	 
	 	 
	COMPANY:
	 	 
	AMERICAN LOCKER GROUP INCORPORATED
	 	 
	 
	 	 
	By: /s/ Paul M Zaidins
 

Name: Paul M. Zaidins

	 	 
	Title: President, Chief Operating Officer and Chief Financial Officer
	 	 
	 
	 	 
	Effective Date: July 28, 2009
	 	 
	 
	 	 
	Attachments:
	 	 
	Schedule A- Definitions
	 	 
	Schedule B- Form of Schedule of Accounts
	 	 
	Schedule C- Form of Release
	 	 

8

 

SCHEDULE A- DEFINITIONS

          “Account Debtor”  — the obligor on a Receivable.

          “Agreement” — This Receivables Purchase Agreement as modified or amended from time to time,
and any exhibits or attachments to this Agreement.

          “Accrual Termination Date” —  see Section 5.2.

          “Avoidance Claim” — any loss, damage or expense (including attorneys’ fees) incurred by GCBC
as a result of a claim made at any time against GCBC for the repayment or recovery of any amount
received by GCBC in payment of any Receivable by the payor or legal representative thereof
(including a trustee in bankruptcy or assignee for the benefit of creditors) on the grounds of
preference under the provisions of the Bankruptcy Code or any other federal or state insolvency
law.

          “Business Day” — any day that GCBC is open for business at its offices in New Orleans,
Louisiana.

          “Collateral” — all now owned and hereafter acquired (i) accounts, chattel paper, other
Receivables, instruments (including promissory notes), investment property, documents, and general
intangibles; including without limitation all reserve accounts, Residual Payments, credits and
reserves, and letter-of credit rights, (ii) all deposit accounts; (iii) all equipment and
inventory, and (iv) all proceeds from any of the foregoing.

          “Company” — see Preamble.

          “Daily Variable Discount Rate” means, for each day, an effective daily return based on the
Prime Rate per annum, and equal to the greater of (a) (i) the Prime Rate per annum in effect on the
close of business of such day (or the immediately preceding Business Day, if such day is not a
Business Day), plus one and one-half of one percent (1.50%), divided by (ii) 360; or (b) (i) six
and one-half of one percent (6.50%), divided by (ii) 360. Provided, following an Event of
Default, the Daily Variable Discount Rate shall be an effective daily return equal to (i) eighteen
percent (18%) per annum, divided by (ii) 360.

          “Discounts”— all Fixed Discounts and all Variable Discounts with respect to a Factored
Receivable.

          “Event of Default” — (a) Company defaults in the payment of any Obligations or in the
performance of any provision hereof or of any other agreement now or hereafter entered into with
GCBC, or any warranty or representation contained herein proves to be false in any way, howsoever
minor, (b) Company or any guarantor of the Obligations becomes subject to any debtor-relief
proceedings, (c) any such guarantor fails to perform or observe any of such Guarantor’s obligations
to GCBC or shall notify GCBC of its intention to rescind, modify, terminate or revoke any guaranty
of the Obligations, or any such guaranty shall cease to be in full force and effect for any reason
whatever, (d) any Event of Default exists under any Related Party Documents, or (e) GCBC for any
reason, in good faith, deems itself insecure with respect to the prospect of repayment or
performance of the Obligations. Notwithstanding the foregoing, an Event of Default shall not be
deemed to have occurred unless GCBC shall have provided written notice of such default to the
Company and such default is not cured within five (5) days following the date of such notice.

          “Facility Limit” — $2,500,000.00, less on each date of calculation, the Gross Amount of all
outstanding Receivables that have been sold to GCBC by any Related Party on or before such date and
which have not been fully paid by the account debtor thereunder of fully repurchased from GCBC.

          “Factored Receivable” — a Receivable which has been purchased by GCBC from Company hereunder.

          “Fixed Discount”— for each Factored Receivable, the Gross Amount of the Factored Receivable
times the applicable Fixed Discount Percentage.

          “Fixed Discount Percentage” — for each Receivable, a percentage, based on the number of days
in the period (for purposes of this definition, the “Discount Period”) starting with the Initial
Payment Date and ending on the Accrual Termination Date. The percentage will be calculated as
follows: (i) if the Accrual Termination Date occurs within ten (10) days of the Initial Payment
Date, 0.20%; (ii) if the Accrual Termination Date occurs following the initial ten (10) day
period, 0.20% PLUS an additional 0.20% for each successive ten (10) day incremental period that
commences prior to the Accrual Termination Date.

          “GCBC” — see preamble.

          “GCBC Investment” — with respect to a Factored Receivable, the sum of (i) the Initial Payment,
plus (ii) all Fixed Discounts, Variable Discounts, fees and charges owed by Company to GCBC
relating to the Factored Receivable.

          “Gross Amount”— the gross amount of a Factored Receivable, based on the shortest payment
terms, prior to any credits, discounts or allowances to which the Account Debtor is entitled.

          “Guarantor” — any present or future guarantor of the Obligations, in whole or in part,
including Allen Tilley and Paul Zaidins.

          “Ineligible Receivables” — see Section 6.1.

          “Initial Payment” — for each Factored Receivable, the Net Face Amount less the Reserve Amount
relating to that Factored Receivable.

          “Initial Payment Date” — with respect to any Factored Receivable, the date on which the
Initial Payment for such Receivable is paid.

          “Late Repurchase Fee” — a fee equal to two percent (2.00%) of the Gross Amount of the
applicable Factored Receivable. The fee shall be in addition to any other fees or discounts due
GCBC.

9

 

				
	 	“Lockbox Address” — the following address:	 	P.O. Box 203047

Houston, Texas 77216-3047

          “Misdirected Payment Fee” — fifteen percent (15%) of the amount of any payment on account of a
Factored Receivable where said payment has been received by Company and not immediately delivered
in kind by Company to GCBC within three (3) Business Days as required hereunder.

          “Net Face Amount” — the Gross Amount of a Factored Receivable, less all credits, discounts,
and allowances to which the Account Debtor is entitled.

          “Obligations” — all Discounts, fees, repurchase payments, and other amounts due hereunder,
together with any and all other present and future obligations owing by Company and/or any Related
Party to GCBC, whether or not for the payment of money, whether or not evidenced by any note or
other instrument, whether direct or indirect, absolute or contingent, due or to become due, joint
or several, primary or secondary, liquidated or unliquidated, secured or unsecured, original or
renewed or extended, whether arising before, during or after the commencement of any bankruptcy
case in which Company or any Related Party is a debtor, and all principal, interest, fees, charges,
expenses, attorneys’ fees and accountants’ fees chargeable to Company or any Related Party or
incurred by GCBC in connection with any of the foregoing.

          “Person” — means an individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority, or other entity of
whatever nature.

          “Prime Rate” means, for each applicable date of calculation, the rate of interest announced in
the Wall Street Journal on such date (or the immediately preceding Business Day, if such date is
not a Business Day) as the “prime” rate of interest. In the event such rate is not published or
available, GCBC may select a substitute interest rate index of comparable nature, as determined by
GCBC in its sole reasonable discretion. The Prime Rate will be adjusted during the term of this
Agreement on a daily basis. The Prime Rate is not necessarily the lowest rate charged by GCBC on
loans or for variable discounts payable in connection with purchased receivables. If the above
Prime Rate becomes unavailable during the term of this Agreement, GCBC may designate a substitute
index after notifying Company.

          “Receivables” means any accounts, contract rights, chattel paper (electronic or written),
notes, drafts, rental receivables, conditional sale contracts, general intangibles, payment
intangibles, security agreements, installment paper, installment sales, revolving charge accounts,
and other obligations for the payment of money, including inter-company accounts and notes
receivable, and all documents, contracts, invoices and instruments evidencing or constituting the
same and all security instruments and security agreements relating thereto, which are created,
generated, acquired or otherwise owned by the Company, all property the sale or lease of which
gives rise or purports to give rise to Receivables, all related letter of credit rights, all
accessory rights, and all cash and non-cash proceeds thereof, including any merchandise returned or
rejected by, or repossessed from, Account Debtors.

          “Related Party” means Security Manufacturing Corporation and/or American Locker Security
Systems Inc.

          “Related Party Documents” means the Receivables Purchase Agreement between any Related Party
and GCBC, together with all amendments thereto and all documents executed in connection therewith,
as well as all other documents executed in connection with any Obligations of Related Party to
GCBC.

          “Repurchase Due Date” means the ninetieth (90th) day following the invoice date of
a Factored Receivable, for each Factored Receivable for which the Account Debtor has not made
payment, in cash, to GCBC, in an amount greater than the GCBC Investment by the ninetieth (90th)
day following the invoice date of the Factored Receivable. Any such Factored Receivable shall
become an Ineligible Receivable on such date (unless it becomes an Ineligible Receivable prior to
such date). Provided, if prior to that date a Factored Receivable becomes an Ineligible
Receivable, the Repurchase Due Date shall be the date on which a Factored Receivable becomes an
Ineligible Receivable, for any reason other than the failure of the Account Debtor to pay the GCBC
Investment amount within ninety (90) days of invoice date. In the event that a Receivable is
purchased, but constitutes an Ineligible Receivable, and such failure has not been expressly and
knowingly waived by GCBC at the time of purchase, the Repurchase Due Date shall be deemed to be the
date of GCBC’s purchase of the Receivable.

          “Repurchase Price” — see Section 6.1.

          “Required Termination Period” — is the ninety day period commencing on the date that GCBC
receives notice of the Company’s intent to terminate. Requests for a payout statement in
connection with a termination, subordination or assignment of GCBC’s interests in the Collateral
shall be deemed to be a request to terminate this Agreement. Termination of this Agreement shall
be deemed to have occurred upon the happening of: (i) the receipt by GCBC of the payment of all
Obligations then outstanding, and (ii) the request by the Company for a subordination, termination,
assignment or partial release of GCBC’s interests in the Collateral, or the actual filing of a
termination, assignment or partial release of GCBC’s interests in the Collateral.

          “Reserve Account” — an account established in the records of GCBC (and not a segregated or
separate account), pursuant to the provisions of Section 4 of this Agreement, to which GCBC shall
credit the Net Face Amount of all Factored Receivables purchased by GCBC from the Company
(calculated based on any and all credits, discounts available to the Company’s Account Debtors, and
anticipations earned by the Company’s Account Debtors) and which GCBC shall debit with all purchase
price payments or advances under this Agreement made to the Company or on its behalf; and against
which GCBC may charge any Discounts and any other Obligations chargeable to the Company.

          “Reserve Amount” — means the Net Face Amount of any Factored Receivable, times the Reserve
Percentage for such Factored Receivable.

          “Reserve Percentage” — initially fifteen percent (15.00%). This percentage may be increased
or decreased by GCBC in its sole discretion at any time with respect to any Receivables that may be
offered for sale hereunder, by written or verbal notice to Company prior to purchase.

          “Residual Payment”— with respect to any Factored Receivable, as of each date of calculation,
means the aggregate amount collected by GCBC from the Account Debtor with respect to the
Receivable, less the sum on such date of (i) the Initial Payment with respect to such Receivable,
and (ii) all Discounts, fees and charges payable hereunder with respect thereto, including any
attorneys fees and other costs of collection with respect thereto, to the extent unpaid by Company
on the date of

10

 

payment of the Residual Payment.

          “Security interest” — shall have the meaning provided in the Uniform Commercial Code, and
shall include without limitation a purchase interest in Factored Receivables.

          “Schedule of Accounts” — A schedule substantially in the form of Schedule “B” annexed hereto
sent by Company to GCBC evidencing Company’s offer to sell receivables.

          “Uniform Commercial Code” — the Uniform Commercial Code in effect in the State of Texas, as
amended from time to time.

          “Variable Discount” — a discount on each Factored Receivable computed on the Initial Payment
amount and accruing on a daily basis for each day of the period commencing on the Initial Payment
Date until and including the Accrual Termination Date. The Variable Discount shall accrue daily,
and for each day shall equal the product of the Daily Variable Discount Rate and the Initial
Payment for such Factored Receivable. The total Variable Discount on a Factored Receivable shall
equal the sum of all daily accruals commencing on the Initial Payment Date up to and including the
Accrual Termination Date.

          “Voluntary Termination Period” — means the period at least sixty (60) days prior and not more
than ninety (90) days prior to the end of the Initial Term or any Renewal Term, as the case may be.

11

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