Document:

$25,000,000

      

      LOAN
        AND SECURITY AGREEMENT

      

      by
        and between

      

      THE
        PRIVATEBANK AND TRUST COMPANY

      

      and

      

      ISI
        SECURITY GROUP, INC.

      

      Dated
        as of October 3, 2008

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

       

      
        	 	 	
                Page

              
	 	 
	
                SECTION
                  1. DEFINITIONS

              	
                1

              
	 	 
	 	
                1.1. Defined
                  Terms

              	
                1

              
	 	
                1.2. Accounting
                  Terms

              	
                15

              
	 	
                1.3. Other
                  Terms Defined in UCC

              	
                16

              
	 	
                1.4. Other
                  Interpretive Provisions

              	
                16

              
	 	
                 

              
	
                SECTION
                  2. COMMITMENT OF THE BANK

              	
                17

              
	 	 	
                 

              
	 	
                2.1. Facility
                  A Loans

              	
                17

              
	 	
                2.2. Facility
                  B Loans

              	
                18

              
	 	
                2.3. Facility
                  C Loan

              	
                19

              
	 	
                2.4. Additional
                  LIBOR Loan Provisions

              	
                21

              
	 	
                2.5. Interest
                  and Fee Computation; Collection of Funds

              	
                23

              
	 	
                2.6. Late
                  Charge

              	
                23

              
	 	
                2.7.Letters
                  of Credit

              	
                23

              
	 	
                2.8. Taxes

              	
                24

              
	 	
                2.9. All
                  Loans to Constitute Single Obligation

              	
                25

              
	 	
                2.10 Guaranty

              	
                25

              
	 	
                 

              
	
                SECTION
                  3. CONDITIONS OF BORROWING

              	
                25

              
	 	 	
                 

              
	 	
                3.1. Loan
                  Documents

              	
                25

              
	 	
                3.2. Event
                  of Default

              	
                27

              
	 	
                3.3. Material
                  Adverse Effect

              	
                27

              
	 	
                3.4. Litigation

              	
                27

              
	 	
                3.5. Representations
                  and Warranties

              	
                27

              
	 	
                3.6. Commitment
                  Fee

              	
                27

              
	 	
                3.7. Escrow
                  Agreement

              	
                27

              
	 	
                 

              
	
                SECTION
                  4. NOTES EVIDENCING LOANS

              	
                28

              
	 	 	
                 

              
	 	
                4.1. Facility
                  A Loan Note and Facility B Loan Note

              	
                28

              
	 	
                4.2. Facility
                  C Note

              	
                28

              
	 	
                 

              
	
                SECTION
                  5. MANNER OF BORROWING

              	
                28

              
	 	 	
                 

              
	 	
                5.1. Borrowing
                  Procedures

              	
                28

              
	 	
                5.2. LIBOR
                  Conversion and Continuation Procedures

              	
                29

              
	 	
                5.3. Letters
                  of Credit

              	
                29

              
	 	
                5.4. Automatic
                  Debit

              	
                30

              
	 	
                5.5. Discretionary
                  Disbursements

              	
                30

              
	 	
                 

              
	
                SECTION
                  6. SECURITY FOR THE OBLIGATIONS

              	
                30

              
	 	 	
                 

              
	 	
                6.1. Security
                  for Obligations

              	
                30

              
	 	
                6.2. Other
                  Collateral

              	
                31

              
	 	
                6.3. Possession
                  and Transfer of Collateral

              	
                31

              

      

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

      (continued)

      

      
        	
                 

              	 	
                Page

              
	
                 

              	 	 
	
                 

              	
                6.4. Financing
                  Statements

              	
                31

              
	
                 

              	
                6.5. Additional
                  Collateral

              	
                32

              
	
                 

              	
                6.6. Preservation
                  of the Collateral

              	
                32

              
	 	
                6.7. Other
                  Actions as to any and all Collateral

              	
                33

              
	 	
                6.8. Collateral
                  in the Possession of a Warehouseman or Bailee

              	
                33

              
	 	
                6.9. Letter-of-Credit
                  Rights

              	
                33

              
	 	
                6.10. Commercial
                  Tort Claims

              	
                33

              
	 	
                6.11. Electronic
                  Chattel Paper and Transferable Records

              	
                34

              
	 	
                 

              
	
                SECTION
                  7. REPRESENTATIONS AND WARRANTIES

              	
                34

              
	 	 	
                 

              
	 	
                7.1. Borrower
                  Organization and Name

              	
                34

              
	 	
                7.2. Authorization

              	
                34

              
	 	
                7.3. Validity
                  and Binding Nature

              	
                34

              
	 	
                7.4. Consent;
                  Absence of Breach

              	
                35

              
	 	
                7.5. Ownership
                  of Properties; Liens

              	
                35

              
	 	
                7.6. Equity
                  Ownership

              	
                35

              
	 	
                7.7. Intellectual
                  Property

              	
                35

              
	 	
                7.8. Financial
                  Statements

              	
                35

              
	 	
                7.9. Litigation
                  and Contingent Liabilities

              	
                35

              
	 	
                7.10. Event
                  of Default

              	
                36

              
	 	
                7.11. Adverse
                  Circumstances

              	
                36

              
	 	
                7.12. Environmental
                  Laws and Hazardous Substances

              	
                36

              
	 	
                7.13. Solvency,
                  etc.

              	
                37

              
	 	
                7.14. ERISA
                  Obligations

              	
                37

              
	 	
                7.15. Labor
                  Relations

              	
                37

              
	 	
                7.16. Security
                  Interest

              	
                37

              
	 	
                7.17. Lending
                  Relationship

              	
                37

              
	 	
                7.18. Business
                  Loan

              	
                38

              
	 	
                7.19. Taxes

              	
                38

              
	 	
                7.20. Compliance
                  with Regulation U

              	
                38

              
	 	
                7.21. Governmental
                  Regulation

              	
                38

              
	 	
                7.22.
                  Bank Accounts

              	
                38

              
	 	
                7.23. Place
                  of Business

              	
                38

              
	 	
                7.24. Complete
                  Information

              	
                38

              
	 	
                7.25. Subordinated
                  Debt

              	
                39

              
	 	
                7.26. Indebtedness

              	
                39

              
	 	
                7.27. Affiliate
                  Transactions

              	
                39

              
	 	
                 

              
	
                SECTION
                  8. AFFIRMATIVE COVENANTS

              	
                39

              
	 	 	
                 

              
	 	
                8.1. Compliance
                  with Bank Regulatory Requirements; Increased Costs

              	
                39

              
	 	
                8.2. Borrower
                  Existence

              	
                40

              
	 	
                8.3. Compliance
                  With Laws

              	
                40

              
	 	
                8.4. Payment
                  of Taxes and Liabilities

              	
                40

              

      

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

      (continued)

       

      
        	 	 	
                Page

              
	 	 	 
	 	
                8.5. Maintain
                  Property

              	
                40

              
	 	
                8.6. Maintain
                  Insurance

              	
                41

              
	 	
                8.7. ERISA
                  Liabilities; Employee Plans

              	
                41

              
	 	
                8.8. Financial
                  Statements

              	
                42

              
	 	
                8.9. Supplemental
                  Financial Statements

              	
                43

              
	 	
                8.10. Aged
                  Accounts, Backlog Report and WIP Schedule

              	
                43

              
	 	
                8.11. Covenant
                  Compliance Certificate

              	
                43

              
	 	
                8.12. Field
                  Audits

              	
                43

              
	 	
                8.13. Other
                  Reports

              	
                43

              
	 	
                8.14. Collateral
                  Records

              	
                44

              
	 	
                8.15. Intellectual
                  Property

              	
                44

              
	 	
                8.16. Notice
                  of Proceedings

              	
                44

              
	 	
                8.17. Notice
                  of Event of Default or Material Adverse Effect

              	
                44

              
	 	
                8.18. Environmental
                  Matters

              	
                44

              
	 	
                8.19. Further
                  Assurances

              	
                44

              
	 	
                8.20. Banking
                  Relationship

              	
                44

              
	 	
                8.21. Non-Utilization
                  Fee

              	
                45

              
	 	
                8.22. Interest
                  Rate Protection

              	
                45

              
	 	
                8.23.
                  Collateral Access Agreements

              	
                45

              
	 	
                 

              
	
                SECTION
                  9. NEGATIVE COVENANTS

              	
                45

              
	 	 	
                 

              
	 	
                9.1. Debt

              	
                45

              
	 	
                9.2. Encumbrances

              	
                46

              
	 	
                9.3. Investments

              	
                46

              
	 	
                9.4. Transfer;
                  Merger; Sales

              	
                47

              
	 	
                9.5. Issuance
                  of Capital Securities

              	
                47

              
	 	
                9.6. Distributions

              	
                47

              
	 	
                9.7. Transactions
                  with Affiliates

              	
                48

              
	 	
                9.8. Unconditional
                  Purchase Obligations

              	
                48

              
	 	
                9.9. Cancellation
                  of Debt

              	
                48

              
	 	
                9.10. Inconsistent
                  Agreements

              	
                48

              
	 	
                9.11. Use
                  of Proceeds

              	
                49

              
	 	
                9.12. Bank
                  Accounts

              	
                49

              
	 	
                9.13. Business
                  Activities; Change of Legal Status and Organizational
                  Documents

              	
                49

              
	 	
                 

              
	
                SECTION
                  10. FINANCIAL COVENANTS

              	
                49

              
	 	 	
                 

              
	 	
                10.1. Senior
                  Debt to EBITDA

              	
                49

              
	 	
                10.2. Total
                  Debt to EBITDA

              	
                49

              
	 	
                10.3. Fixed
                  Charge Coverage

              	
                49

              
	 	
                10.4. Hedging

              	
                50

              
	 	
                 

              
	
                SECTION
                  11. EVENTS OF DEFAULT

              	
                50

              

      

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

      (continued)

       

      
        	 	 	
                Page

              
	 	 	 
	 	
                11.1. Nonpayment
                  of Obligations

              	
                50

              
	 	
                11.2. Misrepresentation

              	
                50

              
	 	
                11.3. Nonperformance

              	
                50

              
	 	
                11.4. Default
                  under Loan Documents

              	
                50

              
	 	
                11.5. Default
                  under Other Debt

              	
                50

              
	 	
                11.6. Other
                  Material Obligations

              	
                50

              
	 	
                11.7. Bankruptcy,
                  Insolvency, etc.

              	
                51

              
	 	
                11.8. Judgments

              	
                51

              
	 	
                11.9. Change
                  in Control

              	
                51

              
	 	
                11.10. Collateral
                  Impairment

              	
                51

              
	 	
                11.11. Material
                  Adverse Effect

              	
                51

              
	 	
                11.12. Guaranty

              	
                51

              
	 	
                11.13. Subordinated
                  Debt

              	
                51

              
	 	
                 

              
	
                SECTION
                  12. REMEDIES

              	
                51

              
	 	 	
                 

              
	 	
                12.1. Possession
                  and Assembly of Collateral

              	
                52

              
	 	
                12.2. Sale
                  of Collateral

              	
                52

              
	 	
                12.3. Standards
                  for Exercising Remedies

              	
                53

              
	 	
                12.4. UCC
                  and Offset Rights

              	
                53

              
	 	
                12.5. Additional
                  Remedies

              	
                54

              
	 	
                12.6. Attorney-in-Fact

              	
                55

              
	 	
                12.7. No
                  Marshaling

              	
                55

              
	 	
                12.8. Application
                  of Proceeds

              	
                55

              
	 	
                12.9. No
                  Waiver

              	
                56

              
	 	
                12.10. Letters
                  of Credit

              	
                56

              
	 	
                 

              
	
                SECTION
                  13. MISCELLANEOUS

              	
                56

              
	 	 	
                 

              
	 	
                13.1. Obligations
                  Absolute

              	
                56

              
	 	
                13.2. Entire
                  Agreement

              	
                57

              
	 	
                13.3. Amendments;
                  Waivers

              	
                57

              
	 	
                13.4. WAIVER
                  OF DEFENSES

              	
                57

              
	 	
                13.5. FORUM
                  SELECTION AND CONSENT TO JURISDICTION

              	
                57

              
	 	
                13.6. WAIVER
                  OF JURY TRIAL

              	
                58

              
	 	
                13.7. Assignability

              	
                58

              
	 	
                13.8. Confirmations

              	
                58

              
	 	
                13.9. Confidentiality

              	
                58

              
	 	
                13.10. Binding
                  Effect

              	
                59

              
	 	
                13.11. Governing
                  Law

              	
                59

              
	 	
                13.12. Enforceability

              	
                59

              
	 	
                13.13. Survival
                  of Borrower Representations

              	
                59

              
	 	
                13.14. Extensions
                  of Bank’s Commitment

              	
                59

              
	 	
                13.15. Time
                  of Essence

              	
                60

              
	 	
                13.16. Counterparts;
                  Facsimile Signatures

              	
                60

              

      

      
        
          
          

        

        
          -iv-

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

      (continued)

      

      
        	 	 	
                Page

              
	 	 	 
	 	
                13.17. Notices

              	
                60

              
	 	
                13.18. Release
                  of Claims Against Bank

              	
                61

              
	 	
                13.19. Costs,
                  Fees and Expenses

              	
                61

              
	 	
                13.21. Indemnification

              	
                62

              
	 	
                13.22. Revival
                  and Reinstatement of Obligations

              	
                62

              

      

      
        
          
          

        

        
          -v-

          
            

          

        

        
          
          

        

      

      SCHEDULES:

       

      
        	
                7.1

                 

              	
                Business
                  Names

                 

              
	
                7.6

                 

              	
                Corporate
                  Structure

                 

              
	
                7.9

                 

              	
                Litigation

                 

              
	
                7.22

                 

              	
                Bank
                  Accounts

                 

              
	
                7.23

                 

              	
                Places
                  of Business

                 

              
	
                7.25

                 

              	
                Subordinated
                  Debt

                 

              
	
                7.26

                 

              	
                Permitted
                  Indebtedness

                 

              
	
                7.27

                 

              	
                Affiliate
                  Transactions

                 

              
	
                9.2

                 

              	
                Permitted
                  Liens

                 

              
	
                9.7

              	
                Transactions
                  with Affiliates

              

      

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

      LOAN
        AND SECURITY AGREEMENT

       

      This
        LOAN AND SECURITY AGREEMENT
        dated as
        of October 3, 2008 (the “Agreement”),
        is
        executed by and between
        ISI SECURITY GROUP, INC.,
        a
        Delaware corporation, (the “Borrower”),
        which
        has its chief executive office located at 12903 Delivery Drive, San Antonio,
        Texas 78247, and
        THE PRIVATEBANK AND TRUST COMPANY,
        an
        Illinois banking corporation (the “Bank”),
        whose
        address is 70 W. Madison, 2nd
        floor,
        Chicago, Illinois 60602.

       

      RECITALS:

       

      Pursuant
        to and subject to the terms and conditions of this Agreement, the Bank will
        make
        available to the Borrower (a) the Facility A Loan secured revolving line
        of
        credit in the maximum amount of $10,000,000.00 with a $5,000,000.00 sublimit
        for
        the issuance of letters of credit, (b) the Facility B Loan secured revolving
        line of credit in the maximum amount of $5,000,000.00, to be used solely
        for the
        issuance of letters of credit, and (c) the Facility C Loan term loan in the
        maximum amount of $10,000,000.00. The loans shall be used to refinance existing
        indebtedness, working capital and for other general corporate purposes. Payment
        by the Borrower of the amounts due hereunder will be secured by liens on
        and
        security interests in the personal property of the Borrower and guaranteed
        by
        the affiliates identified in this Agreement.

       

      NOW
        THEREFORE, in consideration of the premises, and the mutual covenants and
        agreements set forth herein, the Borrower agrees to borrow from the Bank,
        and
        the Bank agrees to lend to the Borrower, subject to and upon the following
        terms
        and conditions:

       

      AGREEMENTS:

       

      Section
        1. DEFINITIONS.

      

      1.1. Defined
        Terms.
        For the
        purposes of this Agreement, in addition to the definitions included in the
        Preamble and Recitals above, the following capitalized words and phrases
        shall
        have the meanings set forth below.

       

      “Affiliate”
of
        any
        Person shall mean (a) any other Person which, directly or indirectly, controls
        or is controlled by or is under common control with such Person, (b) any
        officer
        or director of such Person, and (c) with respect to the Bank, any entity
        administered or managed by the Bank, or an Affiliate or investment advisor
        thereof and which is engaged in making, purchasing, holding or otherwise
        investing in commercial loans. A Person shall be deemed to be “controlled by”
any other Person if such Person possesses, directly or indirectly, power
        to
        direct or cause the direction of the management and policies of such Person
        whether by contract, ownership of voting securities, membership interests
        or
        otherwise.

       

      “Applicable
        Margin”
shall
        mean the rate per annum added to the Prime Rate and LIBOR to determine the
        Interest Rate as determined by the ratio of Total Debt to EBITDA of the Borrower
        for the prior fiscal quarter, effective as of any Interest Rate Change Date,
        as
        set forth below:

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                FACILITY
                  A LOAN AND FACILITY B LOAN

                AND

                LETTER
                  OF CREDIT FEES

              	 	
                FACILITY
                  C LOAN

              	 
	
                Level

              	 	
                 Ratio of Total Debt to

                 EBITDA

              	 	
                 Applicable 

                Margin for 

                Prime Loans

              	 	
                 Applicable

                 Margin for 

                LIBOR 

                Loans

              	 	
                 Applicable 

                Margin for 

                Prime Loans

              	 	
                 Applicable 

                Margin for 

                LIBOR 

                Loans

              	 
	
                I

              	 	 	
                Greater
                  than 3.50

              	 	 	
                1.00

              	
                %

              	 	
                3.00

              	
                %

              	 	
                1.50

              	
                %

              	 	
                3.50

              	
                %

              
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                II

              	 	 	
                Greater
                  than 3.00

                to

                1.00

                less
                  than or equal

                to

                3.50
                  to 1.00

              	 	 	
                0.75

              	
                %

              	 	
                2.75

              	
                %

              	 	
                1.25

              	
                %

              	 	
                3.25

              	
                %

              
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                III

              	 	 	
                Greater
                  than 2.50

                to
                  1.00;

                less
                  than or equal

                to

                3.00
                  to 1.00

              	 	 	
                0.50

              	
                %

              	 	
                2.50

              	
                %

              	 	
                1.00

              	
                %

              	 	
                3.00

              	
                %

              
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                IV

              	 	 	
                Greater
                  than 2.00

                to
                  1.00;

                less
                  than or equal

                to

                2.50
                  to 1:00

              	 	 	
                0.25

              	
                %

              	 	
                2.25

              	
                %

              	 	
                0.75

              	
                %

              	 	
                2.75

              	
                %

              
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                V

              	 	 	
                Less
                  than or equal

                to

                2.00
                  to 1.00

              	 	 	
                0.00

              	
                %

              	 	
                2.00

              	
                %

              	 	
                0.50

              	
                %

              	 	
                2.50

              	
                %

              

      

       

      Level
        I
        pricing shall be in effect from the date hereof until the Bank’s receipt of the
        Borrower’s financial statements for the period ending September 30, 2008 at
        which time the Applicable Margin will be determined based on the Borrower’s
        ratio of Total Debt to EBITDA for the period ending September 30, 2008.
        Thereafter, the Applicable Margin shall be adjusted quarterly. Notwithstanding
        the foregoing, in the event that any financial statement or related Compliance
        Certificate is shown to be inaccurate (regardless of whether this Agreement
        is
        in effect or any of the Loans are outstanding when such inaccuracy is
        discovered), and such inaccuracy, if corrected, would have led to the
        application of a higher or lower Applicable Margin for any period (an
“Applicable
        Period”)
        than
        the Applicable Margin actually applied during such Applicable Period, then
        (i) the Borrower shall immediately deliver to the Bank a corrected
        Compliance Certificate for such Applicable Period, (ii) the Applicable
        Margin shall be determined as if such higher or lower Level were applicable
        for such Applicable Period, and (iii) the Borrower shall immediately pay to
        the Bank the accrued additional interest owing as a result of an increased
        Applicable Margin for such Applicable Period, which payment shall be promptly
        applied by the Bank in accordance with the terms of this Agreement or the
        Bank
        shall repay to the Borrower the accrued additional interest overpaid as a
        result
        of a decreased Applicable Margin for such Applicable Period, which payment
        shall
        be promptly applied by the Bank against the outstanding Obligations in
        accordance with the terms of this Agreement, provided,
        however, that
        the
        Borrower shall not be responsible for payments attributable to a period more
        than one hundred fifty (150) days prior to timely delivery to the Bank of
        the
        corrected Compliance Certificate. This paragraph shall not limit the rights
        of
        the Bank with respect to its remedies under Section
        12
        hereof.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      “Argyle”
shall
        mean Argyle Security, Inc., a Delaware corporation.

       

      “Asset
        Disposition”
shall
        mean the sale, lease, assignment or other transfer for value (each a
“Disposition”)
        by the
        Borrower or any Subsidiary to any Person (other than the Borrower or any
        Subsidiary) of any asset or right of the Borrower or any Subsidiary (including,
        the loss, destruction or damage of any thereof or any actual or threatened
        (in
        writing to the Borrower or such Subsidiary) condemnation, confiscation,
        requisition, seizure or taking thereof), other than (a) the Disposition of
        any
        asset which is to be replaced, and is in fact replaced, within sixty (60)
        days
        with another asset performing the same or a similar function, (b) the sale
        or
        lease of inventory in the ordinary course of business, and (c) other
        Dispositions in any fiscal year the net proceeds of which do not in the
        aggregate exceed $100,000.00.

       

      “Bank
        Product Agreements”
shall
        mean those certain agreements entered into from time to time by the Borrower
        or
        any Subsidiary with the Bank or any Affiliate of the Bank concerning Bank
        Products.

       

      “Bank
        Product Obligations”
shall
        mean all obligations, liabilities, contingent reimbursement obligations,
        fees,
        and expenses owing by the Borrower or any Subsidiary to the Bank or any
        Affiliate of the Bank pursuant to or evidenced by the Bank Product Agreements
        and irrespective of whether for the payment of money, whether direct or
        indirect, absolute or contingent, due or to become due, now existing or
        hereafter arising.

       

      “Bank
        Products”
shall
        mean any service or facility extended to the Borrower or any Subsidiary by
        the
        Bank or any Affiliate of the Bank, including: (a) credit cards, (b) credit
        card
        processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions,
        (f) cash management, including controlled disbursement, accounts or services,
        or
        (g) Hedging Agreements.

       

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

       

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

       

      “Capital
        Expenditures”
shall
        mean all expenditures (including Capitalized Lease Obligations) which, in
        accordance with GAAP, would be required to be capitalized and shown on the
        consolidated balance sheet of the Borrower, but excluding expenditures made
        in
        connection with the replacement, substitution or restoration of assets to
        the
        extent financed (i) from insurance proceeds (or other similar recoveries)
        paid
        on account of the loss of or damage to the assets being replaced or restored
        or
        (ii) with awards of compensation arising from the taking by eminent domain
        or
        condemnation of the assets being replaced.

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

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

       

      “Capital
        Securities”
shall
        mean, with respect to any Person, all shares, interests, participations or
        other
        equivalents (however designated, whether voting or non-voting) of such Person’s
        capital, whether now outstanding or issued or acquired after the date hereof,
        including common shares, preferred shares, membership interests in a limited
        liability company, limited or general partnership interests in a partnership
        or
        any other equivalent of such ownership interest.

       

      “Capitalized
        Lease Obligations”
shall
        mean, as to any Person, all rental obligations of such Person, as lessee
        under a
        Capital Lease which are or will be required to be capitalized on the books
        of
        such Person.

       

      “Cash
        Equivalent Investment”
shall
        mean, at any time, (a) any evidence of Debt, maturing not more than one year
        after such time, issued or guaranteed by the United States government or
        any
        agency thereof, (b) commercial paper, maturing not more than one year from
        the
        date of issue, or corporate demand notes, in each case (unless issued by
        the
        Bank or its holding company) rated at least A-l by Standard & Poor’s Ratings
        Services, a division of The McGraw-Hill Companies, Inc. or P-l by Moody’s
        Investors Service, Inc., (c) any certificate of deposit, time deposit or
        banker’s acceptance, maturing not more than one year after such time, or any
        overnight Federal Funds transaction that is issued or sold by the Bank or
        its
        holding company (or by a commercial banking institution that is a member
        of the
        Federal Reserve System and has a combined capital and surplus and undivided
        profits of not less than $500,000,000), (d) any repurchase agreement entered
        into with the Bank, or other commercial banking institution of the nature
        referred to in clause
        (c),
        which
        (i) is secured by a fully perfected security interest in any obligation of
        the
        type described in any of clauses
        (a)
        through
(c)
        above,
        and (ii) has a market value at the time such repurchase agreement is entered
        into of not less than 100% of the repurchase obligation of the Bank, or other
        commercial banking institution, thereunder, (e) money market accounts or
        mutual
        funds which invest exclusively in assets satisfying the foregoing requirements,
        and (f) other short term liquid investments approved in writing by the
        Bank.

       

      “Change
        in Control”
shall
        mean the occurrence of any of the following events: (a) Argyle shall cease
        to
        own and control, directly or indirectly, at least 100% of the outstanding
        Capital Securities
        of the Borrower; (b) the Borrower shall cease to, directly or indirectly,
        own
        and control 100% of each class of the outstanding Capital Securities of each
        Subsidiary; or (c) the granting by Argyle, directly or indirectly, of a security
        interest in its ownership interest in the Borrower, which could result in
        a
        change in the identity of the individuals or entities in control of the
        Borrower. For the purpose hereof, the terms “control” or “controlling” shall
        mean the possession of the power to direct, or cause the direction of, the
        management and policies of the Borrower by contract or voting of securities
        or
        ownership interests.

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      “Collateral”
shall
        have the meaning set forth in Section
        6.1
        hereof.

       

      “Collateral
        Access Agreement”
shall
        mean an agreement in form and substance reasonably satisfactory to the Bank
        pursuant to which a mortgagee or lessor of real property on which Collateral
        is
        stored or otherwise located, or a warehouseman, processor or other bailee
        of
        Inventory or other property owned by the Borrower or any Subsidiary,
        acknowledges the Liens of the Bank and waives any Liens held by such Person
        on
        such property, and, in the case of any such agreement with a mortgagee or
        lessor, permits the Bank reasonable access to and use of such real property
        following the occurrence and during the continuance of an Event of Default
        to
        assemble, complete and sell any collateral stored or otherwise located
        thereon.

       

      “Compliance
        Certificate”
shall
        have the meaning set forth in Section
        8.12
        hereof.

       

      “Contingent
        Liability”
and
        “Contingent
        Liabilities”
shall
        mean, respectively and without duplication, each obligation and liability
        of the
        Borrower and all such obligations and liabilities of the Borrower incurred
        pursuant to any agreement, undertaking or arrangement by which the Borrower:
        (a)
        guarantees, endorses or otherwise becomes or is contingently liable upon
        (by
        direct or indirect agreement, contingent or otherwise, to provide funds for
        payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise
        to assure a creditor against loss) the indebtedness, dividend, obligation
        or
        other liability of any other Person in any manner (other than by endorsement
        of
        instruments in the course of collection, guarantees of Debt of a Subsidiary
        that
        is reflected on the consolidated balance sheet of the Borrower, or with respect
        to surety bonds, bids, performance bonds, payment bonds and similar obligations,
        and letters of credit securing the foregoing), including any indebtedness,
        dividend or other obligation which may be issued or incurred at some future
        time; (b) guarantees the payment of dividends or other distributions upon
        the
        shares or ownership interest of any other Person; (c) undertakes or agrees
        (whether contingently or otherwise): (i) to purchase, repurchase, or otherwise
        acquire any indebtedness, obligation or liability of any other Person or
        any
        property or assets constituting security therefor, (ii) to advance or provide
        funds for the payment or discharge of any indebtedness, obligation or liability
        of any other Person (whether in the form of loans, advances, stock purchases,
        capital contributions or otherwise), or to maintain solvency, assets, level
        of
        income, working capital or other financial condition of any other Person,
        or
        (iii) to make payment to any other Person other than for value received;
        (d)
        agrees to lease property or to purchase securities, property or services
        from
        such other Person with the purpose or intent of assuring the owner of such
        indebtedness or obligation of the ability of such other Person to make payment
        of the indebtedness or obligation; (e) to induce the issuance of, or in
        connection with the issuance of, any letter of credit for the benefit of
        such
        other Person; or (f) undertakes or agrees otherwise to assure a creditor
        against
        loss. The amount of any Contingent Liability shall (subject to any limitation
        set forth herein) be deemed to be the outstanding principal amount (or maximum
        permitted principal amount, if larger) of the indebtedness, obligation or
        other
        liability guaranteed or supported thereby. If the Borrower and a Guarantor
        are
        responsible for or liable for the same obligation, such obligation shall
        be
        deemed to be only one obligation for the purposes of this definition.
        Notwithstanding the foregoing, “Contingent Liability” will not include any
        contingent liability that is also a Liability on the consolidated balance
        sheet
        of the Borrower.

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      “Debt”
shall
        mean, as to any Person, without duplication, (a) all indebtedness of such
        Person; (b) all borrowed money of such Person (including principal, interest,
        fees and charges), whether or not evidenced by bonds, debentures, notes or
        similar instruments; (c) all obligations to pay the deferred purchase price
        of
        property or services; (d) all obligations, contingent or otherwise, with
        respect
        to the maximum face amount of all letters of credit (whether or not drawn),
        bankers’ acceptances and similar obligations issued for the account of such
        Person (including the Letters of Credit), and all unpaid drawings in respect
        of
        such letters of credit, bankers’ acceptances and similar obligations; (e) all
        indebtedness secured by any Lien on any property owned by such Person, whether
        or not such indebtedness has been assumed by such Person (provided, however,
        if
        such Person has not assumed or otherwise become liable in respect of such
        indebtedness, such indebtedness shall be deemed to be in an amount equal
        to the
        fair market value of the property subject to such Lien at the time of
        determination); (f) the aggregate amount of all Capitalized Lease Obligations
        of
        such Person; (g) all Contingent Liabilities of such Person, whether or not
        reflected on its balance sheet; (h) all Hedging Obligations of such Person;
        (i)
        all Debt of any partnership of which such Person is a general partner; and
        (j)
        all monetary obligations of such Person under (i) a so-called synthetic,
        off-balance sheet or tax retention lease, or (ii) an agreement for the use
        or
        possession of property creating obligations that do not appear on the balance
        sheet of such Person but which, upon the insolvency or bankruptcy of such
        Person, would be characterized as the indebtedness of such Person (without
        regard to accounting treatment). Notwithstanding the foregoing, Debt shall
        not
        include (i) trade payables and accrued expenses incurred by such Person in
        accordance with customary practices and in the ordinary course of business
        of
        such Person, or (ii) operating leases as defined by GAAP.

       

      “Default
        Rate”
shall
        mean a per annum rate of interest equal to rate then in effect plus
        two
        percent (2%).

       

      “Deposit
        Account”
shall
        have the meaning given to such term in Section
        9.12
        herein.

       

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

       

      “EBITDA”
shall
        mean, for any period, the sum for such period of: (i) Consolidated Net
        Income, plus
        (ii)
        Interest Charges, plus
        (iii)
        federal and state income taxes and the Texas Margin Tax, plus
        (iv)
        depreciation and amortization, plus
        (v)
        non-cash management compensation expense, plus
        (vi) all
        other non-cash charges.

       

      “Employee
        Plan”
        includes any pension, stock bonus, employee stock ownership plan, retirement,
        profit sharing, deferred compensation, stock option, bonus or other incentive
        plan, whether qualified or nonqualified, or any disability, medical, dental
        or
        other health plan, life insurance or other death benefit plan, vacation benefit
        plan, severance plan or other employee benefit plan or arrangement, including
        those pension, profit-sharing and retirement plans of the Borrower described
        from time to time in the financial statements of the Borrower and any pension
        plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or
        any
        multi-employer plan, maintained or administered by the Borrower or to which
        the
        Borrower is a party or may have any liability or by which the Borrower is
        bound.

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      “Environmental
        Laws”
shall
        mean all present or future federal, state or local laws, statutes, common
        law
        duties, rules, regulations, ordinances and codes, together with all
        administrative or judicial orders, consent agreements, directed duties,
        requests, licenses, authorizations and permits of, and agreements with, any
        governmental authority, in each case relating to any matter arising out of
        or
        relating to public health and safety, or pollution or protection of the
        environment or workplace, including any of the foregoing relating to the
        presence, use, production, generation, handling, transport, treatment, storage,
        disposal, distribution, discharge, emission, release, threatened release,
        control or cleanup of any Hazardous Substance.

       

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

       

      “Event
        of Default”
shall
        mean any of the events or conditions which are set forth in
        Section 11
        hereof.

       

      “Excess
        Cash Flow”
shall
        mean, for any fiscal year of the Borrower, an amount equal to (a) EBITDA
        minus
        (b) income taxes and the Texas Margin Tax paid in cash by the Borrower and
        its
        Subsidiaries minus (c) cash Interest Charges minus (d) scheduled principal
        payments on all Debt minus (e) amounts due and payable during such fiscal
        year
        for Capital Expenditures not financed with Funded Debt (f) either (1) minus
        the
        increase in Working Capital or (2) plus the decrease in Working Capital as
        applicable, if any, by which the Working Capital of the Borrower and its
        Subsidiaries increased/decreased during the last preceding fiscal year (except
        as a result of the reclassification of items from long-term to
        short-term).

      

      “Existing
        Indebtedness”
shall
        mean the Debt evidenced by two Promissory Notes, each dated January 23, 2008,
        in
        the original principal amount of $12,000,000.00 and $4,250,000.00, respectively,
        made by the Borrower to the order of LaSalle Bank National
        Association.

      

      “Facility
        A Letter of Credit Obligations”
means
        the Letter of Credit Obligations in the maximum amount of $5,000,000.00 incurred
        by the Borrower under the Facility A Loan Commitment.

       

      “Facility
        A Loan Availability”
shall
        mean, at any time, an amount equal to the lesser of the Facility A Loan
        Commitment minus
        the
        Facility A Letter of Credit Obligations.

       

      “Facility
        A Loan
        Commitment”
means
        the commitment of the Bank to Advance Facility A Loans to the Borrower in
        the
        aggregate amount of $10,000,000.00 as provided in Section
        2.1.

       

      “Facility
        A Loan Letter of Credit Commitment”
shall
        mean, at any time, an amount equal to the lesser of (a) the Facility A Loan
        Commitment minus
        the
        aggregate amount of all Facility A Loans outstanding, or (b) Five Million
        and
        00/100 Dollars ($5,000,000.00).

       

      “Facility
        A Loan Letter of Credit Maturity Date”
shall
        mean October 3, 2011.

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      “Facility
        A Loan”
means
        the $10,000,000.00 secured revolving line of credit with a $5,000,000.00
        sublimit to provide standby letters of credit.

       

      “Facility
        A Loan Note”
means
        the promissory note in the principal amount of $10,000,000.00 evidencing
        the
        Facility A Loan, made by the Borrower and payable to the order of the Bank,
        substantially in the form of Exhibit
        A-1
        hereto,
        as the same may be supplemented, modified, amended or restated from time
        to time
        in the manner provided herein. 

       

      “Facility
        A Loan Scheduled Maturity Date”
means
        October 3, 2011.

       

      “Facility
        B Letter of Credit Obligations”
means
        the Letter of Credit Obligations in the maximum amount of $5,000,000.00 incurred
        by the Borrower under the Facility B Loan Commitment.

       

      “Facility
        B Loan Availability”
shall
        mean, at any time, an amount equal to the lesser of the Facility B Loan
        Commitment minus
        the
        Facility B Letter of Credit Obligations.

       

      “Facility
        B Loan
        Commitment”
means
        the commitment of the Bank to Advance Facility B Loans to the Borrower in
        the
        aggregate amount of $5,000,000.00 as provided in Section
        2.2.

       

      “Facility
        B Loan”
means
        the $5,000,000.00 secured revolving line of credit to be used exclusively
        to
        provide standby letters of credit. 

       

      “Facility
        B Loan
        Note”
means
        the promissory note in the principal amount of $5,000,000.00 evidencing the
        Facility B Loan, made by the Borrower and payable to the order of the Bank,
        substantially in the form of Exhibit
        A-2
        hereto,
        as the same may be supplemented, modified, amended or restated from time
        to time
        in the manner provided herein.

       

      “Facility
        B Loan Scheduled Maturity Date”
means
        October 3, 2011.

       

      “Facility
        C Loan
        Commitment”
means
        the commitment of the Bank to Advance Facility C Loans to the Borrower in
        the
        aggregate amount of $10,000,000.00 as provided in Section
        2.3.

       

      “Facility
        C Loan”
means
        the $10,000,000.00 term loan.

       

      “Facility
        C Loan Scheduled Maturity Date”
means
        October 3, 2011.

       

      “Facility
        C
        Loan
        Note”
means
        the promissory note in the principal amount of $10,000,000.00 evidencing
        the
        Facility C Loan, made by the Borrower and payable to the order of the Bank,
        substantially in the form of Exhibit
        A-3
        hereto,
        as the same may be supplemented, modified, amended or restated from time
        to time
        in the manner provided herein.

       

      “Facility
        C Loan Mandatory Prepayment”
shall
        have the meaning set forth in Section
        2.3(d)
        hereof.

       

      “Federal
        Funds Rate”
shall
        mean, for any day, a fluctuating interest rate equal for each day during
        such
        period to the weighted average of the rates on overnight Federal funds
        transactions with members of the Federal Reserve System arranged by Federal
        funds brokers, as published for such day (or, if such day is not a Business
        Day,
        for the next preceding Business Day) by the Federal Reserve Bank of New York,
        or, if such rate is not so published for any day which is a Business Day,
        the
        average of the quotations for such day on such transactions received by the
        Bank
        from three Federal funds brokers of recognized standing selected by the Bank.
        The Bank’s determination of such rate shall be binding and conclusive absent
        manifest error.

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      “Funded
        Debt”
shall
        mean, as to any Person, all Debt of such Person that matures more than one
        year
        from the date of its creation (or is renewable or extendible, at the option
        of
        such Person, to a date more than one year from such date).

       

      “GAAP”
shall
        mean generally accepted accounting principles set forth from time to time
        in the
        opinions and pronouncements of the Accounting Principles Board and the American
        Institute of Certified Public Accountants and statements and pronouncements
        of
        the Financial Accounting Standards Board (or agencies with similar functions
        of
        comparable stature and authority within the U.S. accounting profession),
        which
        are applicable to the circumstances as of the date of determination, provided,
        however, that interim financial statements or reports shall be deemed in
        compliance with GAAP despite the absence of footnotes and fiscal year-end
        adjustments as required by GAAP.

       

      “Guarantor”
and
        “Guarantors”
shall
        mean, respectively, each of and collectively, the following: Detention
        Contracting Group, Ltd., a Texas limited partnership, ISI Detention Contracting
        Group, Inc., a Texas corporation, ISI Detention Contracting Group, Inc.,
        a
        California corporation, ISI Detention Contracting Group, Inc., a New Mexico
        corporation, ISI Detention Systems, Inc., a Texas corporation, ISI Systems,
        Ltd., a Texas limited partnership, Metroplex Control Systems, Inc., a Texas
        corporation, ISI Controls, Ltd., a Texas limited partnership, Metroplex
        Commercial Fire and Security Alarms, Inc., a Texas corporation, MCFSA, Ltd.,
        a
        Texas limited partnership, Com-Tec Security, LLC, a Wisconsin limited liability
        company, Com-Tec California Limited Partnership, a Wisconsin limited partnership
        and any other Person who shall hereafter become a Subsidiary of Borrower
        or any
        Guarantor.

       

      “Guaranty”
shall
        have the meaning set forth in
        Section 3.1
        hereof.

       

      “Hazardous
        Substances”
shall
        mean (a) any petroleum or petroleum products, radioactive materials,
        asbestos in any form that is or could become friable, urea formaldehyde foam
        insulation, dielectric fluid containing levels of polychlorinated biphenyls,
        radon gas and mold; (b) any chemicals, materials, pollutant or substances
        defined as or included in the definition of “hazardous substances”, “hazardous
        waste”, “hazardous materials”, “extremely hazardous substances”, “restricted
        hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”,
“pollutants” or words of similar import, under any applicable Environmental Law;
        and (c) any other chemical, material or substance, the exposure to, or
        release of which is prohibited, limited or regulated by any governmental
        authority or for which any duty or standard of care is imposed pursuant to,
        any
        Environmental Law.

       

      “Hedging
        Agreement”
shall
        mean any interest rate, currency or commodity swap agreement, cap agreement
        or
        collar agreement, and any other agreement or arrangement designed to protect
        a
        Person against fluctuations in interest rates, currency exchange rates or
        commodity prices.

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      “Hedging
        Obligation”
shall
        mean, with respect to any Person, any liability of such Person under any
        Hedging
        Agreement.

       

      “Indemnified
        Party”
and
        “Indemnified
        Parties”
shall
        mean, respectively, each of the Bank and any parent corporation, Affiliate
        or
        Subsidiary of the Bank, and each of their respective officers, directors,
        employees, attorneys and agents, and all of such parties and
        entities.

       

      “Intellectual
        Property”
shall
        mean the collective reference to all rights, priorities and privileges relating
        to intellectual property, whether arising under United States, multinational
        or
        foreign laws or otherwise, including copyrights, patents, service marks and
        trademarks, and all registrations and applications for registration therefor
        and
        all licensees thereof, trade names, domain names, technology, know-how and
        processes, and all rights to sue at law or in equity for any infringement
        or
        other impairment thereof, including the right to receive all proceeds and
        damages therefrom.

       

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

       

      “Interest
        Period”
shall
        mean successive one, two, three or six month periods, beginning and ending
        as
        provided in this Agreement.

       

      “Interest
        Rate”
shall
        mean the Borrower’s option from time to time of (i) a floating per annum rate of
        interest equal to the Prime Rate
        plus
        the
        Applicable Margin, or (ii) the LIBOR Rate plus
        the
        Applicable Margin.

       

      “Interest
        Rate Change Date”
shall
        mean the date two (2) Business Days after the delivery to the Bank of the
        quarterly or year-end financial statements of the Borrower, which initial
        Change
        Date shall occur after the delivery to the Bank of the financial statements
        of
        the Borrower for the fiscal quarter ending December 31, 2008.

       

      “Investment”
shall
        mean, with respect to any Person, any investment in another Person, whether
        by
        acquisition of any debt or equity security, by making any loan or advance,
        by
        becoming obligated with respect to a Contingent Liability in respect of
        obligations of such other Person (other than travel and similar advances
        to
        employees in the ordinary course of business).

       

      “Letter
        of Credit”
and
        “Letters
        of Credit”
shall
        mean, respectively, a standby letter of credit and all such standby letters
        of
        credit issued by the Bank, in its sole discretion, upon the execution and
        delivery by the Borrower and the acceptance by the Bank of a Master Letter
        of
        Credit Agreement and a Letter of Credit Application, as set forth in
Section
        2.7
        of this
        Agreement.

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      “Letter
        of Credit Application”
shall
        mean, with respect to any request for the issuance of a Letter of Credit,
        a
        letter of credit application in the form being used by the Bank at the time
        of
        such request for the type of Letter of Credit requested.

       

      “Letter
        of Credit Obligations”
shall
        mean, at any time, an amount equal to the aggregate of the original face
        amounts
        of all Letters of Credit minus the sum of (i) the amount of any reductions
        in
        the original face amount of any Letter of Credit which did not result from
        a
        draw thereunder, (ii) the amount of any payments made by the Bank with respect
        to any draws made under a Letter of Credit for which the Borrower has reimbursed
        the Bank, (iii) the amount of any payments made by the Bank with respect
        to any
        draws made under a Letter of Credit which have been converted to a Facility
        A
        Loan or Facility B Loan, as applicable, as set forth in Section
        2.7,
        and
        (iv) the portion of any issued but expired Letter of Credit which has not
        been
        drawn by the beneficiary thereunder. For purposes of determining the outstanding
        Letter of Credit Obligations at any time, the Bank’s acceptance of a draft drawn
        on the Bank pursuant to a Letter of Credit shall constitute a draw on the
        applicable Letter of Credit at the time of such acceptance.

       

      “Liabilities”
shall
        mean at all times all liabilities of the Borrower that would be shown as
        such on
        a balance sheet of the Borrower prepared in accordance with GAAP.

       

      “LIBOR”
shall
        mean a rate of interest equal to (a) the per annum rate of interest at which
        United States dollar deposits for a period equal to the relevant Interest
        Period
        are offered in the London Interbank Eurodollar market at 11:00 a.m. (London
        time) two Business Days prior to the commencement of such Interest Period
        (or
        three Business Days prior to the commencement of such Interest Period if
        banks
        in London, England were not open and dealing in offshore United States dollars
        on such second preceding Business Day), as displayed in the
        Bloomberg Financial Markets
        system
        (or other authoritative source selected by the Bank in its sole discretion),
        divided by (b) a number determined by subtracting from 1.00 the then stated
        maximum reserve percentage for determining reserves to be maintained by member
        banks of the Federal Reserve System for Eurocurrency funding or liabilities
        as
        defined in Regulation D (or any successor category of liabilities under
        Regulation D), or as LIBOR is otherwise determined by the Bank in its sole
        and
        absolute discretion. The Bank’s determination of LIBOR shall be conclusive,
        absent manifest error.

       

      “LIBOR
        Loan”
or
        “LIBOR
        Loans”
shall
        mean that portion, and collectively those portions, of the aggregate outstanding
        principal balance of the Loans that bear interest at the LIBOR Rate, of which
        at
        any time, the Borrower may identify no more than five (5) advances of the
        Facility A Loans, Facility B Loans and Facility C Loans which bear interest
        at
        the LIBOR Rate.

       

      “LIBOR
        Rate”
shall
        mean a per annum rate of interest equal to LIBOR for the relevant Interest
        Period, plus
        the
        Applicable Margin, which LIBOR Rate shall remain fixed during such Interest
        Period.

       

      “Lien”
shall
        mean, with respect to any Person, any interest granted by such Person in
        any
        real or personal property, asset or other right owned or being purchased
        or
        acquired by such Person (including an interest in respect of a Capital Lease)
        which secures payment or performance of any obligation and shall include
        any
        mortgage, lien, encumbrance, title retention lien, charge or other security
        interest of any kind, whether arising by contract, as a matter of law, by
        judicial process or otherwise.

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      “Loans”
shall
        mean, collectively, all Facility A Loans, Facility B Loans and Facility C
        Loans
        made by the Bank to the Borrower and all Letter of Credit Obligations, under
        and
        pursuant to this Agreement.

       

      “Loan
        Documents”
shall
        mean each of the agreements, documents, instruments and certificates set
        forth
        in Section
        3.1
        hereof,
        and any and all such other instruments, documents, certificates and agreements
        from time to time executed and delivered by the Borrower, the Guarantors
        or any
        of its/their Subsidiaries for the benefit of the Bank pursuant to any of
        the
        foregoing, and all amendments, restatements, supplements and other modifications
        thereto.

       

      “Master
        Letter of Credit Agreement”
shall
        mean, at any time, with respect to the issuance of Letters of Credit, a Master
        Letter of Credit Agreement in a form acceptable to Bank.

       

      “Material
        Adverse Effect”
shall
        mean (a) a material adverse change in, or a material adverse effect upon,
        the
        assets, business, properties, prospects, condition (financial or otherwise)
        or
        results of operations of the Borrower and its Subsidiaries taken as a whole,
        (b)
        a material impairment of the ability of the Borrower and its Subsidiaries
        to
        perform any of the Obligations under any of the Loan Documents, or (c) a
        material adverse effect on (i) any substantial portion of the Collateral,
        (ii)
        the legality, validity, binding effect or enforceability against the Borrower
        and its Subsidiaries of any of the Loan Documents, (iii) the perfection or
        priority of any Lien granted to the Bank under any Loan Document, or (iv)
        the
        rights or remedies of the Bank under any Loan Document.

       

      “Net
        Cash Proceeds”
shall
        mean:

       

      (a) with
        respect to any Asset Disposition, the aggregate cash proceeds (including
        cash
        proceeds received pursuant to policies of insurance or by way of deferred
        payment of principal pursuant to a note, installment receivable or otherwise,
        but only as and when received) received by the Borrower pursuant to such
        Asset
        Disposition net of (i) the direct costs relating to such sale, transfer or
        other
        disposition (including sales commissions and legal, accounting and investment
        banking fees), (ii) taxes paid or reasonably estimated by the Borrower to
        be
        payable as a result thereof (after taking into account any available tax
        credits
        or deductions and any tax sharing arrangements), and (iii) amounts required
        to
        be applied to the repayment of any Debt secured by a Lien on the asset subject
        to such Asset Disposition (other than the Loans);

       

      (b) with
        respect to any issuance of Capital Securities, the aggregate cash proceeds
        received by the Borrower pursuant to such issuance, net of the direct costs
        relating to such issuance (including sales and underwriters’ commissions;
        and

       

      (c) with
        respect to any issuance of Debt, the aggregate cash proceeds received by
        the
        Borrower pursuant to such issuance, net of the direct costs of such issuance
        (including up-front, underwriters’ and placement fees).

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

      “Net
        Income”
shall
        mean, with respect to the Borrower and its Subsidiaries for any period, the
        consolidated net income (or loss) of the Borrower and its Subsidiaries for
        such
        period as determined in accordance with GAAP, excluding
        any
        gains from Asset Dispositions, any extraordinary gains and any gains from
        discontinued operations.

       

      “Non-Excluded
        Taxes”
shall
        have the meaning set forth in Section
        2.7(a)
        hereof.

       

      “Note”
and
        “Notes”
        shall
        mean,
        respectively, each of and collectively,
        the
        Facility A Note, the Facility B Note and the Facility C Note.

       

      “Obligations”
shall
        mean the Loans, as evidenced by any Note, all interest accrued thereon
        (including interest which would be payable as post-petition in connection
        with
        any bankruptcy or similar proceeding, whether or not permitted as a claim
        thereunder), any fees due the Bank hereunder, any expenses incurred by the
        Bank
        hereunder, including without limitation, all liabilities and obligations
        under
        this Agreement, under any other Loan Document, any reimbursement obligations
        of
        the Borrower in respect of Letters of Credit and surety bonds, all Hedging
        Obligations of the Borrower which are owed to the Bank or any Affiliate of
        the
        Bank, and all Bank Product Obligations of the Borrower, and any and all other
        liabilities and obligations owed by the Borrower to the Bank from time to
        time,
        howsoever created, arising or evidenced, whether direct or indirect, joint
        or
        several, absolute or contingent, now or hereafter existing, or due or to
        become
        due, together with any and all renewals, extensions, restatements or
        replacements of any of the foregoing.

       

      “Obligor”
shall
        mean the Borrower, the Guarantors and any
        Subsidiary of the Borrower, and of any Guarantor, accommodation endorser,
        third
        party pledgor, or any other party liable with respect to the
        Obligations.

       

      “Other
        Taxes”
shall
        mean any present or future stamp or documentary taxes or any other excise
        or
        property taxes, charges or similar levies which arise from the execution,
        delivery, enforcement or registration of, or otherwise with respect to, this
        Agreement or any of the other Loan Documents.

       

      “Permitted
        Liens”
shall
        mean (a) Liens
        for
        Taxes, assessments or other governmental charges not at the time delinquent
        or
        thereafter payable without penalty or being contested in good faith by
        appropriate proceedings and, in each case, for which it maintains adequate
        reserves in accordance with GAAP and in respect of which no Lien has been
        filed;
        (b) Liens arising in the ordinary course of business (i) in favor of landlords,
        carriers, warehousemen, mechanics and materialmen and other similar Liens
        imposed by law, and (ii) in the form of deposits or pledges incurred in
        connection with worker’s compensation, unemployment compensation and other types
        of social security (excluding Liens arising under ERISA); (c) Liens arising
        in
        the ordinary course of business in favor of the issuer of surety bonds, bids,
        performance bonds, payment bonds, and similar obligations, which do not in
        the
        aggregate exceed an amount equal to one-half (1/2) of Borrower’s aggregate
        Accounts Receivable; (d) Liens described on Schedule
        9.2
        as of
        the Closing Date and the replacement, extension or renewal of any such Lien
        upon
        or in the same property subject thereto arising out of the extension, renewal
        or
        replacement of the Debt secured thereby (without increase in the amount
        thereof); (e) attachments,
        appeal bonds, judgments and other similar Liens arising in connection with
        court
        proceedings, to the extent such judgments or awards do not constitute an
        Event
        of Default under Section
        11.8
        hereof;
        (f) easements, rights of way, restrictions, minor defects or irregularities
        in
        title and other similar Liens not interfering in any material respect with
        the
        ordinary conduct of the business of the Borrower or any of its Subsidiaries;
        (g)
        subject to the limitation set forth in Section
        9.1(g),
        Liens
        arising in connection with Capitalized Lease Obligations (and attaching only
        to
        the property being leased); (h) subject to the limitation set forth in
Section
        9.1(h),
        Liens
        that constitute purchase money security interests on any property securing
        Debt
        incurred for the purpose of financing all or any part of the cost of acquiring
        such property, provided
        that any
        such Lien attaches solely to the property so acquired; (i) Liens
        granted to the Bank hereunder and under the Loan Documents, (j) Liens securing
        bonds related to accounts receivable, (k) Liens on amounts deposited by the
        Borrower arising out of the financing of insurance premiums, and (l) Liens
        of
        Bank of America for the period from the Closing Date until payment is received
        by Bank of America from the proceeds of the Loans to pay in full the Bank
        shall
        have received evidence satisfactory to it that all amounts due from the Borrower
        pursuant to the Existing Debt has been paid in full out of the proceeds of
        the
        Loan on the Effective Date, or provision for payment thereof in a manner
        acceptable to the Bank in its sole discretion, shall have been made by the
        Borrower and approved by the Bank, and the Bank shall have received executed
        termination statements, in form satisfactory for filing, evidencing the
        termination of the security interests in the Borrower’s properties which secured
        the Existing Debt.

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      “Person”
shall
        mean any natural person, partnership, limited liability company, corporation,
        trust, joint venture, joint stock company, association, unincorporated
        organization, government or agency or political subdivision thereof, or other
        entity, whether acting in an individual, fiduciary or other
        capacity.

       

      “Prime
        Loan”
or
        “Prime
        Loans”
shall
        mean that portion, and collectively, those portions of the aggregate outstanding
        principal balance of the Loans that bear interest at the Prime Rate plus
        the
        Applicable Margin.

       

      “Prime
        Rate”
shall
        mean the floating per annum rate of interest which at any time, and from
        time to
        time, shall be most recently announced by the Bank as its Prime Rate, which
        is
        not intended to be the Bank’s lowest or most favorable rate of interest at any
        one time. The effective date of any change in the Prime Rate shall for purposes
        hereof be the date the Prime Rate is changed by the Bank. The Bank shall
        not be
        obligated to give notice of any change in the Prime Rate.

       

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

       

      “Senior
        Debt”
shall
        mean all Debt of the Borrower and its Subsidiaries other than Subordinated
        Debt.

       

      “Subordinated
        Debt”
shall
        mean that portion of the Debt of the Borrower which is subordinated to the
        Obligations in a manner satisfactory to the Bank, including right and time
        of
        payment of principal and interest.

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

      “Subsidiary”
and
        “Subsidiaries”
shall
        mean, respectively, with respect to any Person, each and all such corporations,
        partnerships, limited partnerships, limited liability companies, limited
        liability partnerships, joint ventures or other entities of which or in which
        such Person owns, directly or indirectly, such number of outstanding Capital
        Securities as have more than fifty percent (50.00%) of the ordinary voting
        power
        for the election of directors or other managers of such corporation,
        partnership, limited liability company or other entity. Unless the context
        otherwise requires, each reference to Subsidiaries herein shall be a reference
        to Subsidiaries of the Borrower.

       

      “Taxes”
shall
        mean any and all present and future taxes, duties, levies, imposts, deductions,
        assessments, charges or withholdings, and any and all liabilities (including
        interest and penalties and other additions to taxes) with respect to the
        foregoing.

       

      “Total
        Debt”
shall
        mean all Debt of the Borrower and its Subsidiaries, determined on a consolidated
        basis, excluding (i) Contingent Liabilities (except to the extent constituting
        Contingent Liabilities in respect of the Debt of a Person other than the
        Borrower or any Subsidiaries), (ii) Hedging Obligations,
        (iii)
        Debt of the Borrower to Subsidiaries and Debt of Subsidiaries to the Borrower
        or
        to other Subsidiaries,
        and (iv)
        contingent obligations in respect of undrawn Letters of Credit.

       

      “UCC”
shall
        mean the Uniform Commercial Code in effect in the state of Illinois from
        time to
        time.

       

      “United
        States Treasury Securities”
means
        actively traded United States Treasury bonds, bills and notes.

       

      “Unmatured
        Event of Default”
shall
        mean any event which, with the giving of notice, the passage of time or both,
        would constitute an Event of Default.

       

      “Voidable
        Transfer”
shall
        have the meaning set forth in Section
        13.21
        hereof.

       

      “Wholly-Owned
        Subsidiary”
shall
        mean any Subsidiary of which or in which the Borrower owns, directly or
        indirectly, one hundred percent (100%) of the Capital Securities of such
        Subsidiary.

       

      “Working
        Capital”
shall
        mean the total of cash on hand, cash equivalents, marketable securities,
        Accounts minus
        adequate
        reserves for doubtful Accounts, and readily salable Inventory at the lower
        of
        cost or market value, minus the total of all liabilities payable within one
        year, all as determined in accordance with GAAP.

       

      1.2. ACCOUNTING
        TERMS.
        Any
        accounting terms used in this Agreement which are not specifically defined
        herein shall have the meanings customarily given them in accordance with
        GAAP.
        Calculations and determinations of financial and accounting terms used and
        not
        otherwise specifically defined hereunder and the preparation of financial
        statements to be furnished to the Bank pursuant hereto shall be made and
        prepared, both as to classification of items and as to amount, in accordance
        with sound accounting practices and GAAP as used in the preparation of the
        financial statements of the Borrower on the date of this Agreement. If any
        changes in accounting principles or practices from those used in the preparation
        of the financial statements are hereafter occasioned by the promulgation
        of
        rules, regulations, pronouncements and opinions by or required by the Financial
        Accounting Standards Board or the American Institute of Certified Public
        Accountants (or any successor thereto or agencies with similar functions),
        which
        results in a material change in the method of accounting in the financial
        statements required to be furnished to the Bank hereunder or in the calculation
        of financial covenants, standards or terms contained in this Agreement, the
        parties hereto agree to enter into good faith negotiations to amend such
        provisions so as equitably to reflect such changes to the end that the criteria
        for evaluating the financial condition and performance of the Borrower will
        be
        the same after such changes as they were before such changes; and if the
        parties
        fail to agree on the amendment of such provisions, the Borrower will furnish
        financial statements in accordance with such changes, but shall provide
        calculations for all financial covenants, perform all financial covenants
        and
        otherwise observe all financial standards and terms in accordance with
        applicable accounting principles and practices in effect immediately prior
        to
        such changes. Calculations with respect to financial covenants required to
        be
        stated in accordance with applicable accounting principles and practices
        in
        effect immediately prior to such changes shall be reviewed and certified
        by the
        Borrower’s accountants.

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

      1.3. OTHER
        TERMS DEFINED IN UCC.
        All
        other capitalized words and phrases used herein and not otherwise specifically
        defined herein shall have the respective meanings assigned to such terms
        in the
        UCC, to the extent the same are used or defined therein.

       

      1.4. Other
        Interpretive Provisions.

       

      (a) The
        meanings of defined terms are equally applicable to the singular and plural
        forms of the defined terms. Whenever the context so requires, the neuter
        gender
        includes the masculine and feminine, the single number includes the plural,
        and
        vice versa, and in particular the word “Borrower” shall be so
        construed.

       

      (b) Section
        and Schedule references are to this Agreement unless otherwise specified.
        The
        words “hereof”, “herein” and “hereunder” and words of similar import when used
        in this Agreement shall refer to this Agreement as a whole and not to any
        particular provision of this Agreement.

       

      (c) The
        term “including” is not limiting, and means “including, without
        limitation”.

       

      (d) In
        the computation of periods of time from a specified date to a later specified
        date, the word “from” means “from and including”; the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and
        including”.

       

      (e) Unless
        otherwise expressly provided herein, (i) references to agreements
        (including this Agreement and the other Loan Documents) and other contractual
        instruments shall be deemed to include all subsequent amendments, restatements,
        supplements and other modifications thereto, but only to the extent such
        amendments, restatements, supplements and other modifications are not prohibited
        by the terms of any Loan Document, and (ii) references to any statute or
        regulation shall be construed as including all statutory and regulatory
        provisions amending, replacing, supplementing or interpreting such statute
        or
        regulation.

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

      (f) To
        the extent any of the provisions of the other Loan Documents are inconsistent
        with the terms of this Agreement, the provisions of this Agreement shall
        govern.

       

      (g) This
        Agreement and the other Loan Documents may use several different limitations,
        tests or measurements to regulate the same or similar matters. All such
        limitations, tests and measurements are cumulative and each shall be performed
        in accordance with its terms.

       

      Section
        2. COMMITMENT
        OF THE BANK.

       

      2.1. Facility
        A Loans.

       

      (a) Facility
        A Loan Commitment.
        Subject
        to the terms and conditions of this Agreement and the other Loan Documents,
        and
        in reliance upon the representations and warranties of the Borrower set forth
        herein and in the other Loan Documents, the Bank agrees to make such Facility
        A
        Loans at such times as the Borrower may from time to time request until,
        but not
        including, the Facility A Loan Scheduled Maturity Date, and in such amounts
        as
        the Borrower may from time to time request, provided,
        however,
        that
        the aggregate principal balance of all Facility A Loans outstanding at any
        time
        shall not exceed the Facility A Loan Availability. Facility A Loans made
        by the
        Bank may be repaid and, subject to the terms and conditions hereof, borrowed
        again up to, but not including the Facility A Loan Scheduled Maturity Date
        unless the Facility A Loans are otherwise accelerated, terminated or extended
        as
        provided in this Agreement. The Facility A Loans shall be used by the Borrower
        for the purpose of paying in full the Existing
        Indebtedness, for working capital, for the issuance of standby Letters of
        Credit
        and repayment of drawings against any standby Letters of Credit in an amount
        not
        to exceed the Facility A Letter of Credit Commitment and other lawful purposes.
        

       

      (b) Facility
        A Loan Interest and Payments.
        Except
        as otherwise provided in this
        Section 2.1(b),
        the
        principal amount of the Facility A Loans outstanding from time to time shall
        bear interest at the applicable Interest Rate. Accrued and unpaid interest
        on
        the unpaid principal balance of all Facility A Loans outstanding from time
        to
        time which are Prime Loans, shall be due and payable quarterly, in arrears,
        commencing on September 30, 2008 and continuing on the last Business Day
        of each
        June, September, December and March thereafter, and on the Facility A Loan
        Maturity Date. Accrued and unpaid interest on the unpaid principal balance
        of
        all Facility A Loans outstanding from time to time which are LIBOR Loans
        shall
        be payable on the last Business Day of each Interest Period (provided, however,
        that for Interest Periods of six months, accrued interest shall also be paid
        on
        the date which is three months from the first day of such Interest Period),
        commencing on the first such date to occur after the date hereof, on the
        date of
        any principal repayment of a LIBOR Loan and on the Facility A Loan Maturity
        Date. From and after maturity, or after the occurrence and during the
        continuation of an Event of Default, interest on the outstanding principal
        balance of the Facility A Loans, at the option of the Bank, may accrue at
        the
        Default Rate and shall be payable upon demand from the Bank. 

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      (c) Facility
        A Loan Principal Payments.

       

      (i) Facility
        A Loan Mandatory Payments.
        All
        Facility A Loans hereunder shall be repaid by the Borrower on the Facility
        A
        Loan Scheduled Maturity Date, unless payable sooner pursuant to the provisions
        of this Agreement. In the event the aggregate outstanding principal balance
        of
        all Facility A Loans and Letter of Credit Obligations hereunder exceeds the
        Facility A Loan Availability, the Borrower shall, without notice or demand
        of
        any kind, immediately make such repayments of the Facility A Loans or take
        such
        other actions as are satisfactory to the Bank as shall be necessary to eliminate
        such excess. Also, if the Borrower chooses not to continue any Facility A
        Loan
        which is a LIBOR Loan as a LIBOR Loan or the LIBOR Loan option is unavailable
        with respect to such Facility A Loan, then such Facility A Loan will
        automatically be converted to a Prime Loan on the last Business Day the then
        existing Interest Period or on such earlier date as required by law, all
        without
        further demand, presentment, protest or notice of any kind, all of which
        are
        hereby waived by the Borrower.

       

      (ii) Optional
        Prepayments.
        The
        Borrower may from time to time prepay the Facility A Loans which are Prime
        Loans, in whole or in part, without any prepayment penalty whatsoever, provided
        that any prepayment of the entire principal balance of the Prime Loans shall
        include accrued interest on such Prime Loans to the date of such
        prepayment.

       

      2.2. Facility
        B Loans.

      

      (a) Facility
        B Loan Commitment.
        Subject
        to the terms and conditions of this Agreement and the other Loan Documents,
        and
        in reliance upon the representations and warranties of the Borrower set forth
        herein and in the other Loan Documents, the Bank agrees to make such Facility
        B
        Loans at such times as the Borrower may from time to time request until,
        but not
        including, the Facility B Loan Scheduled Maturity Date, and in such amounts
        as
        the Borrower may from time to time request, provided,
        however,
        that
        the aggregate principal balance of all Facility B Loans outstanding at any
        time
        shall not exceed the Facility B Loan Availability. Facility B Loans made
        by the
        Bank may be repaid and, subject to the terms and conditions hereof, borrowed
        again up to, but not including the Facility B Loan Scheduled Maturity Date
        unless the Facility B Loans are otherwise accelerated, terminated or extended
        as
        provided in this Agreement. The Facility B Loan Commitment shall be used
        by the
        Borrower for the exclusive purpose of the issuance of standby Letters of
        Credit
        and the repayment of drawings against such standby Letters of Credit.

       

      (b) Facility
        B Loan Interest and Payments.
        Except
        as otherwise provided in this
        Section 2.2(b),
        the
        principal amount of the Facility B Loans outstanding from time to time shall
        bear interest at the applicable Interest Rate. Amounts drawn on Letters of
        Credit that are Facility B Loans shall be paid within two (2) Business Days
        of
        the draw on the Letter of Credit without notice or further demand from the
        Bank.
        Accrued and unpaid interest on the unpaid principal balance of all Facility
        B
        Loans outstanding from time to time which are Prime Loans, shall be due and
        payable quarterly, in arrears, commencing on September 30, 2008 and continuing
        on the last Business Day of each June, September, December and March thereafter,
        and on the Facility B Loan Maturity Date. From and after maturity, or after
        the
        occurrence and during the continuation of an Event of Default, interest on
        the
        outstanding principal balance of the Facility B Loans, at the option of the
        Bank, may accrue at the Default Rate and shall be payable upon demand from
        the
        Bank.

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

      (c) Facility
        B Loan Principal Payments.

       

      (i) Facility
        B Loan Mandatory Payments.
        Amounts
        drawn on Letters of Credit that are Facility B Loans shall be paid within
        two
        (2) Business Days of the draw on the Letter of Credit without notice or further
        demand from the Bank. All Facility B Loans hereunder shall be repaid by the
        Borrower on the Facility B Loan Scheduled Maturity Date, unless payable sooner
        pursuant to the provisions of this Agreement. In the event the aggregate
        outstanding principal balance of all Facility B Loans and Letter of Credit
        Obligations hereunder exceeds the Facility B Loan Availability, the Borrower
        shall, without notice or demand of any kind, immediately make such repayments
        of
        the Facility B Loans or take such other actions as are satisfactory to the
        Bank
        as shall be necessary to eliminate such excess. Also, if the Borrower chooses
        not to continue any Facility B Loan which is a LIBOR Loan as a LIBOR Loan
        or the
        LIBOR Loan option is unavailable with respect to such Facility B Loan, then
        such
        Facility B Loan will automatically be converted to a Prime Loan on the last
        Business Day the then existing Interest Period or on such earlier date as
        required by law, all without further demand, presentment, protest or notice
        of
        any kind, all of which are hereby waived by the Borrower.

       

      (ii) Optional
        Prepayments.
        The
        Borrower may from time to time prepay the Facility B Loans which are Prime
        Loans, in whole or in part, without any prepayment penalty whatsoever, provided
        that any prepayment of the entire principal balance of the Prime Loans shall
        include accrued interest on such Prime Loans to the date of such
        prepayment.

       

      2.3. Facility
        C Loan.

       

      (a) Facility
        C Loan Commitment.
        Subject
        to the terms and conditions of this Agreement and the other Loan Documents,
        and
        in reliance upon the representations and warranties of the Borrower set forth
        herein and in the other Loan Documents, the Bank agrees to make a Facility
        C
        Loan equal to the Facility C Loan Commitment. The Facility C Loan shall be
        available to the Borrower in a single advance on the date of this Agreement
        for
        the exclusive purpose of paying in full the Existing Indebtedness. The Facility
        C Loan may be prepaid in whole or in part at any time without penalty, but
        shall
        be due in full on the Facility C Loan Maturity Date, unless the credit extended
        under the Facility C Loan is otherwise accelerated, terminated or extended
        as
        provided in this Agreement.

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

      (b) Facility
        C Loan Interest and
        Payments.
        Except
        as otherwise provided in this
        Section 2.3(b),
        the
        principal amount of the Facility C Loan outstanding from time to time shall
        bear
        interest at the applicable Interest Rate. Accrued and unpaid interest on
        that
        portion of the principal balance of the Facility C Loan outstanding from
        time to
        time which is a Prime Loan, shall be due and payable quarterly, in arrears,
        commencing on the last Business Day of the first calendar month following
        the
        first advance under the Facility C Loan and continuing on the same day of
        each
        calendar quarter thereafter, and on the Facility C Loan Maturity Date. Accrued
        and unpaid interest on those portions of the principal balance of the Facility
        C
        Loan outstanding from time to time which are LIBOR Loans shall be payable
        on the
        last Business Day of each Interest Period (provided, however, that for Interest
        Periods of six months, accrued interest shall also be paid on the date which
        is
        three months from the first day of such Interest Period), commencing on the
        first such date to occur after the date hereof, on the date of any principal
        repayment of a LIBOR Loan and on the Facility C Loan Maturity Date. 
        From and
        after maturity, or after the occurrence and during the continuation of an
        Event
        of Default, interest on the outstanding principal balance of the Facility
        C
        Loan, at the option of the Bank, may accrue at the Default Rate and shall
        be
        payable upon demand from the Bank.

       

      (c) Facility
        C Loan Principal Payments.
        The
        outstanding principal balance of the Facility C Loan shall be repaid in
        installments of $500,000.00 commencing on December 31, 2008 and continuing
        on
        the last day of March, June, September and December, together with an additional
        amount representing accrued and unpaid interest on the principal amount of
        the
        Facility C Loan outstanding as set forth above, with a final payment of all
        outstanding principal and accrued interest due on the Facility C Loan Scheduled
        Maturity Date. Principal amounts repaid on the Facility C Note may not be
        borrowed again. Also, if the Borrower chooses not to continue any Facility
        C
        Loan which is a LIBOR Loan as a LIBOR Loan or the LIBOR Loan option is
        unavailable with respect to such Facility C Loan, then such Facility C Loan
        will
        automatically be converted to a Prime Loan on the last Business Day of the
        then
        existing Interest Period or on such earlier date as required by law, all
        without
        further demand, presentment, protest or notice of any kind, all of which
        are
        hereby waived by the Borrower.

       

      (d) Facility
        C Loan Mandatory Prepayment.
        The
        Borrower shall make a prepayment (the “Facility
        C Loan Mandatory Prepayment”)
        of the
        outstanding principal amount of the Facility C Loan until paid in full upon
        the
        occurrence of any of the following events, at the following times and in
        the
        following amounts:

       

      (i) Concurrently
        with the receipt by the Borrower or by any Subsidiary of any Net Cash Proceeds
        from any Asset Disposition, in an amount equal to 100% of such Net Cash
        Proceeds.

       

      (ii) Concurrently
        with the receipt by the Borrower of any Net Cash Proceeds from any issuance
        of
        Capital Securities 
        (excluding (A) any issuance of Capital Securities 
        pursuant
        to any employee or director option program, benefit plan or compensation
        program, and (B) any issuance by a Subsidiary to the Borrower or another
        Subsidiary), in an amount equal to 100% of such Net Cash
        Proceeds.

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

      (iii) Within
        one hundred twenty (120) days after the end of the Borrower’s fiscal year, fifty
        percent (50%) of Excess Cash Flow, if any. 

       

      (e) Facility
        C Loan Optional Prepayments.

       

      Provided
        that no Event of Default then exists under this Agreement or the Loans, the
        Borrower may voluntarily prepay the principal balance of the Facility C Loan,
        in
        whole or in part, at any time on or after the date hereof, subject to the
        following conditions:

       

      (A) Not
        less than thirty (30) days prior to the date upon which the Borrower desires
        to
        make such prepayment, the Borrower shall deliver to the Bank written notice
        of
        its intention to prepay the Facility C, which notice shall be irrevocable
        and
        state the prepayment amount and the prepayment date (the “Facility
        C Loan Prepayment Date”);

       

      (B) The
        Borrower shall pay to the Bank all accrued and unpaid interest on the Facility
        C
        through the date of such prepayment on the principal balance being prepaid.
        Each
        prepayment of the Facility C Loan shall be applied to the scheduled installments
        of the Facility C Loan in inverse order of maturity.

       

      2.4. Additional
        LIBOR Loan Provisions.

       

      (a) LIBOR
        Loan Prepayments.
        Notwithstanding anything to the contrary contained herein, the principal
        balance
        of any LIBOR Loan may not be prepaid in whole or in part at any time. If,
        for
        any reason, a LIBOR Loan is paid prior to the last Business Day of any Interest
        Period, whether voluntary, involuntary, by reason of acceleration or otherwise,
        each such prepayment of a LIBOR Loan will be accompanied by the amount of
        accrued interest on the amount prepaid and any and all costs, expenses,
        penalties and charges incurred by the Bank as a result of the early termination
        or breakage of a LIBOR Loan, plus the amount, if any, by which (i) the
        additional interest which would have been payable during the Interest Period
        on
        the LIBOR Loan prepaid had it not been prepaid, exceeds (ii) the interest
        which
        would have been recoverable by the Bank by placing the amount prepaid on
        deposit
        in the domestic certificate of deposit market, the eurodollar deposit market,
        or
        other appropriate money market selected by the Bank, for a period starting
        on
        the date on which it was prepaid and ending on the last day of the Interest
        Period for such LIBOR Loan. The amount of any such loss or expense payable
        by
        the Borrower to the Bank under this Section shall be determined in the Bank’s
        sole discretion based upon the assumption that the Bank funded its loan
        commitment for LIBOR Loans in the London Interbank Eurodollar market and
        using
        any reasonable attribution or averaging methods which the Bank deems appropriate
        and practical, provided, however, that the Bank is not obligated to accept
        a
        deposit in the London Interbank Eurodollar market in order to charge interest
        on
        a LIBOR Loan at the LIBOR Rate.

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

      (b) LIBOR
        Unavailability.
        If the
        Bank determines in good faith (which determination shall be conclusive, absent
        manifest error) prior to the commencement of any Interest Period that (i)
        the
        making or maintenance of any LIBOR Loan would violate any applicable law,
        rule,
        regulation or directive, whether or not having the force of law, (ii) United
        States dollar deposits in the principal amount, and for periods equal to
        the
        Interest Period for funding any LIBOR Loan are not available in the London
        Interbank Eurodollar market in the ordinary course of business, (iii) by
        reason
        of circumstances affecting the London Interbank Eurodollar market, adequate
        and
        fair means do not exist for ascertaining the LIBOR Rate to be applicable
        to the
        relevant LIBOR Loan, or (iv) the LIBOR Rate does not accurately reflect the
        cost
        to the Bank of a LIBOR Loan, the Bank shall promptly notify the Borrower
        thereof
        and, so long as the foregoing conditions continue, none of the Loans may
        be
        advanced as a LIBOR Loan thereafter. In addition, at the Borrower’s option, each
        existing LIBOR Loan shall be immediately (1) converted to a Prime Loan on
        the
        last Business Day of the then existing Interest Period, or (2) prepaid without
        penalty or premium on the last Business Day of the then existing Interest
        Period.

       

      (c) Regulatory
        Change.
        In
        addition, if, after the date hereof, a Regulatory Change shall, in the
        reasonable determination of the Bank, make it unlawful for the Bank to make
        or
        maintain the LIBOR Loans, then the Bank shall promptly notify the Borrower
        and
        none of the Loans may be advanced as a LIBOR Loan thereafter. In addition,
        at
        the Borrower’s option, each existing LIBOR Loan shall be immediately (1)
        converted to a Prime Loan on the last Business Day of the then existing Interest
        Period, or (2) prepaid without penalty or premium on the last Business Day
        of
        the then existing Interest Period.

       

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

      
        
          
          

        

        
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      2.5. Interest
        and Fee Computation; Collection of Funds.
        Except
        as otherwise set forth herein, all interest and fees shall be calculated
        on the
        basis of a year consisting of 360 days and shall be paid for the actual number
        of days elapsed. Principal payments submitted in funds not immediately available
        shall continue to bear interest until collected. If any payment to be made
        by
        the Borrower hereunder or under any Note shall become due on a day other
        than a
        Business Day, such payment shall be made on the next succeeding Business
        Day and
        such extension of time shall be included in computing any interest in respect
        of
        such payment. Notwithstanding anything to the contrary contained herein,
        the
        final payment due under any of the Loans must be made by wire transfer or
        other
        immediately available funds. All payments made by the Borrower hereunder
        or
        under any of the Loan Documents shall be made without setoff, counterclaim,
        or
        other defense. To the extent permitted by applicable law, all payments hereunder
        or under any of the Loan Documents (including any payment of principal,
        interest, or fees) to, or for the benefit, of any Person shall be made by
        the
        Borrower free and clear of, and without deduction or withholding for, or
        account
        of, any taxes now or hereinafter imposed by any taxing authority.

       

      2.6. Late
        Charge.
        If any
        payment of interest or principal due hereunder is not made within ten (10)
        days
        after such payment is due in accordance with the terms hereof, then, in addition
        to the payment of the amount so due, to defray part of the cost of collection
        and handling such late payment, the Borrower shall pay to the Bank a “late
        charge” in an amount equal to the lesser of (i) five cents for each whole dollar
        so overdue, or (ii) $500.00. The Borrower agrees that the damages to be
        sustained by the Bank for the detriment caused by any late payment are extremely
        difficult and impractical to ascertain, and that the amount set forth in
        this
Section
        2.6
        is a
        reasonable estimate of such damages, does not constitute interest, and is
        not a
        penalty.

       

      2.7.
         Letters
        of Credit.
        Subject
        to the terms and conditions of this Agreement and upon (i) the execution by
        the Borrower and the Bank of a Master Letter of Credit Agreement in form
        and
        substance acceptable to the Bank (together with all amendments, modifications
        and restatements thereof, the “Master
        Letter of Credit Agreement”),
        and
        (ii) the execution and delivery by the Borrower, and the acceptance by the
        Bank, in its reasonable discretion, of a Letter of Credit Application, the
        Bank
        agrees to issue for the account of the Borrower from time to time up to,
        but not
        including, the Facility A Loan Maturity Date or the Facility B Loan Maturity
        Date, as applicable, such Letters of Credit in the standard form of the
        Bank and otherwise in form and substance acceptable to the Bank, provided
        that
        the Facility A Loan Letter of Credit Obligations may not at any time exceed
        the
        Facility A Loan Letter of Credit Commitment and that the Facility B Loan
        Letter
        of Credit Obligations may not at any time exceed the Facility B Loan Letter
        of
        Credit Commitment, and provided further, that no Letter of Credit shall have
        an
        expiration date later than the Facility A Loan Maturity Date or the Facility
        B
        Loan Maturity Date, as applicable. Letters of Credit requested by a Letter
        of
        Credit Application shall first be issued as Facility B Loan Letter of Credit
        Obligations, and if the issuance of a Letter of Credit would result in the
        Facility B Loan Letter of Credit Obligation at any time exceeding the Facility
        B
        Loan Letter of Credit Commitment, Letters of Credit requested by a Letter
        of
        Credit Application shall be issued as Facility A Letter of Credit Obligations
        if
        the issuance of such Letters of Credit do not exceed the Facility A Loan
        Availability. In the event that the Borrower fails to reimburse the Bank
        for the
        amount of any payments made by the Bank with respect to draws made by a
        beneficiary under a Letter of Credit within two (2) Business Days from the
        date
        of such payment to such beneficiary by the Bank, the Bank may make a Facility
        A
        Loan pursuant to a loan request and the terms and conditions of this Agreement
        for the purpose of reimbursing the Bank for the amount of such payment to
        such
        beneficiary by the Bank in an amount equal to the lesser of (i) the amount
        of
        such payment to such beneficiary by the Bank, or (ii) in an amount equal
        to any
        remaining Facility A Loan Availability. The Borrower shall reimburse the
        Bank
        for any part of a payment made by the Bank under a Letter of Credit that
        is not
        converted to a Facility A Loan within two (2) Business Days of the payment
        to
        the beneficiary by the Bank. Upon the occurrence of an Event of a Default
        and at
        the option of the Bank, all Letter of Credit Obligations shall be converted
        to
        Facility A Loans or Facility B Loans, as applicable, consisting of Prime
        Loans,
        all without demand, presentment, protest or notice of any kind, all of which
        are
        hereby waived by the Borrower. All amounts advanced on such Facility A Loans
        or
        Facility B Loans shall be held in a restricted cash collateral account to
        be
        maintained with Bank as additional Collateral for the Obligations. Bank may
        apply the balance of any such cash collateral account to the payment of any
        Letters of Credit subsequently drawn. Upon discharge of all Obligations and
        the
        expiration of all Letters of Credit, the funds remaining in such accounts
        shall
        be paid to the Persons who have a beneficial interest therein. To the extent
        the
        provisions of the Master Letter of Credit Agreement differ from, or are
        inconsistent with, the terms of this Agreement, the provisions of this Agreement
        shall govern.

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

       

    

    2.8. Taxes.

     

    (a) All
      payments made by the Borrower under this Agreement shall be made free and clear
      of, and without deduction or withholding for or on account of, any present
      or
      future income, stamp or other taxes, levies, imposts, duties, charges, fees,
      deductions or withholdings, now or hereafter imposed, levied, collected,
      withheld or assessed by any governmental authority, excluding net income taxes
      and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank
      as
      a result of a present or former connection between the Bank and the jurisdiction
      of the governmental authority imposing such tax or any political subdivision
      or
      taxing authority thereof or therein (other than any such connection arising
      solely from the Bank having executed, delivered or performed its obligations
      or
      received a payment under, or enforced, this Agreement or any other Loan
      Document). If any such non-excluded taxes, levies, imposts, duties, charges,
      fees, deductions or withholdings (collectively, “Non-Excluded
      Taxes”)
      or
      Other Taxes are required to be withheld from any amounts payable to the Bank
      hereunder, the amounts so payable to the Bank shall be increased to the extent
      necessary to yield to the Bank (after payment of all Non-Excluded Taxes and
      Other Taxes) interest or any such other amounts payable hereunder at the rates
      or in the amounts specified in this Agreement, provided, however, that the
      Borrower shall not be required to increase any such amounts payable to the
      Bank
      with respect to any Non-Excluded Taxes that are attributable to the Bank’s
      failure to comply with the requirements of subsection
      2.8(c).

     

    (b) The
      Borrower shall pay any Other Taxes to the relevant governmental authority in
      accordance with applicable law.

     

    (c) At
      the request of the Borrower and at the Borrower’s sole cost, the Bank shall take
      reasonable steps to (i) contest its liability for any Non-Excluded Taxes or
      Other Taxes that have not been paid, or (ii) seek a refund of any Non-Excluded
      Taxes or Other Taxes that have been paid.

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    (d) Whenever
      any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly
      as possible thereafter the Borrower shall send to the Bank a certified copy
      of
      an original official receipt received by the Borrower showing payment thereof.
      If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due
      to
      the appropriate taxing authority or fails to remit to the Bank the required
      receipts or other required documentary evidence or if any governmental authority
      seeks to collect a Non-Excluded Tax or Other Tax directly from the Bank for
      any
      other reason, the Borrower shall indemnify the Bank on an after-tax basis for
      any incremental taxes, interest or penalties that may become payable by the
      Bank.

     

    (e) The
      agreements in this Section shall survive the satisfaction and payment of the
      Obligations and the termination of this Agreement.

     

    2.9. All
      Loans to Constitute Single Obligation.
      The
      Loans shall constitute one general obligation of the Borrower, and shall be
      secured by Bank’s priority security interest in and Lien upon all of the
      Collateral and by all other security interests, Liens, claims and encumbrances
      heretofore, now or at any time or times hereafter granted by the Borrower and/or
      any Subsidiary to Bank.

     

    2.10 Guaranty.
      Borrower shall cause the Obligations to be guaranteed by the Borrower’s present
      Subsidiaries and any Person who hereafter shall become a Subsidiary of Borrower
      or any Guarantor.

     

    Section
      3. CONDITIONS
      OF BORROWING.

     

    Notwithstanding
      any other provision of this Agreement, the Bank shall not be required to
      disburse, make or continue all or any portion of the Loans, if any of the
      following conditions shall have occurred.

     

    3.1. Loan
      Documents.
      The
      Borrower shall have failed to execute and deliver to the Bank any of the
      following Loan Documents, all of which must be satisfactory to the Bank and
      the
      Bank’s counsel in form, substance and execution:

     

    (a)  Loan
      Agreement.
      Two
      copies of this Agreement duly executed by the Borrower.

     

    (b)  Facility
      A Loan Note.
      A
      Facility A Loan Note duly executed by the Borrower, in the form prepared by
      and
      acceptable to the Bank.

     

    (c) Facility
      B Loan Note.
      A
      Facility B Loan Note duly executed by the Borrower, in the form prepared by
      and
      acceptable to the Bank.

     

    (d)  Facility
      C Loan Note.
      A
      Facility C Loan Note duly executed by the Borrower, in the form prepared by
      and
      acceptable to the Bank.

     

    (e)  Security
      Agreement.
      A
      Security Agreement duly executed by the Guarantors, in the form prepared by
      and
      acceptable to the Bank.

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    (f)  Master
      Letter of Credit Agreement.
      A
      Master Letter of Credit Agreement prepared by and acceptable to the Bank, duly
      executed by the Borrower in favor of the Bank.

     

    (g)  Guaranty.
      A
      Continuing Unconditional Guaranty, executed by each of the Guarantors to and
      for
      the benefit of the Bank, in the form prepared by and acceptable to the Bank
      (collectively, the “Guaranty”).

     

    (h)  Pledge
      Agreement.
      A
      Pledge Agreement dated as of the date of this Agreement, executed by the
      Borrower and the Guarantors, in the form prepared by and acceptable to the
      Bank
      together with the original stock certificates subject thereto and stock powers
      therefor.

     

    (i)  Subordination
      Agreements.
      Subordination Agreements dated as of the date of this Agreement, from each
      holder of Subordinated Debt, in the form prepared by and acceptable to the
      Bank.

     

    (j)
       Deposit
      Account Control Agreement. 
      A
      deposit account control agreement dated as of the date of this Agreement, from
      each signed by Frost National Bank, the Borrower and the Bank, in a form
      acceptable to the Bank.

     

    (k)  Search
      Results; Lien Terminations.
      Copies
      of UCC search reports dated such a date as is reasonably acceptable to the
      Bank,
      listing all effective financing statements which name the Borrower and any
      of
      its Subsidiaries, under its/their present names and any previous names, as
      debtors, together with (i) copies of such financing statements, (ii) payoff
      letters evidencing repayment in full of all the Existing Indebtedness shall
      have
      been received by the Bank or evidence satisfactory to it that all amounts due
      from the Borrower pursuant to the Existing Indebtedness has been paid in full
      out of the proceeds of the Loan on the Effective Date, or provision for payment,
      thereof in a manner acceptable to the Bank in its sole discretion, shall have
      been made by the Borrower and approved by the Bank, and the Bank shall have
      received executed termination statements, in form satisfactory for filing,
      evidencing the termination of the security interests in the Borrower’s
      properties which secured the Existing Indebtedness and the termination of all
      agreements relating thereto and the release of all Liens granted in connection
      therewith, with UCC or other appropriate termination statements and documents
      effective to evidence the foregoing (other than Permitted Liens), and (iii)
      such
      other UCC termination statements as the Bank may reasonably
      request.

     

    (l)  Organizational
      and Authorization Document.
      Secretary’s Certificate dated as of the date of this Agreement executed by the
      authorized officers of the Borrower and Guarantors, in a form acceptable to
      the
      Bank, that will have appended to it copies of (i) the Articles of Incorporation
      and Bylaws / Limited Partnership Agreements / Articles of Organization
      (Certificate of Formation) and Operating Agreements 
      of the
      Borrower and each of its Subsidiaries; (ii) resolutions of the shareholders
      /
      board of directors / members / managers / partners of the Borrower and each
      of
      its Subsidiaries approving and authorizing such Person’s execution, delivery and
      performance of the Loan Documents to which it is party and the transactions
      contemplated thereby; (iii) signature and incumbency certificates of the
      officers / members / managers / partners of the Borrower and each of its
      Subsidiaries, executing any of the Loan Documents, each of which the Borrower
      hereby certifies to be true and complete, and in full force and effect without
      modification, it being understood that the Bank may conclusively rely on each
      such document and certificate until formally advised by the Borrower of any
      changes therein; and (iv) good standing certificates in the state of
      incorporation / formation of the Borrower and each of its Subsidiaries and
      in
      each other state requested by the Bank.

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    (m) Legal
      Opinions.
      The
      favorable opinion of K & L Gates LLP, legal counsel to the Borrower and the
      Guarantors, substantially in the form acceptable to the Bank.

    

    (n)  Insurance.
      Evidence satisfactory to the Bank of the existence of insurance required to
      be
      maintained pursuant to Section
      8.6,
      together with evidence that the Bank has been named as a lender’s loss payee on
      all related insurance policies.

    

    (n)  Financial
      Statements.
      The
      December 31, 2007 audited financial statements of the Borrower are acceptable
      to
      the Bank in its sole discretion.

     

    (o)  Additional
      Documents.
      Such
      other certificates, financial statements, schedules, resolutions, opinions
      of
      counsel, notes and other documents which are provided for hereunder or which
      the
      Bank shall reasonably require.

     

    3.2. Event
      of Default.
      Any
      Event of Default, or Unmatured Event of Default shall have occurred and be
      continuing.

     

    3.3. Material
      Adverse Effect.
      The
      occurrence of any event having a Material Adverse Effect upon the Borrower
      and/or Subsidiaries.

     

    3.4. Litigation.
      Any
      litigation or governmental proceeding shall have been instituted against the
      Borrower or any of its officers or shareholders having a Materially Adverse
      Effect upon the Borrower and/or Subsidiaries.

     

    3.5. Representations
      and Warranties.
      Any
      representation or warranty of the Borrower contained herein or in any Loan
      Document shall be untrue or incorrect in any material respect as of the date
      of
      any Loan as though made on such date, except to the extent such representation
      or warranty expressly relates to an earlier date.

     

    3.6. Commitment
      Fee.
      The
      Borrower shall have failed to pay to the Bank a commitment fee in the amount
      of
      SIXTY TWO THOUSAND, FIVE HUNDRED and 00/100 Dollars ($62,500.00) / one-quarter
      of one percent (.25%) of the aggregate Facility A Loan Commitment, Facility
      B
      Loan Commitment and the Facility C Loan Commitment, payable on or before the
      execution of this Agreement by the Bank

     

    3.7. Escrow
      Agreement.
      The
      Borrower, Bank and LaSalle Bank, National Association shall have executed and
      delivered an escrow agreement concerning the deposit and transfer of the
      Subsidiary stock, membership and partnership certificates listed on Schedule
      7.6
      after
      the Bank has issued and delivered letters of credit to certain beneficiaries
      that replace the existing LaSalle Bank, National Association letters of credit
      have been issued at the request of the Borrower. 

    
      
        
        

      

      
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    Section
      4. NOTES
      EVIDENCING LOANS.

     

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

     

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

     

    Section
      5. MANNER
      OF BORROWING.

     

    5.1. Borrowing
      Procedures.
      Each
      Facility A Loan, Facility B Loan and Facility C Loan may
      be
      advanced either as a Prime Loan or a LIBOR Loan, provided, however, that at
      any
      time, the Borrower may identify no more than five (5) Facility A Loans, Facility
      B Loans and Facility C Loans which
      may
      be LIBOR Loans. Each Loan shall be made available to the Borrower upon any
      written, verbal, electronic, telephonic or telecopy loan request which the
      Bank
      in good faith believes to emanate from a properly authorized representative
      of
      the Borrower, whether or not that is in fact the case. Each such request shall
      be effective upon receipt by the Bank, shall be irrevocable, and shall specify
      the date, amount and type of borrowing and, in the case of a LIBOR Loan, the
      initial Interest Period therefor. The Borrower shall select Interest Periods
      so
      as not to require a payment or prepayment of any LIBOR Loan during an Interest
      Period for such LIBOR Loan. The final Interest Period for any LIBOR Loan must
      be
      such that its expiration occurs on or before the Maturity Date 
      of such
      Loan. A request for a Prime Loan must be received by the Bank no later than
      2:00
      p.m. Chicago, Illinois time,
      on
      the day it is to be funded. A request for a LIBOR Loan must be (i) received
      by
      the Bank no later than 2:00 p.m. Chicago, Illinois time, three Business Days
      before the day it is to be funded, and (ii) in an amount equal to One Hundred
      Thousand and 00/100 Dollars ($100,000.00) or a higher integral multiple of
      One
      Hundred Thousand and 00/100 Dollars ($100,000.00). The proceeds of each Loan
      shall be made available at the office of the Bank by credit to the account
      of
      the Borrower or by other means requested by the Borrower and acceptable to
      the
      Bank. The Borrower does hereby irrevocably confirm, ratify and approve all
      such
      advances by the Bank and does hereby indemnify the Bank against losses and
      expenses (including court costs, attorneys’ and paralegals’ fees) and shall hold
      the Bank harmless with respect thereto.

    
      
        
        

      

      
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    5.2. LIBOR
      Conversion and Continuation Procedures.
      If
      pursuant to the notice received by the Bank pursuant to Section
      5.1,
      the
      initial Interest Period of any LIBOR Loan commences on any day other than the
      first Business Day of any month, then the initial Interest Period of such LIBOR
      Loan shall end on the first Business Day of the following calendar month,
      notwithstanding the Interest Period specified in such notice, and the LIBOR
      Rate
      for such LIBOR Loan shall be equal to the LIBOR Rate for an Interest Period
      equal to the length of such partial month. Thereafter, each LIBOR Loan shall
      automatically renew for the Interest Period specified in the initial request
      received by the Bank pursuant to Section
      5.1,
      at the
      then current LIBOR Rate unless the Borrower, pursuant to a subsequent written
      notice received by the Bank, shall elect a different Interest Period or the
      conversion of all or a portion of such LIBOR Loan to a Prime Loan.
      Each
      Interest Period occurring after the initial Interest Period with respect to
      any
      LIBOR Loan shall commence on the same day of each applicable month as the first
      day of the initial Interest Period. Whenever the last day of any Interest Period
      with respect to any LIBOR Loan would otherwise occur on a day other than a
      Business Day, the last day of such Interest Period shall be extended to occur
      on
      the next succeeding Business Day. Whenever an Interest Period with respect
      to
      any LIBOR Loan would otherwise end on a day of a month for which there is no
      numerically corresponding day in the calendar month, such Interest Period shall
      end on the last day of such calendar month, unless such day is not a Business
      Day, in which event such Interest Period shall be extended to end on the next
      Business Day. 
      Upon
      receipt by the Bank of such subsequent notice, the Borrower may, subject to
      the
      terms and conditions of this Agreement, elect, as of the last day of the
      applicable Interest Period, to continue any LIBOR Loan having an Interest Period
      expiring on such day for a different Interest Period, or to convert any such
      LIBOR Loan to a Prime Loan. Such notice shall, in the case of a conversion
      to a
      Prime Loan, be given before 11:00 a.m., Chicago, Illinois time, on the proposed
      date of such conversion, and in the case of conversion to a LIBOR Loan having
      a
      different Interest Period, be given before 11:00 a.m., Chicago, Illinois time,
      at least three Business Days prior to the proposed date of such conversion,
      specifying: (i) the proposed date of conversion; (ii) the aggregate
      amount of Loans to be converted; (iii) the type of Loans resulting from the
      proposed conversion; and (iv) the duration of the requested Interest
      Period. If the Facility C Loan is subject to a Facility C Loan Mandatory
      Prepayment, the last day of the then current Interest Period for any portion
      of
      the Facility C Loan which is a LIBOR Loan must coincide with the date of the
      Facility C Loan Mandatory Prepayment. 
      The
      Borrower may not elect a LIBOR Rate, and an Interest Period for a LIBOR Loan
      shall not automatically renew, with respect to any principal amount which is
      scheduled to be repaid before the last day of the applicable Interest Period,
      and any such amounts shall bear interest at the Prime Rate, until
      repaid.

     

    5.3. Letters
      of Credit.
      All
      Letters of Credit shall bear such application, issuance, renewal, negotiation
      and other fees and charges, and bear such interest as charged by the Bank or
      otherwise payable pursuant to the Master Letter of Credit Agreement. In addition
      to the foregoing, each standby Letter of Credit issued under and pursuant to
      this Agreement shall bear an annual issuance fee equal to the Facility A Loan
      and Facility B Loan LIBOR Applicable Margin then
      in
      effect multiplied by the undrawn face amount of such standby Letter of Credit,
      payable by the Borrower quarterly in arrears beginning September 30, 2008 and
      the last Business Day of each December, March, June and September thereafter,
      until (i) such Letter of Credit has expired or has been returned to the Bank,
      or
      (ii) the Bank has paid the beneficiary thereunder the full face amount of such
      Letter of Credit.

    
      
        
        

      

      
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    5.4. Automatic
      Debit.
      The
      Borrower hereby authorizes and directs the Bank, at the Bank’s option, to (a)
      debit the amount of the Obligations to any deposit account of the Borrower,
      or
      (b) debit any deposit account of the Borrower to pay an Obligation arising
      under
      the Loans. The Bank shall give the Borrower two (2) days prior notice of each
      automatic debit of a deposit account under this Section
      5.4.

     

    5.5. Discretionary
      Disbursements.
      The
      Bank, in its reasonable discretion, may immediately upon notice to the Borrower,
      disburse any or all proceeds of the Loans made or available to the Borrower
      pursuant to this Agreement to pay any fees, costs, expenses or other amounts
      required to be paid by the Borrower hereunder and not so paid. All monies so
      disbursed shall be a part of the Obligations, payable by the Borrower on demand
      from the Bank.

     

    Section
      6. SECURITY
      FOR THE OBLIGATIONS.

     

    6.1. Security
      for Obligations.
      As
      security for the payment and performance of the Obligations, the Borrower does
      hereby pledge, assign, transfer, deliver and grant to the Bank, for its own
      benefit and as agent for its Affiliates, a continuing and unconditional first
      priority security interest in and to any and all property of the Borrower,
      of
      any kind or description, tangible or intangible, wheresoever located and whether
      now existing or hereafter arising or acquired, including the following (all
      of
      which property, along with the products and proceeds therefrom, are individually
      and collectively referred to as the “Collateral”):

     

    (a) all
      property of, or for the account of, the Borrower now or hereafter coming into
      the possession, control or custody of, or in transit to, the Bank or any agent
      or bailee for the Bank or any parent, Affiliate or Subsidiary of the Bank or
      any
      participant with the Bank in the Loans (whether for safekeeping, deposit,
      collection, custody, pledge, transmission or otherwise), including all earnings,
      dividends, interest, or other rights in connection therewith and the products
      and proceeds therefrom, including the proceeds of insurance thereon;
      and

     

    (b) the
      additional property of the Borrower, whether now existing or hereafter arising
      or acquired, and wherever now or hereafter located, together with all additions
      and accessions thereto, substitutions, betterments and replacements therefor,
      products and Proceeds therefrom, and all of the Borrower’s books and records and
      recorded data relating thereto (regardless of the medium of recording or
      storage), together with all of the Borrower’s right, title and interest in and
      to all computer software required to utilize, create, maintain and process
      any
      such records or data on electronic media, identified and set forth as
      follows:

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

     

    (i) All
      Accounts and all Goods whose sale, lease or other disposition by the Borrower
      has given rise to Accounts and have been returned to, or repossessed or stopped
      in transit by, the Borrower, or rejected or refused by an Account
      Debtor;

     

    (ii) All
      Inventory, including raw materials, work-in-process and finished
      goods;

     

    (iii) All
      Goods (other than Inventory), including embedded software, Equipment, vehicles,
      furniture and Fixtures;

     

    (iv) All
      Software and computer programs;

     

    (v) All
      Securities, Investment Property, Financial Assets and Deposit
      Accounts;

     

    (vi) All
      Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of
      Credit Rights, all proceeds of Letters of Credit, Health-Care-Insurance
      Receivables, Supporting Obligations, notes secured by real estate, Commercial
      Tort Claims and General Intangibles, including Payment Intangibles;
      and

     

    (vii) All
      Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing property,
      including all insurance policies and proceeds of insurance payable by reason
      of
      loss or damage to the foregoing property, including unearned premiums, and
      of
      eminent domain or condemnation awards.

     

    6.2. Other
      Collateral.
      In
      addition, the Obligations are also secured by (a) that certain Pledge Agreement,
      of even date herewith, executed by Borrower and Guarantors to and for the
      benefit of the Bank; and (b) that certain Security Agreement, of even date
      herewith, executed by the Guarantors to and for the benefit of the
      Bank.

     

    6.3. Possession
      and Transfer of Collateral.
      Unless
      an Event of Default exists hereunder, the Borrower shall be entitled to
      possession or use of the Collateral (other than Instruments or Documents with
      an
      individual value in excess of $10,000.00, Tangible Chattel Paper, Investment
      Property consisting of certificated securities and other Collateral required
      to
      be delivered to the Bank pursuant to this Section 6). The cancellation or
      surrender of any Note, upon payment or otherwise, shall not affect the right
      of
      the Bank to retain the Collateral for any other of the Obligations. The Borrower
      shall not sell, assign (by operation of law or otherwise), license, lease or
      otherwise dispose of, or grant any option with respect to any of the Collateral,
      except that the Borrower may sell Inventory in the ordinary course of
      business.

     

    6.4. Financing
      Statements.
      The
      Borrower shall, at the Bank’s request, at any time and from time to time,
      execute and deliver to the Bank such UCC financing statements, amendments and
      other documents and do such acts as the Bank deems reasonably necessary in
      order
      to establish and maintain valid, attached and perfected first priority security
      interests in the Collateral in favor of the Bank, free and clear of all Liens
      and claims and rights of third parties whatsoever, except Permitted Liens.
      The
      Borrower hereby irrevocably authorizes the Bank at any time, and from time
      to
      time, to file in any jurisdiction any initial UCC financing statements and
      amendments thereto without the signature of the Borrower that (a) indicate
      the
      Collateral (i) is comprised of all assets of the Borrower or words of similar
      effect, regardless of whether any particular asset comprising a part of the
      Collateral falls within the scope of Article 9 of the Uniform Commercial Code
      of
      the jurisdiction wherein such financing statement or amendment is filed, or
      (ii)
      as being of an equal or lesser scope or within greater detail as the grant
      of
      the security interest set forth herein, and (b) contain any other information
      required by Section 5 of Article 9 of the Uniform Commercial Code of the
      jurisdiction wherein such financing statement or amendment is filed regarding
      the sufficiency or filing office acceptance of any financing statement or
      amendment, including (i) whether the Borrower is an organization, the type
      of
      organization and any Organizational Identification Number issued to the
      Borrower, and (ii) in the case of a financing statement filed as a fixture
      filing or indicating Collateral as as-extracted collateral or timber to be
      cut,
      a sufficient description of the real property to which the Collateral relates.
      The Borrower hereby agrees that a photocopy or other reproduction of this
      Agreement is sufficient for filing as a financing statement and the Borrower
      authorizes the Bank to file this Agreement as a financing statement in any
      jurisdiction. The Borrower agrees to furnish any such information to the Bank
      promptly upon request. The Borrower further ratifies and affirms its
      authorization for any financing statements and/or amendments thereto, executed
      and filed by the Bank in any jurisdiction prior to the date of this Agreement.
      In addition, the Borrower shall make appropriate entries on its books and
      records disclosing the Bank’s security interests in the
      Collateral.

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

     

    6.5. Additional
      Collateral.
      The
      Borrower shall deliver to the Bank immediately upon its demand, such other
      collateral as the Bank may from time to time request, should the value of the
      Collateral, in the Bank’s reasonable discretion, decline, deteriorate,
      depreciate or become impaired, and does hereby grant to the Bank a continuing
      security interest in such other collateral, which, when pledged, assigned and
      transferred to the Bank shall be and become part of the Collateral. The Bank’s
      security interests in all of the foregoing Collateral shall be valid, complete
      and perfected whether or not covered by a specific assignment.

     

    6.6. Preservation
      of the Collateral.
      The
      Bank may, but is not required, to take such actions from time to time as the
      Bank deems appropriate to maintain or protect the Collateral. The Bank shall
      have exercised reasonable care in the custody and preservation of the Collateral
      if the Bank takes such action as the Borrower shall reasonably request in
      writing which is not inconsistent with the Bank’s status as a secured party, but
      the failure of the Bank to comply with any such request shall not be deemed
      a
      failure to exercise reasonable care; provided, however, the Bank’s
      responsibility for the safekeeping of the Collateral shall (i) be deemed
      reasonable if such Collateral is accorded treatment substantially equal to
      that
      which the Bank accords its own property, and (ii) not extend to matters beyond
      the control of the Bank, including acts of God, war, insurrection, riot or
      governmental actions. In addition, any failure of the Bank to preserve or
      protect any rights with respect to the Collateral against prior or third
      parties, or to do any act with respect to preservation of the Collateral, not
      so
      requested by the Borrower, shall not be deemed a failure to exercise reasonable
      care in the custody or preservation of the Collateral. The Borrower shall have
      the sole responsibility for taking such action as may be necessary, from time
      to
      time, to preserve all rights of the Borrower and the Bank in the Collateral
      against prior or third parties. Without limiting the generality of the
      foregoing, where Collateral consists in whole or in part of securities, the
      Borrower represents to, and covenants with, the Bank that the Borrower has
      made
      arrangements for keeping informed of changes or potential changes affecting
      the
      securities (including rights to convert or subscribe, payment of dividends,
      reorganization or other exchanges, tender offers and voting rights), and the
      Borrower agrees that the Bank shall have no responsibility or liability for
      informing the Borrower of any such or other changes or potential changes or
      for
      taking any action or omitting to take any action with respect
      thereto.

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

     

    6.7. Other
      Actions as to any and all Collateral. The
      Borrower further agrees to take any other action reasonably requested by the
      Bank to ensure the attachment, perfection and first priority (subject to
      Permitted Liens) of, and the ability of the Bank to enforce, the Bank’s security
      interest in any and all of the Collateral, including (a) causing the Bank’s name
      to be noted as secured party on any certificate of title for a titled good
      if
      such notation is a condition to attachment, perfection or priority of, or
      ability of the bank to enforce, the Bank’s security interest in such Collateral,
      (b) complying with any provision of any statute, regulation or treaty of the
      United States as to any Collateral if compliance with such provision is a
      condition to attachment, perfection or priority of, or ability of the Bank
      to
      enforce, the Bank’s security interest in such Collateral, (c) obtaining
      governmental and other third party consents and approvals, including any consent
      of any licensor, lessor or other Person obligated on Collateral, (d) obtaining
      waivers from mortgagees and landlords in form and substance satisfactory to
      the
      Bank, and (e) taking all actions required by the UCC in effect from time to
      time
      or by other law, as applicable in any relevant UCC jurisdiction, or by other
      law
      as applicable in any foreign jurisdiction. The Borrower further agrees to
      indemnify and hold the Bank harmless against claims of any Persons not a party
      to this Agreement concerning disputes arising over the Collateral.

     

    6.8. Collateral
      in the Possession of a Warehouseman or Bailee.
      If any
      of the Collateral with an aggregate value in excess of $25,000.00 at any time
      is
      in the possession of a warehouseman or bailee, the Borrower shall promptly
      notify the Bank thereof, and shall promptly obtain a Collateral Access
      Agreement. The Bank agrees with the Borrower that the Bank shall not give any
      instructions to such warehouseman or bailee pursuant to such Collateral Access
      Agreement unless an Event of Default has occurred and is continuing, or would
      occur after taking into account any action by the Borrower with respect to
      the
      warehouseman or bailee.

     

    6.9. Letter-of-Credit
      Rights.
      If the
      Borrower at any time is a beneficiary under a letter of credit now or hereafter
      issued in favor of the Borrower, the Borrower shall promptly notify the Bank
      thereof and, at the request and option of the Bank, the Borrower shall, pursuant
      to an agreement in form and substance satisfactory to the Bank, either (i)
      arrange for the issuer and any confirmer of such letter of credit to consent
      to
      an assignment to the Bank of the proceeds of any drawing under the letter of
      credit, or (ii) arrange for the Bank to become the transferee beneficiary of
      the
      letter of credit, with the Bank agreeing, in each case, that the proceeds of
      any
      drawing under the letter to credit are to be applied as provided in this
      Agreement.

     

    6.10. Commercial
      Tort Claims.
      If the
      Borrower shall at any time hold or acquire a Commercial Tort Claim, the Borrower
      shall immediately notify the Bank in writing signed by the Borrower of the
      details thereof and grant to the Bank in such writing a security interest
      therein and in the proceeds thereof, all upon the terms of this Agreement,
      in
      each case in form and substance satisfactory to the Bank, and shall execute
      any
      amendments hereto deemed reasonably necessary by the Bank to perfect its
      security interest in such Commercial Tort Claim.

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

     

    6.11. Electronic
      Chattel Paper and Transferable Records.
      If the
      Borrower at any time holds or acquires an interest in any electronic chattel
      paper or any “transferable record”, as that term is defined in Section 201 of
      the federal Electronic Signatures in Global and National Commerce Act, or in
      Section 16 of the Uniform Electronic Transactions Act as in effect in any
      relevant jurisdiction, the Borrower shall promptly notify the Bank thereof
      and,
      at the request of the Bank, shall take such action as the Bank may reasonably
      request to vest in the Bank control under Section 9-105 of the UCC of such
      electronic chattel paper or control under Section 201 of the federal Electronic
      Signatures in Global and National Commerce Act or, as the case may be, Section
      16 of the Uniform Electronic Transactions Act, as in effect in such
      jurisdiction, of such transferable record. The Bank agrees with the Borrower
      that the Bank will arrange, pursuant to procedures satisfactory to the Bank
      and
      so long as such procedures will not result in the Bank’s loss of control, for
      the Borrower to make alterations to the electronic chattel paper or transferable
      record permitted under Section 9-105 of the UCC or, as the case may be, Section
      201 of the federal Electronic Signatures in Global and National Commerce Act
      or
      Section 16 of the Uniform Electronic Transactions Act for a party in control
      to
      make without loss of control.

     

    Section
      7. REPRESENTATIONS
      AND WARRANTIES.

     

    To
      induce
      the Bank to make the Loans, the Borrower makes the following representations
      and
      warranties to the Bank, each of which shall survive the execution and delivery
      of this Agreement:

     

    7.1. Borrower
      Organization and Name.
      The
      Borrower is a corporation duly
      organized, existing and in good standing under the laws of the State of
      Delaware, with full and adequate power to carry on and conduct its business
      as
      presently conducted. Each Subsidiary is validly existing and in good standing
      under the laws of the jurisdiction of its organization. The Borrower and each
      Subsidiary is duly licensed or qualified in all foreign jurisdictions wherein
      the nature of its activities require such qualification or licensing, except
      for
      such jurisdictions where the failure to so qualify would not have a Material
      Adverse Effect. Except as shown on Schedule
      7. 1,
      the
      exact legal name of the Borrower is as set forth in the first paragraph of
      this
      Agreement, and the Borrower currently does not conduct, nor has it during the
      last five (5) years conducted, business under any other name or trade name.
      

     

    7.2. Authorization.
      The
      Borrower has full right, power and authority to enter into this Agreement,
      to
      make the borrowings and execute and deliver the Loan Documents as provided
      herein and to perform all of its duties and obligations under this Agreement
      and
      the other Loan Documents. The execution and delivery of this Agreement and
      the
      other Loan Documents will not, nor will the observance or performance of any
      of
      the matters and things herein or therein set forth, violate or contravene any
      provision of law or of the articles/certificate of incorporation or
      bylaws 
      of the
      Borrower. All necessary and appropriate action has been taken on the part of
      the
      Borrower to authorize the execution and delivery of this Agreement and the
      Loan
      Documents.

     

    7.3. Validity
      and Binding Nature.
      This
      Agreement and the other Loan Documents are the legal, valid and binding
      obligations of the Borrower, enforceable against the Borrower in accordance
      with
      their terms, subject to bankruptcy, insolvency and similar laws affecting the
      enforceability of creditors’ rights generally and to general principles of
      equity.

    
      
        
        

      

      
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    7.4. Consent;
      Absence of Breach.
      The
      execution, delivery and performance of this Agreement, the other Loan Documents
      and any other documents or instruments to be executed and delivered by the
      Borrower in connection with the Loans, and the borrowings by the Borrower
      hereunder, do not and will not (a) require any consent, approval, authorization
      of, or filings with, notice to or other act by or in respect of, any
      governmental authority or any other Person (other than any consent or approval
      which has been obtained and is in full force and effect); (b) conflict with
      (i)
      any provision of law or any applicable regulation, order, writ, injunction
      or
      decree of any court or governmental authority, (ii) the articles of
      incorporation or bylaws 
      of the
      Borrower or any of its Subsidiaries, or (iii) any material agreement, indenture,
      instrument or other document, or any judgment, order or decree, which is binding
      upon the Borrower or any of its Subsidiaries or any of its /their respective
      properties or assets; or (c) require, or result in, the creation or imposition
      of any Lien on any asset of Borrower 
      or any
      of its Subsidiaries, other than Liens in favor of the Bank created pursuant
      to
      this Agreement.

     

    7.5. Ownership
      of Properties; Liens.
      The
      Borrower is the sole owner or has other rights in all of its properties and
      assets, real and personal, tangible and intangible, of any nature whatsoever
      (including patents, trademarks, trade names, service marks and copyrights),
      free
      and clear of all Liens, charges and claims (including infringement claims with
      respect to patents, trademarks, service marks, copyrights and the like), other
      than Permitted Liens.

     

    7.6. Equity
      Ownership.
      All
      issued and outstanding Capital Securities of
      each
      of the Borrower’s Subsidiaries are described in Schedule
      7.6
      and are
      duly authorized and validly issued, fully paid, non-assessable, and free and
      clear of all Liens, other than Permitted Liens, and such securities were issued
      in compliance with all applicable state and federal laws concerning the issuance
      of securities. All issued and outstanding Capital Securities of each of the
      Borrower’s Subsidiaries are free and clear of all Liens other than those in
      favor of the Bank, if any. As of the date hereof, there are no pre-emptive
      or
      other outstanding rights, options, warrants, conversion rights or other similar
      agreements or understandings for the purchase or acquisition of any Capital
      Securities 
      of the
      Borrower and each of its Subsidiaries.

     

    7.7. Intellectual
      Property.
      The
      Borrower owns and possesses or has a license or other right to use all
      Intellectual Property, as are necessary for the conduct of the businesses of
      the
      Borrower, without any infringement upon rights of others which could reasonably
      be expected to have a Material Adverse Effect upon the Borrower, and no material
      claim has been asserted and is pending by any Person challenging or questioning
      the use of any Intellectual Property or the validity or effectiveness of any
      Intellectual Property nor does the Borrower know of any valid basis for any
      such
      claim.

     

    7.8. Financial
      Statements.
      All
      financial statements submitted to the Bank have been prepared in accordance
      with
      GAAP on a basis, except as otherwise noted therein, consistent with the previous
      fiscal year and present fairly the financial condition of the Borrower and
      the
      results of the operations for the Borrower as of such date and for the periods
      indicated. Since August 31, 2008, there has been no change in the financial
      condition or in the assets or liabilities of the Borrower having a Material
      Adverse Effect on the Borrower.

     

    7.9. Litigation
      and Contingent Liabilities.
      There
      is no litigation, arbitration proceeding, demand, charge, claim, petition or
      governmental investigation or proceeding pending, or to the knowledge of the
      Borrower, threatened, against the Borrower, which, if adversely determined,
      which might reasonably be expected to have a Material Adverse Effect upon the
      Borrower, except as set forth in Schedule
      7.9.
      Other
      than any liability incident to such litigation or proceedings, the Borrower
      has
      no material guarantee obligations, contingent liabilities, liabilities for
      taxes, or any long-term leases or unusual forward or long-term commitments,
      including any interest rate or foreign currency swap or exchange transaction
      or
      other obligation in respect of derivatives, that are not fully-reflected or
      fully reserved for in the most recent audited financial statements delivered
      pursuant to subsection
      8.8(a)
      or
      fully-reflected or fully reserved for in the most recent quarterly financial
      statements delivered pursuant to subsection
      8.8(b)
      and not
      permitted by Section
      9.1.

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

     

    7.10. Event
      of Default.
      No
      Event of Default or Unmatured Event of Default exists or would result from
      the
      incurrence by the Borrower of any of the Obligations hereunder or under any
      of
      the other Loan Document, and the Borrower is not in default (without regard
      to
      grace or cure periods) under any other contract or agreement to which it is
      a
      party,
      the
      effect of which would have a Material Adverse Effect upon the
      Borrower.

     

    7.11. Adverse
      Circumstances.
      No
      condition, circumstance, event, agreement, document, instrument, restriction,
      litigation or proceeding (or threatened litigation or proceeding or basis
      therefor) exists which (a) would have a Material Adverse Effect upon the
      Borrower, or (b) would constitute an Event of Default or an Unmatured Event
      of
      Default.

     

    7.12. Environmental
      Laws and Hazardous Substances.
      The
      Borrower has not generated, used, stored, treated, transported, manufactured,
      handled, produced or disposed of any Hazardous Substances, on or off any of
      the
      premises of the Borrower (whether or not owned by it) in any manner which at
      any
      time violates any Environmental Law or any license, permit, certificate,
      approval or similar authorization thereunder. The Borrower will comply in all
      material respects with all Environmental Laws and will obtain all licenses,
      permits certificates, approvals and similar authorizations thereunder. There
      has
      been no investigation, proceeding, complaint, order, directive, claim, citation
      or notice by any governmental authority or any other Person, nor is any pending
      or, to the best of the Borrower’s knowledge, threatened, and the Borrower shall
      immediately notify the Bank upon becoming aware of any such investigation,
      proceeding, complaint, order, directive, claim, citation or notice, and shall
      take prompt and appropriate actions to respond thereto, with respect to any
      non-compliance with, or violation of, the requirements of any Environmental
      Law
      by the Borrower or the release, spill or discharge, threatened or actual, of
      any
      Hazardous Material or the generation, use, storage, treatment, transportation,
      manufacture, handling, production or disposal of any Hazardous Material or
      any
      other environmental, health or safety matter, which affects the Borrower or
      its
      business, operations or assets or any properties at which the Borrower has
      transported, stored or disposed of any Hazardous Substances. The Borrower has
      no
      material liability, contingent or otherwise, in connection with a release,
      spill
      or discharge, threatened or actual, of any Hazardous Substances or the
      generation, use, storage, treatment, transportation, manufacture, handling,
      production or disposal of any Hazardous Material. The Borrower further agrees
      to
      allow the Bank or its agent access to the properties of the Borrower and its
      Subsidiaries to confirm compliance with all Environmental Laws, and the Borrower
      shall, following determination by the Bank that there is non-compliance, or
      any
      condition which requires any action by or on behalf of the Borrower in order
      to
      avoid any non-compliance, with any Environmental Law, at the Borrower’s sole
      expense, cause an independent environmental engineer acceptable to the Bank
      to
      conduct such tests of the relevant site as are appropriate, and prepare and
      deliver a report setting forth the result of such tests, a proposed plan for
      remediation and an estimate of the costs thereof.

    
      
        
        

      

      
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    7.13. Solvency,
      etc.
      As of
      the date hereof, and immediately prior to and after giving effect to the
      issuance of each Letter of Credit and each Loan hereunder and the use of the
      proceeds thereof, (a) the fair value of the Borrower’s assets is greater than
      the amount of its liabilities (including disputed, contingent and unliquidated
      liabilities) as such value is established and liabilities evaluated as required
      under the Section 548 of the Bankruptcy Code, (b) the present fair saleable
      value of the Borrower’s assets is not less than the amount that will be required
      to pay the probable liability on its debts as they become absolute and matured,
      (c) the Borrower is able to realize upon its assets and pay its debts and other
      liabilities (including disputed, contingent and unliquidated liabilities) as
      they mature in the normal course of business, (d) the Borrower does not intend
      to, and does not believe that it will, incur debts or liabilities beyond its
      ability to pay as such debts and liabilities mature, and (e) the Borrower is
      not
      engaged in business or a transaction, and is not about to engage in business
      or
      a transaction, for which its property would constitute unreasonably small
      capital.

     

    7.14. ERISA
      Obligations.
      All
      Employee Plans of the Borrower meet the minimum funding standards of Section
      302
      of ERISA and 412 of the Internal Revenue Code where applicable, and each such
      Employee Plan that is intended to be qualified within the meaning of Section
      401
      of the Internal Revenue Code of 1986 is qualified. No withdrawal liability
      has
      been incurred under any such Employee Plans and no “Reportable Event” or
“Prohibited Transaction” (as such terms are defined in ERISA), has occurred with
      respect to any such Employee Plans, unless approved by the appropriate
      governmental agencies. The Borrower has promptly paid and discharged all
      obligations and liabilities arising under the Employee Retirement Income
      Security Act of 1974 (“ERISA”)
      of a
      character which if unpaid or unperformed might result in the imposition of
      a
      Lien against any of its properties or assets.

     

    7.15. Labor
      Relations.
      Except
      as could not reasonably be expected to have a Material Adverse Effect, (i)
      there
      are no strikes, lockouts or other labor disputes against the Borrower
      or
      ,
      to the
      best knowledge of the Borrower
      ,
      threatened, (ii) hours worked by and payment made to employees of the Borrower
      have not been in violation of the Fair Labor Standards Act or any other
      applicable law, and (ii) no unfair labor practice complaint is pending against
      the Borrower or
      ,
      to the
      best knowledge of the Borrower
      ,
      threatened before any governmental authority.

     

    7.16. Security
      Interest.
      This
      Agreement creates a valid security interest in favor of the Bank in the
      Collateral and, when properly perfected by filing in the appropriate
      jurisdictions, or by possession or Control of such Collateral by the Bank or
      delivery of such Collateral to the Bank, shall constitute a valid, perfected,
      first-priority security interest in such Collateral.

     

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

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

     

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

     

    7.19. Taxes.
      The
      Borrower has timely filed all tax returns and reports required by law to have
      been filed by it and has paid all taxes, governmental charges and assessments
      due and payable with respect to such returns, except any such taxes or charges
      which are being diligently contested in good faith by appropriate proceedings
      and for which adequate reserves in accordance with GAAP shall have been set
      aside on its books, are insured against or bonded over to the satisfaction
      of
      the Bank and the contesting of such payment does not create a Lien on the
      Collateral which is not a Permitted Lien. There is no controversy or objection
      pending, or to the knowledge of the Borrower, threatened in respect of any
      tax
      returns of the Borrower. The Borrower has made adequate reserves on its books
      and records in accordance with GAAP for all taxes that have accrued but which
      are not yet due and payable.

     

    7.20. Compliance
      with Regulation U.
      No
      portion of the proceeds of the Loans shall be used by the Borrower, or any
      Affiliate of the Borrower, either directly or indirectly, for the purpose of
      purchasing or carrying any margin stock, within the meaning of Regulation U
      as
      adopted by the Board of Governors of the Federal Reserve System or any successor
      thereto.

     

    7.21. Governmental
      Regulation.
      The
      Borrower,
      its
      Subsidiaries and any of the Guarantors are not, or after giving effect to any
      loan, will not be, subject to regulation under the Public Utility Holding
      Company Act of 1935, the Federal Power Act, the ICC Termination Act of 1995
      or
      the Investment Company Act of 1940 or to any federal or state statute or
      regulation limiting its ability to incur indebtedness for borrowed
      money.

     

    7.22.
      Bank
      Accounts.
      All
      Deposit Accounts and operating bank accounts of the Borrower and its
      Subsidiaries are listed on Schedule
      7.22
      attached
      hereto and the Borrower has no other Deposit Accounts except those listed on
      Schedule
      7.22
      attached
      hereto.

     

    7.23. Place
      of Business.
      The
      principal place of business and books and records of the Borrower is set forth
      in the preamble to this Agreement, and the location of all Collateral, if other
      than at such principal place of business, is as set forth on Schedule
      7.23
      attached
      hereto and made a part hereof, and the Borrower shall promptly notify the Bank
      of any change in such locations. The Borrower will not remove or permit the
      Collateral to be removed from such locations without the prior written consent
      of the Bank, except for Inventory sold in the usual and ordinary course of
      the
      Borrower’s business.

     

    7.24. Complete
      Information.
      This
      Agreement and all financial statements, schedules, certificates, confirmations,
      agreements, contracts, and other materials and information heretofore or
      contemporaneously herewith furnished in writing by the Borrower to the Bank
      for
      purposes of, or in connection with, this Agreement and the transactions
      contemplated hereby is, and all written information hereafter furnished by
      or on
      behalf of the Borrower to the Bank pursuant hereto or in connection herewith
      will be, true and accurate in every material respect on the date as of which
      such information is dated or certified, and none of such information is or
      will
      be incomplete by omitting to state any material fact necessary to make such
      information not misleading in light of the circumstances under which made (it
      being recognized by the Bank that any projections and forecasts provided by
      the
      Borrower are based on good faith estimates and assumptions believed by the
      Borrower to be reasonable as of the date of the applicable projections or
      assumptions and that actual results during the period or periods covered by
      any
      such projections and forecasts may differ from projected or forecasted
      results).

    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

     

    7.25. Subordinated
      Debt.
      All
      Subordinated Debt, and the amounts owed in connection with each such Debt,
      is
      described in Schedule
      7.25.
      The
      subordination provisions of the Subordinated Debt are enforceable against the
      holders of the Subordinated Debt by the Bank. The Obligations constitute Senior
      Debt entitled to the benefits of the subordination provisions contained in
      the
      Subordinated Debt. The Borrower acknowledges that the Bank is entering into
      this
      Agreement and is making the Loans in reliance upon the subordination provisions
      of the Subordinated Debt and this Section
      7.25.

     

    7.26. Indebtedness.
      Except
      as set forth on
      Schedule 7.26,
      no
      Obligor is obligated for any loans or other Indebtedness for borrowed money,
      other than the Loans.

     

    7.27. Affiliate
      Transactions.
      Except
      as set forth in Schedule
      7.27,
      no
      Obligor is conducting, permitting or suffering to be conducted, transactions
      with any Affiliates other than for the purchase or sale of Inventory or services
      in the ordinary course of business, pursuant to terms that are no less favorable
      to the Obligor than the terms upon which such transactions would have been
      made
      had they been made with a Person who is not an Affiliate.

     

    Section
      8. AFFIRMATIVE
      COVENANTS.

     

    So
      long
      as any Obligation shall not have been fully paid or performed by the Borrower,
      the Borrower will, unless the Bank shall otherwise consent in writing or by
      electronic mail, perform and comply with the following covenants:

     

    8.1. Compliance
      with Bank Regulatory Requirements; Increased Costs.
      If the
      Bank shall reasonably determine that any Regulatory Change, or compliance by
      the
      Bank or any Person controlling the Bank with any request or directive (whether
      or not having the force of law) of any governmental authority, central bank
      or
      comparable agency has or would have the effect of reducing the rate of return
      on
      the Bank’s or such controlling Person’s capital as a consequence of the Bank’s
      obligations hereunder or under any Letter of Credit to a level below that which
      the Bank or such controlling Person could have achieved but for such Regulatory
      Change or compliance (taking into consideration the Bank’s or such controlling
      Person’s policies with respect to capital adequacy) by an amount deemed by the
      Bank or such controlling Person to be material or would otherwise reduce the
      amount of any sum received or receivable by the Bank under this Agreement or
      under any Note with respect thereto, then from time to time, upon demand by
      the
      Bank (which demand shall be accompanied by a statement setting forth the basis
      for such demand and a calculation of the amount thereof in reasonable detail),
      the Borrower shall pay directly to the Bank or such controlling Person such
      additional amount as will compensate the Bank for such increased cost or such
      reduction, so long as such amounts have accrued on or after the day which is
      one
      hundred eighty days (180) days prior to the date on which the Bank first made
      demand therefor.

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

    

     

    8.2. Borrower
      Existence.
      The
      Borrower shall at all times (a) preserve and maintain its existence and good
      standing in the jurisdiction of its organization, (b) preserve and maintain
      its
      qualification to do business and good standing in each jurisdiction where the
      nature of its business makes such qualification necessary (other than such
      jurisdictions in which the failure to be qualified or in good standing could
      not
      reasonably be expected to have a Material Adverse Effect), and (c) continue
      as a
      going concern in the business which the Borrower is presently conducting. If
      the
      Borrower does not have an Organizational Identification Number and later obtains
      one, the Borrower shall promptly notify the Bank of such Organizational
      Identification Number.

     

    8.3. Compliance
      With Laws.
      The
      Borrower shall use the proceeds of the Loans for working capital and other
      general corporate or business purposes not in contravention of any requirements
      of law and not in violation of this Agreement, and shall comply, and cause
      each
      Subsidiary to comply, in all respects, including the conduct of its business
      and
      operations and the use of its properties and assets, with all applicable laws,
      rules, regulations, decrees, orders, judgments, licenses and permits, except
      where failure to comply could not reasonably be expected to have a Material
      Adverse Effect. In addition, and without limiting the foregoing sentence, the
      Borrower shall (a) ensure, and cause each Subsidiary to ensure, that no person
      who owns a controlling interest in or otherwise controls the Borrower or any
      Subsidiary is or shall be listed on the Specially Designated Nationals and
      Blocked Person List or other similar lists maintained by the Office of Foreign
      Assets Control (“OFAC”),
      the
      Department of the Treasury or included in any Executive Orders, (b) not use
      or
      permit the use of the proceeds of the Loans to violate any of the foreign asset
      control regulations of OFAC or any enabling statute or Executive Order relating
      thereto, and (c) comply, and cause each Subsidiary to comply, with all
      applicable Bank Secrecy Act (“BSA”)
      laws
      and regulations, as amended.

     

    8.4. Payment
      of Taxes and Liabilities.
      The
      Borrower shall pay, and cause each Subsidiary to pay, and discharge, prior
      to
      delinquency and before penalties accrue thereon, all property and other taxes,
      and all governmental charges or levies against it or any of the Collateral,
      as
      well as claims of any kind which, if unpaid, could become a Lien on any of
      its
      property; provided that the foregoing shall not require the Borrower or any
      Subsidiary to pay any such tax or charge so long as it shall contest the
      validity thereof in good faith by appropriate proceedings and shall set aside
      on
      its books adequate reserves with respect thereto in accordance with GAAP and,
      in
      the case of a claim which could become a Lien on any of the Collateral, such
      contest proceedings stay the foreclosure of such Lien or the sale of any portion
      of the Collateral to satisfy such claim. The Borrower shall have thirty (30)
      days after it receives notice of delinquency, penalty or levy to cure such
      delinquency or penalty or discharge such levy. Notwithstanding the foregoing,
      the Borrower and Subsidiaries in the aggregate may have delinquencies, penalties
      and levies under this Section of not more than $10,000 for any single
      delinquency, penalty or levy and not more than $50,000 in the aggregate for
      all
      delinquencies, penalties or levies at any time. 

     

    8.5. Maintain
      Property.
      The
      Borrower shall at all times maintain, preserve and keep its plant, properties
      and material Equipment, including any Collateral, in good repair, working order
      and condition, normal wear and tear excepted, and shall from time to time make
      all needful and proper repairs, renewals, replacements, and additions thereto
      so
      that at all times the efficiency thereof shall be preserved and maintained
      as is
      customary in Borrower’s industry and as deemed appropriate by Borrower in its
      reasonable business judgment. The Borrower shall permit the Bank to examine
      and
      inspect such plant, properties and Equipment, including any Collateral, at
      all
      reasonable times and upon reasonable prior notice.

    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

     

    8.6. Maintain
      Insurance.
      The
      Borrower shall at all times maintain, and cause each Subsidiary to maintain,
      with Borrower’s current insurers or such other insurance companies reasonably
      acceptable to the Bank, such insurance coverage as may be required by any law
      or
      governmental regulation or court decree or order applicable to it and such
      other
      insurance, and shall have insured amounts no less than, and deductibles no
      higher than, the amounts set forth on Schedule
      8.6
      attached
      hereto. The consent of the Bank to different insured amounts or deductibles
      by
      email shall be binding on the Bank. The Borrower shall furnish to the Bank
      a
      certificate setting forth in reasonable detail the nature and extent of all
      insurance maintained by the Borrower, which shall be reasonably acceptable
      in
      all respects to the Bank. The consent of the Bank by email shall be valid.
      The
      Borrower shall cause each issuer of an insurance policy to provide the Bank
      with
      an endorsement (i) showing the Bank as lender’s loss payee with respect to each
      policy of property or casualty insurance; and (ii) providing that thirty (30)
      days notice will be given to the Bank prior to any cancellation of, material
      reduction or change in coverage provided by or other material modification
      to
      such policy. The Borrower shall execute and deliver to the Bank a collateral
      assignment, in form and substance satisfactory to the Bank, of each business
      interruption insurance policy maintained by the Borrower.

     

    In
      the
      event the Borrower either fails to provide the Bank with evidence of the
      insurance coverage required by this Section or at any time hereafter shall
      fail
      to obtain or maintain any of the policies of insurance required above, or to
      pay
      any premium in whole or in part relating thereto, then the Bank, without waiving
      or releasing any obligation or default by the Borrower hereunder, may at any
      time (but shall be under no obligation to so act), obtain and maintain such
      policies of insurance and pay such premiums and take any other action with
      respect thereto, which the Bank deems advisable. This insurance coverage (a)
      may, but need not, protect the Borrower’s interests in such property, including
      the Collateral, and (b) may not pay any claim made by, or against, the Borrower
      in connection with such property, including the Collateral. The Borrower may
      later cancel any such insurance purchased by the Bank, but only after providing
      the Bank with evidence that the Borrower has obtained the insurance coverage
      required by this Section. If the Bank purchases insurance for the Collateral,
      the Borrower will be responsible for the costs of that insurance, including
      interest and any other charges that may be imposed with the placement of the
      insurance, until the effective date of the cancellation or expiration of the
      insurance. The costs of the insurance may be added to the principal amount
      of
      the Loans owing hereunder. The costs of the insurance may be more than the
      cost
      of the insurance the Borrower may be able to obtain on its own.

     

    8.7. ERISA
      Liabilities; Employee Plans.
      The
      Borrower shall (i) keep in full force and effect any and all Employee Plans
      which are presently in existence or may, from time to time, come into existence
      under ERISA, and not withdraw from any such Employee Plans, unless such
      withdrawal can be effected or such Employee Plans can be terminated without
      liability to the Borrower; (ii) make contributions to all of such Employee
      Plans
      in a timely manner and in a sufficient amount to comply with the standards
      of
      ERISA; including the minimum funding standards of ERISA; (iii) comply with
      all
      material requirements of ERISA which relate to such Employee Plans; (iv) notify
      the Bank immediately upon receipt by the Borrower of any notice concerning
      the
      imposition of any withdrawal liability or of the institution of any proceeding
      or other action which may result in the termination of any such Employee Plans
      or the appointment of a trustee to administer such Employee Plans; (v) promptly
      advise the Bank of the occurrence of any “Reportable Event” or “Prohibited
      Transaction” (as such terms are defined in ERISA), with respect to any such
      Employee Plans; and (vi) amend any Employee Plan that is intended to be
      qualified within the meaning of Section 401 of the Internal Revenue Code of
      1986
      to the extent necessary to keep the Employee Plan qualified, and to cause the
      Employee Plan to be administered and operated in a manner that does not cause
      the Employee Plan to lose its qualified status.

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

     

    8.8. Financial
      Statements.
      The
      Borrower shall at all times maintain a standard and modern system of accounting,
      on the accrual basis of accounting and in all respects in accordance with GAAP,
      and shall furnish to the Bank or its authorized representatives such information
      regarding the business affairs, operations and financial condition of the
      Borrower, including:

     

    (a) promptly
      when available, and in any event, within one hundred twenty (120) days after the
      close of each of its fiscal years, a copy of (i) the annual audited financial
      statements of the Borrower and its Subsidiaries, including consolidated balance
      sheet, statement of income and retained earnings, statement of cash flows for
      the fiscal year then ended, in reasonable detail, prepared and certified without
      adverse reference to going concern value and without qualification by an
      independent auditor of recognized standing, selected by the Borrower and
      reasonably acceptable to the Bank (it is understood that the annual audited
      consolidating financial statements of Argyle will satisfy the reporting
      requirements of Section
      8.8(a)
      as long
      as the Borrower's financials are clearly shown as separate from the remainder
      of
      the Argyle entities and that the Borrower's financials are deemed to be audited
      as part of the Argyle audit by the auditors), and (ii) and such other
      information (including non-financial information) as the Bank may reasonably
      request; "

    

    (b) promptly
      when available, and in any event, within forty five (45) days following the
      end
      of each fiscal month, a copy of the consolidated financial statements of the
      Borrower and its Subsidiaries regarding such fiscal month, including balance
      sheet, statement of income and retained earnings, statement of cash flows for
      the fiscal month then ended and such other information (including nonfinancial
      information) as the Bank may request, in reasonable detail, prepared and
      certified as true and correct by the Borrower’s treasurer or chief financial
      officer;
      and

     

    (c) promptly,
      when available, and in any event within thirty (30) days following each fiscal
      year, annual budgets and projections/business for the upcoming year in form,
      substance and detail acceptable to the Bank.

     

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

    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

    

     

    8.9. Supplemental
      Financial Statements.
      The
      Borrower shall immediately upon receipt thereof, provide to the Bank copies
      of
      interim and supplemental reports if any, submitted to the Borrower by
      independent accountants in connection with any interim audit or review of the
      books of the Borrower.

     

    8.10. Aged
      Accounts, Backlog Report and WIP Schedule.
      The
      Borrower shall, within forty five (45)
      days
      after the end of each month, deliver to the Bank an aged schedule of the
      Accounts of the Borrower, listing the name and amount due from each Account
      Debtor and showing the aggregate amounts due from (a) 0-30 days, (b) 31-60
      days,
      (c) 61-90 days and (d) more than 90 days, backlog report and a work-in-progress
      report, all in form, substance and detail acceptable to the Bank. The aged
      accounts schedule and work-in-progress report will be accompanied by the
      certificate of the Borrower’s treasurer or chief financial officer certifying
      the accuracy of the aged accounts schedule and work-in-progress
      report.

     

    8.11. Covenant
      Compliance Certificate.
      The
      Borrower shall, contemporaneously with the furnishing of the financial
      statements pursuant to Section
      8.8
      that are
      due at the end of each fiscal quarter, deliver to the Bank a duly completed
      compliance certificate in a form acceptable to Bank (a “Compliance
      Certificate”),
      dated
      the date of such financial statements and certified as true and correct by
      an
      appropriate officer of the Borrower, containing a computation of each of the
      financial covenants set forth in Section
      10,
      stating
      the percentage of the total accounts receivable that are related to bonded
      projects, and stating that the Borrower has not become aware of any Event of
      Default or Unmatured Event of Default that has occurred and is continuing or,
      if
      there is any such Event of Default or Unmatured Event of Default describing
      it
      and the steps, if any, being taken to cure it.

     

    8.12. Field
      Audits.
      The
      Borrower shall permit the Bank to inspect the Inventory, other tangible assets
      and/or other business operations of the Borrower and each Subsidiary, to perform
      appraisals of the Equipment of the Borrower and each Subsidiary, and to inspect,
      audit, check and make copies of, and extracts from, the books, records, computer
      data, computer programs, journals, orders, receipts, correspondence and other
      data relating to Inventory, Accounts and any other Collateral, the results
      of
      which must be satisfactory to the Bank in the Bank’s sole and absolute
      discretion. In addition, the Borrower shall permit the Bank to perform process
      audits on the Borrower’s and each Subsidiary’s internal controls and billing
      procedures, history and results. All such inspections or audits by the Bank
      shall be at reasonable times, upon reasonable prior notice, and at the
      Borrower’s sole expense, provided,
      however,
      that so
      long as no Event of Default or Unmatured Event of Default exists, the Borrower
      shall not be required to reimburse the Bank for inspections or audits more
      frequently than once each fiscal year.

     

    8.13. Other
      Reports.
      The
      Borrower shall, within such period of time as the Bank may reasonably require,
      deliver to the Bank such other schedules and reports as the Bank may
      require.

    
      
        
        

      

      
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    8.14. Collateral
      Records.
      The
      Borrower shall keep full and accurate books and records relating to the
      Collateral and shall mark such books and records to indicate the Bank’s Lien in
      the Collateral,
      including placing a legend, in form and content acceptable to the Bank, on
      all
      Chattel Paper created by the Borrower indicating that the Bank has a Lien in
      such Chattel Paper.

     

    8.15. Intellectual
      Property.
      The
      Borrower shall maintain, preserve and renew all Intellectual Property necessary
      for the conduct of its business as and where the same is currently located
      as
      heretofore or as hereafter conducted by it.

     

    8.16. Notice
      of Proceedings.
      The
      Borrower, promptly upon becoming aware, shall give written notice to the Bank
      of
      any litigation, arbitration or governmental investigation or proceeding not
      previously disclosed by the Borrower to the Bank which has been instituted
      or,
      to the knowledge of the Borrower, is threatened against the Borrower or any
      of
      its Subsidiaries or to which any of 
      their
      respective properties is subject which might reasonably be expected to have
      a
      Material Adverse Effect.

     

    8.17. Notice
      of Event of Default or Material Adverse Effect.
      The
      Borrower shall, immediately after the commencement thereof, give notice to
      the
      Bank in writing of the occurrence of any Event of Default or any Unmatured
      Event
      of Default, or the occurrence of any condition or event having a Material
      Adverse Effect.

     

    8.18. Environmental
      Matters.
      If any
      release or threatened release or other disposal of Hazardous Substances shall
      occur or shall have occurred on any real property or any other assets of the
      Borrower or any of its Subsidiaries, the Borrower shall, or
      shall
      cause the applicable Subsidiary to, cause the prompt containment and removal
      of
      such Hazardous Substances and the remediation of such real property or other
      assets as necessary to comply with all Environmental Laws and to preserve the
      value of such real property or other assets. Without limiting the generality
      of
      the foregoing, the Borrower shall,
      and
      shall cause each Subsidiary to, comply with any Federal or state judicial or
      administrative order requiring the performance at any real property of the
      Borrower or any Subsidiary 
      of
      activities in response to the release or threatened release of a Hazardous
      Substance. To the extent that the transportation of Hazardous Substances is
      permitted by this Agreement, the Borrower shall, and shall cause its
      Subsidiaries to, dispose of such Hazardous Substances, or of any other wastes,
      only at licensed disposal facilities operating in compliance with Environmental
      Laws.

     

    8.19. Further
      Assurances.
      The
      Borrower shall take, and cause each Subsidiary to take, such actions as are
      necessary or as the Bank may reasonably request from time to time to ensure
      that
      the Obligations under the Loan Documents are secured by substantially all of
      the
      assets of the Borrower 
      and its
      Subsidiaries, in each case as the Bank may determine, including (a) the
      execution and delivery of security agreements, pledge agreements, mortgages,
      deeds of trust, financing statements and other documents, and the filing or
      recording of any of the foregoing, and (b) the delivery of certificated
      securities and other collateral with respect to which perfection is obtained
      by
      possession.

     

    8.20. Banking
      Relationship.
      The
      Borrower covenants and agrees, that at all times after the date that is sixty
      (60) days of the date of this Agreement and during the remaining term of this
      Agreement, to utilize the Bank as its primary bank of account and depository
      for
      all financial services, including all receipts, disbursements, cash management
      and related services other than Deposit Accounts listed on Schedule
      7.22
      hereto.

    
      
        
        

      

      
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    8.21. Non-Utilization
      Fee.
      The
      Borrower agrees to pay to the Bank a non-utilization fee equal to one-half
      of
      one percent (0.50%) of the total of (a) the Facility A Loan and Facility B
      Loan
      Commitment, minus
      (b) the
      sum of (i) the daily average of the aggregate principal amount of all Facility
      A
      Loan and Facility B Loans outstanding, plus
      (ii) the
      daily average of the aggregate amount of the Letter of Credit Obligations,
      which
      non-utilization fee shall be (A) calculated on the basis of a year consisting
      of
      360 days, (B) paid for the actual number of days elapsed, and (C) payable
      quarterly in arrears on the last day of each March, June, September and
      December, commencing on September 30, 2008, and on the Facility A Loan and
      Facility B Loan Maturity Date.

     

    8.22. Interest
      Rate Protection.
      Within
      sixty (60) days of the date of this Agreement, the Borrower agrees to enter
      into
      a Hedging Agreement with a term of at least two (2) years on an ISDA standard
      form to hedge the interest rate with respect to not less than fifty percent
      (50%) of the principal amount of the Facility C Loan, in form and substance
      reasonably satisfactory to the Bank.

     

    8.23.
      Collateral
      Access Agreements.
      Within
      thirty (30) days of the date of this Agreement, signed Collateral Access
      Agreements, in a form prepared by and acceptable to the Bank from the owner,
      lessor or mortgagee, as the case may be, of each of the following
      locations:

     

    (a) 2472
      Southwell Road, Dallas, Texas 75229,

     

    (b) 577
      N.
      Batavia Street, Orange, California 92868

     

    (c) 583
      N.
      Batavia Street, Orange, California 92868

     

    (d) 3030
      E.
      Goodland Drive, Appleton, Wisconsin 54911; and

     

    (e) such
      other locations where inventory and equipment of the Borrower is stored or
      otherwise located as the Bank may reasonably request from time to
      time.

     

    Section
      9. NEGATIVE
      COVENANTS.

     

    So
      long
      as any Obligation shall not have been fully paid or performed by the Borrower,
      the Borrower will, unless the Bank shall otherwise consent in writing or by
      electronic mail, perform and comply with the following covenants:

     

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

     

    (a) the
      Obligations under this Agreement and the other Loan Documents;

    
      
        
        

      

      
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    (b) obligations
      of the Borrower for Taxes, assessments, municipal or other governmental
      charges;

     

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

     

    (d) Subordinated
      Debt;

     

    (e) Hedging
      Obligations incurred in favor of the Bank or an Affiliate thereof for bona
      fide
      hedging purposes and not for speculation;

     

    (f) Capitalized
      Lease Obligations, provided that the aggregate amount of all such Debt
      outstanding at any time shall not exceed, in the aggregate, Five Hundred
      Thousand and 00/100 Dollars ($500,000.00) plus the amount of any Capitalized
      Lease Obligations owing by the Borrower to Green Wing for so long as the Green
      Wing lease remains subject to an enforceable Subordination
      Agreement;

     

    (g) Debt
      for Capital Expenditures (other than Capitalized Lease Obligations permitted
      by
Section
      9.1(f)
      and
      purchase money indebtedness secured by vehicles permitted by Section
      9.1(h))
      not to
      exceed Five
      Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate at any
      time;

     

    (h) Debt
      for purchase money indebtedness secured by vehicles in an amount not to exceed
      Five Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate at
      any
      time.

     

    (i) Debt
      described on Schedule
      7.25
      and any
      extension, renewal or refinancing thereof so long as the principal amount
      thereof is not increased;

     

    (j) other
      unsecured Debt, in addition to the Debt listed above, in an aggregate amount
      outstanding at any time not to exceed Two Hundred Fifty Thousand 
      and
      00/100 Dollars ($250,000.00); and

     

    (k) Debt
      secured only by Liens on amounts deposited by or paid on behalf of the Borrower
      arising out of the financing of insurance premiums. 

     

    9.2. Encumbrances.
      The
      Borrower shall not, either directly or indirectly, create, assume, incur or
      suffer or permit to exist any Lien or charge of any kind or character upon
      any
      asset of the Borrower, whether owned at the date hereof or hereafter acquired,
      except for Permitted Liens.

     

    9.3. Investments.
      The
      Borrower shall not, either directly or indirectly, make or have outstanding
      any
      Investment, except:

     

    (a) contributions
      by the Borrower to the capital of any Wholly-Owned Subsidiary / Subsidiary
      /
      Guarantor[s] which have granted a first perfected security interest in all
      of
      its/their assets in favor of the Bank, or by any Subsidiary to the capital
      of
      any other domestic Wholly-Owned Subsidiary;

    
      
        
        

      

      
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    (b) Investments
      constituting Debt permitted by Schedule
      7.25;

     

    (c) Contingent
      Liabilities constituting Debt permitted by Schedule
      7.25
      or Liens
      permitted by Section
      9.2;

     

    (d) Cash
      Equivalent Investments;

     

    (e) bank
      deposits in the ordinary course of business;

     

    (f) Investments
      in securities of Account Debtors received pursuant to any plan of reorganization
      or similar arrangement upon the bankruptcy or insolvency of such account
      debtors; 

     

    (g) Investments
      listed on Schedule
      7.21
      as of
      the Closing Date; and

     

    (h)
      Loans
      to employees that shall not exceed $25,000.00 in the aggregate plus the loan
      to
      Chris Bowling with an outstanding balance of $17,730.00 as of July 31,
      2008.

     

    provided,
      however,
      that
      (i) any Investment which when made complies with the requirements of the
      definition of the term “Cash Equivalent Investment” may continue to be held
      notwithstanding that such Investment if made thereafter would not comply with
      such requirements; and (ii) no Investment otherwise permitted by subsections
      (b)
      or (c) shall be permitted to be made if, immediately before or after giving
      effect thereto, any Event of Default or Unmatured Event of Default
      exists.

     

    9.4. Transfer;
      Merger; Sales.
      The
      Borrower shall not and not permit any Subsidiary to, whether in one transaction
      or a series of related transactions, (a) be a party to any merger or
      consolidation, or purchase or otherwise acquire all or substantially all of
      the
      assets or any Capital Securities of any class of, or any partnership or joint
      venture interest in, any other Person, except for (i) any such merger,
      consolidation, sale, transfer, conveyance, lease or assignment of or by any
      Wholly-Owned Subsidiary into the Borrower or into any other domestic
      Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by the
      Borrower or any domestic Wholly-Owned Subsidiary of the assets or equity
      interests of any Wholly-Owned Subsidiary, (b) sell, transfer, convey or lease
      all or any substantial part of its assets or Capital Securities (including
      the
      sale of Capital Securities of any Subsidiary), except for (i) sales of Inventory
      in the ordinary course of business, (ii) sales or leases of assets which are
      replaced within sixty (60) days with another asset performing the same or a
      similar function, and (iii) dispositions in any fiscal year , the net proceeds
      of which do not in the aggregate exceed $100,000.00, or (c) sell or assign,
      with
      or without recourse, any receivables.

     

    9.5. Issuance
      of Capital Securities.
      The
      Borrower shall not and shall not permit any Subsidiary to issue any Capital
      Securities other than (a) any issuance of shares of the Borrower’s common
      Capital Securities pursuant to any employee or director option program, benefit
      plan or compensation program, or (b) any issuance of Capital Securities by
      a
      Subsidiary to the Borrower or another Subsidiary in accordance with Section
      7.6.

     

    9.6. Distributions.
      The
      Borrower shall not and shall not permit any Subsidiary to, (a) make any
      distribution or dividend (other than stock dividends), whether in cash or
      otherwise, to any of its equityholders, (b) purchase or redeem any of its equity
      interests or any warrants, options or other rights in respect thereof, (c)
      pay
      any management fees or similar fees to any of its equityholders or any Affiliate
      thereof, (d) pay or prepay interest on, principal of, premium, if any,
      redemption, conversion, exchange, purchase, retirement, defeasance, sinking
      fund
      or any other payment in respect of any Subordinated Debt, or (e) set aside
      funds
      for any of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary
      may
      pay dividends or make other distributions to the Borrower or to a domestic
      Wholly-Owned Subsidiary; (ii) so long as no Event of Default or Unmatured Event
      of Default exists or would result therefrom, the Borrower may make regularly
      scheduled payments of interest in respect of Subordinated Debt to the extent
      permitted under the subordination provisions thereof, and (iii) the Borrower
      may
      make payments to the extent permitted under the Subordination
      Agreements.

    
      
        
        

      

      
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    9.7. Transactions
      with Affiliates.
      The
      Borrower shall not, directly or indirectly, enter into or permit to exist any
      transaction with any of its Affiliates or with any director, officer or employee
      of the Borrower other than transactions set forth in Schedule
      9.7
      and
      transactions in the ordinary course of, and pursuant to the reasonable
      requirements of, the business of the Borrower and upon fair and reasonable
      terms
      which are fully disclosed to the Bank and are no less favorable to the Borrower
      than would be obtained in a comparable arm’s length transaction with a Person
      that is not an Affiliate of the Borrower, provided,
      however,
      that
      the Borrower or any Subsidiary may make loans to employees in accordance with
      Section
      9.3(h)
      above.

     

    9.8. Unconditional
      Purchase Obligations.
      The
      Borrower shall not and shall not permit any Subsidiary to enter into or be
      a
      party to any contract for the purchase of materials, supplies or other property
      or services if such contract requires that payment be made by it regardless
      of
      whether delivery is ever made of such materials, supplies or other property
      or
      services.

     

    9.9. Cancellation
      of Debt.
      The
      Borrower shall not,
      and not
      permit any Subsidiary to, cancel any claim or debt owing to it, except (i)
      in
      exchange for reasonable consideration, in the ordinary course of business,
      or
      (ii) the cancellation of account receivables for doubtful collections to
      non-Affiliates in an aggregate amount not to exceed $100,000.00 per
      account.

     

    9.10. Inconsistent
      Agreements.
      The
      Borrower shall not and shall not permit any Subsidiary to enter into any
      material agreement (other than the Loan Documents) containing any provision
      which would (a) be violated or breached by any borrowing by the Borrower
      hereunder or by the performance by the Borrower or any Subsidiary of any of
      its
      Obligations hereunder or under any other Loan Document, (b) prohibit the
      Borrower or any Subsidiary from granting to the Bank a Lien on any of its assets
      or (c) create or permit to exist or become effective any encumbrance or
      restriction on the ability of any Subsidiary to (i) pay dividends or make other
      distributions to the Borrower or any other Subsidiary, or pay any Debt owed
      to
      the Borrower or any other Subsidiary, (ii) make loans or advances to the
      Borrower or any other Subsidiary, or (iii) transfer any of its assets or
      properties to the Borrower or any other Subsidiary, other than (A) customary
      restrictions and conditions contained in agreements relating to the sale of
      all
      or a substantial part of the assets of any Subsidiary pending such sale,
      provided that such restrictions and conditions apply only to the Subsidiary
      to
      be sold and such sale is permitted hereunder, (B) restrictions or
      conditions imposed by any agreement relating to purchase money Debt, Capital
      Leases and other secured Debt permitted by this Agreement if such restrictions
      or conditions apply only to the property or assets securing such Debt, and
      (C) customary provisions in leases and other contracts restricting the
      assignment thereof.

    
      
        
        

      

      
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    9.11. Use
      of
      Proceeds.
      Neither
      the Borrower nor any of its Subsidiaries or Affiliates shall use any portion
      of
      the proceeds of the Loans, either directly or indirectly, for the purpose of
      purchasing any securities underwritten by the Bank or any other Affiliate of
      the
      Bank.

     

    9.12. Bank
      Accounts.
      Within
      sixty (60) days of the date of this Agreement, the Borrower shall transfer
      all
      of its depository, collection, disbursement, cash management and investment
      accounts (the “Deposit
      Accounts”)
      to the
      Bank other than Deposit Accounts listed on Schedule
      7.22(a) and (b)
      attached
      hereto. It shall maintain all such accounts with the Bank while any Obligations
      are Outstanding. The Borrower shall not establish any new Deposit Accounts
      or
      other bank accounts, other than Deposit Accounts or other bank accounts
      established at or with the Bank without the prior written consent of the
      Bank.

     

    9.13. Business
      Activities; Change of Legal Status and Organizational Documents.
      The
      Borrower shall not and shall not permit any Subsidiary to (a) engage in any
      line
      of business other than the businesses engaged in on the date hereof and
      businesses reasonably related thereto, (b) change its name, its Organizational
      Identification Number, if it has one, its type of organization, its jurisdiction
      of organization or other legal structure, or (c) permit its charter, bylaws
      or
      other organizational documents to be amended or modified in any way which could
      reasonably be expected to materially adversely affect the interests of the
      Bank.

     

    Section
      10. FINANCIAL
      COVENANTS.

     

    10.1. Senior
      Debt to EBITDA.
      As of
      the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
      maintain a ratio of consolidated Senior Debt to consolidated trailing
      twelve (12) month EBITDA of not greater than 2.00 to 1.00.

     

    10.2. Total
      Debt to
      EBITDA.
      As of
      the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
      maintain a ratio of consolidated Total Debt plus
      an
      amount equal to undrawn Letters of Credit under the Facility A Loan Commitment
      and the Facility B Loan Commitment to
      consolidated trailing twelve (12) month EBITDA (a) for the fiscal quarters
      ending September 30, 2008 through the fiscal quarter ending September 30, 2009
      of not greater than 4.00 to 1.00, and (b) and for fiscal quarters ending
      December 31, 2009 and thereafter of not greater than 3.50 to 1.00.

     

    10.3. Fixed
      Charge Coverage.
      As of
      the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
      maintain a ratio of (a) for the applicable reporting period 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, to (b) the sum
      for
      such reporting period of (i) Interest Charges plus
      (ii)
      required payments of principal of Total Debt (including the Facility C Loans,
      but excluding the Facility A Loans and Facility B Loans), of not less than
      1.10
      to 1.00. For the calendar year of 2008, the Fixed Charge Coverage Ratio shall
      be
      based upon cumulative 2008 reporting until December 31, 2008, and thereafter
      it
      shall be measured on a trailing twelve (12) month basis.

    
      
        
        

      

      
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    10.4. Hedging.
      At
      least fifty percent (50%) of the Facility C must be hedged on or before sixty
      (60) days of the date of this Agreement.

     

    Section
      11. EVENTS
      OF DEFAULT.

     

    The
      Borrower, without notice or demand of any kind, shall be in default under this
      Agreement upon the occurrence of any of the following events (each an
“Event
      of Default”).

     

    11.1. Nonpayment
      of Obligations.
      Any
      amount due and owing on any Note or any of the Obligations, whether by its
      terms
      or as otherwise provided herein, is not paid within five (5) days after notice
      from the Bank that such amount was not paid when due.

     

    11.2. Misrepresentation.
      Any
      oral or written warranty, representation, certificate or statement of any
      Obligor in this Agreement, the other Loan Documents or any other agreement
      with
      the Bank shall be false in any material respect when made or at any time
      thereafter, or if any financial data or any other information now or hereafter
      furnished to the Bank by or on behalf of any Obligor shall prove to be false,
      inaccurate or misleading in any material respect.

     

    11.3. Nonperformance.
      Any
      failure to perform or default in the performance of any covenant, condition
      or
      agreement contained in this Agreement and, if capable of being cured (including
      subsequent compliance with financial covenants contained in Section 10), such
      failure to perform or default in performance continues for a period of thirty
      (30) days after the Borrower receives notice or knowledge from any source of
      such failure to perform or default in performance, or in the other Loan
      Documents or any other agreement with the Bank and such failure to perform
      or
      default in performance continues beyond any applicable grace or cure
      period.

     

    11.4. Default
      under Loan Documents.
      A
      default (after giving effect to notice and cure provisions contained therein)
      under any of the other Loan Documents, all of which covenants, conditions and
      agreements contained therein are hereby incorporated in this Agreement by
      express reference, shall be and constitute an Event of Default under this
      Agreement and any other of the Obligations.

     

    11.5. Default
      under Other Debt.
      Any
      default by any Obligor, at any one time in the payment of any Debt in an
      aggregate amount in excess of $50,000.00 beyond any period of grace provided
      with respect thereto or in the performance of any other term, condition or
      covenant contained in any agreement (including any capital or operating lease
      or
      any agreement in connection with the deferred purchase price of property) under
      which any such obligation is created, the effect of which default is to cause
      or
      permit the holder of such obligation (or the other party to such other
      agreement) to cause such obligation to become due in an aggregate amount of
      $50,000.00 prior to its stated maturity or terminate such other
      agreement.

     

    11.6. Other
      Material Obligations.
      Any
      default in the payment when due, or in the performance or observance of, any
      material obligation of, or condition agreed to by, any Obligor with respect
      to
      any material purchase or lease of goods or services where such default, singly
      or in the aggregate with all other such defaults, might reasonably be expected
      to have a Material Adverse Effect.

    
      
        
        

      

      
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    11.7. Bankruptcy,
      Insolvency, etc. Any
      Obligor becomes insolvent or generally fails to pay, or admits in writing its
      inability or refusal to pay, debts as they become due; or any Obligor applies
      for, consents to, or acquiesces in the appointment of a trustee, receiver or
      other custodian for such Obligor or any property thereof, or makes a general
      assignment for the benefit of creditors; or, in the absence of such application,
      consent or acquiescence, a trustee, receiver or other custodian is appointed
      for
      any Obligor or for a substantial part of the property of any thereof and is
      not
      discharged within sixty (60) days; or any bankruptcy, reorganization, debt
      arrangement, or other case or proceeding under any bankruptcy or insolvency
      law,
      or any dissolution or liquidation proceeding, is commenced in respect of any
      Obligor
      ,
      and if
      such case or proceeding is not commenced by such Obligor, it is consented to
      or
      acquiesced in by such Obligor, or remains undismissed for sixty (60) days;
      or
      any Obligor takes any action to authorize, or in furtherance of, any of the
      foregoing.

     

    11.8. Judgments.
      The
      entry of any final judgment, decree, levy, attachment, garnishment or other
      process, or the filing of any Lien against any Obligor in an amount in excess
      of
      $50,000.00 which shall not have been, within thirty (30) days from the entry
      thereof, (i) bonded over to the satisfaction of the Bank and appealed, (ii)
      vacated, or (iii) discharged.

     

    11.9. Change
      in Control.
      The
      occurrence of any Change in Control.

     

    11.10. Collateral
      Impairment.
      The
      entry of any judgment, decree, levy, attachment, garnishment or other process,
      or the filing of any Lien against, any of the Collateral or any collateral
      under
      a separate security agreement securing any of the Obligations and such judgment
      or other process in excess of $50,000.00 and shall not have been, within thirty
      (30) days from the entry thereof, (i) bonded over to the satisfaction of the
      Bank and appealed, (ii) vacated, or (iii) discharged. The loss, theft,
      destruction, seizure or forfeiture, of any of the Collateral which is not
      covered for the full amount of such loss, theft, destruction, seizure or
      forfeiture, or any of the collateral under any security agreement securing
      any
      of the Obligations which is not covered by insurance. 

     

    11.11. Material
      Adverse Effect.
      The
      occurrence of any development, condition or event which has a Material Adverse
      Effect on the Borrower.

     

    11.12. Guaranty.
      There
      is a discontinuance by any of the Guarantors of any of the Guaranties, or any
      of
      the Guarantors shall contest the validity of such Guaranty.

     

    11.13. Subordinated
      Debt.
      The
      subordination provisions of any Subordinated Debt shall for any reason be
      revoked or invalid or otherwise cease to be in full force and effect. The
      Borrower shall contest in any manner, or any other holder thereof shall contest
      in any judicial proceeding, the validity or enforceability of the Subordinated
      Debt or deny that it has any further liability or obligation thereunder, or
      the
      Obligations shall for any reason not have the priority with respect to the
      Subordinated Debt contemplated by the subordination provisions of the
      Subordinated Debt.

     

    Section
      12. REMEDIES.

     

    Upon
      the
      occurrence of an Event of Default, the Bank shall have all rights, powers and
      remedies set forth in the Loan Documents, in any written agreement or instrument
      (other than this Agreement or the Loan Documents) relating to any of the
      Obligations or any security therefor, as a secured party under the UCC or as
      otherwise provided at law or in equity. Without limiting the generality of
      the
      foregoing, the Bank may, at its option upon the occurrence of an Event of
      Default, declare its commitments to the Borrower to be terminated and all
      Obligations to be immediately due and payable, provided, however, that upon
      the
      occurrence of an Event of Default under Section
      11.7,
      all
      commitments of the Bank to the Borrower shall immediately terminate and all
      Obligations shall be automatically due and payable, all without demand, notice
      or further action of any kind required on the part of the Bank. The Borrower
      hereby waives any and all presentment, demand, notice of dishonor, protest,
      and
      all other notices and demands in connection with the enforcement of Bank’s
      rights under the Loan Documents, and hereby consents to, and waives notice
      of
      release, with or without consideration, of any of the Borrower any of the
      Guarantors or of any Collateral, notwithstanding anything contained herein
      or in
      the Loan Documents to the contrary. In addition to the
      foregoing:

    
      
        
        

      

      
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    12.1. Possession
      and Assembly of Collateral.
      The
      Bank may, without notice, demand or legal process of any kind, take possession
      of any or all of the Collateral (in addition to Collateral of which the Bank
      already has possession), wherever it may be found, and for that purpose may
      pursue the same wherever it may be found, and may at any time enter into any
      of
      the Borrower’s premises where any of the Collateral may be or is supposed to be,
      and search for, take possession of, remove, keep and store any of the Collateral
      until the same shall be sold or otherwise disposed of and the Bank shall have
      the right to store and conduct a sale of the same in any of the Borrower’s
      premises without cost to the Bank. At the Bank’s request, the Borrower will, at
      the Borrower’s sole expense, assemble the Collateral and make it available to
      the Bank at a place or places to be designated by the Bank which is reasonably
      convenient to the Bank and the Borrower.

     

    12.2. Sale
      of Collateral.
      The
      Bank may sell any or all of the Collateral at public or private sale, upon
      such
      terms and conditions as the Bank may deem proper, and the Bank may purchase
      any
      or all of the Collateral at any such sale. The Borrower acknowledges that the
      Bank may be unable to effect a public sale of all or any portion of the
      Collateral because of certain legal and/or practical restrictions and provisions
      which may be applicable to the Collateral and, therefore, may be compelled
      to
      resort to one or more private sales to a restricted group of offerees and
      purchasers. The Borrower consents to any such private sale so made even though
      at places and upon terms less favorable than if the Collateral were sold at
      public sale. The Bank shall have no obligation to clean-up or otherwise prepare
      the Collateral for sale. The Bank may apply the net proceeds, after deducting
      all costs, expenses, attorneys’ and paralegals’ fees incurred or paid at any
      time in the collection, protection and sale of the Collateral and the
      Obligations, to the payment of any Note and/or any of the other Obligations,
      returning the excess proceeds, if any, to the Borrower. The Borrower shall
      remain liable for any amount remaining unpaid after such application, with
      interest at the Default Rate. Any notification of intended disposition of the
      Collateral required by law shall be conclusively deemed reasonably and properly
      given if given by the Bank at least ten (10) calendar days before the date
      of
      such disposition. The Borrower hereby confirms, approves and ratifies all acts
      and deeds of the Bank relating to the foregoing, and each part thereof, and
      expressly waives any and all claims of any nature, kind or description which
      it
      has or may hereafter have against the Bank or its representatives, by reason
      of
      taking, selling or collecting any portion of the Collateral. The Borrower
      consents to releases of the Collateral at any time (including prior to default)
      and to sales of the Collateral in groups, parcels or portions, or as an
      entirety, as the Bank shall deem appropriate. The Borrower expressly absolves
      the Bank from any loss or decline in market value of any Collateral by reason
      of
      delay in the enforcement or assertion or nonenforcement of any rights or
      remedies under this Agreement.

    
      
        
        

      

      
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    12.3. Standards
      for Exercising Remedies. To
      the
      extent that applicable law imposes duties on the Bank to exercise remedies
      in a
      commercially reasonable manner, the Borrower acknowledges and agrees that it
      is
      not commercially unreasonable for the Bank (a) to fail to incur expenses
      reasonably deemed significant by the Bank to prepare Collateral for disposition
      or otherwise to complete raw material or work-in-process into finished goods
      or
      other finished products for disposition, (b) to fail to obtain third party
      consents for access to Collateral to be disposed of, or to obtain or, if not
      required by other law, to fail to obtain governmental or third party consents
      for the collection or disposition of Collateral to be collected or disposed
      of,
      (c) to fail to exercise collection remedies against Account Debtors or other
      Persons obligated on Collateral or to remove liens or encumbrances on or any
      adverse claims against Collateral, (d) to exercise collection remedies against
      Account Debtors and other Persons obligated on Collateral directly or through
      the use of collection agencies and other collection specialists, (e) to
      advertise dispositions of Collateral through publications or media of general
      circulation, whether or not the Collateral is of a specialized nature, (f)
      to
      contact other Persons, whether or not in the same business as the Borrower,
      for
      expressions of interest in acquiring all or any portion of the Collateral,
      (g)
      to hire one or more professional auctioneers to assist in the disposition of
      Collateral, whether or not the collateral is of a specialized nature, (h) to
      dispose of Collateral by utilizing internet sites that provide for the auction
      of assets of the types included in the Collateral or that have the reasonable
      capability of doing so, or that match buyers and sellers of assets, (i) to
      dispose of assets in wholesale rather than retail markets, (j) to disclaim
      disposition warranties, including any warranties of title, (k) to purchase
      insurance or credit enhancements to insure the Bank against risks of loss,
      collection or disposition of Collateral or to provide to the Bank a guaranteed
      return from the collection or disposition of Collateral, or (l) to the extent
      deemed appropriate by the Bank, to obtain the services of other brokers,
      investment bankers, consultants and other professionals to assist the Bank
      in
      the collection or disposition of any of the Collateral. The Borrower
      acknowledges that the purpose of this Section is to provide non-exhaustive
      indications of what actions or omissions by the Bank would not be commercially
      unreasonable in the Bank’s exercise of remedies against the Collateral and that
      other actions or omissions by the Bank shall not be deemed commercially
      unreasonable solely on account of not being indicated in this Section. Without
      limitation upon the foregoing, nothing contained in this Section shall be
      construed to grant any rights to the Borrower or to impose any duties on the
      Bank that would not have been granted or imposed by this Agreement or by
      applicable law in the absence of this Section.

     

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

    
      
        
        

      

      
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    12.5. Additional
      Remedies.
      The
      Bank shall have the right and power to:

     

    (a) instruct
      the Borrower, at its own expense, to notify any parties obligated on any of
      the
      Collateral, including any Account Debtors, to make payment directly to the
      Bank
      of any amounts due or to become due thereunder, or the Bank may directly notify
      such obligors of the security interest of the Bank, and/or of the assignment
      to
      the Bank of the Collateral and direct such obligors to make payment to the
      Bank
      of any amounts due or to become due with respect thereto, and thereafter,
      collect any such amounts due on the Collateral directly from such Persons
      obligated thereon;

     

    (b) enforce
      collection of any of the Collateral, including any Accounts, by suit or
      otherwise, or make any compromise or settlement with respect to any of the
      Collateral, or surrender, release or exchange all or any part thereof, or
      compromise, extend or renew for any period (whether or not longer than the
      original period) any indebtedness thereunder;

     

    (c) take
      possession or control of any proceeds and products of any of the Collateral,
      including the proceeds of insurance thereon;

     

    (d) extend,
      renew or modify for one or more periods (whether or not longer than the original
      period) any Note, any other of the Obligations, any obligation of any nature
      of
      any other obligor with respect to any Note or any of the
      Obligations;

     

    (e) grant
      releases, compromises or indulgences with respect to any Note, any of the
      Obligations, any extension or renewal of any of the Obligations, any security
      therefor, or to any other obligor with respect to any Note or any of the
      Obligations;

     

    (f) transfer
      the whole or any part of securities which may constitute Collateral into the
      name of the Bank or the Bank’s nominee without disclosing, if the Bank so
      desires, that such securities so transferred are subject to the security
      interest of the Bank, and any corporation, association, or any of the managers
      or trustees of any trust issuing any of such securities, or any transfer agent,
      shall not be bound to inquire, in the event that the Bank or such nominee makes
      any further transfer of such securities, or any portion thereof, as to whether
      the Bank or such nominee has the right to make such further transfer, and shall
      not be liable for transferring the same;

     

    (g) vote
      the Collateral;

     

    (h) make
      an election with respect to the Collateral under Section 1111 of the Bankruptcy
      Code or take action under Section 364 or any other section of the Bankruptcy
      Code; provided, however, that any such action of the Bank as set forth herein
      shall not, in any manner whatsoever, impair or affect the liability of the
      Borrower hereunder, nor prejudice, waive, nor be construed to impair, affect,
      prejudice or waive the Bank’s rights and remedies at law, in equity or by
      statute, nor release, discharge, nor be construed to release or discharge,
      the
      Borrower, any guarantor or other Person liable to the Bank for the Obligations;
      and

     

    
      
        
        

      

      
        -54-

        
          

        

      

      
        
        

      

    

     

    (i) at
      any time, and from time to time, accept additions to, releases, reductions,
      exchanges or substitution of the Collateral, without in any way altering,
      impairing, diminishing or affecting the provisions of this Agreement, the Loan
      Documents, or any of the other Obligations, or the Bank’s rights hereunder,
      under any Note or under any of the other Obligations.

     

    The
      Borrower hereby ratifies and confirms whatever the Bank may do with respect
      to
      the Collateral and agrees that the Bank shall not be liable for any error of
      judgment or mistakes of fact or law with respect to actions taken in connection
      with the Collateral.

     

    12.6. Attorney-in-Fact.
      The
      Borrower hereby irrevocably makes, constitutes and appoints the Bank (and any
      officer of the Bank or any Person designated by the Bank for that purpose)
      as
      the Borrower’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in
      the Borrower’s name, place and stead, with full power of substitution, to (i)
      take such actions as are permitted in this Agreement, (ii) execute such
      financing statements and other documents and to do such other acts as the Bank
      may require to perfect and preserve the Bank’s security interest in, and to
      enforce such interests in the Collateral, and (iii) carry out any remedy
      provided for in this Agreement, including endorsing the Borrower’s name to
      checks, drafts, instruments and other items of payment, and proceeds of the
      Collateral, executing change of address forms with the postmaster of the United
      States Post Office serving the address of the Borrower, changing the address
      of
      the Borrower to that of the Bank, opening all envelopes addressed to the
      Borrower and applying any payments contained therein to the Obligations. The
      Borrower hereby acknowledges that the constitution and appointment of such
      proxy
      and attorney-in-fact are coupled with an interest and are irrevocable. The
      Borrower hereby ratifies and confirms all that such attorney-in-fact may do
      or
      cause to be done by virtue of any provision of this Agreement.

     

    12.7. No
      Marshaling.
      The
      Bank shall not be required to marshal any present or future collateral security
      (including this Agreement and the Collateral) for, or other assurances of
      payment of, the Obligations or any of them or to resort to such collateral
      security or other assurances of payment in any particular order. To the extent
      that it lawfully may, the Borrower hereby agrees that it will not invoke any
      law
      relating to the marshaling of collateral which might cause delay in or impede
      the enforcement of the Bank’s rights under this Agreement or under any other
      instrument creating or evidencing any of the Obligations or under which any
      of
      the Obligations is outstanding or by which any of the Obligations is secured
      or
      payment thereof is otherwise assured, and, to the extent that it lawfully may,
      the Borrower hereby irrevocably waives the benefits of all such
      laws.

     

    12.8. Application
      of Proceeds.
      The
      Bank will within three (3) Business Days after receipt of cash or solvent
      credits from collection of items of payment, proceeds of Collateral or any
      other
      source, apply the whole or any part thereof against the Obligations secured
      hereby. The Bank shall further have the exclusive right to determine how, when
      and what application of such payments and such credits shall be made on the
      Obligations, and such determination shall be conclusive upon the Borrower.
      Any
      proceeds of any disposition by the Bank of all or any part of the Collateral
      may
      be first applied by the Bank to the payment of expenses incurred by the Bank
      in
      connection with the Collateral, including attorneys’ fees and legal expenses as
      provided for in
      Section 13
      hereof.

     

    
      
        
        

      

      
        -55-

        
          

        

      

      
        
        

      

    

     

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

     

    12.10. Letters
      of Credit.
      With
      respect to all Letters of Credit for which presentment for honor shall not
      have
      occurred at the time of an acceleration pursuant to this Section
      12,
      the
      Borrower shall at such time deposit in a cash collateral account opened by
      the
      Bank an amount equal to the Letter of Credit Obligations then outstanding.
      Amounts held in such cash collateral account shall be applied by the Bank to
      the
      payment of drafts drawn under such Letters of Credit, and the unused portion
      thereof after all such Letters of Credit shall have expired or been fully drawn
      upon, if any, shall be applied to repay the Obligations, in such order of
      application as the Bank may, in its sole discretion, from time to time elect.
      After all such Letters of Credit shall have expired or been fully drawn upon,
      all commitments to make Loans hereunder have terminated and all other
      Obligations have been indefeasibly satisfied and paid in full in cash, the
      balance, if any, in such cash collateral account shall be returned to the
      Borrower or such other Person as may be lawfully entitled thereto.

     

    Section
      13. MISCELLANEOUS.

     

    13.1. Obligations
      Absolute.
      None of
      the following shall affect the Obligations of the Borrower to the Bank under
      this Agreement or the Bank’s rights with respect to the Collateral:

     

    (a) acceptance
      or retention by the Bank of other property or any interest in property as
      security for the Obligations;

     

    (b) release
      by the Bank of or any of the Guarantors of all or any part of the Collateral
      or
      of any party liable with respect to the Obligations;

     

    (c) release,
      extension, renewal, modification or substitution by the Bank of any Note, or
      any
      note evidencing any of the Obligations, or the compromise of the liability
      of
      any of the Guarantors of the Obligations; or

     

    (d) failure
      of the Bank to resort to any other security or to pursue the Borrower or any
      other obligor liable for any of the Obligations before resorting to remedies
      against the Collateral.

     

    
      
        
        

      

      
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    13.2. Entire
      Agreement.
      This
      Agreement and the other Loan Documents (i) are valid, binding and enforceable
      against the Borrower and the Bank in accordance with their respective provisions
      and no conditions exist as to their legal effectiveness; (ii) constitute the
      entire agreement between the parties with respect to the subject matter hereof
      and thereof; and (iii) are the final expression of the intentions of the
      Borrower and the Bank. No promises, either expressed or implied, exist between
      the Borrower and the Bank, unless contained herein or therein. This Agreement,
      together with the other Loan Documents, supersedes all negotiations,
      representations, warranties, commitments, term sheets, discussions,
      negotiations, offers or contracts (of any kind or nature, whether oral or
      written) prior to or contemporaneous with the execution hereof with respect
      to
      any matter, directly or indirectly related to the terms of this Agreement and
      the other Loan Documents. This Agreement and the other Loan Documents are the
      result of negotiations among the Bank, the Borrower and the other parties
      thereto, and have been reviewed (or have had the opportunity to be reviewed)
      by
      counsel to all such parties, and are the products of all parties. Accordingly,
      this Agreement and the other Loan Documents shall not be construed more strictly
      against the Bank merely because of the Bank’s involvement in their
      preparation.

     

    13.3. Amendments;
      Waivers.
      No
      delay on the part of the Bank in the exercise of any right, power or remedy
      shall operate as a waiver thereof, nor shall any single or partial exercise
      by
      the Bank of any right, power or remedy preclude other or further exercise
      thereof, or the exercise of any other right, power or remedy. No amendment,
      modification or waiver of, or consent with respect to, any provision of this
      Agreement or the other Loan Documents shall in any event be effective unless
      the
      same shall be in writing and acknowledged by the Bank, and then any such
      amendment, modification, waiver or consent shall be effective only in the
      specific instance and for the specific purpose for which given.

     

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

     

    13.5. FORUM
      SELECTION AND CONSENT TO JURISDICTION.
      ANY
      LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
      AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
      EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
      DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING
      IN
      THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM BRINGING
      SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. THE BORROWER HEREBY
      EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
      STATE
      OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
      OF
      ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE BORROWER
      FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
      POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
      THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
      PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
      OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE
      AND
      ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
      FORUM.

     

    
      
        
        

      

      
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    13.6. WAIVER
      OF JURY TRIAL.
      THE
      BANK AND THE BORROWER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
      WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY,
      ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
      ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF
      THE
      OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
      AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
      HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
      CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF
      DEALING IN WHICH THE BANK AND THE BORROWER ARE ADVERSE PARTIES, AND EACH AGREES
      THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
      A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY
      FINANCIAL ACCOMMODATION TO THE BORROWER.

     

    13.7. Assignability.
      The
      Bank may at any time assign the Bank’s rights in this Agreement, the other Loan
      Documents, the Obligations, or any part thereof and transfer the Bank’s rights
      in any or all of the Collateral, and the Bank thereafter shall be relieved
      from
      all liability with respect to such Collateral. In addition, the Bank may at
      any
      time sell one or more participations in the Loans. The Borrower may not sell
      or
      assign this Agreement, or any other agreement with the Bank or any portion
      thereof, either voluntarily or by operation of law, without the prior written
      consent of the Bank. This Agreement shall be binding upon the Bank and the
      Borrower and their respective legal representatives and successors. All
      references herein to the Borrower shall be deemed to include any successors,
      whether immediate or remote. In the case of a joint venture or partnership,
      the
      term “Borrower” shall be deemed to include all joint venturers or partners
      thereof, who shall be jointly and severally liable hereunder.

     

    13.8. Confirmations.
      The
      Borrower and the Bank agree from time to time, upon written request received
      by
      it from the other, to confirm to the other in writing the aggregate unpaid
      principal amount of the Loans then outstanding under such Note.

     

    13.9. Confidentiality.
      The
      Bank agrees to use commercially reasonable efforts (equivalent to the efforts
      the Bank applies to maintain the confidentiality of its own confidential
      information) to maintain as confidential all information provided to it by
      the
      Borrower, including all information designated as confidential, except that
      the
      Bank may disclose such information (a) to Persons employed or engaged by the
      Bank in evaluating, approving, structuring or administering the Loans; (b)
      to
      any assignee or participant or potential assignee or participant that has agreed
      to comply with the covenant contained in this Section
      13.9
      (and any
      such assignee or participant or potential assignee or participant may disclose
      such information to Persons employed or engaged by them as described in clause
      (a) above); (c) as required or requested by any federal or state regulatory
      authority or examiner, or any insurance industry association, or as reasonably
      believed by the Bank to be compelled by any court decree, subpoena or legal
      or
      administrative order or process; (d) as, on the advice of the Bank’s counsel, is
      required by law; (e) in connection with the exercise of any right or remedy
      under the Loan Documents or in connection with any litigation to which the
      Bank
      is a party; (f) to any nationally recognized rating agency that requires access
      to information about the Bank’s investment portfolio in connection with ratings
      issued with respect to the Bank; (g) to any Affiliate of the Bank who may
      provide Bank Products to the Borrower or any Subsidiary, or (h) that ceases
      to
      be confidential through no fault of the Bank.

     

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

     

    13.10. Binding
      Effect.
      This
      Agreement shall become effective upon execution by the Borrower and the Bank.
      If
      this Agreement is not dated or contains any blanks when executed by the
      Borrower, the Bank is hereby authorized, without notice to the Borrower, to
      date
      this Agreement as of the date when it was executed by the Borrower, and to
      complete any such blanks according to the terms upon which this Agreement is
      executed.

     

    13.11. Governing
      Law.
      This
      Agreement, the Loan Documents and any Note shall be delivered and accepted
      in
      and shall be deemed to be contracts made under and governed by the internal
      laws
      of the State of Illinois (but giving effect to federal laws applicable to
      national banks) applicable to contracts made and to be performed entirely within
      such state, without regard to conflict of laws principles.

     

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

     

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

     

    13.14. Extensions
      of Bank’s Commitment.
      This
      Agreement shall secure and govern the terms of (i) any extensions or renewals
      of
      the Bank’s commitment hereunder, and (ii) any replacement note executed by the
      Borrower and accepted by the Bank in its sole and absolute discretion in
      substitution for any Note.

     

    
      
        
        

      

      
        -59-

        
          

        

      

      
        
        

      

    

     

    13.15. Time
      of Essence.
      Time is
      of the essence in making payments of all amounts due the Bank under this
      Agreement and in the performance and observance by the Borrower of each
      covenant, agreement, provision and term of this Agreement.

     

    13.16. Counterparts;
      Facsimile Signatures.
      This
      Agreement may be executed in any number of counterparts and by the different
      parties hereto on separate counterparts and each such counterpart shall be
      deemed to be an original, but all such counterparts shall together constitute
      but one and the same Agreement. Receipt of an executed signature page to this
      Agreement by facsimile or other electronic transmission shall constitute
      effective delivery thereof. Electronic records of executed Loan Documents
      maintained by the Bank shall deemed to be originals thereof.

     

    13.17. Notices.
      Except
      as otherwise provided herein, the Borrower waives all notices and demands in
      connection with the enforcement of the Bank’s rights hereunder. All notices,
      requests, demands and other communications provided for hereunder shall be
      in
      writing and addressed as follows:

     

    
      	
              To
                the Borrower:

            	
              ISI
                Security Group, Inc.

              12903
                Delivery Drive

              San
                Antonio, Texas 78247

              Attention:
                Sam Youngblood

            
	 	 
	
              With
                a copy to:

            	
              K
                & L Gates LLP

              111
                Congress Avenue, Suite 900

              Austin,
                Texas 78701

              Attention:
                D. Hull Youngblood, Esq.

            
	 	 
	
              To
                the Bank:

            	
              The
                PrivateBank and Trust Company

              70
                W. Madison, 2nd Floor

              Chicago,
                Illinois 60602

              Attention:
                Commercial Lending Division

            

    

     

    or,
      as to
      each party, at such other address as shall be designated by such party in a
      written notice to each other party complying as to delivery with the terms
      of
      this subsection. All notices addressed as above shall be deemed to have been
      properly given (i) if served in person, upon acceptance or refusal of delivery;
      (ii) if mailed by certified or registered mail, return receipt requested,
      postage prepaid, on the third (3rd) day following the day such notice is
      deposited in any post office station or letter box; or (iii) if sent by
      recognized overnight courier, on the first (1st) day following the day such
      notice is delivered to such carrier. No notice to or demand on the Borrower
      in
      any case shall entitle the Borrower to any other or further notice or demand
      in
      similar or other circumstances.

     

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

    

     

    13.18. Release
      of Claims Against Bank.
      In
      consideration of the Bank making the Loans, the Borrower and all other Obligors
      do each hereby release and discharge the Bank of and from any and all claims,
      harm, injury, and damage of any and every kind, known or unknown, legal or
      equitable, which any Obligor may have against the Bank from the date of their
      respective first contact with the Bank until the date of this Loan Agreement,
      including any claim arising from any reports (environmental reports, surveys,
      appraisals, etc.) prepared by any parties hired or recommended by the Bank.
      The
      Borrower and all other Obligors confirm to Bank that they have reviewed the
      effect of this release with competent legal counsel of their choice, or have
      been afforded the opportunity to do so, prior to execution of this Agreement
      and
      the Loan Documents and do each acknowledge and agree that the Bank is relying
      upon this release in extending the Loans to the Borrower.

     

    13.19. Costs,
      Fees and Expenses.
      The
      Borrower shall pay or reimburse the Bank for all reasonable costs, fees and
      expenses incurred by the Bank or for which the Bank becomes obligated in
      connection with the negotiation, preparation, consummation, collection of the
      Obligations or enforcement of this Agreement, the other Loan Documents and
      all
      other documents provided for herein or delivered or to be delivered hereunder
      or
      in connection herewith (including any amendment, supplement or waiver to any
      Loan Document), or during any workout, restructuring or negotiations in
      respect thereof, including reasonable consultants’ fees and attorneys’ fees and
      time charges of counsel to the Bank, which shall also include attorneys’ fees
      and time charges of attorneys who may be employees of the Bank or any Affiliate
      of the Bank, plus costs and expenses of such attorneys or of the Bank; search
      fees, costs and expenses; and all taxes payable in connection with this
      Agreement or the other Loan Documents, whether or not the transaction
      contemplated hereby shall be consummated. In furtherance of the foregoing,
      the
      Borrower shall pay any and all stamp and other taxes, UCC search fees, filing
      fees and other costs and expenses in connection with the execution and delivery
      of this Agreement, any Note and the other Loan Documents to be delivered
      hereunder, and agrees to save and hold the Bank harmless from and against any
      and all liabilities with respect to or resulting from any delay in paying or
      omission to pay such costs and expenses. That portion of the Obligations
      consisting of costs, expenses or advances to be reimbursed by the Borrower
      to
      the Bank pursuant to this Agreement or the other Loan Documents which are not
      paid on or prior to the date hereof shall be payable by the Borrower to the
      Bank
      on demand. If at any time or times hereafter the Bank: (a) employs counsel
      for advice or other representation (i) with respect to this Agreement or
      the other Loan Documents, (ii) to represent the Bank in any litigation,
      contest, dispute, suit or proceeding or to commence, defend, or intervene or
      to
      take any other action in or with respect to any litigation, contest, dispute,
      suit, or proceeding (whether instituted by the Bank, the Borrower, or any other
      Person) in any way or respect relating to this Agreement, the other Loan
      Documents or the Borrower’s business or affairs, or (iii) to enforce any
      rights of the Bank against the Borrower or any other Person that may be
      obligated to the Bank by virtue of this Agreement or the other Loan Documents;
      (b) takes any action to protect, collect, sell, liquidate, or otherwise
      dispose of any of the Collateral; and/or (c) attempts to or enforces any of
      the Bank’s rights or remedies under the Agreement or the other Loan Documents,
      the costs and expenses incurred by the Bank in any manner or way with respect
      to
      the foregoing, shall be part of the Obligations, payable by the Borrower to
      the
      Bank on demand.

     

    13.20.
      Maximum
      Interest.
      Notwithstanding anything contained in this Agreement or any other Loan Document
      to the contrary, the Bank shall never be deemed to have contracted for or be
      entitled to receive, collect or apply as interest on the Obligations in excess
      of the maximum rate or amount of nonusurious interest that may be contracted
      for, taken, reserved, charged, or received under applicable law (the
“Maximum
      Rate”),
      and,
      in the event the Bank ever receives, collects or applies as interest any amount
      in excess of the amount permitted and calculated at the Maximum Rate, such
      amount which would be excessive interest shall be applied to the reduction
      of
      the unpaid principal balance of the Obligations, and, if the principal balance
      of the Obligations is paid in full, any remaining excess shall forthwith be
      paid
      to Borrower."

     

    
      
        
        

      

      
        -61-

        
          

        

      

      
        
        

      

    

    

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

     

    13.22. Revival
      and Reinstatement of Obligations.
      If the
      incurrence or payment of the Obligations by any Obligor or the transfer to
      the
      Bank of any property should for any reason subsequently be declared to be void
      or voidable under any state or federal law relating to creditors’ rights,
      including provisions of the Bankruptcy Code relating to fraudulent conveyances,
      preferences, or other voidable or recoverable payments of money or transfers
      of
      property (collectively, a “Voidable
      Transfer”),
      and
      if the Bank is required to repay or restore, in whole or in part, any such
      Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
      then, as to any such Voidable Transfer, or the amount thereof that the Bank
      is
      required or elects to repay or restore, and as to all reasonable costs,
      expenses, and attorneys fees of the Bank, the Obligations shall automatically
      shall be revived, reinstated, and restored and shall exist as though such
      Voidable Transfer had never been made.

     

    
      
        
        

      

      
        -62-

        
          

        

      

      
        
        

      

    

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

     

    
      	
              ISI
                SECURITY GROUP, INC.,

            
	
              a
                Delaware Corporation

            
	 	 
	 	 
	
              By:

            	
              /s/
                Sam
                Youngblood

            
	 	
              Sam
                Youngblood

            
	 	
              President

            
	 	 
	Agreed
              and accepted:
	 	 
	
              THE
                PRIVATEBANK AND TRUST COMPANY,

            
	
              an
                Illinois banking corporation

            
	 	 
	 	 
	
              By:

            	
              /s/
                Nate
                Palmer 

            
	 	
              Nate
                Palmer

            
	 	
              Associate
                Managing DirectorFACILITY
      A LOAN NOTE

    

    
      	
               

            	
              No.
                _____________

            
	
              $10,000,000.00

            	
              Date:
                as of October 3, 2008

            
	
              Chicago,
                Illinois

            	
              Due
                Date: October 3, 2011

            

    

    

    FOR
      VALUE
      RECEIVED,
      ISI SECURITY GROUP, INC.,
      a
      Delaware corporation, (f/k/a ISI DETENTION CONTRACTING GROUP, INC.) (the
“Borrower”),
      whose
      address is 12903 Delivery Drive, San Antonio, Texas 78247, promises to pay
      to the order of THE
      PRIVATEBANK AND TRUST COMPANY,
      an
      Illinois banking corporation (hereinafter, together with any holder hereof,
      the
“Bank”),
      whose
      address is 70 W. Madison, 2nd floor,
      Chicago, Illinois 60602, on or before October 3, 2011 (the “Facility
      A Scheduled Maturity Date”),
      the
      lesser of (i) ten million and 00/100 dollars ($10,000,000.00), or
      (ii) the aggregate principal amount of the Facility A
      Loan
      outstanding under and pursuant to that certain Loan and Security Agreement
      dated
      as of the date hereof, executed by and between the Borrower and the Bank, as
      amended from time to time (as amended, supplemented or modified from time to
      time, the “Loan
      Agreement”),
      and
      made available by the Bank to the Borrower at the maturity or maturities and
      in
      the amount or amounts stated on the records of the Bank, together with interest
      (computed on the actual number of days elapsed on the basis of a 360 day
      year) on the aggregate principal amount of the Facility A
      Loan
      outstanding from time to time as provided in the Loan Agreement. Capitalized
      words and phrases not otherwise defined herein shall have the meanings assigned
      thereto in the Loan Agreement.

    

    This
      Facility A Loan Note evidences the Facility A
      Loan,
      Letters
      of Credit and other indebtedness incurred by the Borrower under and pursuant
      to
      the Loan Agreement, to which reference is hereby made for a statement of the
      terms and conditions under which the Facility A Scheduled Maturity Date or
      any payment hereon may be accelerated. The holder of this Facility A Loan
      Note is entitled to all of the benefits and security provided for in the Loan
      Agreement. The Facility A
      Loan
      shall be
      repaid by the Borrower on the Facility A Scheduled Maturity Date, unless
      payable sooner pursuant to the provisions of the Loan Agreement.

    

    Principal
      and interest shall be paid to the Bank at its address set forth above, or at
      such other place as the holder of this Facility A Loan Note shall designate
      in writing to the Borrower. The Facility A
      Loan
      made,
      and all Letters of Credit issued by the Bank, and all payments on account of
      the
      principal and interest thereof shall be recorded on the books and records of
      the
      Bank and the principal balance as shown on such books and records, or any copy
      thereof certified by an officer of the Bank, shall be rebuttably presumptive
      evidence of the principal amount owing hereunder.

    

    Except
      for such notices as may be required under the terms of the Loan Agreement,
      the
      Borrower waives presentment, demand, notice, protest, and all other demands,
      or
      notices, in connection with the delivery, acceptance, performance, default,
      or
      enforcement of this Facility A Loan Note, and assents to any extension or
      postponement of the time of payment or any other indulgence.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    The
      Facility A
      Loan
      and the
      Letters of Credit evidenced hereby have been made and/or issued and this
      Facility A Loan Note has been delivered at the Bank’s main office set forth
      above. This Facility A Loan Note shall be governed and construed in
      accordance with the laws of the State of Illinois, in which state it shall
      be
      performed, and shall be binding upon the Borrower, and its legal
      representatives, successors, and assigns. Wherever possible, each provision
      of
      the Loan Agreement and this Facility A Loan Note shall be interpreted in
      such manner as to be effective and valid under applicable law, but if any
      provision of the Loan Agreement or this Facility A Loan Note shall be
      prohibited by or be invalid under such law, such provision shall be severable,
      and be ineffective to the extent of such prohibition or invalidity, without
      invalidating the remaining provisions of the Loan Agreement or this
      Facility A Loan Note. The term “Borrower”
as
      used
      herein shall mean all parties signing this Facility A Loan Note, and each
      one of them, and all such parties, their respective successors and assigns,
      shall be jointly and severally obligated hereunder.

     

    [Signature
      page follows]

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Borrower has executed this Facility A Loan Note as of
      the date set forth above.

     

    ISI
      SECURITY GROUP, INC., 

    a
      Delaware Corporation

    

    

    
      	
              By:

            	     	
              
                /s/
                  Sam Youngblood

              

            
	
              Name:

            	     	
              Sam
                Youngblood

            
	
              Title:

            	     	
              President

            

    

    

    
      
        
        

      

      
        3

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