Document:

Birmingham,
                Alabama

              February
                1, 2006

            

    

    

    ADDENDUM
      VII

    

    This
      Addendum VII (“Addendum VII”) is an addendum to the July 27, 2005 Real Estate
      Note (“Note”) executed by D. W. Grimsley, Jr., on behalf of Automotive Services
      Group, LLC (“ASG”) (the “Undersigned”), the Future Advance Mortgage Assignment
      of Rents and Leases and Security Agreement (“Security Agreement”) executed by
      the Undersigned on July 27, 2005, Addendum I (“Addendum I”) dated August 10,
      2005, Addendum II dated September 23, 2005 (“Addendum II”), Addendum III dated
      October 20, 2005 (“Addendum III”), Addendum IV dated December 7, 2005 (“Addendum
      IV”), Addendum V dated December 22, 2005 (“Addendum V”), and Addendum VI dated
      January 10, 2006 (“Addendum VI”). The Note, Security Agreement and Addendum I,
      II, III, IV, V and VI are fully incorporated by reference in this Addendum
      VII.

    

    The
      Undersigned, for value received, promises to pay to the order of AULT GLAZER
      BODNAR ACQUISITION FUND, LLC, the sum of one
      hundred ten thousand dollars
      ($110,000.00)
      (“Advance”)
      together
      with interest upon the unpaid portion thereof from the date at the rate of
      three
      percent (3%) above the “Prime Rate” as published in The
      Wall Street Journal.
      This
      advance was to fund construction costs. This note is secured by mortgage on
      real
      estate, executed to the payee herein. 

    

    This
      Addendum VII fully incorporates by reference the Note, Security Agreement and
      Addendum I, II, III, IV, V and VI for an aggregate advance to date in the amount
      of $1,353,536.00. 

    

    This
      Addendum VII is given, executed and delivered under the seal of the
      Undersigned.

     

    
      	 	 	 
	 	Automotive Services Group, LLC
	 
 	 
 	 
 
	 	
            	/s/
              D.W.
              Grimsley
	 	
              
By:
              Darrell W. Grimsley, Jr.EXHIBIT
      10.1

    

    

    -THE
      ALPINE GROUP, INC. ANNOUNCES COMPLETION OF SALE OF ESSEX ELECTRIC BUILDING
      WIRE
      ASSETS -

    

    EAST
      RUTHERFORD, N.J.,
      February 1, 2006 PR Newswire/ -- The Alpine Group, Inc. (“Alpine”) (OTC:
      APNI.OB) today announced that it had completed the previously announced sale
      of
      the building wire manufacturing business of its wholly-owned subsidiary Essex
      Electric Inc. 

    

    Mr.
      Steven S. Elbaum, Chairman and Chief Executive Officer of Alpine, stated that
      “the sale will realize substantial value for Alpine and enhance its financial
      resources and capacity to continue to build and return value for its
      shareholders. Alpine’s pre-tax book gain is approximately $33 million, including
      a $12 million LIFO related inventory gain recorded in January. Following the
      closing and collection of accounts receivable by Essex Electric and after
      payment of its bank debt and liabilities, we estimate that Essex will realize
      approximately $85 million in cash on a pre-tax basis. This will augment Alpine’s
      existing cash and securities of approximately $20 million.”

    

    “Alpine
      acquired Essex Electric in December 2002 for an initial equity investment of
      $5
      million. Alpine and the Essex Electric team successfully restructured and
      repositioned Essex Electric into a highly competitive and valuable business
      franchise. Alpine provided additional equity capital to support the
      restructuring and through this sale has realized a pre-tax return for its
      shareholders of 12 times its average equity investment.”

    

    Excluded
      from the sale are Essex Electric’s copper scrap reclamation operations based in
      Jonesboro, Indiana and a plastic resin compounding operation based in Marion,
      Indiana. Alpine also owns 46% of the common stock of Superior Cables, Ltd.,
      an
      Israeli based manufacturer of primarily, medium and high voltage cable for
      use
      in power transmission and distribution applications for its local and export
      markets. Superior Cables, Ltd. is listed on the Tel Aviv Stock
      Exchange.

    

    Except
      for the historical information herein, the matters discussed in this news
      release include forward-looking statements that may involve a number of risks
      and uncertainties. Actual results may vary significantly based on a number
      of
      factors, including, but not limited to, risks in product and technology
      development, market acceptance of new products and continuing product demand,
      prediction and timing of customer orders, the impact of competitive products
      and
      pricing, changing economic conditions, including changes in short-term interest
      rates and foreign currency fluctuations, and other risk factors detailed in
      Alpine’s most recent annual report and other filings with the Securities and
      Exchange Commission.Transfer Agreement of Land Use Right
                              (English Translation)

Transferor: Deli Du
Transferee: Bazhou Deli Solar Energy Heating Co. Ltd.

      Through friendly consultation and on the basis of equality and mutual
benefit, the parties enter into the following agreements in compliance with the
relevant laws and regulations:

      1.    The subject of transfer: the land use right of the piece of land
            located on the north of Jinbao Road of Bazhou City, which occupies
            an area of 816 square meters; the land use right expires on June 3,
            2051.

      2.    The transfer price: RMB20,000, effective within 30 days after the
            signatory date.

      3.    The transferor will assist the transfer in processing the relevant
            procedures and registration documents.

      4.    The transferee shall comply with all the national laws and relevant
            administrative regulations within the term of the land use right, it
            shall also operate its business in accordance with relevant laws and
            regulations and shall independently assume all the legal
            responsibilities in connection with its business activities.

      This agreement comes into effect upon the signing of both parties.

Transferor: /s/ Deli Du    Transferee: Bazhou Deli Solar Energy Heating Co. Ltd.
            ------------                   (Corporate Seal)
             Deli Du

Date: October 17, 2005LOAN
      AND SECURITY AGREEMENT

    

    

    This
      LOAN
      AND SECURITY AGREEMENT dated as of February 1, 2006 (the “Agreement”), is
      executed by and between CTI Industries Corporation, an Illinois corporation
      and
      CTI Helium, Inc., an Illinois corporation (collectively the “Borrower”), which
      has its chief executive office located at 22160 North Pepper Road, Barrington,
      Illinois 60010, and Charter One Bank, N.A., a national banking association
      (the
“Bank”), whose address is 71 South Wacker Drive, Suite 2900, Chicago, Illinois
      60606.

    

    

    R E C I T A L S:

    

    A. The
      Borrower desires to borrow funds and obtain other financial accommodations
      from
      the Bank.

    

    B. Pursuant
      to the Borrower’s request, the Bank is willing to extend such financial
      accommodations to the Borrower under the terms and conditions set forth
      herein.

    

    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:

    

    

    A G R E E M E N T S:

    

    Section
      1. DEFINITIONS.

    

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

    

    “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 Base Rate to
      determine the Revolving Interest Rate, Term Interest Rate and Mortgage Rate,
      as
      determined by the ratio of Senior Debt to consolidated EBITDA of the Borrower
      and its Subsidiaries for the twelve month period ending as of the end of the
      prior fiscal quarter, effective as of any Interest Rate Change Date, as set
      forth below:

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

     

    
      	
               

            	
              Ratio
                of Senior

            	 	 
	 	
              Debt
                to EBITDA

            	 	
              Applicable
                Margin

            
	 	 	 	 
	 	
              Greater
                than or equal to 4.50

            	 	
              1.50%

            
	 	
              to
                1.00

            	 	 
	 	 	 	 
	 	
              Greater
                than or equal to 4.00 

            	 	
              1.25%

            
	 	
              to
                1.00; less than 4.50 to 1.00

            	 	 
	 	 	 	 
	 	
              Greater
                than or equal to 3.50

            	 	
              1.00%

            
	 	
              to
                1.00; less than 4.00 to 1.00

            	 	 
	 	 	 	 
	 	
              Greater
                than or equal to 2.75

            	 	
              0.75%

            
	 	
              to
                1.00; less than 3.50 to 1.00

            	 	 
	 	 	 	 
	 	
              Greater
                than or equal to 2.00

            	 	
              0.50%

            
	 	
              to
                1.00; less than 2.75 to 1.00

            	 	 
	 	 	 	 
	 	
              Less
                than 2.00 to 1.00

            	 	
              0.25%

            

    

     

    The
      Applicable Margin as of the date hereof is 1.50%.

    

    “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 thirty (30) 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 $50,000.

    

    “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.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    “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.

    

    “Base
      Rate”
shall
      mean the greater of (a) the Prime Rate as announced from time to time by the
      Bank, or (b) the sum of the Federal Funds Rate plus 0.50%.

    

    “Borrowing
      Base Amount”
shall
      mean:

    

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

    

    (b) the
      lesser of (i) an amount equal to ninety percent (90%) of the net amount (after
      deduction of such reserves and allowances as the Bank deems proper and
      necessary) of all Eligible Foreign Accounts; and (ii) One Million Dollars
      ($1,000,000.00); plus

    

    (c) the
      lesser of (i) an amount equal to sixty percent (60%) of the lower of cost or
      market value (after deduction of such reserves and allowances as the Bank deems
      proper and necessary) of all Eligible Inventory, and (ii) Three Million Two
      Hundred Fifty Thousand and 00/100 Dollars ($3,250,000.00).

    

    “Borrowing
      Base Certificate”
shall
      mean a certificate to be signed by the Borrower certifying to the accuracy
      of
      the Borrowing Base Amount in form and substance satisfactory to the
      Bank.

    

    “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) Stephen M. Merrick
      and
      John H. Schwan shall cease to own and control, directly or indirectly, at least
      35% of the outstanding Capital Securities of the Borrower; (b) the Borrower
      shall cease to, directly or indirectly, own and control at least 98% of each
      class of the outststanding Capital Securities of each Subsidiary. 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.

    

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “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.

    

    “Contingent
      Liability”
and
      “Contingent
      Liabilities”
shall
      mean, respectively, 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), 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.

    

    “Contribution
      to Capital”
shall
      mean the proposed sale of Capital Securities or issuance of Subordinated Debt
      and warrants or convertible debt to Cornell Capital, Stephen M. Merrick, John
      H.
      Schwan or other investor reasonably acceptable to Bank in an amount not to
      exceed $3,000,000, and exclusive of the Shareholder Contribution.

    

    “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 trade payables and accrued expenses incurred by such Person in
      accordance with customary practices and in the ordinary course of business
      of
      such Person.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Default
      Rate”
shall
      mean a per annum rate of interest equal to the Revolving Interest Rate, the
      Term
      Interest Rate and Mortgage Interest Rate, respectively, then in effect
plus
      two
      percent (2%).

    

    “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, (a) the sum for such period of: (i) Net Income,
plus
      (ii)
      Interest Charges, plus
      (iii)
      federal and state income taxes (including the Illinois replacement tax),
plus
      (iv)
      Depreciation, plus
      (v)
      extraordinary losses, other than from operation, minus
      (b)
      extraordinary gains, in each case to the extent included in determining Net
      Income for such period.

    

    “Eligible
      Account”
and
      “Eligible
      Accounts”
shall
      mean each Account and all such Accounts (exclusive of sales, excise or other
      similar taxes) owing to the Borrower which meets each of the following
      requirements:

    

    (a) it
      is
      genuine in all respects and has arisen in the ordinary course of the Borrower’s
      business from (i) the performance of services by the Borrower, which services
      have been fully performed, acknowledged and accepted by the Account Debtor
      or
      (ii) the sale or
      lease
      of Goods by the Borrower, including C.O.D. sales, which Goods have been
      completed in accordance with the Account Debtor’s specifications (if any) and
      delivered to and accepted by the Account Debtor, and the Borrower has possession
      of, or has delivered to the Bank at the Bank’s request, shipping and delivery
      receipts evidencing such delivery;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (b) it
      is
      subject to a perfected, first priority Lien in favor of the Bank and is not
      subject to any other assignment, claim or Lien;

    

    (c) it
      is the
      valid, legally enforceable and unconditional obligation of the Account Debtor
      with respect thereto, and is not subject to the fulfillment of any condition
      whatsoever or any counterclaim, credit, trade or volume discount, allowance,
      discount, rebate or adjustment by the Account Debtor with respect thereto,
      or to
      any claim by such Account Debtor denying liability thereunder in whole or in
      part and the Account Debtor has not refused to accept and/or has not returned
      or
      offered to return any of the Goods or services which are the subject of such
      Account;

    

    (d) the
      Account Debtor with respect thereto is a resident or citizen of, and is located
      within, the United States, unless the sale of goods or services giving rise
      to
      such Account is on letter of credit, banker’s acceptance, guaranty of the Export
      Import Bank of the United States or other credit support terms reasonably
      satisfactory to the Bank;

    

    (e) it
      is not
      an Account arising from a “sale on approval”, “sale or return”, “consignment”,
“guaranteed sale” or “bill and hold”, or are subject to any other repurchase or
      return agreement;

    

    (f) it
      is not
      an Account with respect to which possession and/or control of the goods sold
      giving rise thereto is held, maintained or retained by the Borrower or any
      Subsidiary (or by any agent or custodian of the Borrower or any Subsidiary)
      for
      the account of, or subject to, further and/or future direction from the Account
      Debtor with respect thereto;

    

    (g) it
      has
      not arisen out of contracts with the United States or any department, agency
      or
      instrumentality thereof, unless the Borrower has
      assigned its right to payment of such Account to the Bank pursuant to the
      Assignment of Claims Act of 1940, and evidence (satisfactory to the Bank) of
      such assignment has been delivered to the Bank, or any state, county, city
      or
      other governmental body, or any department, agency or instrumentality
      thereof;

    

    (h) if
      the
      Borrower maintains a credit limit for an Account Debtor, the aggregate dollar
      amount of Accounts due from such Account Debtor, including such Account, does
      not exceed such credit limit;

    

    (i) if
      the
      Account is evidenced by chattel paper or an instrument, the originals of such
      chattel paper or instrument shall have been endorsed and/or assigned and
      delivered to the Bank or, in the case of electronic chattel paper, shall be
      in
      the control of the Bank, in each case in a manner satisfactory to the
      Bank;

    

    (j) such
      Account is evidenced by an invoice delivered to the related Account Debtor
      and
      is not more than ninety (90) days past the original invoice date
      thereof;

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (k) it
      is not
      an Account with respect to an Account Debtor that is located in any jurisdiction
      which has adopted a statute or other requirement with respect to which any
      Person that obtains business from within such jurisdiction must file a notice
      of
      business activities report or make any other required filings in a timely manner
      in order to enforce its claims in such jurisdiction’s courts unless (i) such
      notice of business activities report has been duly and timely filed or the
      Borrower is exempt from filing such report and has provided the Bank with
      satisfactory evidence of such exemption or (ii) the failure to make such filings
      may be cured retroactively by the Borrower for a nominal fee;

    

    (l) the
      Account Debtor with respect thereto is not an Affiliate of the
      Borrower;

    

    (m) such
      Account does not arise out of a contract or order which, by its terms, forbids
      or makes void or unenforceable the assignment thereof by the Borrower to the
      Bank and is not unassignable to the Bank for any other reason;

    

    (n) there
      is
      no bankruptcy, insolvency or liquidation proceeding pending by or against the
      Account Debtor with respect thereto, nor has the Account Debtor suspended
      business, made a general assignment for the benefit of creditors or failed
      to
      pay its debts generally as they come due,
      and/or
      no condition or event has occurred having a Material Adverse Effect on the
      Account Debtor which would require the Accounts of such Account Debtor to be
      deemed uncollectible in accordance with GAAP;

    

    (o) it
      is not
      owed by an Account Debtor with respect to which fifty percent (50.00%) or more
      of the aggregate amount of outstanding Accounts owed at such time by such
      Account Debtor is classified as ineligible under clause (j) of this
      definition;
      and

    

    (p) it
      does
      not violate the negative covenants and does satisfy the affirmative covenants
      of
      the Borrower contained in this Agreement, and it is otherwise not unacceptable
      to the Bank for any other reason.

    

    An
      Account which is at any time an Eligible Account, but which subsequently fails
      to meet any of the foregoing requirements, shall forthwith cease to be an
      Eligible Account. Further, with respect to any Account, if the Bank at any
      time
      hereafter determine in its discretion that the prospect of payment or
      performance by the Account Debtor with respect thereto is materially impaired
      for any reason whatsoever, such Account shall cease to be an Eligible Account
      after notice of such determination is given to the Borrower.

    

    “Eligible
      Foreign Account”
shall
      mean an Eligible Account which has an Account Debtor which is not a resident
      or
      citizen of, and is not located in the United States but which is insured by
      a
      guaranty of the Export Import Bank of the United States or other form of
      insurance acceptable to the Bank.

    

    “Eligible
      Inventory”
shall
      mean all Inventory of the Borrower which meets each of the following
      requirements:

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (a) it
      is
      subject to a perfected, first priority Lien in favor of the Bank and is not
      subject to any other assignment, claim or Lien;

    

    (b) it
      is
      salable and not slow-moving, damaged, obsolete or discontinued, as determined
      in
      the sole and absolute discretion of the Bank;

    

    (c) it
      is in
      the possession and control of the Borrower and it is stored and held in
      facilities owned by the Borrower or, if such facilities are not so owned, the
      Bank is in possession of a Collateral Access Agreement with respect
      thereto;

    

    (d) it
      is not
      Inventory produced in violation of the Fair Labor Standards Act and subject
      to
      the “hot goods” provisions contained in Title 29 U.S.C. §215;

    

    (e) it
      is not
      subject to any agreement or license which would restrict the Bank’s ability to
      sell or otherwise dispose of such Inventory;

    

    (f) it
      is
      located in the United States or in any territory or possession of the United
      States that has adopted Article 9 of the Uniform Commercial Code;

    

    (g) it
      is not
“in transit” to the Borrower or held by the Borrower on consignment;

    

    (h) it
      is not
“work-in-progress” Inventory included in raw materials;

    

    (i) it
      is not
      supply items, packaging or any other similar materials;

    

    (j) it
      is not
      identified to any purchase order or contract to the extent progress or advance
      payments are received with respect to such Inventory; 

    

    (k) it
      is not
      consigned inventory (including inks);

    

    (l) it
      does
      not breach any of the representations, warranties or covenants pertaining to
      Inventory set forth in the Loan Documents; and

    

    (m) the
      Bank
      shall not have determined in its reasonable discretion that it is unacceptable
      due to age, type, category, quality, quantity and/or any other reason
      whatsoever.

    

    Inventory
      which is at any time Eligible Inventory but which subsequently fails to meet
      any
      of the foregoing requirements shall forthwith cease to be Eligible
      Inventory.

    

    “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.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    “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 period, the remainder of (a) EBITDA for such period, minus
      (b) the
      sum, without duplication, of (i) repayments of principal of the Term Loan and
      Mortgage Loan made during such period, plus
      (ii)
      cash payments made in such period with respect to Capital Expenditures,
plus
      (iii)
      all income taxes paid in cash by the Borrower during such period, plus
      (iv)
      cash Interest Expense of the Borrower during such period, plus
      (v)
      payments made by Borrower or any Subsidiary with respect to Debt (to the extent
      such payments are otherwise not prohibited hereunder).

    

    “Facility”
shall
      mean Borrower’s real estate and improvements located at 22160 North Pepper Road,
      Barrington, Illinois 60010.

    

    “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.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    “Funded
      Debt”
shall
      mean, as to any Person, all Senior 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) including
      without limitation all of the outstanding Loans.

    

    “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 Persons: John H.
      Schwan and Stephen M. Merrick.

    

    “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.

    

    “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.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    “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
      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 March 31, 2006.

    

    “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 letter of credit and all such 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.

    

    “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 Commitment”
shall
      mean, at any time, an amount equal to One Million and 00/100 Dollars
      ($1,000,000.00).

    

    “Letter
      of Credit Maturity Date”
shall
      mean the Revolving Loan Maturity Date.

    

    “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 Revolving
      Loan 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.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    “Letter
      of Credit Rate”
shall
      mean the per annum rate as determined by the ratio of the Senior Debt to the
      consolidated EBITDA of the Borrower and its Subsidiaries for the twelve month
      period ending as of the end of the fiscal quarter most recently ended at the
      time of the issuance of a Letter of Credit, as set forth below:

     

    
      
        	 	
                Ratio
                  of Senior Debt

                to
                  EBITDA

              	 	
                Letter
                  of Credit Rate

              
	 	 	 	 
	 	
                Greater
                  than or equal to 4.00

              	 	
                2.75%

              
	 	
                to
                  1.00

              	 	 
	 	 	 	 
	 	
                Greater
                  than or equal to 3.50

              	 	
                2.50%

              
	 	
                to
                  1.00; less than 4.00 to 1.00

              	 	 
	 	 	 	 
	 	
                Greater
                  than or equal to 2.75

              	 	
                2.25%

              
	 	
                to
                  1.00; less than 3.50 to 1.00

              	 	 
	 	 	 	 
	 	
                Greater
                  than or equal to 2.00

              	 	
                2.00%

              
	 	
                to
                  1.00; less than 2.75 to 1.00

              	 	 
	 	 	 	 
	 	
                Less
                  than 2.00 to 1.00

              	 	
                1.75%

              

      

       

    

    “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.

    

    “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.

    

    “Loans”
shall
      mean, collectively, all Revolving Loans, the Term Loan and Mortgage Loan 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 the Borrower’s Subsidiaries for the benefit of the Bank pursuant to any of
      the foregoing, and all amendments, restatements, supplements and other
      modifications thereto.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

    

    “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 the form being used by the Bank at such
      time.

    

    “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.

    

    “Mortgage”
shall
      have the meaning set forth in Section
      6.2
      hereof.

    

    “Mortgage
      Interest Rate”
shall
      mean the floating per annum rate of interest equal to the Base Rate plus
      the
      Applicable Margin.

    

    “Mortgage
      Loan”
shall
      mean the direct advance made by the Bank to the Borrower in the form of a
      Mortgage Loan under and pursuant to this Agreement as set forth in Section
      2.3
      of this
      Agreement.

    

    “Mortgage
      Loan Commitment”
shall
      mean Two Million Eight Hundred Thousand and 00/100 Dollars
      ($2,800,000.00).

    

    “Mortgage
      Loan Maturity Date”
shall
      mean January 31, 2011, unless extended by the Bank pursuant to any modification,
      extension or renewal note executed by the Borrower and accepted by the Bank
      in
      its sole and absolute discretion in substitution for the Mortgage
      Note.

    

    “Mortgage
      Note”
shall
      mean a mortgage note in the form prepared by and acceptable to the Bank, dated
      as of the date hereof, in the amount of the Mortgage Loan Commitment and
      maturing on the Mortgage Loan Maturity Date, duly executed by the Borrower
      and
      payable to the order of the Bank, together with any and all renewal, extension,
      modification or replacement notes executed by the Borrower and delivered to
      the
      Bank and given in substitution therefor.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    “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).

     

    “Net
      Income”
shall
      mean means, 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 2.8(a) hereof.

    

    “Non-Utilization
      Fee Rate”
shall
      mean the per annum rate as determined by the ratio of the Senior Debt to the
      consolidated EBITDA of the Borrower and its Subsidiaries for the twelve month
      period ending as of the end of the prior fiscal quarter, as set forth
      below:

     

    
       

      
        
          	 	
                  Ratio
                    of Senior Debt

                  to
                    EBITDA

                	 	
                  Non-Utilization

                  Fee
                    Rate

                
	 	 	 	 
	 	
                  Greater
                    than or equal to 4.00

                	 	
                  0.75%

                
	 	
                  to
                    1.00

                	 	 
	 	 	 	 
	 	
                  Greater
                    than or equal to 2.75

                	 	
                  0.50%

                
	 	
                  to
                    1.00; less than 4.00 to 1.00

                	 	 
	 	 	 	 
	 	
                  Less
                    than 2.00 to 1.00

                	 	
                  .375%

                

        

         

      

    

    “Note”
and
      “Notes”
shall
      mean, respectively, each of and collectively, the Revolving Note, the Term
      Note
      and the Mortgage Note.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    “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, any domestic Subsidiary of the Borrower, any of the
      Guarantors, accommodation endorser, third party pledgor, or any other party
      liable with respect to the Obligations.

    

    “Organizational
      Identification Number”
means,
      with respect to Borrower, the organizational identification number assigned
      to
      Borrower by the applicable governmental unit or agency of the jurisdiction
      of
      organization of the Borrower.

    

    “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 (such as (i) Liens of
      carriers, warehousemen, mechanics and materialmen and other similar Liens
      imposed by law, and (ii) Liens 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) or in connection with
      surety bonds, bids, performance bonds and similar obligations) for sums not
      overdue or being contested in good faith by appropriate proceedings and not
      involving any advances or borrowed money or the deferred purchase price of
      property or services, which do not in the aggregate materially detract from
      the
      value of the property or assets of the Borrower or materially impair the use
      thereof in the operation of the Borrower’s business and, in each case, for which
      it maintains adequate reserves in accordance with GAAP and in respect of which
      no Lien has been filed; (c) Liens described on Schedule
      9.2
      as of
      the Closing Date; (d) attachments,
      appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty
      Thousand and 00/100 Dollars ($50,000.00) arising in connection with court
      proceedings, provided
      the
      execution or other enforcement of such Liens is effectively stayed and the
      claims secured thereby are being actively contested in good faith and by
      appropriate proceedings and to the extent such judgments or awards do not
      constitute an Event of Default under Section 11.8 hereof; (e) 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; (f) 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); (g) 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 to such property within twenty (20) days of the acquisition
      thereof and attaches solely to the property so acquired; and (h) Liens
      granted to the Bank hereunder and under the Loan Documents.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
 

    “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
      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.

    

    “Revolving
      Interest Rate”
shall
      mean the floating per annum rate of interest equal to the Base Rate plus
      the
      Applicable Margin.

    

    “Revolving
      Loan”
and
      “Revolving
      Loans”
shall
      mean, respectively, each direct advance and the aggregate of all such direct
      advances made by the Bank to the Borrower under and pursuant to this Agreement,
      as set forth in Section
      2.1
      of this
      Agreement.

    

    “Revolving
      Loan Availability”
shall
      mean, at any time, an amount equal to the lesser of (a) the Revolving Loan
      Commitment minus
      the
      Letter of Credit Obligations, or (b) the Borrowing Base Amount, minus
      the
      Letter of Credit Obligations.

    

    “Revolving
      Loan Commitment”
shall
      mean Six Million Five Hundred Thousand and 00/100 Dollars
      ($6,500,000.00).

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    “Revolving
      Loan Excess Availability”
shall
      mean as of the date hereof, an amount equal to One Million Dollars
      ($1,000,000.00). Thereafter, the Revolving Loan Excess Availability shall equal
      the lesser of (a) One Million Dollars ($1,000,000.00); and (b) the sum of (i)
      Five Hundred Thousand Dollars ($500,000.00) plus
      (ii) 36%
      of the accounts payable of the Borrower which are more than ninety (90) past
      due. Notwithstanding the foregoing, the Revolving Loan Excess Availability
      may
      be permanently reduced in whole or in part (but not below zero), at Borrower’s
      option, by an amount equal to twice the amount received by the Borrower after
      the date hereof through either a sale of its Capital Securities and/or its
      issuance of Subordinated Debt. 

    

    “Revolving
      Loan Maturity Date”
shall
      mean January 31, 2009, unless extended by the Bank pursuant to any modification,
      extension or renewal note executed by the Borrower and accepted by the Bank
      in
      its sole and absolute discretion in substitution for the Revolving
      Note.

    

    “Revolving
      Note”
shall
      mean a revolving note in the form prepared by and acceptable to the Bank, dated
      as of the date hereof, in the amount of the Revolving Loan Commitment and
      maturing on the Revolving Loan Maturity Date, duly executed by the Borrower
      and
      payable to the order of the Bank, together with any and all renewal, extension,
      modification or replacement notes executed by the Borrower and delivered to
      the
      Bank and given in substitution therefor.

    

    “Senior
      Debt”
shall
      mean all Debt of the Borrower and its United States Subsidiaries other than
      Subordinated Debt including without limitation all of the outstanding Loans
      and
      all Debt of foreign Subsidiaries which matures more than one year from the
      date
      of its creation (or is renewable or extendable, at the option of such Person,
      to
      a date more than one year from such date). 

    

    “Shareholder
      Contribution”
shall
      mean the additional contribution to the Borrower by John H. Schwan and Stephen
      M. Merrick in the aggregate amount of $1,000,000, in the form of Subordinated
      Debt and warrants.

    

    “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.

    

    “Subordination
      Agreements”
shall
      have the meaning set forth in Section
      3.1(h)
      hereof.

    

    “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.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    “Tangible
      Assets”
shall
      mean the total of all assets appearing on a balance sheet of the Borrower
      prepared in accordance with GAAP (with Inventory being valued at the lower
      of
      cost or market), after deducting all proper reserves (including reserves for
      Depreciation) minus the sum of (i) goodwill, patents, trademarks, prepaid
      expenses, deposits, deferred charges and other personal property which is
      classified as intangible property in accordance with GAAP, and (ii) any amounts
      due from shareholders, Affiliates, officers or employees of the
      Borrower.

    

    “Tangible
      Net Worth”
shall
      mean at any time the total of Tangible Assets minus
      Liabilities plus
      Subordinated Debt plus
      the Net
      Income for the current quarter.

    

    “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.

    

    “Term
      Interest Rate”
shall
      mean the floating per annum rate of interest equal to the Base Rate plus
      the
      Applicable Margin.

    

    “Term
      Loan”
shall
      mean the direct advance or advances made by the Bank to the Borrower in the
      form
      of a Term Loan under and pursuant to this Agreement, as set forth in
Section
      2.2
      of this
      Agreement.

    

    “Term
      Loan Commitment”
shall
      mean Three Million Five Hundred Thousand and 00/100 Dollars
      ($3,500,000.00).

    

    “Term
      Loan Mandatory Prepayment”
shall
      have the meaning set forth in Section
      2.2(d)
      hereof.

    

    “Term
      Loan Maturity Date”
shall
      mean January 31, 2011, unless extended by the Bank pursuant to any modification,
      extension or renewal note executed by the Borrower and accepted by the Bank
      in
      its sole and absolute discretion in substitution for the Term Note.

    

    “Term
      Note”
shall
      mean a term note in the form prepared by and acceptable to the Bank, dated
      as of
      the date hereof, in the amount of the Term Loan Commitment and maturing on
      the
      Term Loan Maturity Date, duly executed by the Borrower and payable to the order
      of the Bank, together with any and all renewal, extension, modification or
      replacement notes executed by the Borrower and delivered to the Bank and given
      in substitution therefor.

    

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

    

    “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.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    “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.

    

    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.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    (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.

    

    (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. Revolving
      Loans.

    

    (a) Revolving
      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 Revolving
      Loans at such times as the Borrower may from time to time request until, but
      not
      including, the Revolving Loan Maturity Date, and in such amounts as the Borrower
      may from time to time request, provided, however, that the aggregate principal
      balance of all Revolving Loans outstanding at any time shall not exceed the
      (i)
      the Revolving Loan Availability less
      (ii) the
      Revolving Loan Excess Availability. Revolving Loans made by the Bank may be
      repaid and, subject to the terms and conditions hereof, borrowed again up to,
      but not including the Revolving Loan Maturity Date unless the Revolving Loans
      are otherwise accelerated, terminated or extended as provided in this Agreement.
      The Revolving Loans shall be used by the Borrower for the purposes of
      refinancing existing indebtedness with Cole Taylor Bank, funding working capital
      and for general corporate purposes.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    (b) Revolving
      Loan Interest and Payments.
      Except
      as otherwise provided in this Section
      2.1(b),
      the
      principal amount of the Revolving Loans outstanding from time to time shall
      bear
      interest at the applicable Revolving Interest Rate. Accrued and unpaid interest
      on the unpaid principal balance of all Revolving Loans outstanding from time
      to
      time, shall be due and payable monthly, in arrears, commencing on March 1,
      2006
      and continuing on the first day of each calendar month thereafter, and on the
      Revolving 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 Revolving Loans, at the option of the Bank, may accrue
      at the Default Rate and shall be payable upon demand from the Bank.

    

    (c) Revolving
      Loan Principal Payments.

    

    (i) Revolving
      Loan Mandatory Payments.
      All
      Revolving Loans hereunder shall be repaid by the Borrower on the Revolving
      Loan
      Maturity Date, unless payable sooner pursuant to the provisions of this
      Agreement. In the event the aggregate outstanding principal balance of all
      Revolving Loan Obligations hereunder exceeds the Revolving Loan Availability
      less
      the
      Revolving Loan Excess Availability, the Borrower shall, without notice or demand
      of any kind, immediately make such repayments of the Revolving Loans or take
      such other actions as are satisfactory to the Bank as shall be necessary to
      eliminate such excess.

    

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

    

    (iii) Mandatory
      Prepayment.
      Upon
      the occurrence of any of the events set forth in Section
      2.2(d)
      below,
      in the event that the Term Loan has been, or by such Term Loan Mandatory
      Prepayment is paid in full, the balance of the amounts described in Section
      2.2(d)(i), (ii), (iii) and (iv)
      below
      shall be used by the Borrower to prepay the Revolving Loans, until paid in
      full.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    2.2. Term
      Loan.

    

    (a) Term
      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 Term Loan
      equal to the Term Loan Commitment. The Term Loan shall be available to the
      Borrower in a single principal advance on such date as the conditions set forth
      in Section
      3
      shall
      have been satisfied. The Term Loan shall be used by the Borrower to repay its
      existing term loan and for general corporate purposes. The Term Loan may be
      prepaid in whole or in part at any time without penalty subject to Section
      2.2(e),
      but
      shall be due in full on the Term Loan Maturity Date, unless the credit extended
      under the Term Loan is otherwise accelerated, terminated or extended as provided
      in this Agreement.

    

    (b) Term
      Loan Interest.
      Except
      as otherwise provided in this Section
      2.2(b),
      the
      principal amount of the Term Loan outstanding from time to time shall bear
      interest at the applicable Term Interest Rate. 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 Term Loan, at the option of the Bank,
      may accrue at the Default Rate and shall be payable upon demand from the
      Bank.

    

    (c) Term
      Loan Interest and Principal Payments.
      The
      outstanding principal balance of the Term Loan shall be repaid in equal
      principal installments each in the amount of Fifty-Eight Thousand Three Hundred
      Thirty-Three and 33/100 Dollars ($58,333.33), together with an additional amount
      representing accrued and unpaid interest on the principal amount of the Term
      Loan outstanding as set forth above, beginning on March 1, 2006, and continuing
      on the first day of each month thereafter, with a final payment of all
      outstanding principal and accrued interest due on the Term Loan Maturity Date.
      Principal amounts repaid on the Term Note may not be borrowed
      again.

    

    (d) Term
      Loan Mandatory Prepayment.
      The
      Borrower shall make a prepayment (the “Term Loan Mandatory Prepayment”) of the
      outstanding principal amount of the Term 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 or by any Subsidiary 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, any stock warrant, (B) any issuance by a Subsidiary to the Borrower
      or
      another Subsidiary, and (C) the issuance of Capital Securities in connection
      with the Contribution to Capital or Shareholder Contribution) in an amount
      equal
      to 100% of such Net Cash Proceeds.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

       

    

    (iii) Within
      90
      days after the end of each of the Borrower’s fiscal years, commencing with the
      fiscal year ending December 31, 2006, in an amount equal to 50% of Excess Cash
      Flow for such fiscal year.

    

    (iv) Concurrently
      with the receipt by the Borrower of any Net Cash Proceeds from the issuance
      of
      any Debt (to the extent permitted hereunder), other than the Shareholder
      Contribution or the Contribution to Capital, in an amount equal to 100% of
      such
      Net Cash Proceeds.

    

    (e) Term
      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 Term 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 Term Loan, which notice shall be irrevocable and state
      the prepayment amount and the prepayment date (the “Term Loan Prepayment
      Date”);

    

    (B) The
      voluntary prepayment shall be in an amount not less than $250,000;
      and

    

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

    

    2.3. Mortgage
      Loan.
      

    

    (a) Mortgage
      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 Mortgage
      Loan
      equal to the Mortgage Loan Commitment. The Mortgage Loan shall be available
      to
      the Borrower in a single principal advance on such date as the conditions set
      forth in Section
      3
      shall
      have been satisfied. The Mortgage Loan shall be used by the Borrower to repay
      its existing mortgage loan. The Mortgage Loan may be prepaid in whole or in
      part
      at any time without penalty subject to Section
      2.3(d),
      but
      shall be due in full on the Mortgage Loan Maturity Date, unless the credit
      extended under the Mortgage Loan is otherwise accelerated, terminated or
      extended as provided in this Agreement.

    
 

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

       

    

    (b) Mortgage
      Loan Interest.
      Except
      as otherwise provided in this Section
      2.3(b),
      the
      principal amount of the Mortgage Loan outstanding from time to time shall bear
      interest at the applicable Mortgage Interest Rate. 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 Mortgage Loan, at the
      option of the Bank, may accrue at the Default Rate and shall be payable upon
      demand from the Bank.

    

    (c) Mortgage
      Loan Interest and Principal Payments.
      The
      outstanding principal balance of the Mortgage Loan shall be repaid in equal
      principal installments each in the amount of Nine Thousand Three Hundred
      Thirty-Three and 00/100 Dollars ($9,333.00), together with an additional amount
      representing accrued and unpaid interest on the principal amount of the Mortgage
      Loan outstanding as set forth above, beginning on March 1, 2006, and continuing
      on the first day of each month thereafter, plus a final payment of all
      outstanding principal in a lump sum (anticipated to be $2,240,020.00) and
      accrued interest due on the Mortgage Loan Maturity Date. Principal amounts
      repaid on the Mortgage Note may not be borrowed again.

    

    (d) Mortgage
      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 Mortgage 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 Mortgage Loan, which notice shall be irrevocable and
      state the prepayment amount and the prepayment date (the “Mortgage Loan
      Prepayment Date”);

    

    (B) The
      voluntary prepayment shall be in an amount not less than $250,000;
      and

    

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

    

    2.4 Intentionally
      Omitted.

    

    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.

    

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

       

    

    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, the Borrower shall pay to the Bank a “late
      charge” of five cents for each whole dollar so overdue to defray part of the
      cost of collection and handling such late payment. 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 of
      five cents for each one dollar due 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
      sole and absolute discretion, of a Letter of Credit Application, the Bank agrees
      to issue for the account of the Borrower such Letters of Credit in the standard
      form of the Bank and otherwise in form and substance acceptable to the Bank,
      from time to time during the term of this Agreement, provided that the Letter
      of
      Credit Obligations may not at any time exceed the Letter of Credit Commitment
      and provided further, that no Letter of Credit shall have an expiration date
      later than the Letter of Credit Maturity Date. The amount of any payments made
      by the Bank with respect to draws made by a beneficiary under a Letter of Credit
      for which the Borrower has failed to reimburse the Bank upon the earlier of
      (i)
      the Bank’s demand for repayment, or (ii) five (5) days from the date of such
      payment to such beneficiary by the Bank, shall be deemed to have been converted
      to a Revolving Loan as of the date such payment was made by the Bank to such
      beneficiary. 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 Revolving
      Loans, all without demand, presentment, protest or notice of any kind, all
      of
      which are hereby waived by the Borrower. 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.

    

    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).

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

       

    

    (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.

    

    (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.

    

    
      	
              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.

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

    

    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) Revolving
      Note.
      A
      Revolving Note duly executed by the Borrower, in the form prepared by and
      acceptable to the Bank.

    

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

    

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

    

    (e) 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.

    

    (f) Guaranties.
      Separate Limited Continuing Unconditional Guaranties dated as of the date of
      this Agreement, 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
      “Guaranties”).

    

    (g) Shareholder
      Contribution.
      John H.
      Schwan and Stephen M. Merrick shall have made Shareholder
      Contribution.

    

    (h) Subordination
      Agreements.
      A
      Subordination Agreement dated as of the date of this Agreement, from certain
      holders of Subordinated Debt, in the form prepared by and acceptable to the
      Bank
      (collectively the “Subordination Agreements”).

    

    (i) Collateral
      Access Agreement.
      Collateral Access Agreements dated as of the date of this Agreement, from the
      owner, lessor or mortgagee, as the case may be, of any real estate whereon
      any
      Collateral is stored or otherwise located, in the form prepared by and
      acceptable to the Bank.

    

    (j) Real
      Estate Documents.
      With
      respect to the Facility, the duly executed Mortgage providing for a fully
      perfected Lien, in favor of the Bank, in all right, title and interest of the
      Borrower in such real property, together with:

    

    (i) an
      ALTA
      Loan Title Insurance Policy, issued by an insurer acceptable to the Bank,
      insuring the Bank’s Lien on such real property and containing such endorsements
      as the Bank may reasonably require (it being understood that the amount of
      coverage, exceptions to coverage and status of title set forth in such policy
      shall be acceptable to the Bank);

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

       

      
         

        (ii) copies
          of
          all documents of record concerning such real property as shown on the commitment
          for the ALTA Loan Title Insurance Policy referred to
          above;

      

    

    

    (iii) original
      or certified copies of all insurance policies required to be maintained with
      respect to such real property by this Agreement, the applicable Mortgage or
      any
      other Loan Document;

    

    (iv) an
      ALTA
      survey certified to the Bank and such title insurer referred to above, meeting
      such standards as the Bank may reasonably establish and otherwise reasonably
      satisfactory to the Bank;

    

    (v) an
      environmental site assessment report, the nature and scope of which is
      reasonably satisfactory to the Bank, and prepared by environmental engineers
      reasonably satisfactory to the Bank;

    

    (vi) a
      flood
      insurance policy concerning such real property, if required by the Flood
      Disaster Protection Act of 1973; and

    

    (vii) an
      appraisal, prepared by an independent appraiser engaged directly by the Bank,
      of
      such parcel of real property or interest in real property, which appraisal
      shall
      satisfy the requirements of the Financial Institutions Reform, Recovery and
      Enforcement Act, if applicable, and shall evidence compliance with the
      supervisory loan-to-value limits set forth in the Federal Deposit Insurance
      Corporation Improvement Act of 1991, if applicable.

    

    Additionally,
      in the case of any leased real property, a consent, in form and substance
      satisfactory to the Bank, from the owner and/or mortgagee of such leased real
      property waiving any landlord’s Lien in respect of personal property kept at the
      premises subject to such lease.

    

    (k) Borrowing
      Base Certificate.
      A
      Borrowing Base Certificate in the form prepared by the Bank, certified as
      accurate by the Borrower and acceptable to the Bank in its sole
      discretion.

    

    (l) 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 or any of
      its
      Subsidiaries, under 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 existing Debt to be repaid with the Loans,
      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.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

       

    

    (m) Organizational
      and Authorization Document.
      Copies
      of (i) the Articles of Incorporation and Bylaws of the Borrower and each of
      its
      Subsidiaries; (ii) resolutions of the board of directors 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 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 of the Borrower and each of its
      Subsidiaries and in each other state requested by 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 and
      as an additional insured on all related insurance policies.

    

    (o) Lockbox
      Agreement.
      The
      Master Cash Management Service Agreement,
      duly
      executed by the Borrower and the Bank (the “Lockbox Agreement”), in the form
      prepared by and acceptable to the Bank.

    

    (p) Supply
      Agreements.
      The
      Bank shall have received and reviewed the supply agreement of the Borrower
      with
      Rapak LLC and received satisfactory representation of a new supply agreement
      with ITW Space Bag, which may include a form of agreement reviewed for ITW
      Spacebag and a statement of intention of Borrower to proceed with such agreement
      on substantially the terms provided in such form of agreement; provided that
      if
      the Borrower ultimately negotiates terms that are materially different than
      such
      terms, or if such terms are at any time hereafter materially amended, Borrower
      shall provide prompt notice thereof to Bank

    

    (q) 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 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.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    

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

    

    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
      one-half percent (0.50%) of the aggregate commitment amounts, payable on or
      before the execution of this Agreement by the Bank.

    

    Section
      4. NOTES
      EVIDENCING LOANS.

    

    4.1. Revolving
      Note.
      The
      Revolving Loans and the Letter of Credit Obligations shall be evidenced by
      the
      Revolving Note. At the time of the initial disbursement of a Revolving Loan
      and
      at each time any additional Revolving 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 Revolving Loans advanced hereunder and the amount of all Letter of Credit
      Obligations, (ii) any accrued and unpaid interest owing on the Revolving Loans,
      and (iii) all amounts repaid on the Revolving Loans or the Letter of Credit
      Obligations. The failure to record any such amount or any error in recording
      such amounts shall not, however, limit or otherwise affect the obligations
      of
      the Borrower under the Revolving Note to repay the principal amount of the
      Revolving Loans, together with all interest accruing thereon.

    

    4.2. Term
      Note.
      The
      Term Loan shall be evidenced by the Term Note. At the time of the initial
      disbursement of the Term 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 Term Loan advanced hereunder, (ii) any accrued
      and unpaid interest owing on the Term Loan and (iii) all amounts repaid on
      the
      Term Loan. The failure to record any such amount or any error in recording
      such
      amounts shall not, however, limit or otherwise affect the obligations of the
      Borrower under the Term Note to repay the principal amount of the Term Loan,
      together with all interest accruing thereon.

    

    4.3. Mortgage
      Note.
      The
      Mortgage Loan shall be evidenced by the Mortgage Note. At the time of the
      initial disbursement of an Mortgage 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 Mortgage Loan advanced hereunder,
      (ii) any accrued and unpaid interest owing on the Mortgage Loan, and (iii)
      all
      amounts repaid on the Mortgage 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 Mortgage Note to repay the
      principal amount of the Mortgage Loan, together with all interest accruing
      thereon.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    

    Section
      5. MANNER
      OF BORROWING.

    

    5.1. Borrowing
      Procedures.
      Subject
      to the terms of this Agreement, 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. A request
      for a direct advance must be received by the Bank no later than 11:00 a.m.
      Chicago, Illinois time,
      on
      the day it is to be funded. The proceeds of each direct advance 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.

    

    5.2. 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, all Letters of Credit issued under and pursuant to this
      Agreement shall bear an annual issuance fee equal to the Letter of Credit Rate
      multiplied by the face amount of such Letter of Credit, payable by the Borrower
      prior to the issuance by the Bank of such Letter of Credit and annually
      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.

    

    5.3. Automatic
      Debit.
      In
      order to effectuate the timely payment of any of the Obligations when due,
      the
      Borrower hereby authorizes and directs the Bank, at the Bank’s option, to (a)
      debit the amount of the Obligations to any ordinary deposit account of the
      Borrower, or (b) make a Revolving Loan hereunder to pay the amount of the
      Obligations.

    

    5.4. Discretionary
      Disbursements.
      The
      Bank, in its sole and absolute 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”):

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    

    (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:

    

    
      
        (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.

      

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

       

    

    6.2. Other
      Collateral.
      In
      addition, the Obligations are also secured by that certain Mortgage, Security
      Agreement, Assignment of Rents and Leases and Fixture Filing on the Facility
      dated as of February 1, 2006, executed by Borrower to and for the benefit of
      the
      Bank (the “Mortgage”).

    

    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 and Facility (other than Instruments or
      Documents with an individual value in excess of $100,000, 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 or the Facility, 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 financing statements, amendments and other
      documents and do such acts as the Bank deems necessary in order to establish
      and
      maintain valid, attached and perfected first priority security interests in
      the
      Collateral and the Facility 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 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.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    

    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 sole and absolute 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 and the Facility.
      The Bank shall have exercised reasonable care in the custody and preservation
      of
      the Collateral and the Facility 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 or Facility
      against prior or third parties, or to do any act with respect to preservation
      of
      the Collateral or Facility, not so requested by the Borrower, shall not be
      deemed a failure to exercise reasonable care in the custody or preservation
      of
      the Collateral or Facility. 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 and the Facility 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.

    

    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 of, and the ability
      of the Bank to enforce, the Bank’s security interest in any and all of the
      Collateral and the Facility, 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 or the Facility.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    

    6.8. Collateral
      in the Possession of a Warehouseman or Bailee.
      If any
      of the Collateral 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. Lockbox
      Arrangement.
      The
      Borrower shall direct all of its Account Debtors to make all payments on its
      Accounts directly to a post office box (the “Lockbox”) designated by, and under
      the exclusive control of, the Bank. Pursuant to the Lockbox Agreement, the
      Borrower shall establish the Lockbox and an account (the “Lockbox Account”) in
      the Borrower’s name with the Bank into which all payments received in the
      Lockbox shall be deposited, and into which the Borrower will immediately deposit
      all payments made for Inventory sold by the Borrower or the performance of
      services by the Borrower, and received by the Borrower in the identical form
      in
      which such payments were made, whether by cash or check. If the Borrower, a
      Subsidiary or any director, officer, employee, agent or the Borrower or any
      Subsidiary, or any other Person acting for or in concert with the Borrower
      shall
      receive any monies, checks, notes, drafts or other payments relating to or
      as
      proceeds of Borrower’s Accounts or other Collateral, the Borrower and each such
      Person shall receive all such items in trust for, and as the sole and exclusive
      property of, the Bank and, immediately upon receipt thereof, shall remit the
      same (or cause the same to be remitted) in kind to the Lockbox Account. The
      Borrower agrees that all payments made to such Lockbox and Lockbox Account
      or
      otherwise received by the Bank, whether in respect of the Accounts or as
      proceeds of other Collateral or otherwise, will be applied on account of the
      Revolving Loans in accordance with Section
      12.8
      of this
      Agreement. The Borrower agrees to pay all fees, costs and expenses which the
      Bank incurs in connection with opening and maintaining the Lockbox and the
      Lockbox Account and depositing for collection by the Bank any check or other
      item of payment received by the Bank on account of the Obligations. All of
      such
      fees, costs and expenses shall constitute Obligations hereunder, shall be
      payable to the Bank by the Borrower upon demand, and, until paid, shall bear
      interest at the Default Rate. All checks, drafts, instruments and other items
      of
      payment or proceeds of Collateral shall be endorsed by the Borrower to the
      Bank,
      and, if that endorsement of any such item shall not be made for any reason,
      the
      Bank is hereby irrevocably authorized to endorse the same on the Borrower’s
      behalf. For the purpose of this section, the Borrower irrevocably hereby makes,
      constitutes and appoints the Bank (and all Persons designated by the Bank for
      that purpose) as the Borrower’s true and lawful attorney and agent-in-fact (i)
      to endorse the Borrower’s name upon such items of payment and/or proceeds of
      Collateral and upon any Chattel Paper, document, instrument, invoice or similar
      document or agreement relating to any Account of the Borrower or goods
      pertaining thereto; (ii) to take control in any manner of any item of payment
      or
      proceeds thereof; and (iii) to have access to any lock box or postal box into
      which any of the Borrower’s mail is deposited, and open and process all mail
      addressed to the Borrower and deposited therein.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    6.10. 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.

    

    6.11. 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.

    

    6.12. 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 so 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 Illinois, with full and adequate power to carry on
      and
      conduct its business as presently conducted and 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. 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.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

    

    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 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.

    

    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 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 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
      the
      Borrower and each of its Subsidiaries are duly authorized and validly issued,
      fully paid, non-assessable, and free and clear of all Liens other than those
      in
      favor of the Bank, if any, and such securities were issued in compliance with
      all applicable state and federal laws concerning the issuance of securities.
      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 other than as set forth on Schedule
      7.6.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    
 

    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
      sound accounting practices and 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 the date of the
      most recent financial statement submitted by the Borrower to the Bank, 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.

    

    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.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

    

    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.

    

    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.

    

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    

    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.

    

    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.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    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 located at the Bank 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).

    

    7.25. Subordinated
      Debt.
      All
      Subordinated Debt has been set forth in the financial statements delivered
      to
      Bank. True and complete copies of any promissory notes constituting Subordinated
      Debt existing as of the date hereof has been delivered to Bank, and none of
      such
      Subordinated Debt is in default. All such Subordinated Debt is unsecured. The
      subordination provisions of the Subordinated Debt, if any, are enforceable
      against the holders of the Subordinated Debt by the Bank. The Obligations
      constitute Senior Debt entitled to the benefits of any 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.

    

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

       

    

    7.26. Internal
      Controls.
      From
      and after the closing of an initial public offering of the capital stock of
      the
      Borrower:

    

    (a) The
      Borrower has established and maintains disclosure controls and procedures (as
      such term is defined in Rule 13a-14 under the U.S. Securities Exchange Act
      or
      1934, as amended (the “Exchange Act”)), which (i) are designed to ensure that
      material information relating to the Borrower is made known to the Borrower’s
      principal executive officer and its principal financial offer or persons
      performing similar functions by others within those entities, particularly
      during the periods in which the periodic reports required under the Exchange
      Act
      are being prepared; (ii) have been evaluated for effectiveness as a date within
      ninety (90) days prior to the filing of the Borrower’s most recent annual or
      quarterly report filed with the Securities Exchange Commission; and (iii) are
      effective in all material respects to perform he functions for which they were
      established;

    

    (b) Based
      on
      the evaluation of its disclosure controls and procedures, the Borrower is not
      aware of (i) any significant deficiency in the design or operation of internal
      controls which could adversely affect the Borrower’s ability to record, process,
      summarize and report financial data or any material weaknesses in internal
      controls or (ii) any fraud, whether or not material, that involves management
      or
      other employees who have a significant role in the Borrower’s internal controls;
      and

    

    (c) Since
      the
      date of the most recent evaluation of such disclosure controls and procedures,
      there have been no significant changes in internal controls or in other factors
      that could significantly affect internal controls, including any corrective
      actions with regard to significant deficiencies and material
      weaknesses.

    

    Section
      8. AFFIRMATIVE
      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.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

       

    

    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.

    

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

       

      8.5. Maintain
        Property.
        The
        Borrower shall at all times maintain, preserve and keep its plant, properties
        and 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 fully preserved and
        maintained. The Borrower shall permit the Bank to examine and inspect such
        plant, properties and Equipment, including any Collateral, at all reasonable
        times.

    

    

    8.6. Maintain
      Insurance.
      The
      Borrower shall at all times maintain, and cause each Subsidiary to maintain,
      with 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, to such extent and
      against such hazards and liabilities, including employers’, public and
      professional liability risks, as is customarily maintained by companies
      similarly situated, and shall have insured amounts no less than, and deductibles
      no higher than, are reasonably acceptable to 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 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 naming the Bank as an additional insured with respect
      to each policy of liability 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.

    

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

       

    

    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.

    

    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 ninety (90) days after the close of
      each of its fiscal years, a copy of 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 and such other information (including nonfinancial
      information) as the Bank may reasonably request, 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;

    

    (b) promptly
      when available, and in any event, within forty five (45) days following the
      end
      of each fiscal quarter, a copy of the consolidated and consolidating financial
      statements of the Borrower and its Subsidiaries regarding such fiscal quarter,
      including balance sheet, statement of income and retained earnings, statement
      of
      cash flows for the fiscal quarter then ended, comparison to prior year and
      to
      budget, 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 after the end of
      each
      calendar month, a copy of the consolidated and consolidating financial
      statements of the Borrower and its Subsidiaries regarding such month, including
      balance sheet, statement of income and retained earnings, statement of cash
      flows for the month then ended, comparison to prior year and to budget, 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.

    

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    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.

    

    8.9. Guarantor
      Financial Statements.
      The
      Borrower shall furnish, or cause to be furnished, to the Bank or its authorized
      representatives such information regarding the business affairs and financial
      condition of each Guarantor, including, within ten (10) days after the filing
      due date (as such date may be extended in accordance with properly granted
      extensions) each year, a signed copy of the complete income tax returns filed
      with the Internal Revenue Service by each Guarantor, along with a personal
      financial statement in form and substance acceptable to the Bank and certified
      as true and correct by such Guarantor.

    

    The
      Borrower represents and warrants to the Bank that (i) the Guarantor 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, (ii) no change with
      respect to such accounting principles shall be made by the Guarantor without
      giving prior notification to the Bank, (iii) the financial statements of the
      Guarantor 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 fairly and accurately reflect the financial condition of the Guarantor,
      (iv) the Bank shall have the right at all times during business hours to inspect
      the books and records of the Guarantor and make extracts therefrom, and (v)
      the
      Borrower agrees to advise the Bank immediately of any development, condition
      or
      event that may have a Material Adverse Effect on the Guarantor.

    

    8.10. 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.

    

    8.11. Borrowing
      Base Certificate.
      The
      Borrower shall, on Wednesday of each week deliver to the Bank a Borrowing Base
      Certificate dated as of the last Business Day of the prior week, certified
      as
      true and correct by an authorized representative of the Borrower and acceptable
      to the Bank in its sole and absolute discretion, provided, however, at any
      time
      an Event of Default exists, the Bank may require the Borrower to deliver
      Borrowing Base Certificates more frequently.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    

    8.12. Aged
      Accounts Schedule.
      The
      Borrower shall, within thirty (30) 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, and
      certified as accurate by the Borrower’s treasurer or chief financial
      officer.

    

    8.13. Inventory
      Reports.
      The
      Borrower shall, within thirty (30) days after the end of each month, deliver
      to
      the Bank an inventory report, certified as accurate by the Borrower’s treasurer
      or chief financial officer, and within such time as the Bank may specify, such
      other schedules and reports as the Bank may require.

    

    8.14. Covenant
      Compliance Certificate.
      The
      Borrower shall, contemporaneously with the furnishing of the financial
      statements pursuant to Section
      8.8(b) and (c),
      deliver
      to the Bank a duly completed 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
      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.

    

    8.15. 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. All such inspections or audits by the Bank shall be 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 twice each
      fiscal year.

    

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

    

    8.17. 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, upon Bank’s request, 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.

    

    8.18. 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.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    

    8.19. Notice
      of Proceedings and Subsidiary Events.
      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. Borrower shall
      also provide Bank with prompt notice (and in any event within ten days thereof)
      of any material change in the capital structure, business or operations of
      any
      Subsidiaries.

    

    8.20. 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.

    

    8.21. 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.

    

    8.22. 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.

    

    8.23. Banking
      Relationship.
      The
      Borrower covenants and agrees, at all times during the 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 service.

    

    8.24. Non-Utilization
      Fee.
      The
      Borrower agrees to pay to the Bank a
      Non-Utilization
      Fee
      equal
      to the Non-Utilization Fee Rate multiplied by the total of (a) the Revolving
      Loan Commitment,
      minus
      (b) the
      sum of (i) the daily average of the aggregate principal amount of all Revolving
      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
      monthly in arrears on the first day of each month commencing on March 1, 2006,
      and on the Revolving Loan Maturity Date.

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    8.25. Interest
      Rate Protection.
      The
      Borrower agrees to enter into, not later than 120 days after the date hereof,
      a
      Hedging Agreement with a term of at least three years on an ISDA standard form
      to hedge the interest rate with respect to not less than 60% of the principal
      amounts of the Term Loan and Mortgage Loan, in form and substance reasonably
      satisfactory to the Bank.

    

    Section
      9. NEGATIVE
      COVENANTS.

    

    9.1. Debt.
      The
      Borrower shall not, and shall not permit any United States Subsidiary, 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;

    

    (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) Debt
      of
      the Borrower to any Wholly-Owned Subsidiary not to exceed One Million Dollars
      ($1,000,000) in the aggregate; provided that such Debt shall be evidenced by
      a
      note in form and substance reasonably satisfactory to the Bank and the
      obligations under such note shall be Subordinated Debt;

    

    (e) Subject
      to the terms of Sections
      2.1 (c) (iii) and 2.2(d),
      Subordinated Debt;

    

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

    

    (g) Capitalized
      Lease Obligations, provided that the aggregate amount of all such Debt
      outstanding at any time shall not exceed Fifty Thousand and 00/100 Dollars
      ($50,000.00) in the aggregate;

    

    (h) Debt
      for
      Capital Expenditures incurred after the date of this Agreement not to
      exceed Fifty
      Thousand and 00/100 Dollars ($50,000.00) in the aggregate in any one fiscal
      year;

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    

    (i) Debt
      described on Schedule
      9.1
      and any
      extension, renewal or refinancing thereof so long as the principal amount
      thereof is not increased;

    

    (j) other
      unsecured subordinated Debt, in addition to the Debt listed above, in an
      aggregate amount outstanding at any time not to exceed Three Million Dollars
      ($3,000,000).

    

    9.2. Encumbrances.
      The
      Borrower shall not, and shall not permit any United States Subsidiary, 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, or
      of
      any United States Subsidiary, 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, and shall not permit any Subsidiary to make or have outstanding
      any
      Investment, except:

    

    (a) contributions
      by the Borrower to the capital of any domestic Wholly-Owned Subsidiary which
      have granted a first perfected security interest in all of its assets in favor
      of the Bank;

    

    (b) Investments
      constituting Debt permitted by Section
      9.1;

    

    (c) Contingent
      Liabilities constituting Debt permitted by Section
      9.1
      or Liens
      permitted by Section
      9.2;

    

    (d) Cash
      Equivalent Investments;

    

    (e) bank
      deposits in the ordinary course of business, provided that the aggregate amount
      of all such deposits (excluding amounts in payroll accounts or for accounts
      payable, in each case to the extent that checks have been issued to third
      parties) which are maintained with any bank other than the Bank shall not at
      any
      time exceed $50,000.00;

    

    (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; and

    

    (g) Investments
      listed on Schedule
      9.3,
      which
      Schedule includes certain projected investments.

    

    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.

    

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

       

    

    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 other 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 sales of Inventory
      in the ordinary course of business, 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, any presently outstanding warrants or options,
      or
      to creditors in payment of Debt, (b) any issuance of Capital Securities by
      a
      Subsidiary to the Borrower or another Subsidiary in accordance with Section
      9.6,
      (c) in
      connection with the Contribution to Capital or Shareholder Contribution, or
      (d)
      with the written consent of the Lender and subject to the conditions in
Sections
      2.1 (c)
      (iii)
      and
2.2(d).

    

    9.6. Distributions.
      The
      Borrower shall not and shall not permit any Subsidiary to, (a) make any
      distribution or dividend, 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 (except in connection
      with
      the exercise of an outstanding warrant or option); (c) pay any management fees
      or similar fees to any of its equityholders or any Affiliate thereof (other
      than
      compensation and directors fees in accordance with past practices), (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; and (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 principal and interest in respect of Subordinated Debt
      (other than the Subordinated Debt of the Guarantors) to the extent permitted
      under the subordination provisions thereof, and (iii) the Borrower may make
      interest payments to the extent permitted under the Subordination
      Agreements.

    

    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 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.

    

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    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 for reasonable consideration or in the ordinary course
      of
      business.

    

    9.10. Inconsistent
      Agreements.
      The
      Borrower shall not and shall not permit any Subsidiary to enter into any
      agreement 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.

    

    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 Affiliate of the
      Bank.

    

    9.12. Bank
      Accounts.
      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, or amend or terminate the Lockbox or the Lockbox Agreement 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 (b) 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.

    

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    Section
      10. FINANCIAL
      COVENANTS.

    

    10.1. EBITDA.
      The
      Borrower and its Subsidiaries shall
      have, as of the end of each calendar month as set forth below, consolidated
      cumulative 2006 EBITDA of not less than the following amounts:

     

    
      
        	 	
                Computation
                  Period Ending

              	 	
                EBITDA

              
	 	 	 	 
	 	
                January
                  31, 2006

              	 	
                $
                  318,012

              
	 	
                February
                  28, 2006

              	 	
                $
                  593,364

              
	 	
                March
                  31, 2006

              	 	
                $
                  885,926

              
	 	
                April
                  30, 2006

              	 	
                $1,178,488

              
	 	
                May
                  31, 2006

              	 	
                $1,471,050

              
	 	
                June
                  30, 2006

              	 	
                $1,672,961

              

      

    

    
    

    10.2. Tangible
      Net Worth.
      As of
      the end of each of its fiscal quarters, commencing on June 30, 2006,
      the
      Borrower and its Subsidiaries shall maintain consolidated Tangible Net Worth
      in
      an amount not less than the sum of: (a) Three Million Five Hundred Thousand
      and
      00/100 Dollars ($3,500,000.00); plus
      (b)
      fifty percent (50%) of the aggregate consolidated Net Income earned by the
      Borrower and its Subsidiaries during all previous fiscal quarters, commencing
      with the fiscal quarter ending on June 30, 2006; provided, however, that net
      losses incurred in any fiscal quarter of the Borrower or its Subsidiaries shall
      not be subtracted in the determination of the Tangible Net Worth
      requirement.

    

    10.3. Senior
      Debt to EBITDA.
      As of
      the end of each of its fiscal quarters set forth below, the Borrower and its
      Subsidiaries shall maintain a ratio of consolidated Senior Debt to consolidated
      EBITDA for the twelve month period ending on the last day of such fiscal
      quarter, of not greater than the following:

    

      
        	 	
                Computation
                  Period Ending

              	 	
                
                  Senior
                    Debt
to EBITDA

              
	 	 	 	 
	 	
                June
                  30, 2006

              	 	
                3.75
                  to 1.00

              
	 	 	 	 
	 	
                September
                  30, 2006

              	 	
                3.50
                  to 1.00

              
	 	 	 	 
	 	
                December
                  31, 2006

              	 	
                3.25
                  to 1.00

              
	 	 	 	 
	 	
                March
                  31, 2007

              	 	
                3.25
                  to 1.00

              
	 	 	 	 
	 	
                June
                  30, 2007

                and
                  thereafter

              	 	
                3.00
                  to 1.00

              

      

       

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

         

      

    

    10.4. Fixed
      Charge Coverage.
      As of
      the end of each fiscal quarter, the Borrower and its Subsidiaries shall maintain
      a ratio of (a) the total for the Computation Period (as defined below) ending
      on
      the last day of such fiscal quarter of EBITDA minus
      the sum
      of all income taxes paid in cash by the Borrower and its Subsidiaries and all
      Capital Expenditures which are not financed with Funded Debt, plus,
      for the
      Computation Period ending on June 30, 2006 only, an add-back adjustment of
      $388,000, plus
      for the
      Computation Period ending on September 30, 2006 only, an add-back adjustment
      of
      $194,000, to (b) the sum for such Computation Period of (i) Interest Charges
      plus
      (ii)
      required payments of principal of Borrower’s Funded Debt (including the Term
      Loan and Mortgage Loan, but excluding the Revolving Loans) for such period,
      of
      not less than 1.15 to 1.00. The “Computation Period” as used herein shall mean
      six months for the quarter ending June 30, 2006, nine months for the quarter
      ending September 30, 2006 and twelve months thereafter. 

    

    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, 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 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 in the payment of any Debt for any other obligation
      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
      prior to its stated maturity or terminate such other agreement.

    

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    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.

    

    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 which is not fully
      covered by insurance and such judgment or other process 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 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, or the loss, theft, destruction, seizure or
      forfeiture, or the occurrence of any material deterioration or impairment of
      any
      of the Collateral or any of the collateral under any security agreement securing
      any of the Obligations, or any material decline or depreciation in the value
      or
      market price thereof (whether actual or reasonably anticipated), which causes
      the Collateral, in the sole opinion of the Bank acting in good faith, to become
      unsatisfactory as to value or character, or which causes the Bank to reasonably
      believe that it is insecure and that the likelihood for repayment of the
      Obligations is or will soon be impaired, time being of the essence. The cause
      of
      such deterioration, impairment, decline or depreciation shall include, but
      is
      not limited to, the failure by the Borrower to do any act deemed reasonably
      necessary by the Bank to preserve and maintain the value and collectability
      of
      the Collateral.

    

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

       

    

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

    

    11.12. Guaranties.
      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 contemplated by the
      subordination provisions of the Subordinated Debt.

    

    11.14. Death
      of Individual.
      The
      death or legal declaration of incompetency of any Obligor who is a natural
      person, provided, however, the death of any Guarantor shall not constitute
      an
      Event of Default hereunder if within sixty (60) days following such death or
      determination of legal incompetency, a substitute guarantor whose
      creditworthiness and business experience and skills are comparable to those
      of
      the original guarantor and who is otherwise acceptable to the Bank in the Bank’s
      sole and absolute discretion, executes a guaranty in favor of the Bank in form
      and substance substantially similar to the Guaranty.

    

    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:

    

    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.

    

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

       

    

    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.

    

    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.

    

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

       

    

    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.

    

    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;

    

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

       

    

    (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;

    

    (i) exercise
      any and all rights under the Mortgage; and

    

    (j) 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.

    

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    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 of the
      Facility 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 or the Facility may be first applied by the Bank to the payment
      of
      expenses incurred by the Bank in connection with the Collateral and the
      Facility, including attorneys’ fees and legal expenses as provided for in
Section
      13
      hereof.

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

     

    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 the Borrower, any of the Guarantors or 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.

    
 

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

       

    

    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.

    

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

       

    

    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.

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

       

    

    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.

    

    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.

    

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

       

    

    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.

    

    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:

            	
              CTI
                Industries Corporation

              22160
                North Pepper Road

              Barrington,
                Illinois 60010

              Attention:
                Stephen Merrick

            
	 	 
	
              With
                a copy to:

            	
              _______________________

              _______________________

              _______________________

              Attention:
                ________________, Esq. 

            
	 	 
	
              To
                the Lender:

            	
              Charter
                One Bank, N.A.

              71
                South Wacker Drive, Suite 2900

              Chicago,
                Illinois 60606

              Attention:
                _______________

            
	 	 
	
              With
                copy to:

            	
              Nisen
                & Elliott, LLC

              200
                West Adams Street, Suite 2500

              Chicago,
                Illinois 60606

              Attention:
                Thomas V. McCauley,
                Esq,

            

    

     

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    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.

    

    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.

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

     

    13.20. 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.

    

    13.21. 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.

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

    

    13.22. Customer
      Identification - USA Patriot Act Notice.
      The
      Bank hereby notifies the Borrower that pursuant to the requirements of the
      USA
      Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001)
      (the
“Act”), and the Bank’s policies and practices, the Bank is required to obtain,
      verify and record certain information and documentation that identifies the
      Borrower, which information includes the name and address of the Borrower and
      such other information that will allow the Bank to identify the Borrower in
      accordance with the Act.

    

    

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

    

    
      	 	
              CTI
                Industries Corporation, an Illinois corporation

            
	 	 
	 	
              By:/s/Howard
                W. Schwan

            
	 	
              Name:Howard
                W. Schwan

            
	
              :

            	
              Title
                President

            
	 	
              CTI
                Helium, Inc.

            
	 	 
	 	 
	 	
              By:
                /s/Howard W. Schwan

            
	 	
              Name:
                Howard W. Schwan

            
	 	
              Title:
                President

            
	 	 
	 	
              Agreed
                and accepted:

            
	 	 
	 	
              Charter
                One Bank, N.A., a national banking association

            
	 	 
	 	 
	 	
              By:
                /s/Richard Bott

            
	 	
              Name:
                Richard Bott

            
	 	
              Title:
                Senior Vice-President

            

    

    

    
      
        
        

      

      
        69

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]