Document:

EXHIBIT
      10.55

     

    TRULITE,
      INC. AMENDED AND RESTATED STOCK OPTION PLAN

     

    NOTICE
      OF STOCK OPTION GRANT

     

    You
      have
      been granted the following option to purchase shares of the Common Stock of
      Trulite, Inc. (the “Company”):

     

    
      	 	
              Name
                of Optionee:

            	
              «John
                Berger»

            
	 	 	 
	 	
              Total
                Number of Shares:

            	
              «20,000»

            
	 	 	 
	 	
              Type
                of Option:

            	
              «ISO»
                Incentive Stock Option (ISO)

            
	 	 	 
	 	
              Exercise
                Price Per Share:

            	
              $«1.00»

            
	 	 	 
	 	
              Date
                of Grant:

            	
              «May
                5, 2006»

            
	 	 	 
	 	
              Date
                Exercisable:

            	
              This
                option may be exercised at any time after the Date of Grant for all
                or any
                part of the Shares subject to this option.

            
	 	 	 
	 	
              Vesting
                Commencement Date:

            	
              «May
                5, 2006»

            
	 	 	 
	 	
              Vesting
                Schedule:

            	
              The
                Right of Repurchase shall lapse with respect to 18.5% of the Shares
                subject to this option when the Optionee completes 12 months of continuous
                Service after the Vesting Com-mence-ment Date; an additional 22.5%
                of the
                Shares subject to this option when the Optionee completes 24 months
                of
                continuous Service after the Vesting Com-mence-ment Date; an additional
                26.5% of the Shares subject to this option when the Optionee completes
                36
                months of continuous Service after the Vesting Com-mence-ment Date;
                and
                the final 32.5% of the Shares subject to this option when the Optionee
                completes 48 months of continuous Service after the Vesting Com-mence-ment
                Date. 

            
	 	 	 
	 	
              Expiration
                Date:

            	
              «May
                5, 2013».
                This option expires earlier if the Optionee’s Service terminates earlier,
                as provided in Section 6 of the Stock Option
                Agreement.

            
	 	 	 

    

    By
      your
      signature and the signature of the Company’s representative below, you and the
      Company agree that this option is granted under and governed by the terms and
      conditions of the Amended and Restated Stock Option Plan and the Stock Option
      Agreement, both of which are attached to and made a part of this
      document. 

     

    
      	
              OPTIONEE:

               

            	
              TRULITE,
                INC.

            
	
              

            	
              

            
	 	 
	 	
              By:                        

              Title:
                President and CEO                

            

    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    THE
      OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
      EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS
      AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
      EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
      SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    TRULITE,
      INC. AMENDED AND RESTATED STOCK OPTION PLAN:

    STOCK
      OPTION AGREEMENT

     

    SECTION
      1. 
      GRANT OF OPTION.

     

    (a) Option.
      On the
      terms and conditions set forth in the Notice of Stock Option Grant and this
      Agreement, the Company grants to the Optionee on the Date of Grant the option
      to
      purchase at the Exercise Price the number of Shares set forth in the Notice
      of
      Stock Option Grant. The Exercise Price is agreed to be at least 100% of the
      Fair
      Market Value per Share on the Date of Grant (110% of Fair Market Value if this
      option is designated as an ISO in the Notice of Stock Option Grant and
      Section 3(b) of the Plan applies). This option is intended to be an ISO or
      an NSO, as provided in the Notice of Stock Option Grant.

     

    (b) $100,000
      Limitation.
      Even if
      this option is designated as an ISO in the Notice of Stock Option Grant, it
      shall be deemed to be an NSO to the extent (and only to the extent) required
      by
      the $100,000 annual limitation under Section 422(d) of the
      Code.

     

    (c) Stock
      Plan and Defined Terms.
      This
      option is granted pursuant to the Plan, a copy of which the Optionee
      acknowledges having received. The provisions of the Plan are incorporated into
      this Agreement by this reference. Capitalized terms are defined in
      Section 14 of this Agreement.

     

    SECTION
      2. 
      RIGHT TO EXERCISE.

     

    (a) Exercisability.
      Subject
      to Subsection (b) below and the other conditions set forth in this
      Agreement, all or part of this option may be exercised prior to its expiration
      at the time or times set forth in the Notice of Stock Option Grant. Shares
      purchased by exercising this option may be subject to the Right of Repurchase
      under Section 7.

     

    
      
        
        

      

      
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    (b) Stockholder
      Approval.
      Any
      other provision of this Agreement notwithstanding, no portion of this option
      shall be exercisable at any time prior to the approval of the Plan by the
      Company’s stockholders.

     

    SECTION
      3. 
      NO TRANSFER OR ASSIGNMENT OF OPTION.

     

    Except
      as
      otherwise provided in this Agreement, this option and the rights and privileges
      conferred hereby shall not be sold, pledged or otherwise transferred (whether
      by
      operation of law or otherwise) and shall not be subject to sale under execution,
      attachment, levy or similar process.

     

    SECTION
      4. 
      EXERCISE PROCEDURES.

     

    (a) Notice
      of Exercise.
      The
      Optionee or the Optionee’s representative may exercise this option by giving
      written notice to the Company pursuant to Section 13(c). The notice shall
      specify the election to exercise this option, the number of Shares for which
      it
      is being exercised and the form of payment. The person exercising this option
      shall sign the notice. In the event that this option is being exercised by
      the
      representative of the Optionee, the notice shall be accompanied by proof
      (satisfactory to the Company) of the representative’s right to exercise this
      option. The Optionee or the Optionee’s representative shall deliver to the
      Company, at the time of giving the notice, payment in a form permissible under
      Section 5 for the full amount of the Purchase Price.

     

    (b) Issuance
      of Shares.
      After
      receiving a proper notice of exercise, the Company shall cause to be issued
      one
      or more certificates evidencing the Shares for which this option has been
      exercised. Such Shares shall be registered (i) in the name of the person
      exercising this option, (ii) in the names of such person and his or her
      spouse as community property or as joint tenants with the right of survivorship
      or (iii) with the Company’s consent, in the name of a revocable trust. In
      the case of Restricted Shares, the Company shall cause such certificates to
      be
      deposited in escrow under Section 7(c). In the case of other Shares, the
      Company shall cause such certificates to be delivered to or upon the order
      of
      the person exercising this option.

     

    (c) Withholding
      Taxes.
      In the
      event that the Company determines that it is required to withhold any tax as
      a
      result of the exercise of this option, the Optionee, as a condition to the
      exercise of this option, shall make arrangements satisfactory to the Company
      to
      enable it to satisfy all withholding requirements. The Optionee shall also
      make
      arrangements satisfactory to the Company to enable it to satisfy any withholding
      requirements that may arise in connection with the vesting or disposition of
      Shares purchased by exercising this option.

     

    SECTION
      5. 
      PAYMENT FOR STOCK.

     

    (a) Cash.
      All or
      part of the Purchase Price may be paid in cash or cash equivalents.

     

    (b) Surrender
      of Stock.
      All or
      any part of the Purchase Price may be paid by surrendering, or attesting to
      the
      ownership of, Shares that are already owned by the Optionee. Such Shares shall
      be surrendered to the Company in good form for transfer and shall be valued
      at
      their Fair Market Value on the date when this option is exercised. The Optionee
      shall not surrender, or attest to the ownership of, Shares in payment of the
      Purchase Price if such action would cause the Company to recognize compensation
      expense (or additional compensation expense) with respect to this option for
      financial reporting purposes.

     

    
      
        
        

      

      
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    (c) Exercise/Sale.
      If
      Stock is publicly traded, all or part of the Purchase Price and any withholding
      taxes may be paid by the delivery (on a form prescribed by the Company) of
      an
      irrevocable direction to a securities broker approved by the Company to sell
      Shares and to deliver all or part of the sales proceeds to the
      Company.

     

    (d) Exercise/Pledge.
      If
      Stock is publicly traded, all or part of the Purchase Price and any withholding
      taxes may be paid by the delivery (on a form prescribed by the Company) of
      an
      irrevocable direction to pledge Shares to a securities broker or lender approved
      by the Company, as security for a loan, and to deliver all or part of the loan
      proceeds to the Company.

     

    SECTION
      6. 
      TERM AND EXPIRATION.

     

    (a) Basic
      Term.
      This
      option shall in any event expire on the expiration date set forth in the Notice
      of Stock Option Grant, which date is 10 years after the Date of Grant (five
      years after the Date of Grant if this option is designated as an ISO in the
      Notice of Stock Option Grant and Section 3(b) of the Plan
      applies).

     

    (b) Termination
      of Service (Except by Death).
      If the
      Optionee’s Service terminates for any reason other than death, then this option
      shall expire on the earliest of the following occasions:

     

    (i) The
      expiration date determined pursuant to Subsection (a) above;

     

    (ii) The
      date
      three months after the termination of the Optionee’s Service for any reason
      other than Disability; or

     

    (iii) The
      date
      12 months after the termination of the Optionee’s Service by reason of
      Disability.

     

    The
      Optionee may exercise all or part of this option at any time before its
      expiration under the preceding sentence, but only to the extent that this option
      had become exercisable for vested Shares before the Optionee’s Service
      terminated. When the Optionee’s Service terminates, this option shall expire
      immediately with respect to the number of Shares for which this option is not
      yet exercisable and with respect to any Restricted Shares. In the event that
      the
      Optionee dies after termination of Service but before the expiration of this
      option, all or part of this option may be exercised (prior to expiration) by
      the
      executors or administrators of the Optionee’s estate or by any person who has
      acquired this option directly from the Optionee by beneficiary designation,
      bequest or inheritance, but only to the extent that this option had become
      exercisable for vested Shares before the Optionee’s Service
      terminated.

     

    
      
        
        

      

      
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    (c) Death
      of the Optionee.
      If the
      Optionee dies while in Service, then this option shall expire on the earlier
      of
      the following dates:

     

    (i) The
      expiration date determined pursuant to Subsection (a) above;
      or

     

    (ii) The
      date
      12 months after the Optionee’s death.

     

    All
      or
      part of this option may be exercised at any time before its expiration under
      the
      preceding sentence by the executors or administrators of the Optionee’s estate
      or by any person who has acquired this option directly from the Optionee by
      beneficiary designation, bequest or inheritance, but only to the extent that
      this option had become exercisable for vested Shares before the Optionee’s
      death. When the Optionee dies, this option shall expire immediately with respect
      to the number of Shares for which this option is not yet exercisable and with
      respect to any Restricted Shares.

     

    (d) Leaves
      of Absence.
      For any
      purpose under this Agreement, Service shall be deemed to continue while the
      Optionee is on a bona
      fide
      leave of
      absence, if such leave was approved by the Company in writing and if continued
      crediting of Service for such purpose is expressly required by the terms of
      such
      leave or by applicable law (as determined by the Company).

     

    (e) Notice
      Concerning ISO Treatment.
      Even if
      this option is designated as an ISO in the Notice of Stock Option Grant, it
      ceases to qualify for favorable tax treatment as an ISO to the extent that
      it is
      exercised:

     

    (i) More
      than
      three months after the date when the Optionee ceases to be an Employee for
      any
      reason other than death or Disability;

     

    (ii) More
      than
      12 months after the date when the Optionee ceases to be an Employee by reason
      of
      Disability; or

     

    (iii) More
      than
      three months after the date when the Optionee has been on a leave of absence
      for
      90 days, unless the Optionee’s reemployment rights following such leave were
      guaranteed by statute or by contract.

     

    SECTION
      7. 
      RIGHT OF REPURCHASE.

     

    (a) Scope
      of Repurchase Right.
      Until
      they vest in accordance with the Notice of Stock Option Grant and
      Subsection (b) below, the Shares acquired under this Agreement shall be
      Restricted Shares and shall be subject to the Company’s Right of Repurchase. The
      Company, however, may decline to exercise its Right of Repurchase or may
      exercise its Right of Repurchase only with respect to a portion of the
      Restricted Shares. The Company may exercise its Right of Repurchase only during
      the Repurchase Period following the termination of the Optionee’s Service. The
      Right of Repurchase may be exercised automatically under Subsection (d)
      below. If the Right of Repurchase is exercised, the Company shall pay the
      Optionee an amount equal to the Exercise Price for each of the Restricted Shares
      being repurchased.

     

    
      
        
        

      

      
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    (b) Lapse
      of Repurchase Right.
      The
      Right of Repurchase shall lapse with respect to the Restricted Shares in
      accordance with the vesting schedule set forth in the Notice of Stock Option
      Grant.

     

    (c) Escrow.
      Upon
      issuance, the certificate(s) for Restricted Shares shall be deposited in escrow
      with the Company to be held in accordance with the provisions of this Agreement.
      Any additional or exchanged securities or other property described in
      Subsection (f) below shall immediately be delivered to the Company to be
      held in escrow. All ordinary cash dividends on Restricted Shares (or on other
      securities held in escrow) shall be paid directly to the Optionee and shall
      not
      be held in escrow. Restricted Shares, together with any other assets held in
      escrow under this Agreement, shall be (i) surrendered to the Company for
      repurchase upon exercise of the Right of Repurchase or the Right of First
      Refusal or (ii) released to the Optionee upon his or her request to the
      extent that the Shares have ceased to be Restricted Shares (but not more
      frequently than once every six months). In any event, all Shares that have
      ceased to be Restricted Shares, together with any other vested assets held
      in
      escrow under this Agreement, shall be released within 90 days after the
      earlier of (i) the termination of the Optionee’s Service or (ii) the
      lapse of the Right of First Refusal.

     

    (d) Exercise
      of Repurchase Right.
      The
      Company shall be deemed to have exercised its Right of Repurchase automatically
      for all Restricted Shares as of the commencement of the Repurchase Period,
      unless the Company during the Repurchase Period notifies the holder of the
      Restricted Shares pursuant to Section 13(c) that it will not exercise its
      Right of Repurchase for some or all of the Restricted Shares. During the
      Repurchase Period, the Company shall pay to the holder of the Restricted Shares
      the purchase price determined under Subsection (a) above for the Restricted
      Shares being repurchased. Payment shall be made in cash or cash equivalents
      and/or by canceling indebtedness to the Company incurred by the Optionee in
      the
      purchase of the Restricted Shares. The certificate(s) representing the
      Restricted Shares being repurchased shall be delivered to the Company properly
      endorsed for transfer.

     

    (e) Termination
      of Rights as Stockholder.
      If the
      Right of Repurchase is exercised in accordance with this Section 7 and the
      Company makes available the consideration for the Restricted Shares being
      repurchased, then the person from whom the Restricted Shares are repurchased
      shall no longer have any rights as a holder of the Restricted Shares (other
      than
      the right to receive payment of such consideration). Such Restricted Shares
      shall be deemed to have been repurchased pursuant to this Section 7,
      whether or not the certificate(s) for such Restricted Shares have been delivered
      to the Company or the consideration for such Restricted Shares has been
      accepted.

     

    (f) Additional
      or Exchanged Securities and Property.
      In the
      event of a merger or consolidation of the Company with or into another entity,
      any other corporate reorganization, a stock split, the declaration of a stock
      dividend, the declaration of an extraordinary dividend payable in a form other
      than stock, a spin-off, an adjustment in conversion ratio, a recapitalization
      or
      a similar transaction affecting the Company’s outstanding securities, any
      securities or other property (including cash or cash equivalents) that are
      by
      reason of such transaction exchanged for, or distributed with respect to, any
      Restricted Shares shall immediately be subject to the Right of Repurchase.
      Appropriate adjustments to reflect the exchange or distribution of such
      securities or property shall be made to the number and/or class of the
      Restricted Shares. Appropriate adjustments shall also be made to the price
      per
      share to be paid upon the exercise of the Right of Repurchase, provided that
      the
      aggregate purchase price payable for the Restricted Shares shall remain the
      same. In the event of a merger or consolidation of the Company with or into
      another entity or any other corporate reorganization, the Right of Repurchase
      may be exercised by the Company’s successor.

     

    
      
        
        

      

      
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    (g) Transfer
      of Restricted Shares.
      The
      Optionee shall not transfer, assign, encumber or otherwise dispose of any
      Restricted Shares without the Company’s written consent, except as provided in
      the following sentence. The Optionee may transfer Restricted Shares to one
      or
      more members of the Optionee’s Immediate Family or to a trust established by the
      Optionee for the benefit of the Optionee and/or one or more members of the
      Optionee’s Immediate Family, provided in either case that the Transferee agrees
      in writing on a form prescribed by the Company to be bound by all provisions
      of
      this Agreement. If the Optionee transfers any Restricted Shares, then this
      Agreement shall apply to the Transferee to the same extent as to the
      Optionee.

     

    (h) Assignment
      of Repurchase Right.
      The
      Board of Directors may freely assign the Company’s Right of Repurchase, in whole
      or in part. Any person who accepts an assignment of the Right of Repurchase
      from
      the Company shall assume all of the Company’s rights and obligations under this
      Section 7.

     

    SECTION
      8. 
      RIGHT OF FIRST REFUSAL.

     

    (a) Right
      of First Refusal.
      In the
      event that the Optionee proposes to sell, pledge or otherwise transfer to a
      third party any Shares acquired under this Agreement, or any interest in such
      Shares, the Company shall have the Right of First Refusal with respect to all
      (and not less than all) of such Shares. If the Optionee desires to transfer
      Shares acquired under this Agreement, the Optionee shall give a written Transfer
      Notice to the Company describing fully the proposed transfer, including the
      number of Shares proposed to be transferred, the proposed transfer price, the
      name and address of the proposed Transferee and proof satisfactory to the
      Company that the proposed sale or transfer will not violate any applicable
      federal or state securities laws. The Transfer Notice shall be signed both
      by
      the Optionee and by the proposed Transferee and must constitute a binding
      commitment of both parties to the transfer of the Shares. The Company shall
      have
      the right to purchase all, and not less than all, of the Shares on the terms
      of
      the proposal described in the Transfer Notice (subject, however, to any change
      in such terms permitted under Subsection (b) below) by delivery of a notice
      of exercise of the Right of First Refusal within 30 days after the date when
      the
      Transfer Notice was received by the Company.

     

    (b) Transfer
      of Shares.
      If the
      Company fails to exercise its Right of First Refusal within 30 days after
      the date when it received the Transfer Notice, the Optionee may, not later
      than
      90 days following receipt of the Transfer Notice by the Company, conclude a
      transfer of the Shares subject to the Transfer Notice on the terms and
      conditions described in the Transfer Notice, provided that any such sale is
      made
      in compliance with applicable federal and state securities laws and not in
      violation of any other contractual restrictions to which the Optionee is bound.
      Any proposed transfer on terms and conditions different from those described
      in
      the Transfer Notice, as well as any subsequent proposed transfer by the
      Optionee, shall again be subject to the Right of First Refusal and shall require
      compliance with the procedure described in Subsection (a) above. If the
      Company exercises its Right of First Refusal, the parties shall consummate
      the
      sale of the Shares on the terms set forth in the Transfer Notice within
      60 days after the date when the Company received the Transfer Notice (or
      within such longer period as may have been specified in the Transfer Notice);
      provided, however, that in the event the Transfer Notice provided that payment
      for the Shares was to be made in a form other than cash or cash equivalents
      paid
      at the time of transfer, the Company shall have the option of paying for the
      Shares with cash or cash equivalents equal to the present value of the
      consideration described in the Transfer Notice.

     

    
      
        
        

      

      
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    (c) Additional
      or Exchanged Securities and Property.
      In the
      event of a merger or consolidation of the Company with or into another entity,
      any other corporate reorganization, a stock split, the declaration of a stock
      dividend, the declaration of an extraordinary dividend payable in a form other
      than stock, a spin-off, an adjustment in conversion ratio, a recapitalization
      or
      a similar transaction affecting the Company’s outstanding securities, any
      securities or other property (including cash or cash equivalents) that are
      by
      reason of such transaction exchanged for, or distributed with respect to, any
      Shares subject to this Section 8 shall immediately be subject to the Right
      of First Refusal. Appropriate adjustments to reflect the exchange or
      distribution of such securities or property shall be made to the number and/or
      class of the Shares subject to this Section 8.

     

    (d) Termination
      of Right of First Refusal.
      Any
      other provision of this Section 8 notwithstanding, in the event that the
      Stock is readily tradable on an established securities market when the Optionee
      desires to transfer Shares, the Company shall have no Right of First Refusal,
      and the Optionee shall have no obligation to comply with the procedures
      prescribed by Subsections (a) and (b) above.

     

    (e) Permitted
      Transfers.
      This
      Section 8 shall not apply to (i) a transfer by beneficiary
      designation, will or intestate succession or (ii) a transfer to one or more
      members of the Optionee’s Immediate Family or to a trust established by the
      Optionee for the benefit of the Optionee and/or one or more members of the
      Optionee’s Immediate Family, provided in either case that the Transferee agrees
      in writing on a form prescribed by the Company to be bound by all provisions
      of
      this Agreement. If the Optionee transfers any Shares acquired under this
      Agreement, either under this Subsection (e) or after the Company has failed
      to exercise the Right of First Refusal, then this Agreement shall apply to
      the
      Transferee to the same extent as to the Optionee.

     

    (f) Termination
      of Rights as Stockholder.
      If the
      Company makes available, at the time and place and in the amount and form
      provided in this Agreement, the consideration for the Shares to be purchased
      in
      accordance with this Section 8, then after such time the person from whom
      such Shares are to be purchased shall no longer have any rights as a holder
      of
      such Shares (other than the right to receive payment of such consideration
      in
      accordance with this Agreement). Such Shares shall be deemed to have been
      purchased in accordance with the applicable provisions hereof, whether or not
      the certificate(s) therefor have been delivered as required by this
      Agreement.

     

    
      
        
        

      

      
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    (g) Assignment
      of Right of First Refusal.
      The
      Board of Directors may freely assign the Company’s Right of First Refusal, in
      whole or in part. Any person who accepts an assignment of the Right of First
      Refusal from the Company shall assume all of the Company’s rights and
      obligations under this Section 8.

     

    SECTION
      9. 
      LEGALITY OF INITIAL ISSUANCE.

     

    No
      Shares
      shall be issued upon the exercise of this option unless and until the Company
      has determined that:

     

    (a) It
      and
      the Optionee have taken any actions required to register the Shares under the
      Securities Act or to perfect an exemption from the registration requirements
      thereof;

     

    (b) Any
      applicable listing requirement of any stock exchange or other securities market
      on which Stock is listed has been satisfied; and

     

    (c) Any
      other
      applicable provision of federal, state or foreign law has been
      satisfied.

     

    SECTION
      10. 
      NO REGISTRATION RIGHTS.

     

    The
      Company may, but shall not be obligated to, register or qualify the sale of
      Shares under the Securities Act or any other applicable law. The Company shall
      not be obligated to take any affirmative action in order to cause the sale
      of
      Shares under this Agreement to comply with any law.

     

    SECTION
      11. 
      RESTRICTIONS ON TRANSFER.

     

    (a) Securities
      Law Restrictions.
      Regardless of whether the offering and sale of Shares under the Plan have been
      registered under the Securities Act or have been registered or qualified under
      the securities laws of any state, the Company at its discretion may impose
      restrictions upon the sale, pledge or other transfer of such Shares (including
      the placement of appropriate legends on stock certificates or the imposition
      of
      stop-transfer instructions) if, in the judgment of the Company, such
      restrictions are necessary or desirable in order to achieve compliance with
      the
      Securities Act, the securities laws of any state or any other law.

     

    (b) Market
      Stand-Off.
      The
      Optionee and each Transferee hereby agrees that it will not, without the prior
      written consent of the Company or the managing underwriter, if any, during
      the
      period commencing on the date of the final prospectus relating to a public
      offering of the Company’s equity securities and ending on the date specified by
      the Company or the managing underwriter, if any (such period not to exceed
      three
      hundred sixty-five (365) days), (i) lend, offer, pledge, sell, contract to
      sell, sell any option or contract to purchase, purchase any option or contract
      to sell, grant any option, right or warrant to purchase, or otherwise transfer
      or dispose of, directly or indirectly, any Shares or any securities convertible
      into or exercisable or exchangeable for Shares (whether such shares or any
      such
      securities are then owned by the Optionee or Transferee or are thereafter
      acquired), or (ii) enter into any swap or other arrangement that transfers
      to another, in whole or in part, any of the economic consequences of ownership
      of the Shares, whether any such transaction described in clause (i) or (ii)
      above is to be settled by delivery of Shares or other securities, in cash or
      otherwise. The underwriters, if any, in connection with any such offering of
      the
      Company’s equity securities are intended third-party beneficiaries of this
      Section 11(b) and shall have the right, power and authority to enforce the
      provisions hereof as though they were a party hereto. The Optionee and each
      Transferee further agrees to execute such agreements as may be reasonably
      requested by the Company or such underwriters, if any, that are consistent
      with
      this Section 11(b) or that are necessary to give further effect
      thereto.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (c) Investment
      Intent at Grant.
      The
      Optionee represents and agrees that the Shares to be acquired upon exercising
      this option will be acquired for investment, and not with a view to the sale
      or
      distribution thereof.

     

    (d) Investment
      Intent at Exercise.
      In the
      event that the sale of Shares under the Plan is not registered under the
      Securities Act but an exemption is available which requires an investment
      representation or other representation, the Optionee shall represent and agree
      at the time of exercise that the Shares being acquired upon exercising this
      option are being acquired for investment, and not with a view to the sale or
      distribution thereof, and shall make such other representations as are deemed
      necessary or appropriate by the Company and its counsel.

     

    (e) Legends.
      All
      certificates evidencing Shares purchased under this Agreement shall bear the
      following legend:

     

    “THE
      SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED
      OR
      IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN
      AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
      PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY
      CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES AND
      CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE COMPANY. THE
      SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
      AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

     

    All
      certificates evidencing Shares purchased under this Agreement in an unregistered
      transaction shall bear the following legend (and such other restrictive legends
      as are required or deemed advisable under the provisions of any applicable
      law):

     

    “THE
      SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
      AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
      SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
      REQUIRED.”

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (f) Removal
      of Legends.
      If, in
      the opinion of the Company and its counsel, any legend placed on a stock
      certificate representing Shares sold under this Agreement is no longer required,
      the holder of such certificate shall be entitled to exchange such certificate
      for a certificate representing the same number of Shares but without such
      legend.

     

    (g) Administration.
      Any
      determination by the Company and its counsel in connection with any of the
      matters set forth in this Section 11 shall be conclusive and binding on the
      Optionee and all other persons.

     

    SECTION
      12. 
      ADJUSTMENT OF SHARES.

     

    In
      the
      event of any transaction described in Section 8(a) of the Plan, the terms
      of this option (including, without limitation, the number and kind of Shares
      subject to this option and the Exercise Price) shall be adjusted as set forth
      in
      Section 8(a) of the Plan. In the event that the Company is a party to a
      merger or consolidation, this option shall be subject to the agreement of merger
      or consolidation, as provided in Section 8(b) of the Plan.

     

    SECTION
      13. 
      MISCELLANEOUS PROVISIONS.

     

    (a) Rights
      as a Stockholder.
      Neither
      the Optionee nor the Optionee’s representative shall have any rights as a
      stockholder with respect to any Shares subject to this option until the Optionee
      or the Optionee’s representative becomes entitled to receive such Shares by
      filing a notice of exercise and paying the Purchase Price pursuant to
      Sections 4 and 5.

     

    (b) No
      Retention Rights.
      Nothing
      in this option or in the Plan shall confer upon the Optionee any right to
      continue in Service for any period of specific duration or interfere with or
      otherwise restrict in any way the rights of the Company (or any Parent or
      Subsidiary employing or retaining the Optionee) or of the Optionee, which rights
      are hereby expressly reserved by each, to terminate his or her Service at any
      time and for any reason, with or without cause.

     

    (c) Notice.
      Any
      notice required by the terms of this Agreement shall be given in writing. It
      shall be deemed effective upon (i) personal delivery, (ii) deposit
      with the United States Postal Service, by registered or certified mail, with
      postage and fees prepaid or (iii) deposit with Federal Express Corporation,
      with shipping charges prepaid. Notice shall be addressed to the Company at
      its
      principal executive office and to the Optionee at the address that he or she
      most recently provided to the Company in accordance with this
      Subsection (c).

     

    (d) Entire
      Agreement.
      The
      Notice of Stock Option Grant, this Agreement and the Plan constitute the entire
      contract between the parties hereto with regard to the subject matter hereof.
      They supersede any other agreements, representations or understandings (whether
      oral or written and whether express or implied) which relate to the subject
      matter hereof.

     

    (e) Choice
      of Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Delaware, as such laws are applied to contracts entered into and
      performed in such State.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    SECTION
      14. 
      DEFINITIONS.

     

    (a) “Agreement”
shall
      mean this Stock Option Agreement.

     

    (b) “Board
      of Directors”
shall
      mean the Board of Directors of the Company, as constituted from time to time
      or,
      if a Committee has been appointed, such Committee.

     

    (c) “Code”
shall
      mean the Internal Revenue Code of 1986, as amended.

     

    (d) “Committee”
shall
      mean a committee of the Board of Directors, as described in Section 2 of
      the Plan.

     

    (e) “Company”
shall
      mean Trulite, Inc., a Delaware corporation.

     

    (f) “Consultant”
shall
      mean a person who performs bona fide services for the Company, a Parent or
      a
      Subsidiary as a consultant or advisor, excluding Employees and Outside
      Directors.

     

    (g) “Date
      of Grant”
shall
      mean the date specified in the Notice of Stock Option Grant, which date shall
      be
      the later of (i) the date on which the Board of Directors resolved to grant
      this option or (ii) the first day of the Optionee’s Service.

     

    (h) “Disability”
shall
      mean that the Optionee is unable to engage in any substantial gainful activity
      by reason of any medically determinable physical or mental impairment which
      can
      be expected to result in death or which has lasted, or can be expected to last,
      for a continuous period of not less than 12 months.

     

    (i) “Employee”
shall
      mean any individual who is a common-law employee of the Company, a Parent or
      a
      Subsidiary.

     

    (j) “Exercise
      Price”
shall
      mean the amount for which one Share may be purchased upon exercise of this
      option, as specified in the Notice of Stock Option Grant.

     

    (k) “Fair
      Market Value”
shall
      mean the fair market value of a Share, as determined by the Board of Directors
      in good faith. Such determination shall be conclusive and binding on all
      persons.

     

    (l) “Immediate
      Family”
shall
      mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
      sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
      brother-in-law or sister-in-law and shall include adoptive
      relationships.

     

    (m) “ISO”
shall
      mean an employee incentive stock option described in Section 422(b) of the
      Code.

     

    (n) “Notice
      of Stock Option Grant”
shall
      mean the document so entitled to which this Agreement is attached.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (o) “NSO”
shall
      mean a stock option not described in Sections 422(b) or 423(b) of the
      Code.

     

    (p) “Optionee”
shall
      mean the person named in the Notice of Stock Option Grant.

     

    (q) “Outside
      Director”
shall
      mean a member of the Board of Directors who is not an Employee.

     

    (r) “Parent”
shall
      mean any corporation (other than the Company) in an unbroken chain of
      corporations ending with the Company, if each of the corporations other than
      the
      Company owns stock possessing 50% or more of the total combined voting power
      of
      all classes of stock in one of the other corporations in such
      chain.

     

    (s) “Plan”
shall
      mean the Trulite, Inc. 200_ Stock Plan, as in effect on the Date of
      Grant.

     

    (t) “Purchase
      Price”
shall
      mean the Exercise Price multiplied by the number of Shares with respect to
      which
      this option is being exercised.

     

    (u) “Repurchase
      Period”
shall
      mean a period of 90 consecutive days commencing on the date when the Optionee’s
      Service terminates for any reason, including (without limitation) death or
      disability.

     

    (v) “Restricted
      Share”
shall
      mean a Share that is subject to the Right of Repurchase.

     

    (w) “Right
      of First Refusal”
shall
      mean the Company’s right of first refusal described in
      Section 8.

     

    (x) “Right
      of Repurchase”
shall
      mean the Company’s right of repurchase described in Section 7.

     

    (y) “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended.

     

    (z) “Service”
shall
      mean service as an Employee, Outside Director or Consultant.

     

    (aa) “Share”
shall
      mean one share of Stock, as adjusted in accordance with Section 8 of the
      Plan (if applicable).

     

    (bb) “Stock”
shall
      mean the Common Stock of the Company, with a par value of $____ per
      Share.

     

    (cc) “Subsidiary”
shall
      mean any corporation (other than the Company) in an unbroken chain of
      corporations beginning with the Company, if each of the corporations other
      than
      the last corporation in the unbroken chain owns stock possessing 50% or more
      of
      the total combined voting power of all classes of stock in one of the other
      corporations in such chain.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (dd) “Transferee”
shall
      mean any person to whom the Optionee has directly or indirectly transferred
      any
      Share acquired under this Agreement.

     

    (ee) “Transfer
      Notice”
shall
      mean the notice of a proposed transfer of Shares described in
      Section 8.

     

    
      
        
        

      

      
        14LOAN
      AND
      SECURITY AGREEMENT

     

    This
      LOAN
      AND SECURITY AGREEMENT dated as of December 18, 2006 (this “Agreement”), is
      executed by and between HILL INTERNATIONAL, INC., a Delaware corporation (the
      “Borrower”), which has its chief executive office located at 303 Lippincott
      Centre, Marlton, New Jersey 08053, and LASALLE BANK NATIONAL ASSOCIATION, a
      national banking association (“Lender”), whose address is 135 South LaSalle
      Street, Chicago, Illinois 60603.

    

    RECITALS:

    

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

    

    B. Pursuant
      to the Borrower’s request, Lender 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 Lender, and
      Lender agrees to lend to the Borrower, subject to and upon the following terms
      and conditions:

    

    AGREEMENTS:

    

    Section
      1. DEFINITIONS.

    

    1.1 Defined
      Terms.
      For the
      purposes of this Agreement, 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 Lender, any entity
      administered or managed by Lender, or an Affiliate or investment advisor thereof
      and which is engaged in making, purchasing, holding or otherwise investing
      in
      commercial loans. A Person shall be deemed to be “controlled by” any other
      Person if such Person possesses, directly or indirectly, power to direct or
      cause the direction of the management and policies of such Person whether by
      contract, ownership of voting securities, membership interests or
      otherwise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      

      “Applicable
        Margin”
shall
        mean the rate per annum added to the Prime Rate and/or LIBOR to determine
        the
        Revolving Interest Rate as
        determined by the ratio of Borrower’s consolidated Total Debt to EBITDA
        calculated on a trailing twelve (12) month basis as of the last day of each
        fiscal quarter, as set forth below:
 

    
      	
              Ratio
                of Total Debt to EBITDA

            	 	
              Applicable
                Margin for Prime Loans

            	 	
              Applicable
                Margin for LIBOR Loans

            
	
               

              Greater
                than or equal to 3.00 to 1:00

            	 	
              50
                bps

            	 	
              262.5
                bps

            
	
               

              Greater
                than or equal to 2.00 to 1.00; less than 3.00 to 1.00

            	 	
              25
                bps

            	 	
              225
                bps

            
	
               

              Greater
                than or equal to 1.00 to 1.00; less than 2.00 to 1.00

            	 	
              0
                bps

            	 	
              187.5
                bps

            
	
               

              Less
                than 1.00 to 1:00

            	 	
              0
                bps

            	 	
              150
                bps

            

    

    

    The
      Applicable Margin as of the date hereof is twenty-five (25) basis points for
      Prime Loans and two hundred twenty-five (225) basis points for LIBOR Loans
      and
      shall be adjusted as of each Interest Rate Change Date.

    

    “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, and (b) the sale or lease of inventory in the ordinary course
      of business.

    

    “Bank
      Product Agreements”
shall
      mean those certain agreements entered into from time to time by the Borrower
      or
      any Subsidiary with Lender or any Affiliate of Lender 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 Lender or any Affiliate
      of Lender pursuant to or evidenced by Bank Product Agreements and irrespective
      of whether for the payment of money, whether direct or indirect, absolute or
      contingent, due or to become due, now existing or hereafter
      arising.

    

    “Bank
      Products”
shall
      mean any service or facility extended to the Borrower or any Subsidiary by
      Lender or any Affiliate of Lender, 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.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    “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.

    

    “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 Lender
      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 Lender 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 Lender, 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 Lender, 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
      Lender.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

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

    

    “Collateral
      Access Agreement”
shall
      mean an agreement in form and substance reasonably satisfactory to Lender
      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 Lender 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 Lender 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 without limitation, 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.

    

    “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, accrued expenses and current operating liabilities
      incurred by such Person in accordance with customary practices and in the
      ordinary course of business of such Person.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    “Default
      Rate”
shall
      mean a per annum rate of interest equal to the Prime Rate plus
      three
      percent (3%).

    

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

    

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

    

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

    

    “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.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

    “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.

    

    “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 Lender
      from three Federal funds brokers of recognized standing selected by Lender.
      Lender’s determination of such rate shall be binding and conclusive absent
      manifest error.

    

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

    

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

    

    “Guarantor”
and
      “Guarantors”
shall
      mean, respectively, each of and collectively, any Person that provides a
      guaranty of all or any portion of the Obligations.

    

    “Guaranty”
shall
      mean any guaranty of all or any part of the Obligations executed and delivered
      in favor of Lender.

    

    “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.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    “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.

    

    “Hill
      Luxembourg”
shall
      mean Hill International S.A.

    

    “Hill
      Middle East”
shall
      mean Hill International (Middle East) Ltd.

    

    “Hill
      UK”
shall
      mean Hill International (UK) Ltd.

    

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

    

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

    

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

    

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

    

    "Interest
      Rate Change Date"
      shall
      mean the date two (2) Business Days after the delivery to Lender of the
      quarterly or year-end financial statements of the Borrower, which initial Change
      Date shall occur after the delivery to Lender of the financial statements of
      the
      Borrower for the fiscal year ending December 31, 2006.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    “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).

    

    “JKH”
shall
      mean James R. Knowles (Holdings) Ltd., an English limited company.

    

    “Letter
      of Credit”
and
      “Letters
      of Credit”
shall
      mean, respectively, a letter of credit and all such letters of credit issued
      by
      Lender, in its sole discretion, upon the execution and delivery by the Borrower
      and the acceptance by Lender of a Master Letter of Credit Agreement and a Letter
      of Credit Application, as set forth in Section 2.5 of this
      Agreement.

    

    “Letter
      of Credit Applicable Margin”
shall
      mean the rate per annum to determine the standby Letter of Credit
      fee as
      determined by the ratio of Borrower’s consolidated Total Debt to EBITDA
      calculated on a trailing twelve (12) month basis as of the last day of each
      fiscal quarter, as set forth below:

    

    
      	
              Ratio
                of Total Debt to EBITDA

            	 	
              Letter
                of Credit Applicable Margin 

            
	
               

              Greater
                than or equal to 3.00 to 1:00

            	 	
              262.5
                bps

            
	
               

              Greater
                than or equal to 2.00 to 1.00; less than 3.00 to 1.00

            	 	
              225
                bps

            
	
               

              Greater
                than or equal to 1.00 to 1.00; less than 2.00 to 1.00

            	 	
              187.5
                bps

            
	
               

              Less
                than or equal to 1.00 to 1:00

            	 	
              150
                bps

            

    

    

    The
      Letter of Credit Applicable Margin as of the date hereof is 225 basis points
      and
      shall be adjusted as of each Interest Rate Change Date.

    

    “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 Lender 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 the lesser of (a) the Revolving Loan
      Commitment minus
      the
      aggregate amount of all Revolving Loans outstanding, or (b) Ten Million and
      no/100 Dollars ($10,000,000). 

    

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

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    “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 Lender with respect
      to
      any draws made under a Letter of Credit for which the Borrower has reimbursed
      Lender, (iii) the amount of any payments made by Lender with respect to any
      draws made under a Letter of Credit which have been converted to a Revolving
      Loan as set forth in Section
      2.2,
      and
      (iv) the portion of any issued but expired Letter of Credit which has not been
      drawn by the beneficiary thereunder. For purposes of determining the outstanding
      Letter of Credit Obligations at any time, Lender’s acceptance of a draft drawn
      on Lender pursuant to a Letter of Credit shall constitute a draw on the
      applicable Letter of Credit at the time of such acceptance.

    

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

    

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

    

    “LIBOR
      Loan”
or
      “LIBOR
      Loans”
shall
      mean that portion, and collectively those portions, of the aggregate outstanding
      principal balance of the Loans that bear interest at the LIBOR Rate, of which
      at
      any time, the Borrower may identify no more than three (3) advances of the
      Revolving Loans which
      bear interest at the LIBOR Rate.

    

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

    

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

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
 

    “Loans”
shall
      mean, collectively, all Revolving Loans made by Lender 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 their
      Subsidiaries for the benefit of Lender pursuant to any of the foregoing, and
      all
      amendments, restatements, supplements and other modifications
      thereto.

    

    “Master
      Letter of Credit Agreement”
shall
      mean, at any time, with respect to the issuance of Letters of Credit, a Master
      Letter of Credit Agreement in the form being used by Lender 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 Lender under any Loan Document,
      or
      (iv) the rights or remedies of Lender under any Loan Document.

    

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

    

    “Net
      Worth”
shall
      mean the total of all assets appearing on a consolidated balance sheet of the
      Borrower and its Subsidiaries prepared in accordance with GAAP, less the total
      of all liabilities appearing on a consolidated balance sheet of the Borrower
      and
      its Subsidiaries prepared in accordance with GAAP.

    

    “Non-Excluded
      Taxes”
shall
      have the meaning set forth in Section 2.5(a) hereof.

    

    “Note”
and
      “Notes” shall
      mean, respectively, each of and collectively, the Revolving Note and any other
      promissory notes executed and delivered by Borrower to Lender under this
      Agreement.

    

    “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 Lender hereunder, any expenses incurred by Lender
      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 Lender or any Affiliate of Lender,
      and all Bank Product Obligations of the Borrower, and any and all other
      liabilities and obligations owed by the Borrower to Lender 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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “Obligor”
shall
      mean 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
      Acquisition”
shall
      mean the Borrower’s acquisition of the Capital Securities or substantially all
      of the assets of a single Person or group of related Persons (A) which meets
      the
      following requirements and conditions: (a) Borrower shall have notified Lender
      of such proposed acquisition not less than 30 days prior to the closing thereof
      and shall have provided Lender with all information requested by Lender in
      connection with such acquisition; (b) the sum of the cash paid and debt incurred
      (including drawings under the Revolving Loan) for each such acquisition shall
      not exceed Ten Million and no/100 Dollars ($10,000,000.00); (c) no
      Event
      of Default or Unmatured Event of Default then exists; (d) Borrower shall have
      provided proof to Lender that on a pro-forma basis, immediately after giving
      effect to the proposed acquisition, Borrower will be in compliance with the
      financial covenants set forth in Section 10 below;
      (e) if
      Borrower acquires a foreign entity deemed material by Lender in Lender’s sole
      and absolute discretion, then Borrower shall grant to Lender a first priority
      lien in 66 2/3% of the issued and outstanding stock of such foreign entity;
      and
      (f) contemporaneously with any such acquisition of a United States domestic
      entity or substantially all of the assets thereof, (i) Lender shall be granted
      a
      first priority lien in all of the assets of such domestic entity, and (ii)
      the
      acquired entity shall execute and deliver to Lender such agreements, documents
      and instruments as required by Lender to make such entity a co-Borrower or
      Guarantor of the Obligations, as selected by Lender in its sole discretion,
      or
      (B) as approved by Lender in writing in its sole and absolute
      discretion.

    

    “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 One
      Hundred Thousand and 00/100 Dollars ($100,000) 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(f),
      Liens
      for Capital Expenditures (including 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; (g) deposits or Liens
      to secure the performance of bids, trade contracts, leases, statutory
      obligations, surety and appeal bonds, performance bonds and other obligations
      of
      a like nature, in each case in the ordinary course of Borrower’s business;
      provided that no Liens shall be granted in favor of such surety encumbering
      Inventory, Accounts or Equipment; and (h) Liens
      granted to Lender hereunder and under the Loan Documents.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

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

    

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

    

    “Prime
      Rate”
shall
      mean the floating per annum rate of interest which at any time, and from time
      to
      time, shall be most recently announced by Lender as its Prime Rate, which is
      not
      intended to be Lender’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 Lender. Lender 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 Lender or its lending
      office.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

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

    

    “Revolving
      Loan”
and
      “Revolving
      Loans”
shall
      mean, respectively, each direct advance and the aggregate of all such direct
      advances made by Lender 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 Revolving Loan Commitment minus
      the
      Letter of Credit Obligations.

    

    “Revolving
      Loan Commitment”
shall
      mean Twenty-Five Million and 00/100 Dollars ($25,000,000.00).

    

    “Revolving
      Loan Maturity Date”
shall
      mean January 1, 2010, unless extended by Lender pursuant to any modification,
      extension or renewal note executed by the Borrower and accepted by Lender 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 Lender, 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 Lender, together with any and all renewal, extension,
      modification or replacement notes executed by the Borrower and delivered to
      Lender and given in substitution therefor.

    

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

    

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

    

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

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
 

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

    

    “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.

    

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

    

    “Warrants”
shall
      mean those certain Warrants dated June 23, 2004 and described as common stock
      purchase warrants exercisable for $5.00 per share and expiring on June 23,
      2008.

    

    “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 Lender 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 Lender 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.

     

     

    
      
        
        

      

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

    

    1.4 Other
      Interpretive Provisions.

    

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

    

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

    

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

    

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

    

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

    

    (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.

     

     

    
      
        
        

      

      
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    (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 LENDER.

    

    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, Lender 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
      Revolving Loan Availability. Revolving Loans made by Lender 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 purpose of working capital
      and to finance Permitted Acquisitions.

    

    (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 which are Prime Loans, shall be due and payable quarterly, in arrears,
      commencing on December 31, 2006 and continuing on the last day of each calendar
      quarter thereafter, and on the Revolving Loan Maturity Date. Accrued and unpaid
      interest on the unpaid principal balance of all Revolving Loans outstanding
      from
      time to time which are LIBOR Loans shall be payable on the last Business Day
      of
      each Interest Period, commencing on the first such date to occur after the
      date
      hereof, on the date of any principal repayment of a LIBOR Loan and on the
      Revolving Loan Maturity Date. 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 Lender, may accrue
      at
      the Default Rate and shall be payable upon demand from Lender.

    

    (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 Loans and Letter of Credit Obligations hereunder exceeds the Revolving
      Loan 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 Lender as shall be necessary to eliminate such
      excess. Also, if the Borrower chooses not to convert any Revolving Loan which
      is
      a LIBOR Loan to a Prime Loan as provided in Section
      2.2(b)
      and
Section
      2.2(c),
      then
      such Revolving Loan shall immediately be due and payable on the last Business
      Day of the then existing Interest Period or on such earlier date as required
      by
      law, all without further demand, presentment, protest or notice of any kind,
      all
      of which are hereby waived by the Borrower.

     

     

    
      
        
        

      

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

    

    2.2 Additional
      LIBOR Loan Provisions.

    

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

    

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

     

     

    
      
        
        

      

      
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    (c) Regulatory
      Change.
      In
      addition, if, after the date hereof, a Regulatory Change shall, in the
      reasonable determination of Lender, make it unlawful for Lender to make or
      maintain the LIBOR Loans, then Lender shall promptly notify the Borrower and
      none of the Loans may be advanced as a LIBOR Loan thereafter. In addition,
      at
      the Borrower’s option, each existing LIBOR Loan shall be immediately (i)
      converted to a Prime Loan on the last Business Day of the then existing Interest
      Period or on such earlier date as required by law, or (ii) due and payable
      on
      the last Business Day of the then existing Interest Period or on such earlier
      date as required by law, all without further demand, presentment, protest or
      notice of any kind, all of which are hereby waived by the Borrower.

    

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

    

    2.3 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.

     

     

    
      
        
        

      

      
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    2.4 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 Lender 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 Lender 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.

    

    2.5 Letters
      of Credit.
      Subject
      to the terms and conditions of this Agreement and upon (i) the execution by
      the
      Borrower and Lender of a Master Letter of Credit Agreement in form and substance
      acceptable to Lender (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 Lender, in its
      sole and absolute discretion, of a Letter of Credit Application, Lender agrees
      to issue for the account of the Borrower such Letters of Credit in the standard
      form of Lender and otherwise in form and substance acceptable to Lender, 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 Lender with respect to draws made by a beneficiary under a Letter of Credit
      for which the Borrower has failed to reimburse Lender upon the earlier of (i)
      Lender’s demand for repayment, or (ii) five (5) days from the date of such
      payment to such beneficiary by Lender, shall be deemed to have been converted
      to
      a Revolving Loan as of the date such payment was made by Lender to such
      beneficiary. Upon the occurrence of an Event of a Default and at the option
      of
      Lender, all Letter of Credit Obligations shall be converted to Revolving Loans
      consisting of Prime 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.

    

    2.6 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 Lender
      as a
      result of a present or former connection between Lender 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 Lender 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 Lender hereunder,
      the amounts so payable to Lender shall be increased to the extent necessary
      to
      yield to Lender (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 Lender with respect
      to
      any Non-Excluded Taxes that are attributable to Lender’s failure to comply with
      the requirements of subsection 2.8(c).

     

     

    
      
        
        

      

      
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    (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, Lender 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 Lender 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 Lender 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 Lender for any other
      reason, the Borrower shall indemnify Lender on an after-tax basis for any
      incremental taxes, interest or penalties that may become payable by
      Lender.

    

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

     

    2.7
      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.

     

     

    
      
        
        

      

      
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    Section
      3.CONDITIONS
      OF BORROWING.

    

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

    

    3.1 Loan
      Documents.
      The
      Borrower shall have failed to execute and deliver to Lender any of the following
      Loan Documents, all of which must be satisfactory to Lender and Lender’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 Lender.

    

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

    

    (d) Stock
      Pledge Agreement.
      A
      separate Stock Pledge Agreement in favor of Lender in the form prepared by
      and
      acceptable to Lender, together with original stock certificates and stock powers
      duly executed in blank for all stock pledged to Lender, pledging to Lender
      66.67% of the issued and outstanding Capital Securities of Hill Luxembourg,
      Hill
      UK, Hill Middle East and JKH.

    

    (e) Collateral
      Access Agreement.
      Unless
      waived by Lender, 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 Lender. Lender hereby acknowledges and agrees
      that
      no Collateral Access Agreements will be required to close the Loans referenced
      in this Agreement; provided, however, Lender reserves the right to request
      Collateral Access Agreements at any time hereafter, in which case Borrower
      shall
      use its commercially reasonable best efforts to obtain such Collateral Access
      Agreements and shall provide proof thereof to Lender.

     

    (f) Search
      Results; Lien Terminations.
      Copies
      of UCC search reports dated such a date as is reasonably acceptable to Lender,
      listing all effective financing statements which name the Borrower under its
      present name and any previous names, as debtor, 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 Lender may reasonably request.

     

    
      
        
        

      

      
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    (g) Organizational
      and Authorization Document.
      Copies
      of (i) the Articles of Incorporation and Bylaws of
      the
      Borrower; (ii) resolutions of the board of directors of the Borrower 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 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 Lender 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 in each other state requested by Lender.

    

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

    

    (i) Additional
      Documents.
      Such
      other certificates, financial statements, schedules, resolutions, opinions
      of
      counsel, notes and other documents which are provided for hereunder or which
      Lender 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.

    

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

    

    3.5 Representations
      and Warranties.
      Any
      representation or warranty of the Borrower contained herein or in any Loan
      Document shall be untrue or incorrect 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 Lender a commitment fee in the amount
      of
      Two Hundred Fifty Thousand and 00/100 Dollars ($250,000), payable on or before
      the execution of this Agreement. Up to $15,000 of Borrower’s closing costs shall
      be paid from the commitment fee. All closing costs in excess of $15,000 shall
      be
      paid by Borrower to Lender in accordance with this Agreement.

    

    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 Lender. 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.

     

    
      
        
        

      

      
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    Section
      5. MANNER
      OF BORROWING.

    

    5.1 Borrowing
      Procedures.
      Each
      Revolving Loan may
      be
      advanced either as a Prime Loan or a LIBOR Loan, provided, however, that at
      any
      time, the Borrower may identify no more than three (3) Revolving
      Loans which
      may
      be LIBOR Loans. Each Loan shall be made available to the Borrower upon any
      written, verbal, electronic, telephonic or telecopy loan request which Lender
      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 notice shall be
      effective upon receipt by Lender, shall be irrevocable, and shall specify the
      date, amount and type of borrowing and, in the case of a LIBOR Loan, the initial
      Interest Period therefor. The Borrower shall select Interest Periods so as
      not
      to require a payment or prepayment of any LIBOR Loan during an Interest Period
      for such LIBOR Loan. The final Interest Period for any LIBOR Loan must be such
      that its expiration occurs on or before the Maturity Date of such Loan. A
      request for a Prime Loan must be received by Lender no later than 11:00 a.m.
      Chicago, Illinois time,
      on
      the day it is to be funded. A request for a LIBOR Loan must be (i) received
      by
      Lender no later than 11:00 a.m. Chicago, Illinois time, three days before the
      day it is to be funded, and (ii) in an amount equal to One Hundred Thousand
      and
      00/100 Dollars ($100,000.00) or a higher integral multiple of One Hundred
      Thousand and 00/100 Dollars ($100,000.00). The proceeds of each Loan shall
      be
      made available at the office of Lender by credit to the account of the Borrower
      or by other means requested by the Borrower and acceptable to Lender. The
      Borrower does hereby irrevocably confirm, ratify and approve all such advances
      by Lender and does hereby indemnify Lender against losses and expenses
      (including court costs, attorneys’ and paralegals’ fees) and shall hold Lender
      harmless with respect thereto.

    

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

     

    
      
        
        

      

      
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    5.3.  Letters
      of Credit.
      All
      Letters of Credit shall bear such application, issuance, renewal, negotiation
      and other fees and charges, and bear such interest as charged by Lender or
      otherwise payable pursuant to the Master Letter of Credit Agreement. In addition
      to the foregoing, each standby Letters of Credit issued under and pursuant
      to
      this Agreement shall bear an issuance fee equal to the Letter of Credit
      Applicable Margin multiplied by the face amount of such standby Letter of
      Credit, payable by the Borrower quarterly in arrears, until (i) such Letter
      of
      Credit has expired or has been returned to Lender, or (ii) Lender has paid
      the
      beneficiary thereunder the full face amount of such Letter of
      Credit.

    

    5.4 Automatic
      Debit.
      In
      order to effectuate the timely payment of any of the Obligations when due,
      the
      Borrower hereby authorizes and directs Lender, at Lender’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.

    

    5.5 Discretionary
      Disbursements.
      Lender,
      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 Lender.

     

    
      
        
        

      

      
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    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 Lender, for its own
      benefit and as agent for its Affiliates, a continuing and unconditional first
      priority security interest in and to any and all property of the Borrower,
      of
      any kind or description, tangible or intangible, wheresoever located and whether
      now existing or hereafter arising or acquired, including the following (all
      of
      which property, along with the products and proceeds therefrom, are individually
      and collectively referred to as the “Collateral”):

    

    (a) all
      property of, or for the account of, the Borrower now or hereafter coming into
      the possession, control or custody of, or in transit to, Lender or any agent
      or
      bailee for Lender or any parent, Affiliate or Subsidiary of Lender or any
      participant with Lender 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, without limitation, raw materials, work-in-process
                and finished goods;

            

    

    

    
      	 	
              (iii)

            	
              All
                Goods (other than Inventory), including, without limitation, 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

            

    

     

    
      
        
        

      

      
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              (vii)

            	
              All
                Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing
                property, including, without limitation, all insurance policies and
                proceeds of insurance payable by reason of loss or damage to the
                foregoing
                property, including unearned premiums, and of eminent domain or
                condemnation awards.

            

    

    

    6.2 Other
      Collateral.
      In
      addition, the Obligations are also secured by (a) that certain Stock Pledge
      Agreement of even date herewith executed and delivered by Borrower to Lender,
      and (b) that certain Stock Pledge Agreement of even date herewith executed
      and
      delivered by Hill Luxembourg to Lender.

    

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

    

    6.4 Financing
      Statements.
      The
      Borrower shall, at Lender’s request, at any time and from time to time, execute
      and deliver to Lender such financing statements, amendments and other documents
      and do such acts as Lender deems necessary in order to establish and maintain
      valid, attached and perfected first priority security interests in the
      Collateral in favor of Lender, free and clear of all Liens and claims and rights
      of third parties whatsoever, except Permitted Liens. The Borrower hereby
      irrevocably authorizes Lender 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
      Lender to file this Agreement as a financing statement in any jurisdiction.
      The
      Borrower agrees to furnish any such information to Lender promptly upon request.
      The Borrower further ratifies and affirms its authorization for any financing
      statements and/or amendments thereto, executed and filed by Lender in any
      jurisdiction prior to the date of this Agreement. In addition, the Borrower
      shall make appropriate entries on its books and records disclosing Lender’s
      security interests in the Collateral.

     

    
      
        
        

      

      
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    6.5 Additional
      Collateral.
      The
      Borrower shall deliver to Lender immediately upon its demand, such other
      collateral as Lender may from time to time request, should the value of the
      Collateral, in Lender’s sole and absolute discretion, decline, deteriorate,
      depreciate or become impaired, and does hereby grant to Lender a continuing
      security interest in such other collateral, which, when pledged, assigned and
      transferred to Lender shall be and become part of the Collateral. Lender’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.
      Lender
      may, but is not required, to take such actions from time to time as Lender
      deems
      appropriate to maintain or protect the Collateral. Lender shall have exercised
      reasonable care in the custody and preservation of the Collateral if Lender
      takes such action as the Borrower shall reasonably request in writing which
      is
      not inconsistent with Lender’s status as a secured party, but the failure of
      Lender to comply with any such request shall not be deemed a failure to exercise
      reasonable care; provided, however, Lender’s
      responsibility for the safekeeping of the Collateral shall (i) be deemed
      reasonable if such Collateral is accorded treatment substantially equal to
      that
      which Lender accords its own property, and (ii) not extend to matters beyond
      the
      control of Lender, including acts of God, war, insurrection, riot or
      governmental actions.
      In
      addition, any failure of Lender to preserve or protect any rights with respect
      to the Collateral against prior or third parties, or to do any act with respect
      to preservation of the Collateral, not so requested by the Borrower, shall
      not
      be deemed a failure to exercise reasonable care in the custody or preservation
      of the Collateral. The Borrower shall have the sole responsibility for taking
      such action as may be necessary, from time to time, to preserve all rights
      of
      the Borrower and Lender in the Collateral against prior or third parties.
      Without limiting the generality of the foregoing, where Collateral consists
      in
      whole or in part of securities, the Borrower represents to, and covenants with,
      Lender 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 Lender 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 Lender
      to ensure the attachment, perfection and first priority of, and the ability
      of
      Lender to enforce, Lender’s security interest in any and all of the Collateral
      including (a) causing Lender’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,
      Lender’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 Lender to enforce, Lender’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 Lender, 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 Lender harmless
      against claims of any Persons not a party to this Agreement concerning disputes
      arising over the Collateral.

     

    
      
        
        

      

      
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    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 Lender thereof, and shall promptly obtain
      a
      Collateral Access Agreement. Lender agrees with the Borrower that Lender shall
      not give any instructions to such warehouseman or bailee pursuant to such
      Collateral Access Agreement unless an Event of Default has occurred and is
      continuing, or would occur after taking into account any action by the Borrower
      with respect to the warehouseman or bailee.

    

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

    

    6.10 Commercial
      Tort Claims.
      If the
      Borrower shall at any time hold or acquire a Commercial Tort Claim, the Borrower
      shall immediately notify Lender in writing signed by the Borrower of the details
      thereof and grant to Lender 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 Lender, and shall execute any amendments hereto
      deemed reasonably necessary by Lender to perfect its security interest in such
      Commercial Tort Claim.

    

    6.11 Electronic
      Chattel Paper and Transferable Records.
      If the
      Borrower at any time holds or acquires an interest in any electronic chattel
      paper or any “transferable record”, as that term is defined in Section 201 of
      the federal Electronic Signatures in Global and National Commerce Act, or in
      Section 16 of the Uniform Electronic Transactions Act as in effect in any
      relevant jurisdiction, the Borrower shall promptly notify Lender thereof and,
      at
      the request of Lender, shall take such action as Lender may reasonably request
      to vest in Lender 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. Lender agrees with the Borrower that Lender will
      arrange, pursuant to procedures satisfactory to Lender and so long as such
      procedures will not result in Lender’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.

     

    
      
        
        

      

      
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    Section
      7. REPRESENTATIONS
      AND WARRANTIES.

    

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

    

    7.1 Borrower
      Organization and Name.
      The
      Borrower is a corporation duly organized, existing and in good standing under
      the laws of the State of Delaware, with full and adequate power to carry on
      and
      conduct its business as presently conducted and
      each
      Subsidiary is validly existing and in good standing under the laws of the
      jurisdiction of its organization. The Borrower 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 Borrower’s
      Organizational Identification Number is 3785704. 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, other than Arpeggio
      Acquisition Corporation.

    

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

    

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

    

    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 Lender created pursuant to this
      Agreement.

     

    
      
        
        

      

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

    

    7.6 Equity
      Ownership.
      All
      issued and outstanding Capital
      Securities of
      the
      Borrower and each of its Subsidiaries are duly authorized and validly issued,
      fully paid, non-assessable, and such securities were issued in compliance with
      all applicable state and federal laws concerning the issuance of securities.
      All
      issued and outstanding Capital Securities of each of the Borrower’s Subsidiaries
      are free and clear of all Liens other than those in favor of Lender. 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 the Warrants.

    

    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 Lender 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 Lender, 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.

     

    
      
        
        

      

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

    

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

    

    7.12 Environmental
      Laws and Hazardous Substances.
      The
      Borrower has not generated, used, stored, treated, transported, manufactured,
      handled, produced or disposed of any Hazardous Substances, on or off any of
      the
      premises of the Borrower (whether or not owned by it) in any manner which at
      any
      time violates any Environmental Law or any license, permit, certificate,
      approval or similar authorization thereunder. The Borrower will comply in all
      material respects with all Environmental Laws and will obtain all licenses,
      permits certificates, approvals and similar authorizations thereunder. There
      has
      been no investigation, proceeding, complaint, order, directive, claim, citation
      or notice by any governmental authority or any other Person, nor is any pending
      or, to the best of the Borrower’s knowledge, threatened, and the Borrower shall
      immediately notify Lender 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 Lender 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 Lender 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 Lender to
      conduct such tests of the relevant site as are appropriate, and prepare and
      deliver a report setting forth the result of such tests, a proposed plan for
      remediation and an estimate of the costs thereof.

     

    
      
        
        

      

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

    

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

    

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

    

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

    

    7.17 Lending
      Relationship.
      The
      relationship hereby created between the Borrower and Lender 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. Lender
      represents that it will receive any Note payable to its order as evidence of
      a
      bank loan.

     

    
      
        
        

      

      
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    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 Lender and the contesting
      of such payment does not create a Lien on the Collateral which is not a
      Permitted Lien.
      There
      is no controversy or objection pending, or to the knowledge of the Borrower,
      threatened in respect of any tax returns of the Borrower. The Borrower has
      made
      adequate reserves on its books and records in accordance with GAAP for all
      taxes
      that have accrued but which are not yet due and payable.

    

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

    

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

    

    7.22 Bank
      Accounts.
      All
      Deposit Accounts and operating bank accounts of the Borrower are located at
      Lender 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
      Lender of any change in such locations. The Borrower will not remove or permit
      the Collateral to be removed from such location without the prior written
      consent of Lender, 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 Lender 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 Lender 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 Lender 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).

     

    
      
        
        

      

      
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    7.25 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 the 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
      Lender shall reasonably determine that any Regulatory Change, or compliance
      by
      Lender or any Person controlling Lender 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
      Lender’s or such controlling Person’s capital as a consequence of Lender’s
      obligations hereunder or under any Letter of Credit to a level below that which
      Lender or such controlling Person could have achieved but for such Regulatory
      Change or compliance (taking into consideration Lender’s or such controlling
      Person’s policies with respect to capital adequacy) by an amount deemed by
      Lender or such controlling Person to be material or would otherwise reduce
      the
      amount of any sum received or receivable by Lender under this Agreement or
      under
      any Note with respect thereto, then from time to time, upon demand by Lender
      (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 Lender or such controlling Person such additional
      amount as will compensate Lender 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 Lender first made demand
      therefor.

     

    
      
        
        

      

      
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    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.

    

    8.3 Compliance
      With Laws.
      The
      Borrower shall use
      the
      proceeds of the Loans for working capital and other general corporate or
      business purposes as set forth herein (including Permitted Acquisitions) 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.

     

    
      
        
        

      

      
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    8.5 Maintain
      Property.
      The
      Borrower shall at all times maintain, preserve and keep its plant, properties
      and Equipment, including, but not limited to, 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 Lender to examine and inspect such plant, properties and Equipment,
      including, but not limited to, any Collateral, upon reasonable notice during
      business hours.

    

    8.6 Maintain
      Insurance.
      The
      Borrower shall at all times maintain, and cause each Subsidiary to maintain,
      with insurance companies reasonably acceptable to Lender, 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 Lender. The Borrower shall furnish
      to Lender 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 Lender. The Borrower shall cause each issuer
      of an
      insurance policy to provide Lender with an endorsement (i) showing Lender as
      lender’s loss payee with respect to each policy of property or casualty
      insurance and naming Lender as an additional insured with respect to each policy
      of liability insurance; and (ii) providing that thirty (30) days notice will
      be
      given to Lender 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 Lender a collateral assignment, in form and
      substance satisfactory to Lender, of each business interruption insurance policy
      maintained by the Borrower.

    

    In
      the
      event the Borrower either fails to provide Lender 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 Lender, 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 Lender 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 Lender, but only after providing Lender
      with evidence that the Borrower has obtained the insurance coverage required
      by
      this Section. If Lender 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.

     

    
      
        
        

      

      
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    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
      Lender 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 Lender 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 Lender or its authorized representatives such information
      regarding the business affairs, operations and financial condition of the
      Borrower, including:

    

    (a) promptly
      when available, and in any event, within one hundred twenty (120) days after
      the
      close of each of its fiscal years, a copy of (i) the annual audited financial
      statements of the Borrower and its Subsidiaries, including consolidated balance
      sheet, statement of income and retained earnings, and statement of cash flows
      for the fiscal year then ended and such other information (including
      nonfinancial information) as Lender may request, in reasonable detail, prepared
      and certified without adverse reference to going concern value and without
      qualification by Amper, Politziner & Mattia or other independent auditor of
      recognized standing, selected by the Borrower and reasonably acceptable to
      Lender, and (ii) a consolidating balance sheet of the Borrower and its
      Subsidiaries as of the end of each of its fiscal years and consolidating
      statements of earnings and cash flows for the Borrower and its Subsidiaries
      for
      each of its fiscal years, certified as true and correct by the Borrower’s
      treasurer or chief financial officer; 

    

    (b) promptly
      when available, and in any event, within sixty (60) days following the end
      of
      each of the first three fiscal quarters of each fiscal year, 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 and such other information (including nonfinancial information)
      as
      Lender may request, in reasonable detail, prepared and certified as true and
      correct by the Borrower’s treasurer or chief financial officer; and

     

    
      
        
        

      

      
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    (c) 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 the
      Borrower.

    

    The
      Borrower represents and warrants to Lender that the financial statements
      delivered to Lender 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. Lender 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 Reserved.

    

    8.10 Supplemental
      Financial Statements.
      The
      Borrower shall immediately upon receipt thereof, provide to Lender 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 Aged
      Accounts Schedule/Work in Process Reports.
      The
      Borrower shall, within sixty (60) days after the end of each fiscal quarter,
      deliver the following to Lender, each certified as accurate by the Borrower’s
      treasurer or chief financial officer and otherwise in form and substance
      satisfactory to Lender: (a) 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 (1) 0-30 days, (2) 31-60 days, (3) 61-90 days and
      (4)
      more than 90 days, and (b) Borrower’s and its Subsidiaries’ work in process
      report.

    

    8.12 Covenant
      Compliance Certificate.
      The
      Borrower shall, contemporaneously with the furnishing of the financial
      statements pursuant to Section
      8.8,
      deliver
      to Lender 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.

    

    8.13 Field
      Audits.
      Upon
      reasonable notice and during regular business hours, the Borrower shall permit
      Lender 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 Lender in Lender’s sole and absolute discretion. All such
      inspections or audits by Lender shall be at the Borrower’s sole expense;
      provided, however, that so long as no Event of Default shall have occurred,
      (a)
      the Borrower shall not be obligated to pay for more than two such inspections
      or
      audits in any given year; and (b) the Borrower shall not be obligated to pay
      more than $10,000 in the aggregate in any given year for such inspections or
      audits.

     

    
      
        
        

      

      
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    8.14 Other
      Reports.
      The
      Borrower shall, within such period of time as Lender may specify, deliver to
      Lender such other schedules and reports as Lender may reasonably
      require.

    

    8.15 Collateral
      Records.
      The
      Borrower shall keep full and accurate books and records relating to the
      Collateral and shall mark its financial books and records to indicate Lender’s
      Lien in the Collateral.

    

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

    

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

    

    8.18 Notice
      of Event of Default or Material Adverse Effect.
      The
      Borrower shall, immediately after the commencement thereof, give notice to
      Lender 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.

    

    8.19 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. 

    

    8.20 Further
      Assurances.
      The
      Borrower shall take such actions as are necessary or as Lender 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, in
      each case as Lender 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.

     

    
      
        
        

      

      
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    8.21 Banking
      Relationship.
      The
      Borrower covenants and agrees, as soon as reasonably possible, but not later
      than ninety days after the date hereof, to utilize Lender as its bank of account
      and depository for all financial services, including all receipts,
      disbursements, cash management and related service. Notwithstanding the
      foregoing, Borrower shall be permitted to maintain depository accounts at
      Citizens Bank maintained in Marlton, New Jersey, provided that within ninety
      (90) days following the date of this Agreement (a) such accounts are subject
      to
      a first priority lien in favor of Lender, and (b) the Borrower, Lender and
      Citizens Bank enter into a blocked account agreement, in form and substance
      satisfactory to Lender, with respect to such accounts which provides for a
      daily
      cash sweep from Citizens Bank to Lender for all collected funds held in such
      accounts in excess of $250,000.

    

    8.22 Non-Utilization
      Fee.
      The
      Borrower agrees to pay to Lender a
      non-utilization
      fee
      equal
      to three-tenths of one percent (3/10%) of
      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
      quarterly in arrears on the last day of each March, June, September and
      December, commencing on December 31, 2006, and on the Revolving Loan Maturity
      Date.

    

    Section
      9. NEGATIVE
      COVENANTS.

    

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

    

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

    

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

    

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

    

    (d) Subordinated
      Debt;

    

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

     

    
      
        
        

      

      
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    (f) Debt
      for
      Capital Expenditures, other than Capital Expenditures constituting Permitted
      Acquisitions, provided that the aggregate amount of all such Debt outstanding
      at
      any time shall not exceed One Million and no/100 Dollars
      ($1,000,000.00);

    

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

    

    (h) performance
      guaranties issued by the Borrower of the operating obligations of its
      Subsidiaries made in the ordinary course of Borrower’s business; provided,
      however, such guaranties shall exclude any guaranty of the payment of such
      Subsidiaries’ monetary obligations; 

    

    (i) other
      unsecured Subordinated Debt, in addition to the Debt listed above, in an
      aggregate amount outstanding at any time not to exceed One Million and 00/100
      Dollars ($1,000,000.00); and

    

    (j) revolving
      loan facility Debt or Debt incurred in connection with advance payment or
      performance guaranties, each to the extent incurred by Borrower’s foreign
      Subsidiaries after the date hereof, provided, (i) the applicable foreign
      Subsidiary uses good faith efforts to utilize Lender or an Affiliate of Lender
      to obtain such financing (considering all of the business circumstances
      involved) and it is determined to be impractical for the applicable foreign
      Subsidiary to obtain such financing from Lender or any of Lender’s Affiliates,
      whether utilizing Letters of Credit issued under this Agreement or otherwise;
      and (ii) the total aggregate outstanding amount of such Debt incurred after
      the
      date hereof does not exceed $5,000,000.

    

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

    

    9.3 Investments.
      The
      Borrower and its direct and indirect Subsidiaries shall not, either directly
      or
      indirectly, make or have outstanding any Investment, except:

    

    (a) capital
      contributions or loans by the Borrower to any Wholly-Owned Subsidiary, or by
      any
      Subsidiary to any other Wholly-Owned Subsidiary;

    

    (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;

     

    
      
        
        

      

      
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    (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 Lender shall not at
      any
      time exceed $250,000, unless any such amount in excess of $250,000 is swept
      to
      Lender on a daily basis pursuant to Section 8.21 above;

    

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

    

    (g) Permitted
      Acquisitions made after the date of this Agreement; 

    

    
      (h) Investments
        listed on Schedule
        9.3
        as of
        the Closing Date; 

    

    

    (i)
      Investments
      in publicly traded securities not in excess of $5,000,000 outstanding at any
      time, provided (a) no Event of Default exists at the time of any such
      Investment, and (b) no Loan proceeds are used to purchase all or any portion
      of
      such Investments.

    

    (j)
      bank
      deposits maintained by Borrower’s foreign Subsidiaries and Affiliates in
      non-United States bank accounts in the ordinary course of business.

    

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

    

    9.4 Transfer;
      Merger; Sales.
      The
      Borrower shall not and not permit any Subsidiary to, whether in one transaction
      or a series of related transactions, (a) be a party to any merger or
      consolidation, or purchase or otherwise acquire all or substantially all of
      the
      assets or any Capital Securities of any class of, or any partnership or joint
      venture interest in, any other Person, except for (i) any such merger,
      consolidation, sale, transfer, conveyance, lease or assignment of or by any
      Wholly-Owned Subsidiary into the Borrower or into any other domestic
      Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by the
      Borrower or any domestic Wholly-Owned Subsidiary of the assets or equity
      interests of any Wholly-Owned Subsidiary, (b) sell, transfer, convey or lease
      all or any substantial part of its assets or Capital Securities (including
      the
      sale of Capital Securities of any Subsidiary), except for sales of Inventory
      in
      the ordinary course of business, or (c) sell or assign, with or without
      recourse, any receivables.

    

    9.5 Reserved.
      

     

    
      
        
        

      

      
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    9.6 Distributions.
      The
      Borrower shall not (a) make any distribution or dividend (other than stock
      dividends), whether in cash or otherwise, to any of its equityholders, (b)
      purchase or redeem any of its equity interests or any warrants, options or
      other
      rights in respect thereof, (c) pay any management fees or similar fees to any
      of
      its equityholders or any Affiliate thereof, (d) pay
      or
      prepay interest on, principal of, premium, if any, redemption,
      conversion, exchange,
      purchase, retirement,
      defeasance, sinking fund or any other payment in respect of any Subordinated
      Debt, or (e) set aside funds for any of the foregoing. Notwithstanding the
      foregoing, provided no Unmatured Event of Default or Event of Default then
      exists or would be created thereby, (i) Borrower shall be entitled to make
      cash
      dividends to its equityholders, and (ii) Borrower shall be entitled to make
      regularly scheduled payments of principal and interest on Subordinated Debt
      to
      the extent such payments are expressly permitted pursuant to the terms of the
      subordination agreement between Lender and the holder of such Subordinated
      Debt.

    

    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 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.

    

    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 Lender
      a
      Lien on any of its assets or (c) create or permit to exist or become effective
      any encumbrance or restriction on the ability of any Subsidiary to (i) pay
      dividends or make other distributions to the Borrower or any other Subsidiary,
      or pay any Debt owed to the Borrower or any other Subsidiary, (ii) make loans
      or
      advances to the Borrower or any other Subsidiary, or (iii) transfer any of
      its
      assets or properties to the Borrower or any other Subsidiary, other than (A)
      customary restrictions and conditions contained in agreements relating to the
      sale of all or a substantial part of the assets of any Subsidiary pending such
      sale, provided that such restrictions and conditions apply only to the
      Subsidiary to be sold and such sale is permitted hereunder,
      (B) restrictions or conditions imposed by any agreement relating to
      purchase money Debt, Capital Leases and other secured Debt permitted by this
      Agreement if such restrictions or conditions apply only to the property or
      assets securing such Debt, and (C) customary provisions in leases and other
      contracts restricting the assignment thereof.

     

    
      
        
        

      

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

    

    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 Lender
      without the prior written consent of Lender.

    

    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
      Lender.

    

    Section
      10. FINANCIAL
      COVENANTS.

    

    10.1 Net
      Worth.
      As of
      the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
      maintain consolidated Net Worth in an amount not less than Thirty-Five Million
      and 00/100 Dollars ($35,000,000.00).

    

    10.2 Total
      Debt to EBITDA.
      As of
      the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
      maintain a ratio of consolidated Total Debt to consolidated EBITDA for such
      fiscal quarter, of not greater than 3.5 to 1.00, calculated on a trailing twelve
      (12) month basis as of the last day of each fiscal quarter.

    

    10.3 Fixed
      Charge Coverage.
      As of
      the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
      maintain a ratio of (a) the total for 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, to (b) the sum
      for
      such fiscal quarter of (i) Interest Charges plus
      (ii)
      required payments of principal of Funded Debt (excluding the Revolving Loans),
      of not less than 2.00 to 1.00, calculated on a trailing twelve (12) month basis
      as of the last day of each fiscal quarter.

    

    10.4 Billed
      Accounts Receivable to Total Debt .
      As of
      the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
      maintain a ratio of consolidated billed accounts receivable arising in the
      ordinary course of business to Total Debt, of not less than 2.00 to
      1.00.

     

    
      
        
        

      

      
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    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 when due and such failure to pay
      continues for a period of five (5) days after notice thereof is provided to
      Borrower.

    

    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
      Lender 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 Lender 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, or in the other Loan Documents or any
      other agreement with Lender and such failure to perform or default in
      performance continues beyond any applicable grace or cure period; provided,
      that, with respect to the affirmative covenants set forth in Article VIII (other
      than Sections 8.2(c), 8.3, 8.6, 8.8, 8.11, 8.12, 8.13, 8.15, 8.18, 8.20, 8.21,
      and 8.22, for which there shall be no cure period) there shall be a thirty
      (30)
      calendar day 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 (other than Debt subject
      to a
      bona fide dispute which is being contested in good faith by Borrower) for any
      other obligation in excess of $250,000.00 beyond any period of grace provided
      with respect thereto or in the performance of any other term, condition or
      covenant contained in any agreement (including any capital or operating lease
      or
      any agreement in connection with the deferred purchase price of property) under
      which any such obligation is created, the effect of which default is to cause
      or
      permit the holder of such obligation (or the other party to such other
      agreement) to cause such obligation to become due prior to its stated maturity
      or terminate such other agreement.

    

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

     

    
      
        
        

      

      
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    11.7 Bankruptcy,
      Insolvency, etc.
      Any
      Obligor becomes insolvent or generally fails to pay, or admits in writing its
      inability or refusal to pay, debts as they become due; or any Obligor applies
      for, consents to, or acquiesces in the appointment of a trustee, receiver or
      other custodian for such Obligor or any property thereof, or makes a general
      assignment for the benefit of creditors; or, in the absence of such application,
      consent or acquiescence, a trustee, receiver or other custodian is appointed
      for
      any Obligor or for a substantial part of the property of any thereof; 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; 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 in excess of $100,000.00, 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, (a) bonded
      over to the satisfaction of Lender and appealed (unless applicable judicial
      rules permit the filing of an appeal after 30 days in which case the appeal
      shall be filed within such applicable period), (b) vacated, or (c)
      discharged.

    

    11.9 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, 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
      Lender acting in good faith, to become unsatisfactory as to value or character,
      or which causes Lender 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 necessary by Lender to preserve and maintain the value
      and
      collectability of the Collateral.

    

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

    

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

    

    11.12 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.

     

    
      
        
        

      

      
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    Section
      12. REMEDIES.

    

    Upon
      the
      occurrence of an Event of Default, Lender 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, Lender 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 Lender 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 Lender. 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 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.
      Lender
      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 Lender 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 Lender shall have the right
      to
      store and conduct a sale of the same in any of the Borrower’s premises without
      cost to Lender. At Lender’s request, the Borrower will, at the Borrower’s sole
      expense, assemble the Collateral and make it available to Lender at a place
      or
      places to be designated by Lender which is reasonably convenient to Lender
      and
      the Borrower.

    

    12.2 Sale
      of Collateral.
      Lender
      may sell any or all of the Collateral at public or private sale, upon such
      terms
      and conditions as Lender may deem proper, and Lender may purchase any or all
      of
      the Collateral at any such sale. The Borrower acknowledges that Lender 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.
      Lender shall have no obligation to clean-up or otherwise prepare the Collateral
      for sale. Lender 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 Lender
      at
      least ten (10) calendar days before the date of such disposition. The Borrower
      hereby confirms, approves and ratifies all acts and deeds of Lender 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
      Lender 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 Lender shall deem
      appropriate. The Borrower expressly absolves Lender from any loss or decline
      in
      market value of any Collateral by reason of delay in the enforcement or
      assertion or nonenforcement of any rights or remedies under this
      Agreement.

     

    
      
        
        

      

      
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    12.3 Standards
      for Exercising Remedies. To
      the
      extent that applicable law imposes duties on Lender to exercise remedies in
      a
      commercially reasonable manner, the Borrower acknowledges and agrees that it
      is
      not commercially unreasonable for Lender (a) to fail to incur expenses
      reasonably deemed significant by Lender 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 Lender against risks of loss,
      collection or disposition of Collateral or to provide to Lender a guaranteed
      return from the collection or disposition of Collateral, or (l) to the extent
      deemed appropriate by Lender, to obtain the services of other brokers,
      investment bankers, consultants and other professionals to assist Lender 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 Lender would not be commercially unreasonable
      in
      Lender’s exercise of remedies against the Collateral and that other actions or
      omissions by Lender 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 Lender that would not have
      been granted or imposed by this Agreement or by applicable law in the absence
      of
      this section.

     

    
      
        
        

      

      
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    12.4 UCC
      and Offset Rights.
      Lender
      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 Lender, 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 Lender may, from time to
      time, elect, any indebtedness of Lender 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 Lender.
      The
      Borrower, on behalf of itself and each Obligor, hereby waives the benefit of
      any
      law that would otherwise restrict or limit Lender in the exercise of its right,
      which is hereby acknowledged, to appropriate at any time hereafter any such
      indebtedness owing from Lender to any Obligor.

    

    12.5 Additional
      Remedies.
      Lender
      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 Lender
      of
      any amounts due or to become due thereunder, or Lender may directly notify
      such
      obligors of the security interest of Lender, and/or of the assignment to Lender
      of the Collateral and direct such obligors to make payment to Lender of any
      amounts due or to become due with respect thereto, and thereafter, collect
      any
      such amounts due on the Collateral directly from such Persons obligated
      thereon;

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
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    (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 Lender 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 Lender’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 Lender for the Obligations;
      and

    

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

    

    The
      Borrower hereby ratifies and confirms whatever Lender may do with respect to
      the
      Collateral and agrees that Lender 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 Lender (and any
      officer of Lender or any Person designated by Lender 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) after
      the occurrence of an Event of Default, take such actions as are permitted in
      this Agreement, (ii) execute such financing statements and other documents
      and
      to do such other acts as Lender may require to perfect and preserve Lender’s
      security interest in, and to enforce such interests in the Collateral, and
      (iii)
      after the occurrence of an Event of Default, 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 Lender, 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.
      Lender
      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 Lender’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.

     

    
      
        
        

      

      
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    12.8 Application
      of Proceeds.
      Lender
      will within three (3) Business Days after receipt of cash or solvent credits
      from collection of items of payment, proceeds of Collateral or any other source,
      apply the whole or any part thereof against the Obligations secured hereby.
      Lender 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 Lender of all or any part of the Collateral may be first
      applied by Lender to the payment of expenses incurred by Lender in connection
      with the Collateral, including attorneys’ fees and legal expenses as provided
      for in Section
      13
      hereof.

    

    12.9 No
      Waiver.
      No
      Event of Default shall be waived by Lender except in writing. No failure or
      delay on the part of Lender 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 Lender to exercise any remedy available to Lender 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 Lender, no remedy of law will
      provide adequate relief to Lender, and further agrees that Lender 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
      Lender an amount equal to the Letter of Credit Obligations then outstanding.
      Amounts held in such cash collateral account shall be applied by Lender 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 Lender 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.

     

    
      
        
        

      

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

    

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

    

    (b) release
      by Lender 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 Lender 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 Lender 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.

    

    13.2 Entire
      Agreement.
      This
      Agreement and the other Loan Documents (i) are valid, binding and enforceable
      against the Borrower and Lender 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 Lender.
      No
      promises, either expressed or implied, exist between the Borrower and Lender,
      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
      Lender, 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 Lender merely because
      of
      Lender’s involvement in their preparation.

    

    13.3 Amendments;
      Waivers.
      No
      delay on the part of Lender in the exercise of any right, power or remedy shall
      operate as a waiver thereof, nor shall any single or partial exercise by Lender
      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 Lender, 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.

     

    
      
        
        

      

      
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    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 LENDER
      IN
      ENFORCING THIS AGREEMENT. PROVIDED LENDER ACTS IN GOOD FAITH, THE BORROWER
      RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO PURSUANT TO THE TERMS OF THIS
      AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER 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 LENDER 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.

    

    13.6 WAIVER
      OF JURY TRIAL.
      LENDER
      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
      LENDER 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 LENDER GRANTING ANY FINANCIAL
      ACCOMMODATION TO THE BORROWER.

     

    
      
        
        

      

      
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    13.7 Assignability.
      Lender
      may at any time assign Lender’s rights in this Agreement, the other Loan
      Documents, the Obligations, or any part thereof and transfer Lender’s rights in
      any or all of the Collateral, and Lender thereafter shall be relieved from
      all
      liability with respect to such Collateral. In addition, Lender 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 Lender or any portion
      thereof, either voluntarily or by operation of law, without the prior written
      consent of Lender. This Agreement shall be binding upon Lender 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 Lender agree from time to time, upon written request received
      by it
      from the other, to confirm to the other in writing the aggregate unpaid
      principal amount of the Loans then outstanding under such Note.

    

    13.9 Confidentiality.
      Lender
      agrees to use commercially reasonable efforts (equivalent to the efforts Lender
      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 Lender may
      disclose such information (a) to Persons employed or engaged by Lender 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 Lender to be compelled by any court decree, subpoena or legal or
      administrative order or process; (d) as, on the advice of Lender’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 Lender
      is
      a party; (f) to any nationally recognized rating agency that requires access
      to
      information about Lender’s investment portfolio in connection with ratings
      issued with respect to Lender; (g) to any Affiliate of Lender who may provide
      Bank Products to the Borrower or any Subsidiary, or (h) that ceases to be
      confidential through no fault of Lender.

    

    13.10 Binding
      Effect.
      This
      Agreement shall become effective upon execution by the Borrower and Lender.
      If
      this Agreement is not dated or contains any blanks when executed by the
      Borrower, Lender 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.

     

    
      
        
        

      

      
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    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 Lender, be deemed material
      and relied upon by Lender 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 Lender, and Lender has been
      indefeasibly paid in full in cash. Lender, in extending financial accommodations
      to the Borrower, is expressly acting and relying on the aforesaid
      representations and warranties. Notwithstanding anything to the contrary
      contained herein, in the event any Investment Property is subject to the terms
      of a separate security agreement in favor of Lender, the terms of such separate
      security agreement shall govern and control unless otherwise agreed to in
      writing by Lender.

    

    13.14 Extensions
      of Bank’s Commitment.
      This
      Agreement shall secure and govern the terms of (i) any extensions or renewals
      of
      Lender’s commitment hereunder, and (ii) any replacement note executed by the
      Borrower and accepted by Lender 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 Lender 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 Lender 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 Lender’s rights hereunder. All notices,
      requests, demands and other communications provided for hereunder shall be
      in
      writing and addressed as follows:

    

    
      	
              To
                the Borrower:

            	
              Hill
                International, Inc.

              303
                Lippincott Centre

              Marlton,
                New Jersey 08053

              Attention:
                Irvin E. Richter, Chief Executive Officer

              Attention:
                John Fanelli III, Chief Financial
                Officer

            

    

     

    
      
        
        

      

      
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              With
                a copy to:

            	
              McCarter
                & English, LLP

              245
                Park Avenue, 33rd Floor

              New
                York, New York 10167

              Attention:
                Peter S. Twombly, Esq. 

            
	 	 
	
              To
                the Lender:

            	
              LaSalle
                Bank National Association

              135
                South LaSalle Street

              Chicago,
                Illinois 60603

              Attention:
                Matt Gibbons

            
	 	 
	
              With
                a copy to:

            	
              FagelHaber
                LLC

              55
                E. Monroe Street, 40th Floor

              Chicago,
                Illinois 60603

              Attention:
                Victor A. Des Laurier, Esq,

            

    

     

    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 Lender making the Loans, the Borrower and all other Obligors
      do
      each hereby release and discharge Lender 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 Lender from the date of their respective
      first contact with Lender until the date of this Agreement including any claim
      arising from any reports (environmental reports, surveys, appraisals, etc.)
      prepared by any parties hired or recommended by Lender. 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 Lender is relying upon this
      release in extending the Loans to the Borrower.

    

    13.19 Costs,
      Fees and Expenses.
      The
      Borrower shall pay or reimburse Lender for all reasonable costs, fees and
      expenses incurred by Lender or for which Lender 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
      Lender, which shall also include attorneys’ fees and time charges of attorneys
      who may be employees of Lender or any Affiliate of Lender, plus costs and
      expenses of such attorneys or of Lender; 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 Lender 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 Lender 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
      Lender on demand. If at any time or times hereafter Lender: (a) employs
      counsel for advice or other representation (i) with respect to this
      Agreement or the other Loan Documents, (ii) to represent Lender 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 Lender, 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 Lender against the Borrower or any other Person that
      may
      be obligated to Lender 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
      Lender’s rights or remedies under the Agreement or the other Loan Documents, the
      costs and expenses incurred by Lender in any manner or way with respect to
      the
      foregoing, shall be part of the Obligations, payable by the Borrower to Lender
      on demand.

     

    
      
        
        

      

      
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    13.20 Indemnification.
      The
      Borrower agrees to defend (with counsel satisfactory to Lender), 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 Lender’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 Lender; 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.

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

    

    13.21 Revival
      and Reinstatement of Obligations.
      If the
      incurrence or payment of the Obligations by any Obligor or the transfer to
      Lender 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 Lender 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 Lender is required or elects to repay
      or
      restore, and as to all reasonable costs, expenses, and attorneys fees of Lender,
      the Obligations shall automatically shall be revived, reinstated, and restored
      and shall exist as though such Voidable Transfer had never been
      made.

    

    13.22  Customer
      Identification - USA Patriot Act Notice.
      Lender
      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 Lender’s policies and practices, Lender 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 Lender to identify the Borrower in
      accordance with the Act.

    

    [signature
      page follows]

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    

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

    
      	 	 	 
	 	
              HILL
                INTERNATIONAL, INC.,
                a
                Delawarecorporation

            
	 
 	 
 	 
 
	 	By:  	/s/
              David L. Richter 
	 	
              
Name: David
              L. Richter
	 	Title: President
              and Chief Operating Officer

    

    

    
      	 	 	 
	 	
              Agreed
                and accepted:

            
	 	 
	 	
              LASALLE
                BANK
                NATIONAL
                ASSOCIATION,
                a

              
                national
                  banking association

              

            
	 
 	 
 	 
 
	 	By:  	/s/
              Matthew J. Gibbons
	 	
              
Name: Matthew
              J. Gibbons
	 	Title: Vice
              President 

    

     

    
      
        
        

      

      
        59

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