Document:

SEVERANCE
      AGREEMENT AND COVENANTS

    

    
      
        1.  
          PARTIES.

      

    

     

    The
      parties to this Severance Agreement and Covenants (hereinafter “Agreement”)
      are
      CSABA TORO (“TORO”) and SOLAR THIN FILMS, INC., a Delaware corporation f/k/a
      American United Global, Inc. (“SOLAR”).

     

    1.1 CSABA
      TORO.

     

    For
      the
      purposes of this Agreement, TORO means CSABA TORO, TORO’s heirs, executors,
      administrators, assigns, and spouse (as applicable).

     

    1.2 THE
      COMPANY.

     

    For
      purposes of this Agreement the “Company”
      means
      SOLAR THIN FILMS, INC., and all subsidiaries, affiliated companies and other
      business entities thereof, all predecessors and successors of each, and all
      of
      each entity’s
      officers, shareholders, directors, employees, agents, or assigns, in their
      individual and representative capacities.

     

    
      
        2. 
          BACKGROUND
          AND PURPOSE.

      

    

     

    TORO
      was
      employed by SOLAR. TORO’s employment ended effective June 1, 2007 (the
“Termination Date”). The parties are entering into this Agreement to define the
      severance relationship and to settle fully and finally, any and all claims
      TORO
      may have against Company, whether asserted or not, known or unknown, including,
      but not limited to, claims arising out of or related to TORO’s employment, claim
      for reemployment, board membership, board observation rights, any termination
      or
      any other claims whether asserted or not, known or unknown, past or future,
      that
      relate to TORO’s employment, termination, reemployment, or application for
      reemployment.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3. 
      ACKNOWLEDGEMENTS
      AND REPRESENTATIONS.

     

    3.1 PAYMENT.

     

    TORO
      acknowledges and agrees that he has been paid all earned salary and accrued
      vacation pay that is owed through the Termination Date.

     

    3.2 EMPLOYEE
      BENEFITS.

     

    TORO
      acknowledges and agrees that he has received information regarding his rights
      to
      health insurance continuation and retirement benefits. Toro acknowledges that
      such rights, if any, have been terminated.

     

    3.3 AGREEMENT
      COVENANTS.

     

    TORO
      acknowledges and agrees that under the Executive Employment Agreement dated
      October 31, 2006 (the “Employment Agreement”), he has been, and will be, for an
      indefinite period, bound by a covenant involving Confidential Information (as
      defined in the Employment Agreement). In addition, TORO acknowledges and agrees
      that, under the Employment Agreement, he has and will be, until the one year
      anniversary of the Termination Date, bound by a noncompete provision and during
      such period, he is bound by a non-solicit provision. In regards to the
      noncompete provision, the parties to this agreement hereby mutually agree that
      the definition Competing Business as originally utilized in the Employment
      Agreement shall hereinafter be limited to the business of Kraft Projects Zrt.
      or
      its affiliates (“Competitor”). TORO understands that COMPANY retains the right
      to enforce its rights under the original noncompete provision as applicable
      to
      Competitor and all other remaining provisions of the Employment Agreement,
      including the non-solicit provision.

    

    4. 
      RELEASES.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    4.1 TORO’S
      RELEASE.

     

    TORO
      waives, acquits, forever discharges and hereby releases Company from any and
      all
      claims, demands, actions, or causes of action, whether known or unknown, arising
      from or related in any way to any employment of or past or future failure or
      refusal to employ TORO by Company, or any other past or future claim (except
      as
      reserved by this Agreement or where expressly prohibited by law) that relates
      in
      any way to TORO’s employment, employment contract, board membership, board
      observation rights, any termination, compensation, benefits, reemployment or
      application for employment, with the exception of any claim either party may
      have for enforcement of this Agreement. This release includes any and all
      claims, direct or indirect, which might otherwise be made under any applicable
      local, state or federal authority, including but not limited to any claim
      arising under the state or local statutes where TORO was employed by Company
      dealing with employment, discrimination in employment, Title VII of the Civil
      Rights Act of 1964, the Civil Rights Act of 1991, the Americans With
      Disabilities Act, the Family and Medical Leave Act of 1993, the Equal Pay Act
      of
      1963, Executive Order 11246, the Rehabilitation Act of 1973, the Uniformed
      Services Employment and Reemployment Rights Act of 1994, the Age Discrimination
      in Employment Act, the Older Workers Benefit Protection Act, the Fair Labor
      Standards Act, wage and hour statutes of the state where employed, all as
      amended, any regulations under such authorities, or any other applicable
      statutory contract, tort, or common law theories, except that TORO does not
      release SOLAR from its obligations under this Agreement, its contribution and
      indemnification
      obligations, if any, or from any coverage under any policy of insurance
      providing indemnity and related costs for the benefit of TORO.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4.2 NO
      ADMISSION OF LIABILITY. 

     

    It
      is
      understood and agreed that the acts done and evidenced hereby and the release
      granted hereunder is not an admission of liability on the part of TORO, SOLAR
      or
      Company, by whom liability has been and is expressly denied.

     

    5. CONSIDERATION.

     

    After
      receipt of this Agreement properly and fully endorsed by TORO, SOLAR will be
      obligated to pay to TORO: Thirty Four Thousand dollars ($34,000.00) (less proper
      withholding), payable upon execution. 

     

    As
      additional consideration for entering into this Agreement, TORO hereby agrees
      to
      terminate those certain options granted to TORO pursuant to the Employment
      Agreement. 

     

    6. MUTUAL
      NONDISPARAGEMENT.

     

    TORO
      agrees that TORO will not disparage or make false statements about Company.
      SOLAR should report to TORO any actions or statements that are attributed to
      TORO that SOLAR believes are disparaging or false. SOLAR may take actions
      consistent with the provision for breach of the agreement should it determine
      that TORO has disparaged or made false statements about Company.

     

    SOLAR
      agrees that its officers and directors will not disparage or make false
      statements about TORO. TORO should report to SOLAR any actions or statements
      that are attributed to SOLAR’s officers or directors which TORO believes are
      disparaging or false. TORO may take actions consistent with the provision for
      breach of this Agreement should TORO determine that SOLAR’s officers or
      directors have disparaged or made false statements about TORO.

     

    7. CONFIDENTIAL,
      PROPRIETARY AND TRADE SECRET INFORMATION.

     

    TORO
      acknowledges the continuing duties under the Employment Agreement signed by
      TORO
      and agrees not to use or disclose confidential, proprietary or trade secret
      information learned while an employee of SOLAR or its predecessors, including
      the terms of this Agreement, and covenants not to breach that duty (except
      as
      required by law). Should TORO, TORO’s attorney or agents be requested in any
      judicial, administrative, or other proceeding or investigation to disclose
      confidential, proprietary or trade secret information TORO learned while an
      employee of SOLAR or its predecessors, TORO shall promptly notify SOLAR of
      such
      request.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    8. COVENANTS.

     

    
      
        8.1 
          COVENANT
          NOT TO PROSECUTE OR MAINTAIN ANY ACTION OR
          PROCEEDING.

      

    

    

    In
      exchange for the Consideration, TORO covenants as to Company, not to prosecute
      or hereafter maintain or institute any action at law, suit or proceeding in
      equity, administrative or any proceeding of any kind or nature whatsoever for
      any reason related in any way to any claim released herein. TORO further
      covenants and agrees that TORO will not raise any claim against Company, by
      way
      of defense, counterclaim or cross-claim or in any other manner, on any alleged
      claim, demand, liability or cause of action released herein. At the time of
      his
      execution of this Agreement, TORO represents that there are no claims,
      complaints or charges pending against Company in which TORO is a party or
      complainant. Further, TORO acknowledges and agrees there are no unasserted
      workers’ compensation claims through the date of his execution of this
      Agreement.

     

    8.2 COVENANT
      TO RETURN ALL COMPANY PROPERTY. 

     

    TORO
      agrees to return all property of SOLAR or Company, if any, within seven (7)
      days
      after TORO’s execution of this Agreement. For the purposes of this Agreement,
      property includes, but is not limited to, credit cards, keys, card keys,
      computers, computer files, all originals and copies of all documents, cell
      phone, palm pilot, equipment, supplies, and any other property belonging to
      SOLAR or Company. TORO further covenants that, since May 1, 2007, TORO has
      no
      personal charges nor unauthorized business charges on the credit cards to be
      returned or otherwise and agrees to reimburse SOLAR if TORO is
      mistaken.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    8.3 COOPERATION
      IN DEFENSE OF COMPANY; CONSULTATION.

     

    TORO
      agrees to reasonably provide specific operations information to SOLAR as
      requested in a reasonable, timely and clear manner to allow SOLAR to continue
      and/or complete job tasks, activities, assignments, to continue effective
      relationships with business partners by responding to reasonable inquiries
      as
      needed by telephone (“Consulting Services”). Through August 31, 2007, these
      Consulting Services will be at no additional cost to SOLAR beyond what is
      provided in this Agreement. Thereafter, SOLAR agrees to pay to TORO $350 per
      hour plus reasonable travel and out-of-pocket expenses for any such Consulting
      Services.

     

    8.5 RESIGNATION
      FROM BOARD OF DIRECTORS.

     

    By
      executing Exhibit
      A
      concurrently with this Agreement, TORO hereby tenders his resignation as an
      officer and a director of SOLAR effective June 1, 2007. Further, TORO hereby
      agrees to waive any and all rights to notice and attendance at all regular
      and
      special meetings of TORO’s board of directors.

     

    
      
        9. 
          ARBITRATION
          OF CERTAIN DISPUTES; CLAIMS FOR IRREPARABLE HARM;
          VENUE.

      

    

    

    Except
      as
      provided below, TORO and SOLAR agree that should any dispute arise between
      the
      parties whether or not arising out of this Agreement, the issue shall be
      submitted to arbitration in New York, New York, before one arbitrator pursuant
      to the then current employment rules of the American Arbitration Association.
      In
      such event, each party shall pay its own costs and attorneys’
      fees.
      Notwithstanding the above, in the event either party wishes to obtain equitable
      relief for violations of paragraphs 6, 7, or 8 including, without limitation,
      specific performance, immediate issuance of a temporary restraining order or
      preliminary injunction enforcing this Agreement, it may bring a claim for such
      relief in arbitration or in an action in an applicable court in New York, New
      York.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      
        10. 
          SCOPE
          OF AGREEMENT.

      

    

     

    The
      provisions of this Agreement shall be deemed to obligate, extend to, and inure
      to the benefit of the parties: Company’s
      affiliates, successors, predecessors, assigns, directors, officers, and
      employees; and each parties insurers, transferees, grantees, legatees, agents
      and heirs, including those who may assume any and all of the above-described
      capacities subsequent to the execution and effective date of this
      Agreement.

     

    
      
        11. 
          OPPORTUNITY
          FOR ADVICE OF COUNSEL.

      

    

     

    TORO
      acknowledges that TORO has been encouraged by SOLAR to seek advice of counsel
      with respect to this Agreement and has had the opportunity to do
      so.

     

    
      
        12. 
          SEVERABILITY.

      

    

     

    Every
      provision of this Agreement is intended to be severable. In the event any term
      or provision of this Agreement is declared to be illegal or invalid for any
      reason whatsoever by an arbitrator or a court of competent jurisdiction or
      by
      final and unappealed order of an administrative agency of competent
      jurisdiction, such illegality or invalidity should not affect the balance of
      the
      terms and provisions of this Agreement, which terms and provisions shall remain
      binding and enforceable.

     

    13. 
      NO
      WAIVER.

     

    Failure
      of either party to enforce any term of this Agreement shall not constitute
      a
      waiver of the party’s
      right
      to enforce that term or any other term of this Agreement. 

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    14. 
      COSTS
      AND ATTORNEY’S
      FEES.

     

    The
      parties each agree to bear their own costs and attorneys’
      fees
      which have been or may be incurred in connection with any matter herein or
      in
      connection with the negotiation and consummation of this Agreement or any action
      to enforce the provisions of this Agreement.

     

    
      
        15. 
          GOVERNING
          LAW.

      

    

     

    The
      rights and obligations of the parties under this Agreement shall in all respects
      be governed by the laws of the United States and the State of New
      York.

     

    16. PAYMENT

     

    TORO
      acknowledges that the Agreement provides severance pay and benefits which SOLAR
      would otherwise not be obligated to provide. Upon receipt of TORO’s
      properly-signed Agreement, payment by SOLAR as provided herein will be forwarded
      by mail in a timely manner.

     

    17. ENTIRE
      AGREEMENT: MODIFICATION.

     

    This
      Agreement and the Employment Agreement signed by TORO contain the entire
      agreement and understanding among the parties as to TORO’s separation as an
      employee and director. This Agreement supersedes and replaces all other prior
      negotiations and proposed agreements, written or oral as to TORO’s separation.
      TORO and SOLAR acknowledge that no other party, nor agent nor attorney of any
      other party, has made any promise, representation, or warranty, express or
      implied, not contained in this Agreement concerning the subject matter of this
      Agreement or to induce this Agreement, and TORO and SOLAR acknowledge that
      they
      have not executed this Agreement in reliance upon any such promise,
      representation, or warranty not contained in this Agreement. 

     

    No
      modification or waiver of any of the provisions or any future representation,
      promise or addition shall be binding upon the parties unless made in writing
      and
      signed by the parties.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the undersigned has executed this Severance Agreement and
      Convenants as of the 1st
      day of
      June, 2007.

     

    

      
        	 	
                __________________________________

              
	 	
                Csaba
                  Toro

              
	 	 
	 	 
	 	 
	 	 
	 	
                SOLAR
                  THIN FILMS, INC.

              
	 	 
	 	
                By:
                  _______________________________

              
	 	 
	 	
                Its:
                  _______________________________

              
	 	
                On
                  behalf of “SOLAR” 

              
	 	
                and
                  “Company”

              

      

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Exhibit
      A

    

    

    RESIGNATION

    

    

    The
      undersigned, Csaba Toro, effective as of June 20, 2007, hereby resigns from
      his
      positions as officer and director of Solar Thin Films, Inc., a Delaware
      corporation.

    

    

    

    _________________________________

    Csaba
      Toro

    

    
      
         

      

      
        10Exhibit
      10.1

    

    June
      22,
      2007

    

    Universal
      Security Instruments, Inc.

    7
      Gwynns
      Mill Court 

    Owings
      Mills , Maryland 21117 

    

    AMENDED
      AND RESTATED FACTORING AGREEMENT

    

    Ladies
      and Gentlemen:

    

    We
      are
      pleased to confirm the terms and conditions that will govern our funds in use
      accounting, notification factoring arrangement with advances (the “Agreement”).
      This Agreement shall amend, replace and supersede in its entirety the Factoring
      Agreement between us dated February 28, 1995, as supplemented and amended.
      This
      Agreement is intended to set forth the terms and provisions pursuant to which
      we
      shall factor the sales created or arising on and after the date hereof. This
      Agreement shall in no way be construed to, nor shall it affect, modify, diminish
      or break the continuity of our ownership and/or security interest in, as further
      set forth herein, all of your present and future accounts receivable, as more
      fully described in said Factoring Agreement which ownership and/or security
      interest is hereby ratified and confirmed by this Agreement as provided above.
      

    

    1. SALE
      OF ACCOUNTS

    You
      sell
      and assign to us, and we purchase as absolute owner, all accounts arising from
      your sales of inventory or rendition of services, including those under any
      trade names, through any divisions and through any selling agent (collectively,
      the "Accounts" and individually, an "Account").

    

    2, CREDIT
      APPROVAL 

    

    2.1 Requests
      for credit approval for all of your orders must be submitted to our Credit
      Department via computer by either: (a) On-Line Terminal Access, or (b)
      Electronic Batch Transmission. If you are unable to submit orders via computer,
      then orders can be submitted over the phone, by fax or in writing. All credit
      decisions by our Credit Department (including approvals, declines and holds)
      will be sent to you daily by a Credit Decisions Report, which constitutes the
      official record of our credit decisions. Credit approvals will be effective
      only
      if shipment is made or services are rendered within thirty (30) days from the
      completion date specified in our credit approval. Credit approval of any Account
      may be withdrawn by us any time before delivery is made or services are
      rendered.

    

    2.2 We
      assume
      the Credit Risk on each Account approved in the Credit Decision Report. “Credit
      Risk” means the customer's failure to pay the Account in full when due on its
      longest maturity solely because of its financial inability to pay. If there
      is
      any change in the amount, terms, shipping date or delivery date for any shipment
      of goods or rendition of services (other than accepting returns and granting
      allowances as provided in section 0 below), you must submit a change of terms
      request to us, and, if such pertains to a Factor Risk Account, then we shall
      advise you of our decision either to retain the Credit Risk or to withdraw
      the
      credit approval. Accounts on which we bear the Credit Risk are referred to
      collectively as "Factor Risk Accounts", and individually as a "Factor Risk
      Account". Accounts on which you bear some or all of the risk as to credit are
      referred to collectively as "Client Risk Accounts", and individually as a
      "Client Risk Account".

    

    2.3 We
      shall
      have no liability to you or to any person, firm or entity for declining,
      withholding or withdrawing credit approval on any order. If we decline to credit
      approve an order and furnish to you any information regarding the credit
      standing of that customer, such information is confidential and you agree not
      to
      reveal same to the customer, your sales agent or any third party. You agree
      that
      we have no obligation to perform, in any respect, any contracts relating to
      any
      Accounts.

    

    3. INVOICING
      

    

    You
      agree
      to place a notice (in form and content acceptable to us) on each invoice and
      invoice equivalent that the Account is sold, assigned and payable only to us,
      and to take all necessary steps so that payments and remittance information
      are
      directed to us. All invoices, or their equivalents, will be promptly mailed
      or
      otherwise transmitted by you to your customers at your expense. You will provide
      us with copies of all invoices (or the equivalent thereof if the invoices were
      sent electronically), confirmation of the sale of the Accounts to us and proof
      of shipment or delivery, all as we may reasonably request. If you fail to
      provide us with copies of such invoices (or equivalents) or such proofs when
      requested by us, we will not bear any Credit Risk as to those Accounts.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4. REPRESENTATIONS
      AND WARRANTIES

    

    4.1 You
      represent and warrant that: each Account is based upon a bona fide sale and
      delivery of inventory or rendition of services made by you in the ordinary
      course of business; the inventory being sold and the Accounts created are your
      exclusive property and are not, and will not be, subject to any lien,
      consignment arrangement, encumbrance or security interest other than in our
      favor; all amounts are due in United States Dollars; all original invoices
      bear
      notice of the sale and assignment to us; any taxes or fees relating to your
      Accounts or inventory are solely your responsibility; and none of the Accounts
      factored with us hereunder represent sales to any subsidiary, affiliate or
      parent company. You also warrant and represent that: your customers have
      accepted the goods or services and owe and are obligated to pay the full amounts
      stated in the invoices according to their terms, without dispute, claim, offset,
      defense, deduction, rejection, recoupment, counterclaim or contra account,
      other
      than as to returns and allowances as provided in section 8 below (the foregoing
      being referred to in this Agreement as "Customer Claims").

     

    4.2 You
      further represent and warrant that: your legal name is exactly as set forth
      on
      the signature page of this Agreement, you are a duly organized and validly
      existing business organization incorporated or registered in the state of
      Maryland, and are qualified to do business in all states where required; the
      most recent financial statements provided by you to us accurately reflect your
      financial condition as of that date and there has been no material adverse
      change in your financial condition since the date of those financial statements.
      You
      agree
      to furnish us with such information concerning your business affairs and
      financial condition as we may reasonably request from time to time,
      including
      consolidated financial
      statements as of the end of such year, reviewed by a firm of independent,
      certified public accountants, selected by you and acceptable to us.

    

    4.3 You
      agree
      that you will promptly notify us of any change in your: name, state of
      incorporation or registration, location of your chief executive office, place(s)
      of business, and legal or business structure. Further, you agree that you will
      promptly notify us of any change in control of the ownership of your business
      organization, and of significant lawsuits or proceedings against you.

    

    5. PURCHASE
      OF ACCOUNTS 

    

    We
      shall
      purchase the Accounts for the gross amount of the respective invoices, less:
      factoring fees or charges, trade and cash discounts allowable to, or taken
      by,
      your customers, credits, cash on account and allowances ("Purchase Price").
      Our
      purchase of the Accounts will be reflected on the Statement of Account (defined
      in section 0 below), which we shall render to you, which will also reflect
      all
      credits and discounts made available to your customers.

     

    6. ADVANCES 

    

    At
      your
      request, and in our sole discretion, we may advance funds to you and your
      affiliate USI Electric, Inc. (“USI”) of up to the lesser of (i) $10,000,000 or
      (ii) 85% of your Accounts and the Accounts of USI, prior to the collection
      of
      the Accounts and (iii) 50% of your eligible Inventory and/or the eligible
      inventory of USI. We have the right, at any time and from time to time, to
      hold
      any reserves we deem reasonably necessary as security for the payment and
      performance of any and all of your Obligations (defined in section 0 below).
      All
      amounts you owe us, including all advances to you and any debit balance in
      your
      Client Position Account (defined in section 0 below), and any Obligations,
      are
      payable on demand and may be charged to your account at any
      time.

    PAYMENT
      OF ACCOUNTS 

    

    7.1 All
      payments received by us on the Accounts will be promptly applied to your account
      with us after crediting your customer's account. In exchange for such
      application, we shall charge your account monthly with the cost of five (5)
      additional business days on all such payments at the rate charged by us in
      section 14.1 below on debit balances. No checks, drafts or other instruments
      received by us will constitute final payment of an Account unless and until
      such
      items have actually been collected.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    7.2 The
      amount of the Purchase Price of any Factor Risk Account which remains unpaid
      will be deemed collected and will be credited to your account as of the earlier
      of the following dates:

    

    (a)
      the
      date
      of the Account's longest maturity if a proceeding or petition is filed by or
      against the customer under any state or federal bankruptcy or insolvency law,
      or
      if a receiver or trustee is appointed for the customer; or 

    
 

    (b)
      the
      last
      day of the third month following the Account’s longest maturity date if such
      Account remains unpaid as of said date without the occurrence of any of the
      events specified in clause (a) above.

    

    If
      any
      Factor Risk Account credited to you was not paid for any reason other than
      Credit Risk, we shall reverse the credit and charge your account accordingly,
      and such Account is then deemed to be a Client Risk Account.

     

    8. CUSTOMER
      CLAIMS AND CHARGE BACKS

    

    8.1 You
      must
      notify us promptly of any matter affecting the value, enforceability or
      collectibility of any Account and of all Customer Claims. You agree to promptly
      issue credit memoranda or otherwise adjust the customer’s account upon accepting
      returns or granting allowances. For full invoice credit memoranda, you agree
      to
      send duplicate copies thereof to us and to confirm their assignment to us.
      You
      may continue to do so until we have advised you that all such credits or
      allowances on Factor Risk Accounts require our prior written approval. We shall
      cooperate with you in the adjustment of Customer Claims, but we retain the
      right
      to adjust Customer Claims on Factor Risk Accounts directly with customers,
      upon
      such terms as we in our sole discretion may deem advisable. 

    

    8.2 We
      may at
      any time charge back to your account the amount of: (a) any Factor Risk Account
      which is not paid in full when due for any reason other than Credit Risk; (b)
      any Factor Risk Account which is not paid in full when due because of an act
      of
      God, civil strife, or war; (c) anticipation (interest) deducted by a customer
      on
      any Account; (d) Customer Claims; (e) any Client Risk Account which is not
      paid
      in full when due; and (f) any Account for which there is a breach of any
      representation or warranty. A charge back does not constitute a reassignment
      of
      an Account. We
      shall
      not bear the Credit Risk on any Account charged back to you.
      We
      shall immediately charge any deduction taken by a customer to your account.
      

    

    8.3 We
      may at
      any time charge to your account the amount of: (a) payments we receive on Client
      Risk Accounts which we are required at any time to turnover or return (including
      preference claims); (b) all remittance expenses (including incoming wire
      charges, currency conversion fees and stop payment fees), other than stop
      payment fees on Factor Risk Accounts; (c) expenses, collection agency fees
      and
      attorneys' fees incurred by us in collecting or attempting to collect any Client
      Risk Account or any Obligation (defined in section 0 below); and (d) our fees
      for handling collections on Client Risk Accounts which you have requested us
      to
      process, as provided in the Guide (see section 0 below). You shall indemnify
      us
      for, and hold us harmless against, any loss, liability claim or expense of
      any
      kind (including attorneys’ fees and disbursements) arising from: (i) any
      Customer Claims, (ii) any claim for a return of any payment on or relating
      to
      any Client Risk Account, or (iii) any other matter, except for any claim for
      a
      return of any payment on or relating to any Factor Risk Account. The foregoing
      indemnity shall survive any termination of this Agreement. 

    

    9. HANDLING
      AND COLLECTING ACCOUNTS; RETURNED GOODS

    

    9.1 As
      owners
      of the Factor Risk Accounts, we have the right to: (a) bring suit, or otherwise
      enforce collection, in your name or ours; (b) modify the terms of payment,
      (c)
      settle, compromise or release, in whole or in part, any amounts owing, and
      (d)
      issue credits in your name or ours. To the extent applicable, you waive any
      and
      all claims and defenses based on suretyship. If moneys are due and owing from
      a
      customer for both Factor Risk Accounts and Client Risk Accounts, you agree
      that
      any payments or recoveries received on such Accounts will be applied using
      our
      normal procedures. If at the time of a customer liquidation, we each have
      Accounts at our respective risk, we agree that all payments, dividends,
      recoveries or proceeds will be shared pro rata in proportion to our respective
      Credit Risk for that customer. Once you have granted or issued a discount,
      credit or allowance on any Account, you have no further interest therein. Any
      checks, cash, notes or other documents or instruments, proceeds or property
      received with respect to the Accounts must be held by you in trust for us,
      separate from your own property, and immediately turned over to us with proper
      endorsements. We may endorse your name or ours on any such check, draft,
      instrument or document. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    9.2 As
      owners
      and assignees of the Accounts and all proceeds thereof, upon our written notice,
      you will, at your expense, set aside, mark with our name and hold in trust
      for
      us, any and all returned, rejected, reclaimed or repossessed inventory
      (“Returned Goods”). Further, upon such notice, you agree promptly: to notify us
      of all Returned Goods and, at our request, either to deliver same to us, or
      to
      pay us the invoice price thereof, or to sell the same for our account.

     

    10. STATEMENT
      OF ACCOUNT

    

    Periodically
      we shall make available to you certain reports reflecting Accounts purchased,
      advances made, fees and charges and all other financial transactions between
      us
      during the applicable period ("Reports"). The Reports that shall be made
      available to you include a Statement of Account reflecting transactions in
      three
      sections: an accounts receivable account (the “Accounts Receivable”), a client
      position account (the “Client Position Account”) and a funds in use account (the
“Funds In Use”). The Reports shall be deemed correct and binding upon you and
      shall constitute an account stated between us unless we receive your written
      statement of exceptions within thirty (30) days after same are made available
      to
      you.

    

    11. GRANT
      OF SECURITY INTEREST

    

    11.1 You
      hereby assign and grant to us a continuing security interest in all of your
      right, title and interest in and to all of your now existing and future
(herein
      collectively the “Collateral”):
      (a)
      accounts (including the Accounts), instruments, documents, chattel paper
      (including electronic chattel paper), and any other obligations owing to you;
      (b) unpaid seller's rights (including rescission, repossession, replevin,
      reclamation and stoppage in transit); (c) rights to any inventory represented
      by
      the foregoing, including Returned Goods; (d) reserves and credit balances
      arising hereunder; (e) guarantees, collateral, supporting obligations and letter
      of credit rights with respect to the foregoing; (f) insurance policies, proceeds
      or rights relating to the foregoing; (g) general intangibles (including all
      payment intangibles and all other rights to payment); (h) federal, state and
      local income tax refunds; (i) cash and non-cash proceeds of the foregoing;
      and
      (i) Books and Records (defined in section 0 below) evidencing or pertaining
      to
      the foregoing.

    

    11.2 You
      agree
      to comply with all applicable laws to perfect our security interest in
      collateral pledged to us hereunder, and to execute such documents as we may
      require to effectuate the foregoing and to implement this Agreement. You
      irrevocably authorize us to file financing statements, and all amendments and
      continuations with respect thereto, all in order to create, perfect or maintain
      our security interest in the Collateral, and you hereby ratify and confirm
      any
      and all financing statements, amendments and continuations with respect thereto
      heretofore and hereafter filed by us pursuant to the foregoing
      authorization.

     

    12. OBLIGATIONS
      SECURED

    

    The
      security interest granted hereunder and any lien or security interest that
      we
      now or hereafter have in any of your other assets, collateral or property,
      secure the payment and performance of all of your now existing and future
      indebtedness and obligations to us, whether absolute or contingent, whether
      arising under this Agreement or any other agreement or arrangement between
      us,
      by operation of law or otherwise ("Obligations"). Obligations also includes
      ledger debt (which means indebtedness for goods and services purchased by you
      from any party whose accounts receivable are factored or financed by us), and
      indebtedness arising under any guaranty, credit enhancement or other credit
      support granted by you in our favor. Any reserves or balances to your credit
      and
      any other assets, collateral or property of yours in our possession constitutes
      security for any and all Obligations. 

     

    13. BOOKS
      AND RECORDS AND EXAMINATIONS

    

    13.1 You
      agree
      to maintain such Books and Records concerning the Accounts as we may reasonably
      request and to reflect our ownership of the Accounts therein. “Books and
      Records” means your accounting and financial records (whether paper, computer or
      electronic), data, tapes, discs, or other media, and all programs, files,
      records and procedure manuals relating thereto, wherever located. 

    

    13.2 Upon
      our
      reasonable request, you agree to make your Books and Records available to us
      for
      examination and to permit us to make copies or extracts thereof. Also, you
      agree
      to permit us to visit your premises during your business hours and to conduct
      such examinations as we deem reasonably necessary. To cover our costs and
      expenses of any such examinations, we shall charge you $1,000 for each day,
      or
      part thereof, during which such examination is conducted, plus any out-of-pocket
      costs and expenses incurred by us, as provided in the Guide (see section 0
      below) Said Examination fees shall be limited to $25,000.00 in any Contract
      Year
      on a combined basis with you, USI Electric, Inc, and International Conduit,
      Ltd. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    14. INTEREST

    

    14.1 Loans
      and
      advances made to you hereunder may bear interest based either on the JPMorgan
      Rate, as defined in section 14.2 hereof (the "JPMorgan Rate Loans") or, subject
      to the terms set forth below, based on the LIBOR Rate, as defined in section
      14.4 hereof (the "LIBOR Rate Loans"). 

    

    14.2 Interest
      accrued on JPMorgan Rate Loans shall be due and payable in arrears on the last
      day of each month, and shall be calculated at a per annum rate 0.25% below
      the
      JPMorgan Rate. The JPMorgan Rate is the per annum rate of interest publicly
      announced by JPMorgan Chase Bank (or its successor) in New York, New York from
      time to time as its prime rate, and is not intended to be the lowest rate of
      interest charged by JPMorgan Chase Bank to its borrowers. Any change in the
      rate
      of interest hereunder due to a change in the JPMorgan Rate will take effect
      as
      of the first of the month following such change in the JPMorgan Rate. Interest
      will be credited as of the last day of each month based on the daily credit
      balances in your Funds In Use account for that month, at a rate four percent
      (4%) per annum below the JPMorgan Rate being used to calculate interest for
      the
      period. All interest is calculated on a 360 day year. 

    

    14.3 Interest
      accrued on LIBOR Rate Loans shall be due and payable in arrears on the earlier
      of (a) the last day of the applicable Interest Period and (b) the first calendar
      day of each quarter (for the immediately preceding quarter) computed through
      the
      last calendar day of the Interest Period or the last calendar day of the
      preceding quarter, as the case may be, and shall be calculated at a rate equal
      to two percent (2.0%) over the LIBOR Rate.

    

    14.4 As
      used
      in this Section 14, the following terms shall have the following meanings:
      

    

    (a) "Interest
      Period" shall mean, for any LIBOR Rate Loan, the period commencing on the date
      of the borrowing thereof and ending on the last day of the period selected
      by
      you pursuant to the provisions contained in Section 14.5. The duration of each
      such Interest Period shall be for one, two or three months, in each case as
      you
      may select, pursuant to an appropriate notice of borrowing, notice of
      continuation or notice of conversion, except as otherwise provided in Section
      14.5 or Section 14.6. Notwithstanding anything hereinabove to the contrary,
      you
      may not select any Interest Period that ends after the last day of the
      applicable Period, as defined in Section 15.1. Whenever the last day of any
      Interest Period would otherwise occur on a day other than a business day, the
      last day of such Interest Period shall be extended so as to occur on the next
      succeeding business day; provided,
      however,
      if such
      extension would cause the last day of such Interest Period to occur during
      the
      next following calendar month, the last day of such Interest Period shall occur
      on the next preceding business day.

    

    (b) “LIBOR
      Rate” shall mean with respect to the Interest Period applicable to the borrowing
      of a LIBOR Rate Loan, the rate obtained (rounded upwards to the nearest
      one-sixteenth of one percent) by dividing (i) the rate of interest per annum
      appearing in the interest rate quote section of the Wall
      Street Journal
      on the
      first business day prior to the commencement of such Interest Period for U.S.
      dollar deposits of amounts in immediately available funds comparable to the
      principal amount of the LIBOR Rate Loan for which the LIBOR Rate is being
      determined with maturities comparable to the Interest Period for which such
      LIBOR Rate will apply, by (ii) an amount equal to one minus the stated reserve
      (expressed as a decimal), if any, required to be maintained against
      "Eurocurrency liabilities" as specified in Regulation D of the Board of
      Governors of the Federal Reserve System as from time to time shall be in effect
      (or against any other category of liabilities, which includes deposits, by
      reference to which the interest rate on LIBOR Rate Loans is determined or any
      category of extensions of credit on other assets, which includes loans by a
      Non-U.S. office of the JPMorgan Chase Bank to U.S. residents). In the absence
      of
      manifest error, each determination by us of the applicable LIBOR Rate shall
      be
      deemed conclusive. 

    

    14.5 Requests
      for LIBOR Rate Loans shall be made on at least three (3) business days’ prior
      written notice to us, in which notice you shall specify the amount of the
      proposed LIBOR Rate Loan, the Interest Period with respect thereto, and the
      proposed borrowing date, provided,
      however,
      that no
      such request with respect to the borrowing of a LIBOR Rate Loan may be made
      after the occurrence and during the continuance of any Event of Default
      hereunder.

    

    14.6 (A) Subject
      to the provisions of paragraph (C) hereof, you may elect to maintain any
      borrowing consisting of LIBOR Rate Loans, or any portion thereof, as a LIBOR
      Rate Loan by selecting a new Interest Period for such borrowing, which new
      Interest Period shall commence on the last day of the then existing Interest
      Period, provided
      that no
      Event of Default shall have occurred and be continuing on the date upon which
      notice of a proposed Continuation (as hereafter defined) is given. Each
      selection of a new Interest Period (a "Continuation") shall be made on three
      (3)
      business days’ prior notice, given by you to us not later than 12:00 noon (New
      York City time) on the third business day preceding the date of any proposed
      Continuation. If you elect to maintain more than one borrowing consisting of
      LIBOR Rate Loans by combining such borrowings into one borrowing and selecting
      a
      new Interest Period pursuant to this subsection, each of the borrowings so
      combined shall consist of LIBOR Rate Loans having Interest Periods ending on
      the
      same date. If you shall fail to select a new Interest Period for any borrowing
      consisting of LIBOR Rate Loans in accordance with this paragraph (A), each
      such
      LIBOR Rate Loan shall automatically convert into a JPMorgan Rate
      Loan.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (B) Subject
      to the provisions of paragraph (C) hereof, you may convert the entire amount
      of
      or a portion of all loans of the same type into loans of the other type (a
      "Conversion"), provided,
      that
      (i) no Event of Default shall have occurred and be continuing, (ii) any
      Conversion of JPMorgan Rate Loans into LIBOR Rate Loans such may only be made
      upon three (3) business days' prior notice given to us, and (iii) any Conversion
      of any LIBOR Rate Loans into JPMorgan Rate Loans may only be made on the last
      day of the Interest Period for such LIBOR Rate Loans, and upon Conversion of
      any
      JPMorgan Rate Loans into LIBOR Rate Loans, you shall pay accrued interest to
      the
      date of Conversion on the principal amount converted on the first day of the
      following month. Each such notice of Conversion of a Base Rate Loan to a LIBOR
      Rate Loan shall be given not later than 12:00 noon (New York City time) on
      the
      third business day preceding the date of any proposed Conversion. Each
      Conversion of JPMorgan Rate Loans into LIBOR Rate Loans shall be in an aggregate
      amount of not less than One Million Dollars ($1,000,000.00). You may elect
      to
      convert the entire amount of or a portion of all loans of the same type
      comprising more than one borrowing into loans of the other type by combining
      such borrowings into one borrowing consisting of loans of such other type;
      provided,
      however,
      that if
      the borrowings so combined consist of LIBOR Rate Loans, such LIBOR Rate Loans
      shall have Interest Periods ending on the same date.

    

    (C) Notwithstanding
      anything contained in paragraphs (A) and (B) above to the contrary:

    

    
      	 	
              (i)

            	
              if
                we reasonably determine that adequate and fair means do not otherwise
                exist for ascertaining the LIBOR Rate for LIBOR Rate Loans comprising
                any
                requested borrowing, Continuation or Conversion, your right to select
                or
                maintain LIBOR Rate Loans for such borrowing or any subsequent borrowing
                shall be suspended until we shall notify you that the circumstances
                causing such suspension no longer exist, and each loan comprising
                such
                requested borrowing, Continuation or Conversion shall be automatically
                converted into a JPMorgan Rate Loan;

            

    

    

    
      	 	
              (ii)

            	
              if
                at any time we shall notify you in good faith that the LIBOR Rate
                for
                loans comprising such borrowing will not adequately reflect the cost
                to us
                of making such loans, your right to select, maintain, continue or
                convert
                to LIBOR Rate Loans for any borrowing shall be suspended until we
                shall
                notify you that the circumstances causing such suspension no longer
                exist,
                and each loan comprising such borrowing shall be automatically converted
                into a JPMorgan Rate Loan; 

            

    

    

    
      	 	
              (iii)

            	
              there
                shall not be outstanding at any one time more than three (3) loan
                tranches
                bearing interest based on the LIBOR Rate;
                and

            

    

    

    
      	 	
              (iv)

            	
              not
                more than Seven Million Dollars ($7,000,000.00) in principal amount
                of
                loans and advances outstanding hereunder at any one time may bear
                interest
                based on the LIBOR Rate.

            

    

    

    (D) Each
      notice of Continuation or Conversion shall be irrevocable and binding on you.
      In
      the case of (i) any borrowing of a loan, Continuation or Conversion that the
      related notice of borrowing, notice of Continuation or notice of Conversion
      specifies is to be comprised of LIBOR Rate Loans or (ii) any payment or
      prepayment of principal of, or Conversion or Continuation of, any LIBOR Rate
      Loan made other than on the last day of the Interest Period for such loan as
      a
      result of a payment, prepayment, Conversion or Continuation of such loan or
      acceleration of the maturity of any of the Obligations pursuant to Section
      17
      hereof, or for any other reason, then in any such case, upon our demand, you
      shall pay to us and indemnify us from and against the following costs and
      expenses: (1) any cost or expense incurred by us as a result of any failure
      to
      fulfill, on or before the date for such borrowing, Continuation or Conversion,
      and (2) any additional costs or expenses which we may reasonably incur as a
      result of such payment or prepayment, including, without limitation in each
      such
      case, any cost or expense incurred by reason of the liquidation or redeployment
      of deposits or other funds acquired by us to fund the LIBOR Rate Loans requested
      by you to be made as part of such borrowing, Continuation or
      Conversion.

    

    14.7 Notwithstanding
      any other provision herein, if any change in any "Requirement of Law" or in
      the
      interpretation or application thereof shall make it unlawful for us to make
      or
      maintain LIBOR Rate Loans, as contemplated by this Agreement, then (i) our
      obligation to make LIBOR Rate Loans, continue LIBOR Rate Loans as such and
      convert JPMorgan Rate Loans to LIBOR Rate Loans forthwith shall be cancelled
      and
      (ii) any loans then outstanding as LIBOR Rate Loans automatically shall be
      converted to JPMorgan Rate Loans on the respective last days of the then current
      Interest Periods with respect to such loans or within such earlier period as
      required by law. If any such conversion of a LIBOR Rate Loan occurs on a day
      which is not the last day of the then current Interest Period with respect
      thereto, you shall pay to us such amounts, if any, as may be required pursuant
      to Section 14.6 (D). As used herein, the term "Requirement of Law" shall mean
      as
      to any person, any law, treaty, rule or regulation or determination of an
      arbitrator or a court or other governmental authority, in each case applicable
      to or binding upon such person or any of its property or pursuant to which
      such
      person or any of its property is subject.

    

    14.8 If
      we
      shall have reasonably determined that the adoption of any law, rule or
      regulation regarding capital adequacy, or any change therein or in the
      interpretation or application thereof, or compliance by us with any request
      or
      directive regarding capital adequacy (whether or not having the force of law)
      from any central bank or governmental authority, does or shall have the effect
      of reducing the rate of return on our capital as a consequence of our
      obligations hereunder to a level below that which we could have achieved but
      for
      such adoption, change or compliance (taking into consideration our policies
      with
      respect to capital adequacy) by a material amount, then from time to time,
      after
      submission by us to you of a written demand therefor, you agree to pay to us
      such additional amount or amounts as will compensate us for such reduction.
      Our
      certificate claiming entitlement to payment as set forth above shall be
      delivered to you and shall be conclusive in the absence of manifest error.
      Such
      certificate shall set forth the nature of the occurrence giving rise to such
      reduction, the additional amount or amounts to be paid to us, and the method
      by
      which such amounts were determined. In determining such amount, we may use
      any
      reasonable averaging and attribution method.

    

    14.9 In
      no
      event will interest charged hereunder exceed the highest lawful rate. In the
      event, however, that we do receive interest in excess of the highest lawful
      rate, you agree that your sole remedy would be to seek repayment of such excess,
      and you irrevocably waive any and all other rights and remedies which may be
      available to you under law or in equity.

    

    14.10 Notwithstanding
      anything to the contrary contained herein, we shall not be required to purchase
      United States Dollar deposits in the London interbank market or from any other
      applicable LIBOR Rate market or source or otherwise “match fund” to fund any
      loans, but any and all provisions hereof relating to LIBOR Rates shall be deemed
      to apply as if we had purchased such deposits to fund any LIBOR Rate Loans.
      

    

    15. FACTORING
      FEES AND OTHER CHARGES 

     

    15.1 For
      our
      services hereunder, you will pay us a factoring fee or charge as set forth
      below
      on the gross face amount of all Accounts factored with us, but in no event
      less
      than $4.50 per invoice. 

    

    The
      factoring fee will be as follows:

    

    (a) 1%
      on the
      gross face amount of all of your Accounts factored with us and the accounts
      of
      USI (collectively, “Combined Accounts”) during each calendar month on the first
      Fifteen Million Dollars ($15,000,000.00) of Accounts during any Period;
      and

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b) 0.875%
      on
      the gross face amount of all Combined
      Accounts factored
      with us during each calendar month on Combined Accounts in excess of Fifteen
      Million Dollars ($15,000,000.00) up to Thirty Million Dollars ($30,000,000.00)
      during such Period; and 

    

    (c) 0.75%
      on
      the gross face amount of all Combined
      Accounts factored
      with us during each calendar month on Combined Accounts in excess of Thirty
      Million Dollars ($30,000,000.00) during such Period; and

    

    (d) 0.25%
      of
      the gross face amount of all Combined Accounts factored with us from Home Depot
      Inc., Home Depot Supply, Hughes Supply, Inc. and Contractors
      Warehouse.

    

    (e) Commencing
      on
      the
      date occurring on the first day of the next month hereafter,
      if the
      actual factoring fees or charges paid to us by you and USI, during the period
      commencing on January 1, 2007 to December 31, 2007 (“Initial Period”) is less
      than $75,000.00 (such amount, the “Initial Minimum Factoring Fees”), we shall
      charge your account and/or USI’s account, at our option, as of the end of such
      Initial Period with an amount equal to the difference between the actual
      factoring fees or charges paid during such Initial Period and said Initial
      Minimum Factoring Fees. Commencing on
      the
      first day of the month immediately following the end of the Initial Period,
      if
      the actual factoring fees or charges paid to us by you and/or USI, during any
      calendar year or part thereof which follows (“Subsequent Period”) is less than
      the Initial Minimum Factoring Fees we shall charge your
      account and/or the account of USI, at our option,
      as of
      the end of such Subsequent Period with an amount equal to the difference between
      the actual factoring fees or charges paid during such Subsequent Period and
      the
      Initial Minimum Factoring Fees.
      For
      purposes of this Agreement the Initial Period and each Subsequent Period may
      be
      referred to as the “Period”. Without limiting the forgoing, upon any termination
      of this Agreement or upon the termination of the separate Factoring Agreements
      between you and USI, we shall have the right to immediately charge your account
      and/or the account of USI, at our option, with an amount equal to the Initial
      Minimum Factoring Fees if any, for such Period or Periods through the next
      forthcoming Anniversary Date of this Agreement, as applicable.

    

    15.2 You
      agree
      to pay all costs and expenses incurred by us in connection with or in any way
      related to: (i) this Agreement or (ii) the preparation, execution,
      administration and enforcement of this Agreement, including all reasonable
      fees
      and expenses attributable to the services of our attorneys (whether in-house
      or
      outside), search fees and public record filing fees. Furthermore, you agree
      to
      pay to us our fees (as more fully set forth in the Guide, see section 0 below)
      including fees for: (a) special reports prepared by us at your request; (b)
      wire
      transfers; (c) handling change of terms requests relating to Accounts; and
      (d)
      your usage of our on-line computer services. Beginning on the first of the
      month
      six months from the date hereof, you also agree to pay us our fees for : (i)
      each new customer set-up on our customer accounts receivable data base and
      each
      new customer relationship established for you; (ii) crediting your account
      with
      proceeds of non-factored invoices received by us; and (iii) charge backs of
      invoices factored with us that were paid directly to you. All such fees will
      be
      charged to your account when incurred. We may change our fees from time to
      time
      upon notice to you; however, any failure to give you such notice does not
      constitute a breach of this Agreement and does not impair our ability to
      institute any such change. 

    

    15.3 Any
      tax
      or fee of any governmental authority imposed on or arising from any transactions
      between us, any sales made by you, or any inventory relating to such sales
      is
      your sole responsibility (other than income and franchise taxes imposed on
      us
      which are not related to any specific transaction between us). If we are
      required to withhold or pay any such tax or fee, or any interest or penalties
      thereon, you hereby indemnify and hold us harmless therefor and we shall charge
      your account with the full amount thereof. 

    

    15.4 In
      addition to all other fees and charges paid to us pursuant to this agreement,
      you also agree to pay us a client set up fee in the amount of $300.00, which
      we
      may charge to your account as of the date hereof, which fee relates to
      administration, analysis, review and handling performed by us in implementing
      this agreement, as well as the preparation of related legal
      documentation.

    

    16. TERMINATION

     

    16.1 You
      may
      terminate this Agreement only as of an Anniversary Date and then only by giving
      us at least sixty (60) days prior written notice of termination. Upon any
      termination of this Agreement, we shall be entitled to the unpaid portion of
      the
      Initial Minimum Factoring Fees, if any, for such Period or Periods for the
      remainder of the term of this Agreement, as applicable, and as provided in
      section 15.1 above, as of the effective date of termination. "Anniversary Date"
      means January 1, 2010, and the same date in each year thereafter. Except as
      otherwise provided, we may terminate this Agreement at any time by giving you
      at
      least sixty (60) days prior written notice of termination. However, we may
      terminate this Agreement immediately, without prior notice to you, upon the
      occurrence of an Event of Default (defined in section 0 below). 

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    16.2 This
      Agreement remains effective between us until terminated as herein provided.
      Unless sooner demanded, all Obligations will become immediately due and payable
      upon any termination of this Agreement. 

    

    16.3 All
      of
      our rights, liens and security interests hereunder continue and remain in full
      force and effect after any termination of this Agreement and pending a final
      accounting, we may withhold any balances in your account unless we are supplied
      with an indemnity satisfactory to us to cover all Obligations. You agree to
      continue to assign accounts receivable to us and to remit to us all collections
      on accounts receivable, until all Obligations have been paid in full or we
      have
      been supplied with an indemnity satisfactory to us to cover all Obligations.
      Once all Obligations have been paid in full or we have received an indemnity
      as
      described above, we shall continue to remit to you any balances in your account.
      

     

    17. EVENTS
      OF DEFAULT AND REMEDIES UPON DEFAULT 

     

    17.1 It
      is an
      "Event of Default" under this Agreement if: (a) your business ceases or a
      meeting of your creditors is called; (b) any bankruptcy, insolvency,
      arrangement, reorganization, receivership or similar proceeding is commenced
      by
      or against you under any federal or state law; (c) you breach any
      representation, warranty or covenant contained in this Agreement; (d) you fail
      to pay any Obligation when due, or (e) any default shall have occurred under
      any
      other agreement or arrangement between us. 

    

    17.2 After
      the
      occurrence of an Event of Default which is not waived by us, we may terminate
      this Agreement without notice to you. We shall then have immediate access to,
      and may remove from any premises where same may be located, any and all Books
      and Records as may pertain to the Accounts, Returned Goods and any other
      collateral hereunder. Furthermore, as may be necessary to administer and enforce
      our rights in the Accounts, Returned Goods and any other collateral hereunder,
      or to facilitate the collection or realization thereof, we have your permission
      to: (a) use (at your expense) your personnel, supplies, equipment, computers
      and
      space, at your place of business or elsewhere; and (b) notify postal authorities
      to change the address for delivery of your mail to such address as we may
      designate and to receive and open your mail. We agree to turn over to you or
      your representative all mail not related to the aforesaid purposes.

    

    17.3 After
      the
      occurrence of an Event of Default which is not waived by us, with respect to
      any
      other property or collateral in which we have a security interest, we shall
      have
      all of the rights and remedies of a secured party under Article 9 of the Uniform
      Commercial Code. If notice of intended disposition of any such property or
      collateral is required by law, it is agreed that five (5) days notice
      constitutes reasonable notice. The net cash proceeds resulting from the exercise
      of any of the foregoing rights, after deducting all charges, costs and expenses
      (including reasonable attorneys' fees) will be applied by us to the payment
      or
      satisfaction of the Obligations, whether due or to become due, in such order
      as
      we may elect. You remain liable to us for any deficiencies. With respect to
      Factor Risk Accounts and Returned Goods relating thereto, you hereby confirm
      that we are the owners thereof, and that our rights of ownership permit us
      to
      deal with this property as owner and you confirm that you have no interest
      therein, other than the right to receive payment as set forth in Section 7
      hereof. 

    

    18. MISCELLANEOUS
      PROVISIONS

    

    18.1 This
      Agreement, and all attendant documentation, as the same may be amended from
      time
      to time, constitutes the entire agreement between us with regard to the subject
      matter hereof, and supersedes any prior agreements or understandings. This
      Agreement can be changed only by a writing signed by both of us. Our failure
      or
      delay in exercising any right hereunder will not constitute a waiver thereof
      or
      bar us from exercising any of our rights at any time. The validity,
      interpretation and enforcement of this Agreement is governed by the laws of
      the
      State of New York, excluding the conflict laws of such State.

     

    18.2 The
      Client Service Guide, as supplemented and amended from time to time (the
“Guide”) has been furnished to you or is being furnished to you concurrently
      with the signing of this Agreement, and by your signature below you acknowledge
      receipt thereof. The Guide provides information on credit approval processes,
      accounting procedures and fees. The procedures for Electronic Batch Transmission
      are covered in supplemental instructions to the Guide. From time to time, we
      may
      provide you with amendments, additions, modifications, revisions or supplements
      to the Guide, which will be operative for transactions between us. All
      information and exhibits contained in the Guide, on any screen accessed by
      you,
      and on any print-outs, reports, statements or notices received by you are,
      and
      will be, our exclusive property and are not to be disclosed to, or used by,
      anyone other than you, your employees or your professional advisors, in whole
      or
      in part, unless we have consented in writing. 

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    18.3 This
      Agreement binds and benefits each of us and our respective successors and
      assigns, provided, however, that you may not assign this Agreement or your
      rights hereunder without our prior written consent. 

    

    18.4 Section
      headings are for convenience only and are not controlling. The use of
“including” means “including without limitation”. 

    

    18.5 If
      any
      provision of this Agreement is contrary to, prohibited by, or deemed invalid
      under applicable laws or regulations, such provision will be inapplicable and
      deemed omitted to such extent, but the remainder will not be invalidated thereby
      and will be given effect so far as possible.

    

    18.6 You
      further represent and covenant that you: (i) are familiar with all applicable
      anti-money laundering laws and guidelines ("AML Policies") of the United States
      of America, including the USA Patriot Act; (ii) acknowledge that your
      transactions with residents of the United States of America are subject to
      the
      AML Policies of the United States of America, including the USA Patriot Act;
      (iii) will make all reasonable efforts to comply with all applicable AML
      Policies, including, if appropriate, the USA Patriot Act; (iv) acknowledge
      that
      our performance hereunder is also subject to our compliance with all applicable
      AML Policies, including the USA Patriot Act; and (v) will provide all such
      information about your ownership, officers, directors and business structure
      as
      we may require.

    

    19. JURY
      TRIAL WAIVER

    

    To
      the extent permitted by applicable law, we each hereby waive any right to a
      trial by jury in any action or proceeding arising directly or indirectly out
      of
      this Agreement, or any other agreement or transaction between us or to which
      we
      are parties.

    

    If
      the
      foregoing is in accordance with your understanding, please so indicate by
      signing and returning to us the original and one copy of this Agreement. This
      Agreement will take effect as of the date set forth above but only after being
      accepted below by one of our officers in New York, New York, after which we
      shall forward a fully executed copy to you for your files.

    

    Sincerely,

     

    
      	THE
              CIT GROUP/COMMERCIAL SERVICES, INC.	 	 	 
	 	 	 	 
	
              By: 
                /s/ 

            	 	 	
            
	
              
                

              

              Name: 

            	 	 	
            
	
              Title:

            	 	 	
            

    

     

    
      
        	Read and Agreed to:
                	 	 	Accepted
                at New York, New York
	
                UNIVERSAL
                  SECURITY INSTRUMENTS, INC.

              	 	 	
                THE
                  CIT GROUP/COMMERCIAL SERVICES, INC.

              
	 	 	 	 
	By: 
                 /s/ 	 	 	
                By:  /s/ 

              
	
                
                  

                

                
                  Name:

                

              	 	 	
                
                  

                  Name: 

                

              
	
                Title:

              	 	 	
                Title: 

              

      

       

    

    
      
        
        

      

      
        9

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