Document:

Exhibit 10.1

CONSULTING AGREEMENT

          THIS CONSULTING AGREEMENT (this “Agreement”) is made and entered into effective as of this 1st day of May, 2006, by and among Northern Technologies International Corporation, a Delaware corporation (“NTIC”), and Emeritushnic Facilities Company, Inc., an Ohio Corporation (“EFC”) owned by Philip M. Lynch, Juliane I. Lynch, Sarah I. Lynch, and Jennifer S. Lynch.

RECITALS

          A.          NTIC is engaged in the business of owning, developing and distributing certain technologies and products throughout the world, including, but not limited to, corrosion-inhibiting technology and products (the “Business”), and commercially exploits its technology and products through, among other things, entering into joint ventures throughout the world and licensing such technology and products to these joint ventures for ultimate sale.

          B.          Philip M. Lynch (“Lynch”) has retired from serving as Chief Executive Officer and a Director of NTIC.

          C.          NTIC desires to engage EFC to render certain consulting services and EFC desires to accept such engagement, all upon the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, NTIC and EFC, each intending to be legally bound, agree as follows:

          1.          ENGAGEMENT.  Commencing as of May 1, 2006 and continuing until this Agreement is terminated in accordance with Section 9 hereof, NTIC hereby engages EFC to provide consulting services to NTIC, and EFC hereby accepts such engagement.

          2.          SERVICES OF THIRD PARTIES.  EFC shall not utilize the services of any person or entity in providing the Services hereunder unless pre-approved in writing by NTIC.  NTIC hereby approves Lynch as pre-approved to perform the Services.

          3.          SERVICES.  EFC shall provide the expertise of Lynch, as EFC and NTIC shall agree, to communicate with NTIC’s joint venture partners as desired to assist in maintaining ongoing good relations between the parties, to assist and enhance revenues therefrom, and to work on projects and perform such other services as designated and approved by NTIC’s Board of Directors and/or Executive Management (the “Services”).  EFC shall maintain close contact with NTIC’s Board of Directors and Executive Management and shall regularly report its activities on behalf of NTIC hereunder to NTIC’s Management. 

          4.          COMPENSATION TO EFC.  

                        (a)          In consideration for the Services, during the term of this Agreement, NTIC shall pay to EFC a monthly fee (“Monthly Fee”) of Twenty Five Thousand and 00/100 Dollars ($25,000.00), such fee to be payable on the first day of each month.

                        (b)          NTIC will reimburse EFC up to a maximum of One Hundred Eighty Thousand and 00/100 Dollars ($180,000.00) per year for the out-of-pocket expenses reasonably incurred by EFC in the course of conducting business on behalf of NTIC.  EFC will submit proper documentation, at a frequency determined by EFC, to NTIC in order to substantiate expenses incurred by EFC, including without limitation, transportation, hotel and cell-phone charges, prior to receiving expense reimbursement.  Expenses incurred after receipt of notice of termination in accordance with Section 10 hereof shall not be reimbursed unless irrevocably committed prior to such receipt of notice of termination.  EFC shall not be reimbursed for any expense whatsoever with respect to its
performance under this Agreement except as provided in this Section 4(b) and Section 5 of this Agreement.

          5.          LOGISTIC SUPPORT TO EFC.  During the term of this Agreement, NTIC shall provide to EFC at NTIC’s expense:  (a) an office with e-mail, phone, fax machine, and copier access, and (b) an administrative support person.  Any additional use of NTIC resources, including but not limited to, people, financial resources, outside consultants and outside technical service people, shall be subject to prior approval of NTIC’s Chief Financial Officer.

          6.          WAIVER OF ALL RIGHTS TO FUTURE COMPENSATION BY EFC. EFC hereby waives all right, title and interest in and/or claim for, if any, compensation for any and all past contributions made by EFC relating to the commercialization of NTIC’s existing program of goods and services whether directly or indirectly including, but not limited to, through joint ventures and other external contractual relations.

          7.          LIABILITY INSURANCE COVERAGE OF EFC BY NTIC.  During the pendency of this Agreement, EFC shall be covered under NTIC’s Liability Insurance to the extent applicable and possible.

          8.          INDEPENDENT CONTRACTOR STATUS OF EFC.  Notwithstanding anything contained herein to the contrary, EFC is and shall act as, and for all purposes shall be deemed to be, an independent contractor of NTIC.  No contract of partnership, joint venture or any other relationship except that of independent contractor shall be deemed to exist between NTIC and EFC.  EFC shall have sole and exclusive responsibility for the payment of all federal, state and local income taxes and all other taxes with respect to any compensation provided by NTIC to EFC hereunder.  EFC shall not bind NTIC or incur any obligation or liability on behalf of NTIC, including but not limited to financial obligations, promises of equity in NTIC technology projects or joint ventures, or hiring of employees, without the prior approval of NTIC’s Board of
Directors.

          9.          TERM.  Subject to the respective continuing obligations of EFC and NTIC under Sections 11, 12 and 13 below, this Agreement shall continue until terminated pursuant to Section 10 hereof.

          10.        TERMINATION.  

                        (a)          NTIC and EFC may mutually agree to terminate this Agreement.

                         (b)          Either party hereto may terminate this Agreement for any reason upon at least 90 days prior written notice to the other party. 

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                        (c)          NTIC shall have the right to terminate this Agreement upon 90 days written notice upon any “Change of Control” of EFC (as hereinafter defined).  A “Change in Control” shall mean any change in ownership, management, control or scope of business activities of EFC which could affect the performance of the duties and/or obligations of EFC to NTIC under this Agreement.  

                        (d)          NTIC may terminate this Agreement immediately upon written notice to EFC for cause, including (without limitation) (i) dishonesty, fraud, misrepresentation, deliberate injury or attempted injury, by EFC or any employees or agents of EFC and in each case related to NTIC or its business, (ii) any unlawful or criminal activity by EFC or any employees or agents of EFC, (iii) any willful breach of duty or habitual neglect of duty or (iv) the breach by EFC of any provision of this Agreement.

                        (e)          This Agreement will terminate upon 90 days written notice after the death, incapacity or discontinuation of an active relationship with EFC for any reason of Philip M. Lynch.

                        (f)          This Agreement will terminate immediately if EFC makes an assignment for the benefit of creditors; the institution of voluntary or involuntary proceedings by or against EFC under bankruptcy or insolvency laws; any general suspension by EFC of payments to creditors; EFC files a petition of any type as to its bankruptcy, is declared bankrupt, becomes insolvent, or goes into liquidation or receivership; or any similar actions by or against EFC in respect of bankruptcy, insolvency or actions taken by creditors generally.

          11.         EFFECT OF TERMINATION.  Except as set forth in this Agreement, upon termination, the parties shall have no obligations to each other hereunder other than NTIC’s obligation to pay any earned but unpaid Monthly Fees under Section 4(a) and any unpaid reimbursable travel expenses as set forth in Section 4(b).  EFC’s covenants in Sections 12 and 13 shall survive the termination of this Agreement.

          12.         CONFIDENTIAL INFORMATION.  For purposes hereof, the term “Confidential Information” means information:  (a) disclosed to or actually known by EFC, (b) not generally known outside NTIC, and (c) that relates to the Business.  The parties agree that Confidential Information includes, but is not limited to, the products and services of NTIC, all of NTIC’s technology and other technical information such as designs, trade secrets, know-how, methods and materials, all marketing information, business strategies, pricing information, customer lists, and so forth.  EFC recognizes and acknowledges that NTIC develops Confidential Information, that EFC may develop Confidential Information for NTIC, and that EFC has previously learned of and will continue to learn of the Confidential Information.  EFC and NTIC further
recognize and acknowledge that Confidential Information is a valuable, special and unique asset of NTIC and is the sole property of NTIC.  As a result, both during the term of this Agreement and thereafter, EFC shall not, without the prior written consent of NTIC, for any reason, either directly or indirectly, divulge to any third party or use for their own benefit, or for any other purpose other than the exclusive benefit of NTIC, any Confidential Information.

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          13.         NON-COMPETITION/NON-SOLICITATION.  EFC acknowledges that NTIC devotes substantial resources to develop the Business and its practices, methods, trade secrets, know-how, services, products and customers.  EFC and NTIC further acknowledge that NTIC would be unfairly and irreparably harmed if EFC competes with NTIC.  Therefore, EFC agrees that during the term of this Agreement and for a period of three (3) years thereafter, EFC shall not, directly or indirectly, whether alone or in association with others, whether as principal, agent, partner, member, manager or in any other capacity:  (a) compete with NTIC or its affiliates (including any joint venture) in any geographic market in which it has done business during the term of this Agreement, (b) cause or seek to cause any client, customer, or supplier of NTIC or any of its
affiliates (including any joint venture) to cease or alter its, or not enter into a, relationship with NTIC or a NTIC affiliate, or (c) cause or seek to cause any employee, agent, or contractor of NTIC or any of its affiliates (including any joint venture) to cease or alter such employee’s, agent’s or contractor’s relationship with NTIC or its affiliate.  The restricted period set forth in the preceding sentence will be extended for a period equal to the duration of any breach of the preceding restrictive covenants.  EFC and NTIC agree not to slander or libel the other party, its officers, employees, directors or affiliates at any time.

          14.         REMEDIES.  EFC acknowledges and agrees that by virtue of the special knowledge of NTIC’s Business that EFC shall develop, great loss and irreparable damage would be suffered by NTIC if EFC should breach or violate any of the terms or provisions of the covenants and agreements set forth herein.  EFC further acknowledges and agrees that each such covenant and agreement is reasonably necessary to protect and preserve NTIC’s interests.  Therefore, in addition to all other remedies available at law or in equity, EFC agrees that NTIC shall be entitled to a temporary restraining order and a permanent injunction (with or without bond) to prevent a breach of any of the covenants or agreements of EFC contained herein.

          15.         MISCELLANEOUS.

                        (a)          Compliance with Laws.  EFC and NTIC will perform their respective obligations under this Agreement in accordance with all applicable statutes, laws, judgments, writs, injunctions, decisions, decrees, orders, regulations, ordinances or other similar authoritative matters of any foreign, federal, state or local governmental or quasi-governmental, administrative, regulatory or judicial court, department, commission, agency, board, bureau, instrumentality or other authority.

                        (b)          No Conflicts.  EFC and NTIC represent and warrant each to the other party that neither the entering into of this Agreement nor the performance of any of the representing party’s obligations hereunder will conflict with or constitute a breach under any obligation of the representing party under any agreement or contract to which the representing party is a party or any other obligation by which the representing party is bound.  Without limiting the foregoing, EFC agrees that at no time will it use any trade secrets or other intellectual property of any third party while performing services hereunder.

                        (c)          NTIC Policies and Procedures.  In carrying out its duties under this Agreement, EFC agrees that it and its employees and agents providing services hereunder, including Lynch, will follow without limitation NTIC’s insider trading policy and code of ethics and conduct, as such policy and code may be amended or supplemented from time to time and provided by NTIC to EFC.

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                        (d)             Notices.  All notices, requests, consents and other communications required or permitted to be given hereunder, shall be in writing and shall be deemed to have been given: (i) when received if delivered by hand; (ii) the next business day after placement with a reputable express carrier for delivery during the morning of the following business day; or (iv) three (3) business days after deposit in the U.S. mail for delivery by registered or certified mail, return receipt requested, and addressed to the appropriate party at the following address), to the parties at the following addresses or at such other address as either party shall designate by notice in writing to the other in accordance herewith:

	
  
 
  	
  
(i)
  	
  
If to EFC:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
13720 Shaker   Boulevard, Suite 702
  
	
   
  	
  
 
  	
  
Cleveland,   OH  44120
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
If to NTIC:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
6680 N Hwy   49
  
	
  
 
  	
  
 
  	
  
Lino Lakes,   MN 55014
  

                        (e)          Assignment.  This Agreement is for services to be provided by EFC and may not be assigned or transferred, or the duties or services of EFC be performed or provided by any third party without the prior written consent of NTIC.  This Agreement may not be assigned by NTIC (by operation of law or otherwise) without the prior written consent of EFC.

                        (f)          Binding Effect.  This Agreement shall be binding upon, and shall inure to the benefit of, NTIC and its officers, directors, successors and assigns, and EFC and its officers, successors and permitted assigns, respectively.

                        (g)          Governing Law/Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.  The parties hereto agree that the Federal and state courts located in Minneapolis, Minnesota shall be the exclusive venue and shall have jurisdiction with respect to the enforcement of any right or remedy of any party hereto.

                        (h)          Entire Agreement.  This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof.  Except as modified herein, all of the terms and conditions of the Agreement shall remain in full force and effect.

                        (i)          Amendments; Waivers.  This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms or covenants hereof may be waived, only by a written instrument executed by all of the parties hereto, or in the case of a waiver, by the party against whom the waiver is sought to be enforced, which instrument specifically refers to this Agreement.  The failure of any party at any time or times to require compliance with any provision hereof shall in no manner affect the right of such party at a later time to enforce the same.  No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach of any term or covenant contained in this Agreement.

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                        (j)          Headings/Recitals.  The headings contained herein are for reference only and shall not in any way affect the meaning or interpretation of this Agreement.  The Recitals to this Agreement are an integral part of this Agreement and are incorporated herein by reference.

          IN WITNESS WHEREOF, the parties have executed this agreement as of the day and year first above written.

	
  
 
  	
  
NORTHERN   TECHNOLOGIES
  
	
  
 
  	
  
INTERNATIONAL   CORPORATION
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By
  	
  
 
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Its
  	
  
 
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
EMERITUSHNIC   FACILITIES COMPANY, INC.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By
  	
  
 
  
	
  
 
  	
  
 
  	
  

  
	
   
  	
  
Its
  	
  
 
  
	
  
 
  	
  
 
  	
  

  

INDIVIDUAL UNDERTAKING

I, Philip M. Lynch, an individual, acknowledge that I have read and understand the above Agreement.  Further, I agree, as an individual, to provide for EFC the agreed services and to be bound by all of the terms and conditions stated in the said Agreement as fully as if I were a party thereto.  My agreement shall continue until the Agreement is fully performed or terminated in accordance with its terms. 

	
  
________________________________
  	
  
 
  	
  
_________________,   2006
  
	
  
Philip M.   Lynch
  	
  
 
  	
  
 
  
	
  
16210   Parkland Drive
  	
  
 
  	
  
 
  
	
  Shaker   Heights, OH 44120
  	
   
  	
   
  

6Exhibit 10.2
   
	
  
 
   
	
    
	
  
MASTER NOTE
  
	
  

  

	
  
$1,700,000
  	
  
Date: May 19,  2006
  

          FOR VALUE RECEIVED, the undersigned, a Delaware corporation, promises to pay to the order of CITIBANK, N.A. (the “Bank”), on or before June 30, 2006 (the “Maturity Date”), the sum of One Million Seven Hundred Thousand Dollars ($1,700,000), or, if less, the aggregate unpaid principal amount of all advances made by the Bank pursuant to the line of credit, not to exceed an aggregate amount at any one time outstanding of One Million Seven Hundred Thousand Dollars ($1,700,000), available to the undersigned hereunder (the “Line”).

          The undersigned also promises to pay interest in like money on the unpaid principal amount hereof from time to time outstanding at a fluctuating rate per annum equal to the prime rate of interest as published in the Money Rates column of the Wall Street Journal from time to time (the “Prime Rate”) plus a margin of 0% per annum (the “Prescribed Rate”). Any change in the Prescribed Rate shall take effect on the date of the change in the Prime Rate. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed and shall be payable on the first day of each month commencing on the first such date to occur after the date the first advance is made, and on the Maturity Date. All payments hereunder shall be payable in immediately available funds in lawful money of the United Stales. The undersigned authorizes the Bank to charge any of the undersigned’s
accounts for payments of principal or interest.

          Any payment of principal of or interest payable hereunder which is not paid when due, whether at maturity, by acceleration, or otherwise, shall bear interest from the date due until paid in full at a rate per annum equal to three percent (3%) above the Prescribed Rate.

          All requests for advances shall be irrevocable and shall be for a minimum of $25,000 and must be received by the Bank no later than 12:00 noon on the date of the proposed advance. The Bank may act without liability upon the basis of telephonic notice believed by the Bank in good faith to be from the undersigned. In each such case, the undersigned hereby waives the right to dispute the Bank’s record of the terms of such telephonic notice. The undersigned shall immediately confirm to the Bank in writing each telephonic notice. All advances under the Line are at the Bank’s sole and absolute discretion and the Bank, at its option and in its sole and absolute discretion and without notice to the undersigned, may decline to make any advance requested by the undersigned.

          Subject to the terms and conditions hereof and the terms and conditions set forth in any agreement in writing between the Bank and the undersigned, the undersigned may borrow, repay in whole or in part, and reborrow on a revolving basis, up to the maximum amount of the Line. Advances may be prepaid without premium or penalty together with accrued interest thereon to and including the date of prepayment. The Bank shall maintain its records to reflect the amount and date of each advance and of each payment of principal and interest thereon. All such records shall, absent manifest error, be conclusive as to the outstanding principal amount hereof; provided, however, that the failure to make any notation to the Bank’s records shall not limit or otherwise affect the obligations of the undersigned to repay each advance made by the Bank, in accordance, with the terms hereof.

          As security for the payment of this Note and of all other obligations and liabilities of the undersigned to the Bank, whether now or hereafter existing, joint, several, direct, indirect, absolute, contingent, secured, matured or unmatured, the undersigned grants to the Bank a right of setoff against, a continuing security interest in, and an assignment and pledge of all moneys, deposits (general or special), securities and other property of the undersigned and the proceeds thereof, now or hereafter held by the Bank on deposit, in safekeeping, in transit or otherwise, at any time credited by or due from the Bank to the undersigned, or in which the undersigned shall have an interest.

          Upon the occurrence and continuance of any of the following (each an “Event of Default”): (a) default in the payment when due of any amount hereunder; (b) filing by or against the undersigned of a petition commencing any proceeding under any bankruptcy, reorganization, rearrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or hereafter in effect; (c) making by the undersigned of an assignment for the benefit of creditors; (d) petitioning or applying to any tribunal for the appointment of a custodian, receiver or trustee for the undersigned or for a substantial part of its assets; (e) death or incapacity of the undersigned (if an individual); (f) entry of any judgment or order of attachment, injunction or governmental tax lien or levy issued against the undersigned or against any property of the undersigned; (g) consent by the undersigned to
assume, suffer or allow to exist, without the prior written consent of the Bank, any lien, mortgage, assignment or other encumbrance on any of its assets or personal property, now owned or hereafter acquired, except those liens, mortgages, assignments or other encumbrances in existence on the date hereof and consented to in writing by the Bank; (h) default in the punctual payment or performance of this or any other obligation to the Bank or to any other lender at any time; (i) the existence or occurrence at any time of one or more conditions or events which, in the sole opinion of the Bank, has resulted or is reasonably likely to result in a material adverse change in the business, properties or financial condition of the undersigned; (j) failure on request to furnish any financial information or to permit inspection of the books and records of the undersigned; (k) any warranty, representation or statement in any application, statement or agreement which proves

false in any material respect, (l) default in the observance or performance of any covenant or agreement of the undersigned herein or in any other agreement between the Bank and the undersigned; or (m) any of the foregoing events (other than the event described in clause (a)) shall occur with respect to any guarantor of the undersigned’s obligations hereunder then this Note shall, at the sole option of the Bank, become due and payable without notice or demand; provided, however, if an event described in clause (b), clause (c) or clause (d) above occurs, this Note shall automatically become due and payable.

          Upon the occurrence and during the continuance of an Event of Default, the Bank shall be entitled to setoff against and apply to the payment hereof the balance of any account or accounts maintained with the Bank by the undersigned and to exercise any other right or remedy granted hereunder, or under any agreement between the undersigned and the Bank or available at law or in equity, including, but not limited to, the rights and remedies of a secured party under the New York Uniform Commercial Code. The failure by the Bank at any time to exercise any such right shall not be deemed a waiver thereof, nor shall it bar the exercise of any such right at a later date. Each and every right and remedy granted to the Bank hereunder or under any agreement between the undersigned and the Bank or available at law or in equity shall be cumulative and not exclusive of any other rights, powers, privileges or remedies,
and may be exercised by the Bank from time to time and as often as may be necessary in the sole and absolute discretion of the Bank.

          The undersigned agrees to pay, on demand, all of the Bank’s costs and expenses, including reasonable counsel fees (whether in-house or outside counsel), in connection with the collection of any amounts due to the Bank hereunder or in connection with the enforcement of the Bank’s rights under this Note.

          This Note shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflict or choice of laws.

          THE UNDERSIGNED HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS NOTE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND CONSENTS TO THE PLACING OF VENUE IN THE COUNTY OF NASSAU OR OTHER COUNTY PERMITTED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO HEREIN MAY NOT BE LITIGATED IN OR BY
SUCH COURTS. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE UNDERSIGNED AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE UNDERSIGNED AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO ITS ADDRESS SET FORTH BELOW OR SUCH OTHER ADDRESS THAT THE UNDERSIGNED SHALL HAVE NOTIFIED THE BANK IN WRITING OR ANY METHOD AUTHORIZED BY THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS PROHIBITED BY LAW, THE UNDERSIGNED HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.

          The undersigned and the Bank hereby agree and acknowledge that any and all information relating to the undersigned which is furnished by the undersigned to the Bank (or to any affiliate of the Bank), and which is non-public, confidential or proprietary in nature, shall be kept confidential by the Bank or such affiliate in accordance with applicable law; provided, however, that such information and other credit information relating to the undersigned may be distributed by the Bank or such affiliate (a) to the Bank’s or such affiliate’s directors, officers, employees, attorneys, affiliates, attorneys, auditors and regulators, and (b) upon the order of a court or other governmental agency having jurisdiction over the Bank or such affiliate, to any other party. The undersigned and the Bank further agree that this provision shall survive the termination of this Note.

          The Bank shall not, by any act, delay, omission or otherwise, be deemed to have waived any of its rights and/or remedies hereunder. No change, amendment, modification, termination, waiver, or discharge, in whole or in part, of any provision of this Note shall be effective unless in writing and signed by the Bank, and if so given by the Bank, shall be effective only in the specific instance in which given. The undersigned acknowledges that this Note and the undersigned’s obligations under this Note are, and shall at all times continue to be, absolute and unconditional in all respects, and shall at all times be valid and enforceable irrespective of any other agreements or circumstances of any nature

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whatsoever which might otherwise constitute a defense to this Note and the obligations of the undersigned under this Note. The undersigned absolutely, unconditionally and irrevocably waives any and all right to assert any set-off, counterclaim or crossclaim of any nature whatsoever with respect to this Note or the undersigned’s obligations hereunder.

          In the event any one or more of the provisions contained in this Note should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

          The undersigned hereby waives presentment, demand for payment, protest, notice of dishonor, and any and all other notices or demands in connection with the delivery, acceptance, performance, default, or enforcement of this Note.

          The term “Bank” as used herein shall be deemed to include the Bank and its successors and assigns, and any holder hereof.

          The term “undersigned” as used herein shall, if this Note is signed by more than one party, unless otherwise stated herein, mean the “undersigned and each of them” and each undertaking herein contained shall be their joint and several undertaking. The Bank may proceed against one or more of the undersigned at one time or from time to time as it elects in its sole and absolute discretion.

          At no time shall the rate of interest charged under this Note exceed the maximum rate of interest permitted under applicable law. If at any time the Prescribed Rate shall exceed such maximum rate, and thereafter the Prescribed Rate is below such maximum rate, then the Prescribed Rate shall be increased to the maximum rate for such period of time as is required so that the total amount of interest received by the Bank is that which would have been received by the Bank but for the first sentence of this paragraph.

          In the event that any change in applicable law or regulation, or in the interpretation thereof by any governmental authority charged with the administration thereof, shall impose on or deem applicable to the Bank any reserve requirements against this Note or the Line or impose upon the Bank any other costs or assessments, the undersigned shall pay to the Bank on demand an amount sufficient to compensate the Bank for the additional cost resulting from the maintenance or imposition of such reserves, costs or assessments.

          Any consents, agreements, instructions or requests pertaining to any matter in connection with this Note, signed by any one of the undersigned, shall be binding upon all of the undersigned. This Note shall bind the respective successors, heirs or representatives of the undersigned. This Note and the Line shall not be assigned by the undersigned without the Bank’s prior written consent.

          IN WITNESS WHEREOF, the undersigned has duly executed this Note the day and year first above written,

	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
  International   Smart Sourcing, Inc.

	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
Witness:
  	
  
Andrew Franzone
  	
  
 
  	
  
By:
  	
  
/s/ David Hale
  
	
  
 
  	
  
 
  	
  

  	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
Name: 
  	
  
David Hale
  
	
  
 
  	
  
Witness:
  	
  
Jason Quinn
  	
  
 
  	
  
Title:
  	
  
President
  
	
  
 
  	
  
 
  	
  

  	
  
 
  	
  
 
  	

 

  

Borrower’s Address: 
 320 Broad Hollow Road 
 Farmingdale,NY11735

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