SECURITY AGREEMENT

THIS SECURITY AGREEMENT, dated as of February 28, 2007 (this “ Agreement ”), is made by and among ADVANCED FIBERGLASS TECHNOLOGIES, INC., a Wisconsin corporation (the “ Corporation ”) and M & W FIBERGLASS, LLC, a Wisconsin limited liability company (the “ LLC ,” and together with the Corporation, are referred to herein individually as a “ Debtor ” or collectively, “ Debtors ”), in favor of NEKOOSA PORT EDWARDS STATE BANK, as Trustee and as Original Purchaser (“ Bank ” or “ Secured Party ”).

A.           The City of Wisconsin Rapids, Wisconsin (the “ Issuer ”), will issue its Industrial Development Revenue Bonds, Series 2007A, 2007B and 2007C (Advanced Fiberglass Technologies Project) in the aggregate principal amount of Four Million Dollars ($4,000,000) (the “ Bonds ”), pursuant to a Bond Agreement dated as of February 28, 2007 (the “ Bond Agreement ”), by and between the Issuer, the Debtors, the Individual Borrowers (collectively, the Debtors and the Individual Borrowers are referred to herein as the “ Borrowers ”), Nekoosa Port Edwards State Bank, as trustee (the “ Trustee ”) and Nekoosa Port Edwards State Bank, as original purchaser (“ Original Purchaser ”).

B.           The proceeds derived from the issuance of the Bonds will be loaned to the Borrowers pursuant to the Bond Agreement, and used to finance a project consisting of (i) the construction of an approximately 70,000 square foot manufacturing facility to be located at 4400 Commerce Drive in the City of Wisconsin Rapids, Wisconsin (the “ Facility ”) to be owned by the LLC and operated by the Corporation; and (ii) the acquisition and installation of equipment at the Facility (collectively (i) and (ii) are referred to herein as the “ Project ”).

C.           To provide the funds to be loaned to the Borrowers for payment of the costs of the Project, the Issuer has contracted for the sale of the Bonds to the Original Purchaser, and the Original Purchaser has agreed to purchase such Bonds in reliance on Borrowers’ agreement to the terms and conditions set forth in that certain Credit Agreement dated as of February 28, 2007 by and among the Borrowers and the Original Purchaser (the “ Credit Agreement ”).

D.           It is a condition precedent to the Original Purchaser’s obligation to purchase the Bonds that the Debtors shall have executed and delivered this Security Agreement to the Bank to secure the Obligations (as defined in the Credit Agreement) and all other indebtedness (whether presently existing or hereafter arising) of the Borrowers to the Bank.

NOW, THEREFORE in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

1.01                Definitions .  All capitalized terms used herein and not otherwise defined below, shall have meanings assigned to them in the Credit Agreement.  The following terms used herein have the meanings defined below:

“ Accounts ” shall mean “accounts” as defined in Section 9-102 of the UCC, “instruments” and “chattel paper” as defined in Section 9-102 of the UCC, and, without limiting the generality of the foregoing, shall include:  (a) any and all rights to the payment of money or other forms of consideration of any kind now or hereafter owing or to be owing to Debtor (whether classified under the UCC as accounts, chattel paper, instruments, general intangibles, or otherwise) including, but not limited to, accounts receivable, letters of credit and the right to receive payment thereunder, chattel paper, tax refunds, insurance proceeds, contract rights, notes, drafts, instruments, documents, acceptances, and all other debts, obligations and liabilities in whatever form now or hereafter owing to Debtor, all guarantees, security and liens which secure payment of any of the foregoing, all of Debtor’s rights to goods, now owned or hereafter acquired by Debtor, sold (delivered, undelivered, in transit or returned) which may be represented thereby; and (b) all proceeds of any of the foregoing.

“ Architect’s Contract ”:  shall mean any contract for architectural services between Debtor and an architect or architectural firm for the design of the Project.

“ Chattel Paper ”: shall mean “chattel paper” as defined in Section 9-102(11) of the UCC.

“ Collateral ” shall mean and include all of Debtor’s respective right, title, and interest in and to the following, whether now owned or hereafter acquired and wherever located:

“ Commercial Tort Claims ” shall mean a “commercial tort claim” as defined under Section 9-102(13) of the UCC.

“ Construction Collateral ” shall mean Debtor’s respective right, title, and interest in and under: (a) the Construction Contract, and all modifications, amendments, and additions thereto; (b) the Architect’s Contract, and all modifications, amendments, and additions thereto; (c) the Plans and Specifications; and (d) all permits, licenses, easements, approvals, surety bonds, contracts and agreements relating to the Project, to the extent assignable.

“ Construction Contract ” shall mean any construction contract between Debtor and any construction firm for the construction of the Project.

“ Copyrights ” shall mean all of the following now or hereafter owned by Debtor:  (i) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise; and (ii) all registrations and applications for registration or any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office.

“ Deposit Accounts ” shall mean a “deposit account” as defined under Section 9-102(29) of the UCC.

“ Document ” shall mean a “document” as defined under Section 9-102(30) of the UCC.

“ Equipment ” shall mean “equipment” as defined in Section 9-102(33) of the UCC and, without limiting the generality of the foregoing, shall include: (a) all motor vehicles; (b) all accessions, attachments, substitutions and replacements (including spare parts) for any item described herein; (c) any other goods now owned or hereafter acquired by Debtor that do not constitute Inventory and which are used or bought for use primarily in business; and (d) all proceeds of any of the foregoing.

“ Event of Default ” shall have the meaning assigned to it in Section 7.01 of the Credit Agreement.

“ Fixtures ” shall mean “fixtures,” as defined in Section 9-102(41) of the UCC, installed on, or affixed to, the real property described on Schedule 1.01 attached hereto, or to the buildings or improvements situated thereon, and all proceeds of the foregoing.

“ General Intangibles ” shall mean “general intangibles” as defined in Section 9-102(42) of the UCC relating to any other Collateral, and shall include, without limiting the generality of the foregoing, all goodwill, inventions, designs, copyrights, trademarks, tradenames, patents, licenses, applications for any of the foregoing, government approvals, permits or authorizations for any of the foregoing, all contract rights, including all rights under the Construction Contract, the Architect’s Contract, or any other contract, permit, or other document or agreement pertaining to the construction of the Project.

“ Goods ” shall mean “goods” as defined in Section 9-102(44) of the UCC.

“ Intellectual Property ” shall mean all Patents, Trademarks, Copyrights, and Licenses.

“ Inventory ” shall mean “inventory” as defined in Section 9-102(48) of the UCC and, without limiting the generality of the foregoing, shall include: (a) all goods held or intended for sale or lease by Debtor; (b) all documents evidencing and general intangibles relating to such goods; and (c) all proceeds of any of the foregoing.

“ Investment Property ” shall mean “investment property” as defined in Section 9-102(49) of the UCC and all dividends, distributions and rights in connection therewith and proceeds thereof.

“ Letter-of-Credit Rights ” shall mean a “Letter-of-credit right” as defined under Section 9-102(51) of the UCC.

“ Licenses ” shall mean any written agreement, now or hereafter in effect, granting to any third party any right to use any Patent, Copyright or Trademark now or hereafter owned by Debtor or which Debtor has the right to license, or any written agreement, now or hereafter in effect granting to Debtor any right to use any Patent, Copyright or Trademark owned by a third party.

“ Obligations ” shall mean: (a) all existing and future indebtedness of Borrowers to Secured Party, and any promissory notes taken in renewal, exchange or substitution thereof or therefor, including interest and premium on all the foregoing and all costs of collecting the same; (b) all of Borrower’s obligations and liabilities under the Credit Agreement and the other Related Documents, as the same may be amended from time to time; (c) all of Debtors’ obligations and liabilities hereunder; (d) all other debts, obligations and liabilities of Borrowers’ to or in favor of Secured Party, whether now existing or hereafter incurred or arising; and (e) all of Borrowers’ obligations and liabilities under the Bond Documents, as the same may be amended from time to time.

“ Patents ” shall mean all of the following now or hereafter owned by the Debtor:  (i) all letters patent of the United States or any other country, all registrations and records thereof, and all applications for letters patent of the United States or any other country, including registrations, records and pending applications in the United States Patent and Trademark Office or any similar offices in any other country; and (ii) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

“ Permitted Liens ” shall have the same meaning assigned to it in the Credit Agreement.

“ Plans and Specifications ” shall mean the drawings and specifications for the construction of the Project, and all revisions or amendments thereto.

“ Trademarks ” shall mean all of the following now or hereafter owned by Debtor:  (i) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs, and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office, any State of the United States or any similar offices in any other

country or any political subdivision thereof, and all extensions or renewals thereof; (ii) all goodwill associated therewith or symbolized thereby; and (iii) all other assets, rights and interests that uniquely reflect or embody such goodwill.

“ UCC ” shall mean the Uniform Commercial Code as adopted by, and as in effect in, the State of Wisconsin, as the same may be amended from time to time.

2.01              Security Interest .   To secure the payment and performance of the Obligations and for other good and valuable consideration, receipt of which is hereby acknowledged, Debtor hereby mortgages, pledges and assigns all the Collateral to Secured Party, and grants to Secured Party a continuing security interest in all the Collateral.

2.02              Assignment .  To secure the payment and performance of the Obligations and for other good and valuable consideration, receipt of which is hereby acknowledged, Debtor assigns unto the Secured Party all of its right, title and interest in and to the Construction Collateral.  The Debtor agrees that the Secured Party does not assume any of the obligations or duties of Debtor under or with respect to the Construction Collateral unless and until the Secured Party shall have given any party thereto written notice that it has affirmatively exercised its right to complete or cause the completion of construction of the Project following the occurrence of an Event of Default.  In the event that the Secured Party does not personally undertake to complete construction of the Project, the Secured Party shall have no liability whatsoever for the performance of any of such obligations and duties.  For the purpose of completing the Project, the Secured Party may, in its absolute discretion, reassign its right, title and interest in the Construction Collateral upon notice to Debtor but without any requirement for Debtor’s consent.  The Debtor agrees that no material change in the terms of the Architect’s Contract or the Construction Contract shall be valid without the written approval of the Secured Party.

Each Debtor represents and warrants that:

3.01                Location of Chief Executive Offices and Principal Places of Business .  Each Debtor’s chief executive office and principal place of business and the books and records relating to the Collateral are located at the locations set forth on Schedule 3.01 .

3.02                Location of Collateral .  All Equipment and Fixtures are, or will be, located at the locations set forth on Schedule 3.02 .

3.03                Ownership of Collateral .  The Collateral owned by each Debtor is owned free of all encumbrances and security interests, except Permitted Liens.  Chattel paper constituting Collateral evidences a perfected security interest in the goods covered by it, free from all other encumbrances and security interests.  No financing statement (other than that filed by any secured party with

respect to Permitted Liens) is on file covering the Collateral or any of it.  Debtor may grant the Security Interest in the Collateral owned by such Debtor.

3.04                Accounts .  Each Account and chattel paper constituting Collateral as of this date arose from the performance of services by such Debtor from a bona fide sale or lease of goods, which have been delivered or shipped to the account debtor, and for which such Debtor has genuine invoices, shipping documents or receipts.  Each Account constituting Collateral as of this date is genuine and enforceable against the account debtor according to its terms.  It, and the transaction out of which it arose, comply with all applicable laws and regulations.  The amount represented by such Debtor to Secured Party as owing by each account debtor is the amount actually owing and is not subject to setoff, credit, allowance or adjustment, except discount for prompt payment, nor has any account debtor returned the goods or disputed its liability.

3.05                No Defaults under Collateral .  There has been no default as of this date according to the terms of any Collateral and no step has been taken to foreclose the security interest it evidences or otherwise to enforce its payment, and as of this date, Debtor has no notice or knowledge which might impair the credit standing of any account debtor.

3.06                Filings .  Debtor shall ensure and warrant that fully executed (if applicable) financing statements containing a description of the Collateral will be filed of record in every governmental, municipal or other office in every jurisdiction located within the United States and its respective territories and possessions or such other analogous documents in other countries as are necessary to publish notice of and protect the validity of and to establish a valid and perfected security interest in favor of the Secured Party in respect of the Collateral in which a security interest may be perfected by filing a financing statement or analogous document in the United States and its political subdivisions, territories and possessions pursuant to the UCC or other applicable law in such jurisdictions or pursuant to applicable law in other countries, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements or other documents of similar effect.

3.07                Validity of Security Interests .  The Security Interest constitutes a valid and perfected security interest in all the Collateral in which a security interest may be perfected by filing a financing statement or analogous document in the United States and its political subdivisions, territori