WELLS FARGO BUSINESS CREDIT CREDIT AND SECURITY AGREEMENT

1.

AMOUNT AND TERMS OF THE LINE OF CREDIT

1.1

Line of Credit; Limitations on Borrowings; Termination Date; Use of Proceeds.

(a)

Line of Credit and Limitations on Borrowing . Wells Fargo shall make Advances to Company under the Line of Credit that, shall not at any time exceed in the aggregate the lesser of (i) $9,000,000.00 (the “Maximum Line Amount”), or (ii) the Borrowing Base limitations described in Section 1.2. Within these limits, Company may periodically borrow, prepay in whole or in part, and reborrow. Wells Fargo has no obligation to make an Advance during a Default Period or at any time that making an Advance would result in an Event of Default.

(b)

Maturity and Termination Dates . Company may request Advances from the date that the conditions set forth in Section 3 are satisfied until the earlier of: (i) three (3) years from the date of this Agreement (the “Maturity Date”), (ii) the date Company terminates the Line of Credit, or (iii) the date Wells Fargo terminates the Line of Credit following an Event of Default. (The earliest of these dates is the “Termination Date.”)

(c)

Use of Line of Credit Proceeds . Company shall use the proceeds of each Advance for ordinary working capital purposes and to repay indebtedness owed to Key Bank.

(d)

Revolving Note . Company’s obligation to repay Line of Credit Advances, regardless of how initiated under Section 1.3, shall be evidenced by a revolving promissory note (as renewed, amended or replaced from time to time, the “Revolving Note”).

1.2

Borrowing Base; Mandatory Prepayment.

(a)

Borrowing Base . The borrowing base (the “Borrowing Base”) is an amount equal to:

(b)

Mandatory Prepayment; Overadvances . If unreimbursed Line of Credit Advances evidenced by the Revolving Note exceed the Borrowing Base or the Maximum Line Amount at any time, then Company shall immediately prepay the Revolving Note in an amount sufficient to eliminate the excess, unless Wells Fargo has delivered to Company an Authenticated Record consenting to the Overadvance prior to its occurrence, in which event the Overadvance shall be temporarily permitted on such terms and conditions as Wells Fargo in its sole discretion may deem appropriate, including the payment of additional fees or interest, or both.

1.3

Procedures for Line of Credit Advances.

(a)

Advances to Operating Account . Advances shall be credited to Company’s demand deposit account maintained with Wells Fargo (the “Operating Account”), unless the parties agree in a Record Authenticated by both of them to disburse to another account.

(b)

Protective Advances; Advances to Pay Indebtedness Due . Wells Fargo may initiate a Floating Rate Advance on the Line of Credit in its sole discretion for any reason at any time, without Company’s compliance with any of the conditions of this Agreement, and (i) disburse the proceeds directly to third Persons in order to protect Wells Fargo’s interest in Collateral or to perform any of Company’s obligations under this Agreement, or (ii) apply the proceeds to the amount of any Indebtedness then due and payable to Wells Fargo.

(c)

Converting Floating Rate Advances to Fixed Rate Advances . Company may request that all or any part of an outstanding Floating Rate Advance be converted to a Fixed Rate Advance, provided that no part of the Floating Rate Advance is subject to a Rate Hedge, that no Default Period is in effect, and that Wells Fargo receives the request no later than 11:59 a.m. Central Time on the

Business Day on which Company wishes the conversion to become effective. Each request shall specify the principal amount of the Floating Rate Advance to be converted and the Business Day of conversion. The request shall be confirmed in an Authenticated Record if requested by Wells Fargo. Each conversion to a Fixed Rate Advance shall be in multiples of $100,000.00 and in the minimum amount of at least $1,000,000.00.

(d)

Expiration of Fixed Rate Advances . Unless Company requests a new Fixed Rate Advance, or prepays an outstanding Fixed Rate Advance at the expiration of a Fixed Rate Interest Period, Wells Fargo shall convert each Fixed Rate Advance to a Floating Rate Advance on the last day of the expiring Fixed Rate Interest Period. If no Default Period is in effect, Company may request that all or part of any expiring Fixed Rate Advance be renewed as another Fixed Rate Advance, provided that Wells Fargo receives the request no later than 11:59 a.m. Central Time on the Business Day that constitutes the first day of the new Fixed Rate Interest Period. Each request shall specify the principal amount of the expiring Fixed Rate Advance to be renewed, and shall be confirmed in an Authenticated Record if requested by Wells Fargo. Each renewal of a Fixed Rate Advance shall be in multiples of One Hundred Thousand Dollars ($100,000.00) and in the minimum amount of at least One Million Dollars ($1,000,000.00).

(e)

Quotation of Fixed Rates for Fixed Rate Advances . Wells Fargo shall, with respect to any request for a Fixed Rate Advance or the renewal of an existing Fixed Rate Advance, or for the conversion of a Floating Rate Advance to a Fixed Rate Advance, provide Company with a Fixed Rate quote based on LIBOR for each Fixed Rate Interest Period identified by Company on the Business Day on which the request was made, if the request is received by Wells Fargo no later than 11:59 a.m. Central Time of the Business Day on which Company has requested that the Fixed Rate Advance be funded. If Company does not immediately accept the Fixed Rate quote for a Fixed Rate Interest Period, then the quoted rate shall expire and any subsequent request for a Fixed Rate quote for a Fixed Rate Interest Period shall be subject to redetermination by Wells Fargo.

(f)

Taxes and Regulatory Costs . Company shall also pay Wells Fargo with respect to any Advance based on LIBOR, all (i) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority that are related to LIBOR, and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, the assessment rates imposed by the Federal Deposit Insurance Corporation, or similar costs imposed by any domestic or foreign governmental authority or resulting from compliance by Wells Fargo with any request or directive (whether or not having the force of law) from any central bank or other governmental authority that are related to LIBOR but not otherwise included in the calculation of LIBOR. In determining which of these amounts are attributable to an existing Advance that is based on LIBOR, any reasonable allocation made

by Wells Fargo among its operations shall be deemed conclusive and binding absent manifest error.

1.4

Collection of Accounts and Application to Revolving Note.

(a)

The Collection Account . Company has granted a security interest to Wells Fargo in the Collateral, including all Accounts. Except as otherwise agreed by both parties in an Authenticated Record, all Proceeds of Accounts and other Collateral, upon receipt or collection, shall be deposited each Business Day into the Collection Account. Funds so deposited (“Account Funds”) are the property of Wells Fargo, and may only be withdrawn from the Collection Account by Wells Fargo. Notwithstanding, Company and Wells Fargo have agreed contemporaneously herewith, and on an interim basis, to the establishment of a control deposit account and lockbox with KeyBank, N.A. in certain agreements to that effect (the “KeyBank Control/Lockbox Agreement”) to which such Proceeds and payments shall be initially deposited. Upon termination of the KeyBank Control/Lockbox Agreement, and in accordance with its terms, all such Proceeds shall be deposited and delivered to the Collection Account in accordance with this paragraph and subject to the terms of this Agreement.

(b)

Payment of Accounts by Company’s Account Debtors . Company shall instruct all account debtors to make payments either directly to the Lockbox for deposit by Wells Fargo directly to the Collection Account, or instruct them to deliver such payments to Wells Fargo by wire transfer, ACH, or other means as Wells Fargo may direct for deposit to the Collection Account or for direct application to the Line of Credit. If Company receives a payment or the Proceeds of Collateral directly, Company will promptly deposit the payment or Proceeds into the Collection Account. Until deposited, it will hold all such payments and Proceeds in trust for Wells Fargo without commingling with other funds or property. All deposits held in the Collection Account shall constitute Proceeds of Collateral and shall not constitute the payment of Indebtedness. Notwithstanding, Company and Wells Fargo have agreed contemporaneously herewith, and on an interim basis, to the establishment of a control deposit account and lockbox with KeyBank, N.A. in the KeyBank Control/Lockbox Agreement to which such Proceeds and payments shall be initially deposited. Upon termination of the KeyBank Control/Lockbox Agreement, and in accordance with its terms, all such Proceeds and payments shall be deposited and delivered to the Collection Account and/or Lockbox in accordance with this paragraph and subject to the terms of this Agreement.

(c)

Application of Payments to Revolving Note . Wells Fargo will withdraw Account Funds deposited to the Collection Account and pay down borrowings on the Line of Credit by applying them to the Revolving Note on the first Business Day following the Business Day of deposit to the Collection Account, or, if payments are received by Wells Fargo that are not first deposited to the Collection Account pursuant to any treasury management service provided to Company by Wells Fargo, such payments shall be applied to the Revolving Note as provided in the

Master Agreement for Treasury Management Services and the relevant service description.

1.5

Interest and Interest Related Matters.

(a)

Interest Rates Applicable to Line of Credit . Except as otherwise provided in this Agreement, the unpaid principal amount of each Line of Credit Advance evidenced by the Revolving Note shall accrue interest at an annual interest rate calculated as follows:

(b)

[Intentionally omitted]

(c)

Default Interest Rate . Commencing on the day an Event of Default occurs, through and including the date identified by Wells Fargo in a Record as the date that the Event of Default has been cured or waived (each such period a “Default Period”), or during a time period specified in Section 1.8(b) or (c), or at any time following the Termination Date, in Wells Fargo’s sole discretion and without waiving any of its other rights or remedies, the principal amount of the Revolving

Note shall bear interest at a rate that is three (3.0%) percent above the contractual rate set forth in Section 1.5(a) (the “Default Rate”), or any lesser rate that Wells Fargo may deem appropriate, starting on the first day of the month in which the Default Period begins through the last day of that Default Period, or any shorter time period to which Wells Fargo may agree in an Authenticated Record.

(d)

Interest Accrual on Payments Applied to Revolving Note . Payments received by Wells Fargo shall be applied to the Revolving Note as provided in Section 1.4(c), but the principal amount paid down shall continue to accrue interest through the end of the first Business Day following the Business Day that the payment was applied to the Revolving Note.

(e)

Usury . No interest rate shall be effective which would result in a rate greater than the highest rate permitted by law. Payments in the nature of interest and other charges made under any Loan Documents or any other document or agreement described in or related to this Agreement that are later determined to be in excess of the limits imposed by applicable usury law will be deemed to be a payment of principal, and the Indebtedness shall be reduced by that amount so that such payments will not be deemed usurious.

1.6

Fees.

(a)

Origination Fee . Company shall pay Wells Fargo a one time origination fee of Sixty Thousand Dollars ($60,000.00), which shall be fully earned and payable upon the execution of this Agreement.

(b)

Unused Line Fee . Company shall pay Wells Fargo an annual unused line fee of one-half percent (1/2%) of the daily average of the Maximum Line Amount reduced by outstanding Advances (the “Unused Amount”), from the date of this Agreement to and including the Termination Date, which unused line fee shall be payable monthly in arrears on the first day of each month and on the Termination Date.

(c)

[Intentionally Omitted]

(d)

Collateral Exam Fees . Company shall pay Wells Fargo fees in connection with any collateral exams, audits or inspections conducted by or on behalf of Wells Fargo at the current rates established from time to time by Wells Fargo as its collateral exam fees (which fees are currently One Thousand Dollars ($1,000.00) per eight hour day per collateral examiner), together with all actual out-of-pocket costs and expenses incurred in conducting any collateral examination or inspection

(e)

Collateral Management Fees . Company shall pay Wells Fargo a fee at the rates established from time to time by Wells Fargo as its Collateral management fees

(which fees are currently Seven Hundred Fifty Dollars ($750.00) per month), due and payable monthly in arrears on the first day of the month and on the Termination Date.

(f)

Line of Credit Termination and/or Reduction Fees . If (i) Wells Fargo terminates the Line of Credit during a Default Period, or if (ii) Company terminates the Line of Credit on a date prior to the Maturity Date, or if (iii) Company and Wells Fargo agree to reduce the Maximum Line Amount, then Company shall pay Wells Fargo as liquidated damages a termination or reduction fee in an amount equal to a percentage of the Maximum Line Amount (or the reduction of the Maximum Line Amount, as the case may be) calculated as follows: (A) three percent (3.0%) if the termination or reduction occurs on or before the first anniversary of the first Line of Credit Advance; (B) two percent (2.0%) if the termination or reduction occurs after the first anniversary of the first Line of Credit Advance, but on or before the second anniversary of the first Line of Credit Advance; and (C) one percent (1.0%) if the termination or reduction occurs after the second anniversary of the first Line of Credit Advance.

(g)

Overadvance Fees . Company shall pay a $500.00 Overadvance fee for each day that an Overadvance exists which was not agreed to by Wells Fargo in an Authenticated Record prior to its occurrence; provided that Wells Fargo’s acceptance of the payment of such fees shall not constitute either consent to the Overadvance or waiver of the resulting Event of Default. Company shall pay additional Overadvance fees and interest in such amounts and on such terms as Wells Fargo in its sole discretion may consider appropriate for any Overadvance to which Wells Fargo has specifically consented in an Authenticated Record prior to its occurrence.

(h)

Treasury Management Fees . Company will pay service fees to Wells Fargo for treasury management services provided pursuant to the Master Agreement for Treasury Management Services or any other agreement entered into by the parties, in the amount prescribed in Wells Fargo’s current service fee schedule.

(i)

[Intentionally omitted]

(j)

[Intentionally omitted]

(k)

Other Fees and Charges . Wells Fargo may impose additional reasonable fees and charges during a Default Period for (i) waiving an Event of Default, or for (ii) the administration of Collateral by Wells Fargo. All such fees and charges shall be imposed at Wells Fargo’s sole discretion following oral notice to Company on either an hourly, periodic, or flat fee basis, and in lieu of or in addition to imposing interest at the Default Rate, and Company’s request for an Advance following such notice shall constitute Company’s agreement to pay such fees and charges.

(l)

Termination and Prepayment Fees Following Transfer Between Wells Fargo Operating Divisions . If the Loan Documents, following Company’s request and

the consent of Wells Fargo Business Credit (which consent may be withheld by Wells Fargo Business Credit in its sole discretion), are transferred to an operating division of Wells Fargo other than Wells Fargo Business Credit, the transfer will not be deemed a termination or prepayment resulting in the payment of termination and/or prepayment fees, or Fixed Rate Advance breakage fees, provided that Company agrees, at the time of transfer, to the payment of comparable fees in an amount not less than that set forth in this Agreement, in the event that any facilities extended under this Agreement are terminated early or prepaid after transfer.

(m)

Fixed Rate Advance Breakage Fees . Company may prepay any Revolving Note Fixed Rate Advance at any time in any amount, whether voluntarily or by acceleration; provided, however, that if the Fixed Rate Advance is prepaid, Company shall pay Wells Fargo upon demand a Fixed Rate Advance breakage fee equal to the sum of the discounted monthly differences for each month from the month of prepayment through the month in which the Fixed Rate Interest Period matures, calculated as follows for each such month:

(n)

CSI Fee . Accounts receivable agings and inventory reports shall be submitted electronically to Wells Fargo via its vendor, Collateral Services, Inc. (CSI) for which a monthly processing fee of $100.00 per month shall apply, payable by the Company in arrears.

1.7

Interest Accrual; Principal and Interest Payments; Computation.

(a)

Interest Payments and Interest Accrual . Accrued and unpaid interest under the Revolving Note on Floating Rate Advances shall be due and payable on the first day of each month (each an “Interest Payment Date”) and on the Termination Date, and shall be paid in the manner provided in Section 1.4(c). Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of Advance to the Interest Payment Date. Interest accruing on any Fixed Rate Advance shall be due and payable on the last day of the applicable Fixed Rate Interest Period and on the Termination Date; provided, however, for Fixed Rate Interest Periods in excess of one month, interest shall nevertheless be due and payable monthly on the last day of each month, and on the last day of the Fixed Rate Interest Period.

(b)

Payment of Revolving Note Principal . The principal amount of the Revolving Note shall be paid from time to time as provided in this Agreement, and shall be fully due and payable on the Termination Date.

(c)

Payments Due on Non Business Days . If an Interest Payment Date or the Termination Date falls on a day which is not a Business Day, payment shall be made on the next Business Day, and interest shall continue to accrue during that time period.

(d)

Computation of Interest and Fees . Interest accruing on the unpaid principal amount of the Revolving Note and fees payable under this Agreement shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(e)

Liability Records . Wells Fargo shall maintain accounting and bookkeeping records of all Advances and payments under the Line of Credit and all other Indebtedness due to Wells Fargo in such form and content as Wells Fargo in its sole discretion deems appropriate. Wells Fargo’s calculation of current Indebtedness shall be presumed correct unless proven otherwise by Company. Upon Wells Fargo’s request, Company will admit and certify in a Record the exact principal balance of the Indebtedness that Company then believes to be outstanding. Any billing statement or accounting provided by Wells Fargo shall be conclusive and binding unless Company notifies Wells Fargo in a detailed Record of its intention to dispute the billing statement or accounting within 30 days of receipt.

1.8

Termination, Reduction or Non-Renewal of Line of Credit by Company; Notice.

(a)

Termination by Company after Advance Notice . Company may terminate or reduce the Line of Credit at any time prior to the Maturity Date, if it (i) delivers an Authenticated Record notifying Wells Fargo of its intentions at least 90 days prior to the proposed Termination Date, (ii) pays Wells Fargo the termination fee set forth in Section 1.6(f), and (iii) pays the Indebtedness in full or down to the

reduced Maximum Line Amount. Any reduction in the Maximum Line Amount shall be in multiples of $100,000.00, with a minimum reduction of at least $1,000,000.00.

(b)

Termination by Company without Advance Notice . If Company fails to deliver Wells Fargo timely notice of its intention to terminate the Line of Credit or reduce the Maximum Line Amount as provided in Section 1.8(a), Company may nevertheless terminate the Line of Credit or reduce the Maximum Line Amount and pay the Indebtedness in full or down to the reduced Maximum Line Amount if it (i) pays the termination fee set forth in Section 1.6(f), and (ii) pays the Default Rate on the Revolving Note commencing on the 90th day prior to the proposed Termination Date or reduction date and continuing through the date that Wells Fargo receives delivery of an Authenticated Record giving it actual notice of Company’s intention to terminate or reduce the Line of Credit.

(c)

Non-Renewal by Company; Notice . If Company does not wish Wells Fargo to consider renewal of the Line of Credit on the next Maturity Date, Company shall deliver an Authenticated Record to Wells Fargo at least 90 days prior to the Maturity Date notifying Wells Fargo of its intention not to renew. If Company fails to deliver to Wells Fargo such timely notice, then the Revolving Note shall accrue interest at the Default Rate commencing on the 90th day prior to the Maturity Date and continuing through the date that Wells Fargo receives delivery of an Authenticated Record giving it actual notice of Company’s intention not to renew.

1.9

[Intentionally omitted]

1.10

[Intentionally omitted]

2.

SECURITY INTEREST AND OCCUPANCY OF COMPANY’S PREMISES

2.1

Grant of Security Interest. Company hereby pledges, assigns and grants to Wells Fargo, for the benefit of Wells Fargo, a Lien and security interest (collectively referred to as the “Security Interest”) in the Collateral, as security for the payment and performance of all Indebtedness. Following request by Wells Fargo, Company shall grant Wells Fargo, for the benefit of Wells Fargo, a Lien and security interest in all commercial tort claims that it may have against any Person.

2.2

Notifying Account Debtors and Other Obligors; Collection of Collateral. Wells Fargo may at any time (whether or not a Default Period then exists) deliver a Record giving an account debtor or other Person obligated to pay an Account, a General Intangible, or other amount due, notice that the Account, General Intangible, or other amount due has been assigned to Wells Fargo for security and must be paid directly to Wells Fargo. Company shall join in giving such notice and shall Authenticate any Record giving such notice upon Wells Fargo’s request. After Company or Wells Fargo gives such notice, Wells Fargo may, but

need not, in Wells Fargo’s or in Company’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, such Account, General Intangible, or other amount due, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any account debtor or other obligor. Wells Fargo may, in Wells Fargo’s name or in Company’s name, as Company’s agent and attorney-in-fact, notify the United States Postal Service to change the address for delivery of Company’s mail to any address designated by Wells Fargo, otherwise intercept Company’s mail, and receive, open and hold Company’s mail, applying all Collateral as permitted under this Agreement and holding all other mail for Company’s account or forwarding such mail to Company’s last known address.

2.3

Assignment of Insurance. As additional security for the Indebtedness, Company hereby assigns to Wells Fargo, all rights of Company under every policy of insurance covering the Collateral and all business records and other documents relating to it, and all monies (including proceeds and refunds) that may be payable under any policy, and Company hereby directs the issuer of each policy to pay all such monies directly to Wells Fargo; provided however that if any such monies are less than $50,000 for any loss and no Default Period then exists, such monies may be paid directly to the Company to be applied to repair and restore such damage or loss unless agreed by Wells Fargo in an Authenticated Record that the proceeds be paid on account of the Revolving Note. In connection with a claim in excess of $50,000 at any time, whether or not a Default Period then exists, Wells Fargo may (but need not), in Wells Fargo’s or Company’s name, execute and deliver proofs of claim, receive payment of proceeds and endorse checks and other instruments representing payment of the policy of insurance, and adjust, litigate, compromise or release claims against the issuer of any policy. Any monies received under any insurance policy assigned to Wells Fargo, other than liability insurance policies, or received as payment of any award or compensation for condemnation or taking by eminent domain, shall be paid to Wells Fargo and, as determined by Wells Fargo in its sole discretion, either be applied to prepayment of the Indebtedness or disbursed to Company under staged payment terms reasonably satisfactory to Wells Fargo for application to the cost of repairs, replacements, or restorations which shall be effected with reasonable promptness and shall be of a value at least equal to the value of the items or property destroyed.

2.4

Company’s Premises

(a)

Wells Fargo’s Right to Occupy Company’s Premises . Company hereby grants to Wells Fargo the right, at any time during a Default Period and without notice or consent, to take exclusive possession of all locations where Company conducts its business or has any rights of possession, including the locations described on Exhibit B (the “Premises”), until the earlier of (i) payment in full and discharge of all Indebtedness and termination of the Line of Credit, or (ii) final sale or

disposition of all items constituting Collateral and delivery of those items to purchasers.

(b)

Wells Fargo’s Use of Company’s Premises . Wells Fargo may use the Premises to store, process, manufacture, sell, use, and liquidate or otherwise dispose of items that are Collateral, and for any other incidental purposes deemed appropriate by Wells Fargo in good faith.

(c)

Company’s Obligation to Reimburse Wells Fargo . Wells Fargo shall not be obligated to pay rent or other compensation for the possession or use of any Premises, but if Wells Fargo elects to pay rent or other compensation to the owner of any Premises in order to have access to the Premises, then Company shall promptly reimburse Wells Fargo all such amounts, as well as all taxes, fees, charges and other expenses at any time payable by Wells Fargo with respect to the Premises by reason of the execution, delivery, recordation, performance or enforcement of any terms of this Agreement.

2.5

License . Without limiting the generality of any other Security Document, Company hereby grants to Wells Fargo a non-exclusive, worldwide and royalty-free license to use or otherwise exploit all Intellectual Property Rights of Company for the purpose of: (a) completing the manufacture of any in-process materials during any Default Period so that such materials become saleable Inventory, all in accordance with the same quality standards previously adopted by Company for its own manufacturing and subject to Company’s reasonable exercise of quality control; and (b) selling, leasing or otherwise disposing of any or all Collateral during any Default Period.

2.6

Financing Statements.

(a)

Authorization to File . Company authorizes Wells Fargo to file financing statements describing Collateral to perfect Wells Fargo’s Security Interest in the Collateral, and Wells Fargo may describe the Collateral as “all personal property” or “all assets” or describe specific items of Collateral including commercial tort claims as Wells Fargo may consider necessary or useful to perfect the Security Interest. All financing statements filed before the date of this Agreement to perfect the Security Interest were authorized by Company and are hereby re-authorized. Following the termination of the Line of Credit and payment of all Indebtedness, Wells Fargo shall, at Company’s expense and within the time periods required under applicable law, release or terminate any filings or other agreements that perfect the Security Interest.

(b)

Termination . Wells Fargo shall, at Company’s expense, release or terminate any filings or other agreements that perfect the Security Interest, provided that there are no suits, actions, proceedings or claims pending or threatened against any Indemnitee under this Agreement with respect to any Indemnified Liabilities, upon Wells Fargo’s receipt of the following, in form and content satisfactory to Wells Fargo: (i) cash payment in full of all Indebtedness and a completed

performance by Company with respect to its other obligations under this Agreement, (ii) evidence that the commitment of Wells Fargo to make Advances under the Line of Credit or under any other facility with Company has been terminated, (iii) a release of all claims against Wells Fargo by Company relating to Wells Fargo’s performance and obligations under the Loan Documents, and (iv) an agreement by Company, and any new lender to Company to indemnify Wells Fargo for any payments received by Wells Fargo that are applied to the Indebtedness as a final payoff that may subsequently be returned or otherwise not paid for any reason.

2.7

Setoff. Wells Fargo may at any time, in its sole discretion and without demand or notice to anyone, setoff any liability owed to Company by Wells Fargo against any Indebtedness, then due.

2.8

Collateral Related Matters. This Agreement does not contemplate a sale of Accounts or chattel paper, and, as provided by law, Company is entitled to any surplus and shall remain liable for any deficiency. Wells Fargo’s duty of care with respect to Collateral in its possession (as imposed by law) will be deemed fulfilled if it exercises reasonable care in physically keeping such Collateral, or in the case of Collateral in the custody or possession of a bailee or other third Person, exercises reasonable care in the selection of the bailee or third Person, and Wells Fargo need not otherwise preserve, protect, insure or care for such Collateral. Wells Fargo shall not be obligated to preserve rights Company may have against prior parties, to liquidate the Collateral at all or in any particular manner or order or apply the Proceeds of the Collateral in any particular order of application. Wells Fargo has no obligation to clean-up or prepare Collateral for sale. Company waives any right it may have to require Wells Fargo to pursue any third Person for any of the Indebtedness.

2.9

Notices Regarding Disposition of Collateral. If notice to Company of any intended disposition of Collateral or any other intended action is required by applicable law in a particular situation, such notice will be deemed commercially reasonable if given in the manner specified in Section 7.4 at least ten calendar days before the date of intended disposition or other action.

3.

CONDITIONS PRECEDENT

3.1

Conditions Precedent to Initial Advance. Wells Fargo’s obligation to make the initial Advance shall be subject to the condition that Wells Fargo shall have received this Agreement and each of the Loan Documents, and any document, agreement, or other item described in or related to this Agreement, and all fees and information described in Exhibit C, executed and in form and content satisfactory to Wells Fargo.

3.2

Additional Conditions Precedent to All Advances. Wells Fargo’s obligation to make any Advance (including the initial Advance) shall be subject to the further additional conditions: (a) that the representations and warranties described in

Exhibit D are correct on the date of the Advance, except to the extent that such representations and warranties relate solely to an earlier date; and (b) that no event has occurred and is continuing, or would result from the requested Advance that would result in an Event of Default.

4.

REPRESENTATIONS AND WARRANTIES

5.

COVENANTS

5.1

Reporting Requirements. Company shall deliver to Wells Fargo the following information, compiled where applicable using GAAP consistently applied, in form and content acceptable to Wells Fargo:

(a)

Annual Financial Statements . As soon as available and in any event within ninety (90) days after Company’s fiscal year end, Company’s audited financial statements audited by an independent certified public accountant acceptable to Wells Fargo, which shall include Company’s balance sheet, income statement, and statement of retained earnings and cash flows prepared, if requested by Wells Fargo, on a consolidated and consolidating basis to include Company’s Affiliates. The annual financial statements shall be accompanied by the unqualified opinion of such accountant and a certificate (the “Compliance Certificate”) in the form of Exhibit E that is signed by Company’s chief financial officer, together with Company’s Form 10K.

(b)

Quarterly Financial Statements . As soon as available and in any event within forty-five (45) days after the end of each quarter, a Company prepared balance sheet, income statement, and statement of retained earnings prepared for that quarter and for the year–to-date period then ended, prepared, if requested by Wells Fargo, on a consolidated and consolidating basis to include Company’s Affiliates, and stating in comparative form the figures for the corresponding date

and periods in the prior fiscal year, subject to year-end adjustments. The financial statements shall be accompanied by a Compliance Certificate in the form of Exhibit E that is signed by Company’s chief financial officer, together with Company’s Form 10Q.

(c)

Collateral Reports . No later than ten (10) days after each month end (or more frequently if Wells Fargo shall request it), detailed agings and listings of Company’s accounts receivable, sales, collections, credit memos, and accounts payable, detailed agings of accrued expenses, an inventory certification report, and a calculation of Company’s Accounts, Eligible Accounts, Inventory and Eligible Inventory as of the end of that month or shorter time period requested by Wells Fargo.

(d)

Projections . No later than thirty (30) days following the beginning of a fiscal year, Company’s projected balance sheet and income statement and statement of cash flows and statement of retained earnings and cash flows for each month of the next fiscal year, certified as accurate by Company’s chief financial officer and accompanied by a statement of assumptions and supporting schedules and information.

(e)

Supplemental Reports . Weekly, or more frequently if Wells Fargo requests, Wells Fargo’s standard form of “daily collateral report,” together with detailed inventory report, sales reports, collection reports, credit memos, receivables schedules, collection reports, and a copy of invoices in excess of $30,000.00, shipment documents and delivery receipts for goods sold to account debtors in excess of $30,000.00.

(f)

Litigation . No later than three days after discovery, a Record notifying Wells Fargo of any litigation or other proceeding before any court or governmental agency which seeks a monetary recovery against Company in excess of $50,000.00.

(g)

Intellectual Property . (i) No later than 30 days before it acquires material Intellectual Property Rights, a Record notifying Wells Fargo of Company’s intention to acquire such rights; (ii) except for transfers permitted under Section 5.18, no later than 30 days before it disposes of material Intellectual Property Rights, a Record notifying Wells Fargo of Company’s intention to dispose of such rights, along with a copy of all proposed documents and agreements concerning the disposal of such rights as requested by Wells Fargo; (iii) promptly upon discovery, a Record notifying Wells Fargo of (A) any Infringement of Company’s Intellectual Property Rights by any Person, (B) claims that Company is Infringing another Person’s Intellectual Property Rights and (C) any threatened cancellation, termination or material limitation of Company’s Intellectual Property Rights; and (iv) promptly upon receipt, a copy of all registrations and filings with respect to Company’s Intellectual Property Rights.

(h)

Defaults . No later than three days after learning of the probable occurrence of any Event of Default, a Record notifying Wells Fargo of the Event of Default and the steps being taken by Company to cure the Event of Default.

(i)

Disputes . Promptly upon discovery, a Record notifying Wells Fargo of (i) any disputes or claims by Company’s customers exceeding $10,000.00 individually or $20,000.00 in the aggregate during any fiscal year; (ii) credit memos not previously reported in Section 5.1(e); and (iii) any goods returned to or recovered by Company outside of the ordinary course of business or in the ordinary course of business but with a value in an amount in excess of $10,000.00.

(j)

Changes in Officers and Directors . Promptly following occurrence, a Record notifying Wells Fargo of any change in the persons constituting Company’s Officers and Directors.

(k)

Collateral . Promptly upon discovery, a Record notifying Wells Fargo of any loss of or material damage to any Collateral having an aggregate value in excess of $20,000 or of any substantial adverse change in any Collateral having an aggregate value in excess of $20,000 or the prospect of its payment.

(l)

Commercial Tort Claims . Promptly upon discovery, a Record notifying Wells Fargo of any commercial tort claims brought by Company against any Person, including the name and address of each defendant, a summary of the facts, an estimate of Company’s damages, a copy of any complaint or demand letter submitted by Company, and such other information as Wells Fargo may request.

(m)

Reports to Owners . Promptly upon distribution, a copy of all financial statements, reports and proxy statements which Company shall have sent to its Owners.

(n)

Tax Returns of Company . No later than five days after they are required to be filed, copies of Company’s signed and dated state and federal income tax returns and all related schedules, and a copy of any extension requests.

(o)

[Intentionally omitted]

(p)

Violations of Law . No later than three days after discovery of any violation, a Record notifying Wells Fargo of Company’s violation of any law, rule or regulation, the non-compliance with which could have a Material Adverse Effect on Company.

(q)

Pension Plans . (i) Promptly upon discovery, and in any event within 30 days after Company knows or has reason to know that any Reportable Event with respect to any Pension Plan has occurred, a Record authenticated by Company’s chief financial officer notifying Wells Fargo of the Reportable Event in detail and the actions which Company proposes to take to correct the deficiency, together with a copy of any related notice sent to the Pension Benefit Guaranty Corporation; (ii) promptly upon discovery, and in any event within 10 days after

Company fails to make a required quarterly Pension Plan contribution under Section 412(m) of the IRC, a Record authenticated by Company’s chief financial officer notifying Wells Fargo of the failure in detail and the actions that Company will take to cure the failure, together with a copy of any related notice sent to the Pension Benefit Guaranty Corporation; and (iii) promptly upon discovery, and in any event within 10 days after Company knows or has reason to know that it may be liable or may be reasonably expected to have liability for any withdrawal, partial withdrawal, reorganization or other event under any Multiemployer Plan under Sections 4201 or 4243 of ERISA, a Record authenticated by Company’s chief financial officer notifying Wells Fargo of the details of the event and the actions that Company proposes to take in response.

(r)

Other Reports . From time to time, with reasonable promptness, all customer lists, receivables schedules, inventory reports, collection reports, deposit records, equipment schedules, invoices to account debtors, shipment documents and delivery receipts for goods sold, and such other materials, reports, records or information as Wells Fargo may reasonably request.

5.2

Financial Covenants. Company agrees to comply with the financial covenants described below, which shall be calculated using GAAP consistently applied, except as they may be otherwise modified by the following capitalized definitions:

(a)

Minimum Book Net Worth . Based upon Company’s submitted projections, Company shall maintain, at the end of each fiscal quarter described below, its non-cumulative Book Net Worth, determined as of the end of each fiscal quarter in an amount not less than the amount set forth below (numbers appearing between “< >“ are negative):

(b)

Minimum Net Income . Based upon 75% of the Company’s submitted projections, Company shall achieve for each fiscal quarter described below, non-cumulative Net Income of not less than the amount set forth for each such fiscal quarter (numbers appearing between “< >“ are negative):

(c)

[Intentionally omitted]

(d)

Intentionally omitted]

(e)

[Intentionally omitted]

(f)

[Intentionally omitted]

(g)

Capital Expenditures . Company shall not incur or contract to incur Capital Expenditures of more than Four Hundred Thousand Dollars ($400,000.00) in the aggregate during any fiscal year, beginning with fiscal year ending December 31, 2009, and thereafter.

(h)

[Intentionally omitted]

(i)

[Intentionally omitted]

(j)

[Intentionally omitted]

5.3

Other Liens and Permitted Liens.

(a)

Other Liens; Permitted Liens . Company shall not create, incur or suffer to exist any Lien upon any of its assets, now owned or later acquired, as security for any indebtedness, with the exception of the following (each a “Permitted Lien”; collectively, “Permitted Liens”): (i) In the case of real property, covenants, restrictions, rights, easements and minor irregularities in title which do not materially interfere with Company’s business or operations as presently conducted; (ii) Liens in existence on the date of this Agreement that are described in Exhibit F and secure indebtedness for borrowed money permitted under Section 5.4; (iii) The Security Interest and Liens created by the Security Documents; (iv) Purchase money Liens relating to the acquisition of Equipment not exceeding the lesser of cost or fair market value or $100,000.00 in the aggregate during any fiscal year, and so long as no Default Period is then in existence and none would exist immediately after such acquisition and (v) Liens for taxes, assessments or