Common use of WARRANTIES, REPRESENTATIONS AND COVENANTS Clause in Contracts

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and represents to and covenants with Bank that: (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a) attached hereto and are Borrower’s sole offices and places of business; (c) Borrower has the right, power and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; (d) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (g) Borrower is not and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt in the ordinary course of business; (ii) renewals, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheld. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and Guarantor warrants, represents to and covenants with Bank that: : (a) Borrower is The chief executive office and other places of business of Guarantor, the Collateral and the books and records relating to the Collateral and the Collateral are, and have been during the four month period prior to the date hereof (or in the case of a corporation duly organizednew business, validly existing from the date of commencement of said business), located at the address(es) set forth below and in good standing under Guarantor will not change the laws same, or merge or consolidate with any person or change its name, without prior written notice to and consent of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; the Agent: Addresses: 00 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000; (b) Borrower’s principal executive officeGuarantor will use the Collateral for lawful and business purposes only, principal place of business with all reasonable care and other offices caution and places of business are set forth on Schedule 7.1(a) attached hereto in conformity with all applicable laws, ordinances and are Borrower’s sole offices and places of business; regulations; (c) Borrower has Guarantor will keep the rightCollateral in first-class order, power repair, running and capacity marketable condition, at Guarantor's sole cost and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; expense; (d) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and The Banks shall at all times hereafter own property whichhave free access to and right of inspection of the Collateral and any records pertaining thereto, at a fair valuation, is greater than and the sum right to make extracts from and to receive from Guarantor originals or true copies of its debts; (g) Borrower is not such records and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially papers and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect instruments relating to any indentureCollateral upon request therefor (which rights shall, loan agreementexcept after the occurrence of an Event of Default, mortgagebe exercised only upon reasonable notice during regular business hours), deed or other similar agreement relating and Guarantor hereby grants to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant Banks a security interest in orall such records, papers and instruments to secure the payment, performance and observance of the Obligations; (ie) unsecured trade debt in The Collateral is now and shall remain personal property, is not now a fixture and Guarantor will not permit any Collateral which is not now a fixture to become a fixture without prior written notice to and consent of the ordinary course of business; (ii) renewalsBanks and without first making all arrangements, extensions and delivering, or refinancings in causing to be delivered, to the same amount of existing indebtedness Agent all instruments and interest thereon; documents, including, without limitation, waivers and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor by any landlords or mortgagees, requested by and satisfactory to the payment of Borrower’s Liabilities; Banks to preserve and protect the primary security interest granted herein against all persons; (f) be Guarantor, at its sole cost and expense, will insure the Collateral in the name of and with loss or become subject at any time damage payable solely to any lawthe Agent, regulationas its interest may appear, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business against such risks, with Borrower or fail to provide documentary such companies and other evidence of Borrower’s identity in such amounts, as may be required by Bank at any the Banks from time to enable Bank time (all such policies providing ten (10) days minimum written notice of cancellation to verify Borrowers’ identity the Agent) and Guarantor will deliver to the Agent the original or duplicate policies, or certificates or other evidence satisfactory to comply with the Agent attesting thereto, and Guarantor will promptly notify the Agent of any applicable law loss or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and damage to any Collateral or arising from its use; (g) make Guarantor will, at its sole cost and expense, and at all times, pay and discharge all taxes and assessments and keep the Collateral free and clear of any changes to its state and all liens, security interests or encumbrances (other than in favor of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(athe Banks), without perform all acts and execute all documents requested by the prior written consent Banks from time to time to evidence, perfect, maintain or enforce the Banks' primary security interest granted herein or otherwise in furtherance of Bank, which shall not be unreasonably withheld.the provisions of this Security Agreement; 7.3 Borrower warrants (h) At any time and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, Guarantor shall, at its sole cost and expense, execute and deliver to the Banks such financing statements pursuant to the Uniform Commercial Code ("UCC"), applications for certificate of title and other papers, documents or instruments as may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as be requested by the Bank may reasonably requireBanks in connection with this Security Agreement, and Guarantor hereby authorizes the Banks to discuss Borrower’s businessexecute and file at any time and from time to time one or more financing statements or copies thereof or of this Security Agreement with respect to the Collateral signed only by the Banks; (i) In its discretion, operationsthe Agent may, at any time and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” from time to time, after a Default (as hereinafter defined) has occurred and is continuing, in excess its name or Guarantor's or otherwise, notify any account debtor or obligor of Fifteen Million any account, contract, document, instrument, chattel paper or general intangible included in the Collateral to make payment to the Banks; (j) In their discretion, the Banks may, at any time and No/100 Dollars from time to time, after a Default has occurred and is continuing, demand, xxx for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable by the Banks with respect to, any Collateral, and/or extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release, any Collateral or Obligations, all without notice to or consent by Guarantor and without otherwise discharging or affecting the Obligations, the Collateral or the security interest granted herein; ($15,000,000). Tangible Capital Funds k) In their discretion, the Banks may, at any time and from time to time, for the account of Guarantor, pay any amount or do any act required of Guarantor hereunder and which Guarantor fails to do or pay, and any such payment shall mean be deemed an advance by the sum of (a) Banks to Guarantor payable on demand together with interest at the book value highest rate then payable on any of the net worth Obligations; (l) Guarantor will pay the Banks for any sums, costs, and expenses which the Banks may pay or incur pursuant to the provisions of Borrower as determined this Security Agreement or in accordance negotiating, executing, perfecting, defending, or protecting the security interest granted herein or in enforcing payment of the Obligations or otherwise in connection with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheetprovisions hereof, including shareholder receivables but not limited to court costs, collection charges, travel expenses, and loans reasonable attorneys' fees, all of which, together with interest at the highest rate then payable on any of the Obligations, shall be part of the Obligations and be payable on demand; (m) All proceeds of any other assets reasonably deemed intangible Collateral received by BankGuarantor after the occurrence of a Default shall not be commingled with other property of Guarantor, plus but shall be segregated, held by Guarantor in trust for the Banks, and immediately delivered to the Agent in the form received, duly endorsed in blank where appropriate to effectuate the provisions hereof, the same to be held by the Agent as additional Collateral hereunder or, at the Banks' option, to be applied to payment of the Obligations, whether or not due and in any order; and (cn) In their sole discretion, the Banks may, subject to the terms of the Credit Agreement, at any debt that is formally subordinated time and from time to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigationtime, claimsassign, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower transfer or deliver to withdraw from, or the institution any transferee of any steps to terminateObligations, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to Collateral, whereupon the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch Banks shall be maintained at such bank or branch. 7.7 Borrower warrants fully discharged from all responsibility and represents to and covenants with Bank that the proceeds from the Revolving Credit transferee shall be used for vested with all powers and rights of the working capital Banks hereunder with respect thereto, but the Banks shall retain all rights and general business needs of Borrowerpowers with respect to any Collateral not assigned, transferred or delivered.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 5.1 Borrower warrants and represents to and covenants with Bank that: (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a) attached hereto and are Borrower’s sole offices and places of business; (c) Borrower has the right, power and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; (db) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s 's Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (fc) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (gd) Borrower is not and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (he) Borrower is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (jf) since December 31, 20051999, there has been no material adverse change in the financial condition of Borrower and no change to the information reported in Part I, Item 3 of Borrower's Form 10-K for December 31, 1999, year end. 7.2 5.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s 's prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt enter into any transaction not in the ordinary course of businessbusiness which materially and adversely affects Borrower's ability to repay Borrower's Liabilities or any other obligations and liabilities of Borrower; (b) other than as specifically permitted in or contemplated by this Agreement or the Other Agreements, encumber, pledge, mortgage, sell, lease or otherwise dispose of or transfer, whether by sale, loan, distribution, merger, consolidation or otherwise, any of Borrower's assets; or (c) incur Indebtedness except for (i) renewals or extensions of existing Indebtedness and interest thereon, (ii) renewals, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness Indebtedness that is unsecured unsecured, in an amount approved by Bank and is to Persons who execute and deliver to Bank Bank, in form and substance acceptable to Bank and its counsel counsel, subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s 's Liabilities; , and (fiii) be or become subject at any time to any law, regulationleases of new personal property which are for less than one year, or list of any government agency (including which are for more than one year provided that all such leases do not exceed, in the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit aggregate, $500,000.00 in outstanding total payments to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheldmaturity. 7.3 5.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty ninety (12090) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty forty-five (6045) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such periodperiod (the "Quarterly Financial Statements"); (c) as soon as available but not later than fifteen (15) days after copies on the close date of each month during which borrowing is outstanding under filing of all reports by Borrower to the Revolving CreditSecurities and Exchange Commission, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; including without limitation, all forms 8-K, 10-Q, 10-K, proxy statements and registration statements, and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 5.4 Borrower warrants and represents to and covenants with Bank that Borrower shall at all times maintain “a "Tangible Capital Funds” Net Worth" (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars $8,000,000 plus 50% of "Net Income" ($15,000,000)as hereinafter defined) earned during each year after 1998. As used herein, the term "Tangible Capital Funds Net Worth" shall mean the sum of (a) the book value of the net worth tangible assets of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) consistently applied, after subtracting therefrom the aggregate book value of general any intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans without limitation, prepaid expenses, goodwill and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge minus the aggregate of (a) all existing contingent and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services contingent liabilities of Borrower determined in accordance with Bank’s determinationgenerally accepted accounting principles, consistently applied. As used herein, the term "Net Income" shall mean the income after taxes of Borrower shall not maintain any depository accounts as reported each year in the United States at any bank or its audited financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branchstatements. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and Debtor warrants, represents to and covenants with Bank that: : (a) Borrower is The chief executive office and other places of business of Debtor, the Collateral and the books and records relating to the Collateral and the Collateral are, and have been during the four month period prior to the date hereof (or in the case of a corporation duly organizednew business, validly existing from the date of commencement of said business), located at the address(es) set forth below and in good standing under Debtor will not change the laws same, or merge or consolidate with any person or change its name, other than mergers permitted pursuant to the Credit Agreement without prior written notice to and consent of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; the Secured Party: Addresses: 00 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000 (b) Borrower’s principal executive officeDebtor will use the Collateral for lawful and business purposes only, principal place of business with all reasonable care and other offices caution and places of business are set forth on Schedule 7.1(a) attached hereto in conformity with all applicable laws, ordinances and are Borrower’s sole offices and places of business; regulations; (c) Borrower has Debtor will keep the rightCollateral in marketable condition, power at Debtor's sole cost and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; expense; (d) The Secured Party shall at all times, upon reasonable advance notice (except if a Default or event which but for the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse passage of time, the giving of notice or otherwise, both would constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of IncorporationDefault, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower has occurred and is now or hereafter a party or by which it is or may be bound; (econtinuing) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title free access to and ownership right of inspection of the Collateral, free Collateral and clear any records pertaining thereto (and the right to make extracts from and to receive from Debtor originals or true copies of all liens, claims, security interests such records and encumbrances except those of Bank; (f) Borrower is now, any papers and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (g) Borrower is not and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect instruments relating to any indenture, loan agreement, mortgage, deed or other similar agreement relating Collateral upon request therefor) and Debtor hereby grants to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant Secured Party a security interest in orall such records, papers and instruments to secure the payment, performance and observance of the Obligations; (ie) unsecured trade debt in The Collateral is now and shall remain personal property, is not now a fixture and Debtor will not permit any Collateral which is not now a fixture to become a fixture without prior written notice to and consent of the ordinary course of business; (ii) renewalsSecured Party and without first making all arrangements, extensions and delivering, or refinancings in causing to be delivered, to the same amount of existing indebtedness Secured Party all instruments and interest thereon; documents, including, without limitation, waivers and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor by any landlords or mortgagees, requested by and satisfactory to the payment of Borrower’s Liabilities; Secured Party to preserve and protect the primary security interest granted herein against all persons; (f) be Debtor, at its sole cost and expense, will insure the Collateral in the name of and with loss or become subject at any time damage payable solely to any lawthe Secured Party, regulationas its interest may appear, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business against such risks, with Borrower or fail to provide documentary such companies and other evidence of Borrower’s identity in such amounts, as may be required by Bank at any time the Credit Agreement with such changes as to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of which the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of BankSecured Party shall consent, which consent shall not be unreasonably withheld. 7.3 Borrower warrants and represents withheld from time to and covenants with Bank that Borrower shall furnish to Bank: time (a) as soon as available but not later than one hundred twenty all such policies providing ten (12010) days after minimum written notice of cancellation to the close of each fiscal year of BorrowerSecured Party) and Debtor will deliver to the Secured Party the original or duplicate policies, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable or certificates or other evidence satisfactory to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently appliedSecured Party attesting thereto, and Debtor will promptly notify the Secured Party of any loss or damage to fairly present any Collateral or arising from its use; (g) Debtor will, at its sole cost and expense, and at all times, pay and discharge all taxes and assessments (but may contest the financial position same so long as it maintains adequate reserves to pay said sums) and results keep the Collateral free and clear of operations any and all liens, security interests or encumbrances (other than in favor of Borrower for such period; the Secured Party), perform all acts and execute all documents requested by the Secured Party from time to time to evidence, perfect, maintain or enforce the Secured Party's primary security interest granted herein or otherwise in furtherance of the provisions of this Security Agreement; (ch) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; At any time and (d) such other data and information (financial and otherwise) as Bank, from time to time, Debtor shall, at its sole cost and expense, execute and deliver to the Secured Party such financing statements pursuant to the Uniform Commercial Code ("UCC"), applications for certificate of title and other papers, documents or instruments as may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as be requested by the Bank may reasonably requireSecured Party in connection with this Security Agreement, and Debtor hereby authorizes the Secured Party to discuss Borrower’s businessexecute and file at any time and from time to time one or more financing statements or copies thereof or of this Security Agreement with respect to the Collateral signed only by the Secured Party; (i) In its discretion, operationsthe Secured Party may, at any time and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” from time to time after a Default (as hereinafter defined) has occurred and is continuing, in excess its name or Debtor's or otherwise, notify any account debtor or obligor of Fifteen Million any account, contract, document, instrument, chattel paper or general intangible included in the Collateral to make payment to the Secured Party; (j) In its discretion, Secured Party may, at any time and No/100 Dollars from time to time after a Default has occurred and is continuing, demand, xxx for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable by Secured Party with respect to, any Collateral, and/or extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release, any Collateral or Obligations, all without notice to or consent by Debtor and without otherwise discharging or affecting the Obligations, the Collateral or the security interest granted herein; ($15,000,000). Tangible Capital Funds k) In its discretion, but upon reasonable notice to Debtor (except if a Default or event which but for the passage of time, the giving of notice or both would constitute a Default, has occurred and is continuing) Secured Party may, at any time and from time to time, for the account of Debtor, pay any amount or do any act required of Debtor hereunder and which Debtor fails to do or pay, and any such payment shall mean be deemed an advance by Secured Party to Debtor payable on demand together with interest at the sum of (a) the book value highest rate then payable on any of the net worth Obligations; (l) Debtor will pay Secured Party for any reasonable sums, costs, and expenses which Secured Party may pay or incur pursuant to the provisions of Borrower as determined this Security Agreement or in accordance negotiating, executing, perfecting, defending, or protecting the security interest granted herein or in enforcing payment of the Obligations or otherwise in connection with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheetprovisions hereof, including shareholder receivables but not limited to court costs, collection charges, travel expenses, and loans reasonable attorneys' fees, all of which, together with interest at the highest rate then payable on any of the Obligations, shall be part of the Obligations and any other assets reasonably deemed intangible by Bank, plus be payable on demand; (cm) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution All proceeds of any steps Collateral received by Debtor after the occurrence of a Default shall not be commingled with other property of Debtor, but shall be segregated, held by Debtor in trust for Secured Party, and immediately delivered to terminateSecured Party in the form received, duly endorsed in blank where appropriate to effectuate the provisions hereof, the same to be held by Secured Party as additional Collateral hereunder or, at Secured Party's option, to be applied to payment of the Obligations, whether or not due and in any order; and (n) In its sole discretion, Secured Party may, at any time and from time to time, assign, transfer or deliver to any transferee of any Obligations, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement pointCollateral, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch whereupon Secured Party shall be maintained at such bank or branch. 7.7 Borrower warrants fully discharged from all responsibility and represents to and covenants with Bank that the proceeds from the Revolving Credit transferee shall be used for the working capital vested with all powers and general business needs rights of BorrowerSecured Party hereunder with respect thereto, but Secured Party shall retain all rights and powers with respect to any Collateral not assigned, transferred or delivered.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 5.1 Borrower warrants and represents to and covenants with Bank that: (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a) attached hereto and are Borrower’s sole offices and places of business; (c) Borrower has the right, power and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; (db) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s 's Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (fc) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (gd) Borrower is not and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (he) Borrower is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (jf) since December 31, 20051997, there has been no material adverse change in the financial condition of Borrower and no change to the information reported in Part I, Item 3 of Borrower's Form 10-K for December 31, 1997, year end. 7.2 5.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s 's prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt enter into any transaction not in the ordinary course of business; (ii) renewals, extensions business which materially and adversely affects Borrower's ability to repay Borrower's Liabilities or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheld. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing obligations and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition liabilities of Borrower; (b) the institution of steps other than as specifically permitted in or contemplated by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or the Other Agreements, encumber, pledge, mortgage, sell, lease or otherwise dispose of or transfer, whether by sale, loan, distribution, merger, consolidation or otherwise, any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.'s

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower Debtor covenants, represents and warrants and represents to and covenants with Bank that: Secured Party as follows: (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a) attached hereto and are Borrower’s sole offices and places of business; (c) Borrower Debtor has the rightright and power, power and capacity and is duly authorized and empowered to enter into, execute, deliver into and perform this Agreement Agreement, and the Other Agreements; (d) the execution, delivery and/or execution and performance by Borrower of this Agreement does not and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, not constitute a violation of any applicable law breach or a breach default of any provision contained in Borrower’s Articles of Incorporation, By-Laws any agreement or similar document, or contained in any material agreement, instrument or document to which Borrower Debtor is now or hereafter may become a party or by which it Debtor is or may be bound; bound or affected; (b) Debtor shall defend the security interest of Secured Party in the Collateral against the interests, claims and demands of all other parties except the Senior Lender of Debtor; (c) All information contained in Section 1 of this Agreement currently is and shall remain true, accurate and complete during the term of this Agreement and Debtor will not change the status of any item set forth in Section 1 without providing Secured Party thirty (30) days prior written notice; (d) Except for the security interest of the lender set forth on Exhibit "B" attached hereto (the "Senior Lender") and except for the security interest in favor of the Secured Party, Debtor is the lawful owner of the Collateral and has and shall continue to have full, clear and absolute legal title to the Collateral subject to no claims, levies, liens, security interests, attachments, rights or interests of any party whatsoever; (e) Borrower has Debtor shall not use or permit the Collateral to be used for any unlawful purpose whatsoever; (f) The Collateral is and at all times hereafter shall have goodbe fully preserved, indefeasible protected and merchantable title to safeguarded from theft, damage, the elements and ownership of the Collateral, free all other risks and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns hazards and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; be maintained in good operating condition and repair; (g) Borrower is not and will not be, during the term hereof, in violation Except for sales of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt inventory in the ordinary course of business; Debtor's business and the disposal of obsolete assets, Debtor shall not voluntarily or involuntarily sell, assign, transfer, grant any security interest in (ii) renewals, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor other than to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(aSenior Lender), pledge or otherwise dispose of or encumber any Collateral without the prior written consent of BankSecured Party; and (h) Debtor shall pay all personal property taxes, which shall not be unreasonably withheld. 7.3 Borrower warrants assessments and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after governmental charges against the close of Collateral in each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in case before the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch become delinquent and before interest and/or penalties shall be maintained at such bank or branchaccrue. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and 3.1 Seller warrants, represents to and covenants with Bank that: as follows: (a) Borrower Seller is a corporation duly organized, validly existing the sole and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a) attached hereto and are Borrower’s sole offices and places of business; (c) Borrower has the right, power and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; (d) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership absolute owner of the CollateralAccounts, free and clear of all any liens, claims, security interests or encumbrances, and encumbrances except those has the full legal right to sell, assign and transfer the Accounts, and the sale, assignment and transfer thereof does not contravene or conflict with the terms of Bankany other agreement, commitment or instrument to which Seller is a party; (b) this Agreement will vest in KCap all right, title and interest in and to the Accounts as such right , title and interest was vested in Seller immediately prior to the execution and delivery of this Agreement; (c) Each Account represents an accurate and undisputed statement of indebtedness from an Account Debtor of Seller for a sum certain, without offset or counterclaim and which is due and payable within 90 days of invoice date or less; (d) Each Account is an accurate statement of bona fide sale, delivery, and acceptance of merchandise or performance of service by Seller to an Account Debtor; (e) Seller is not affiliated with and does not own, control, or exercise dominion, in any way whatsoever, over the business of any Account Debtor; (f) Borrower is nowAll financial records, statements, books, or other documents shown to KCap by Seller at any time either before or after the signing of this Agreement are true and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debtsaccurate; (g) Borrower is not All invoices will state plainly on their face that the Accounts represented thereby have been sold and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially assigned to KCap and adversely affects its business, property, assets, operations or condition, financial or otherwiseare payable only and directly to KCap; (h) Borrower is not in default with respect to No Account shall be on a bxxx and hold, guaranteed sale, sale and return, sale on approval, consignment or any indenture, loan agreement, mortgage, deed other repurchase or other similar agreement relating to the borrowing of monies to which it is a party or by which it is boundreturn basis; (i) all Seller is solvent; (j) No financing statement governing any of Borrower’s trademark registrationsthe Accounts, patents and patent applications and copyright registrations are listed or any property of Seller in which KCap is granted a security interest under this Agreement, is on Schedule 7.1(i) attached heretofile in any public office other than that which may be in favor of KCap; and (jk) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt in the ordinary course of business; (ii) renewals, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, Seller's principal place of business and other offices and places of business are is set forth on Schedule 7.1(a), without above and Seller maintains its records relating to the prior written consent of Bank, which shall not be unreasonably withheldAccounts and such property at such place. 7.3 Borrower warrants and represents to 3.2 The warranties, representations and covenants with Bank that Borrower contained in paragraph 3.1 above shall furnish be continuous and be deemed to Bank: (a) be renewed as soon as available but not later than one hundred twenty (120) days after of the close date of each fiscal year additional Assignment each txxx Xxxxxx assigns Accounts to KCap. All representations, warranties and covenants of Borrower, financial statements, which Seller under this paragraph shall include, but not be limited to, balance sheets, income statements and statements survive any purchase or sale of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans Accounts and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision termination of this Agreement or any other agreement related to the Revolving CreditAgreement. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and Guarantor warrants, represents to and covenants with Bank that: : (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal The chief executive office, principal place of business office and other offices and places of business are of Guarantor, the Collateral and the books and records relating to the Collateral and the Collateral are, and have been during the four month period prior to the date hereof (or in the case of a new business, from the date of commencement of said business), located at the address(es) set forth on Schedule 7.1(abelow and Guarantor will not change the same, or merge or consolidate with any person or change its name, without prior written notice to and consent of the Bank: Addresses: 4890 E. LaPalma Avenue, Anaheim, California 92807 (x) attached hereto Xxxxxxxxx xxxx xxx xxx Xxxxxxxxxx xxx xxwful and are Borrower’s sole offices business purposes only, with all reasonable care and places of business; caution and in conformity with all applicable laws, ordinances and regulations; (c) Borrower has Guarantor will keep the rightCollateral in good order, power repair, running and capacity marketable condition as used in the ordinary course of business, at Guarantor's sole cost and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; expense; (d) The Bank shall at all times have free access to and right of inspection of the executionCollateral and any records pertaining thereto, delivery and/or and the right to make extracts from and to receive from Guarantor originals or true copies of such records and any papers and instruments relating to any Collateral upon request therefor (which rights shall, except after the occurrence of an Event of Default, be exercised only upon reasonable notice during regular business hours), and Guarantor hereby grants to the Bank a security interest in all such records, papers and instruments to secure the payment, performance and observance of the Obligations; (e) Guarantor, at its sole cost and expense, will insure the Collateral in the name of and with loss or damage payable solely to the Bank, as its interest may appear, against such risks, with such companies a nd in such amounts, as may be required by Borrower the Bank from time to time (all such policies providing ten (10) days minimum written notice of cancellation to the Bank) and Guarantor will deliver to the Bank the original or duplicate policies, or certificates or other evidence satisfactory to the Bank attesting thereto, and Guarantor will promptly notify the Bank of any loss or damage to any Collateral or arising from its use; (f) Guarantor will, at its sole cost and expense, and at all times, pay and discharge all taxes and assessments and keep the Collateral free and clear of any and all liens, security interests or encumbrances (other than in favor of the Bank), perform all acts and execute all documents requested by the Bank from time to time to evidence, perfect, maintain or enforce the Bank's primary security interest granted herein or otherwise in furtherance of the provisions of this Agreement Security Agreement; (g) At any time and from time to time, Guarantor shall, at its sole cost and expense, execute and deliver to the Other Agreements shall notBank such financing statements pursuant to the Uniform Commercial Code ("UCC"), applications for certificate of title and other papers, documents or instruments as may be requested by the lapse Bank in connection with this Security Agreement, and Guarantor hereby authorizes the Bank to execute and file at any time and from time to time one or more financing statements or copies thereof or of this Security Agreement with respect to the Collateral signed only by the Bank; (h) In its discretion, the Bank may, at any time and from time to time, after a Default (as hereinafter defined) or an event which but for the passage of time, the giving of notice or both would constitute a Default has occurred and is continuing, in its name or Guarantor's or otherwise, constitute a violation notify any account debtor or obligor of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporationaccount, By-Laws or similar contract, document, instrument, chattel paper or contained general intangible included in any material agreement, instrument or document the Collateral to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (g) Borrower is not and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating make payment to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or; (i) unsecured trade debt in In their discretion, the ordinary course of business; (ii) renewalsBank may, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheld. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower after a Default has occurred and is continuing, demand, sue for, collect or receive any money or property at any txxx payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable by the Bank with respect to, any Collateral, and/or extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release, any Collateral or Obligations, all without notice to or consent by Guarantor and without otherwise discharging or affecting the Obligations, the Collateral or the security interest granted herein; (j) In their discretion, the Bank may, at any time and from time to time, for the account of Guarantor, pay any amount or do any act required of Guarantor hereunder and which Guarantor fails to do or pay, and any such payment shall permit be deemed an advance by the Bank to inspect Guarantor payable on demand together with interest at the highest rate then payable on any of the Obligations; (k) Guarantor will pay the Bank for any sums, costs, and copy Borrower’s business records at such times and at such intervals during usual business hours as expenses which the Bank may reasonably requirepay or incur pursuant to the provisions of this Security Agreement or in negotiating, executing, perfecting, defending, or protecting the security interest granted herein or in enforcing payment of the Obligations or otherwise in connection with the provisions hereof, including but not limited to court costs, collection charges, travel expenses, and to discuss Borrower’s businessreasonable attorneys' fees, operationsall of which, together with interest at the highest rate then payable on any of the Obligations, shall be part of the Obligations and be payable on demand; (l) All proceeds of any other Collateral received by Guarantor after the occurrence of a Default shall not be commingled with other property of Guarantor, but shall be segregated, held by Guarantor in trust for the Bank, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall immediately delivered to the Bank in the form received, duly endorsed in blank where appropriate to effectuate the provisions hereof, the same to be held by the Bank as additional Collateral hereunder or, at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value Bank's option, to be applied to payment of the net worth Obligations, whether or not due and in any order; and (m) In their sole discretion, the Bank may, subject to the terms of Borrower as determined in accordance with the generally accepted accounting principlesCredit Agreement, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheetat any time and from time to time, including shareholder receivables and loans and assign, transfer or deliver to any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution transferee of any steps to terminateObligations, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to Collateral, whereupon the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants fully discharged from all responsibility and represents to and covenants with Bank that the proceeds from the Revolving Credit transferee shall be used for vested with all powers and rights of the working capital Bank hereunder with respect thereto, but the Bank shall retain all rights and general business needs of Borrowerpowers with respect to any Collateral not assigned, transferred or delivered.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and Debtor warrants, represents to and covenants with Bank that: : (a) Borrower is The chief executive office and other places of business of Debtor, the Collateral and the books and records relating to the Collateral are, and have been during the four month period prior to the date hereof (or in the case of a corporation duly organizednew business, validly existing from the date of commencement of said business), located at the address(es) set forth below and in good standing under Debtor will not change the laws same, or merge or consolidate with any person or change its name, without prior written notice to and consent of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; the Secured Party: Addresses: 0000 Xxxxxxx Xxxxxx Xxxxxxx Waverly, Virginia 23890 Xxx 0, Xxxxxx Xxxx Xxxxxx Xxxxxxxxxx Park Xxxxxx, New York 00000 Xxxxx 0, Xxxxxxx 000 Xxxxxxx, Xxxxxxxx 00000 (b) Borrower’s principal executive officeDebtor will use the Collateral for lawful and business purposes only, principal place of business with all reasonable care and other offices caution and places of business are set forth on Schedule 7.1(a) attached hereto in conformity with all applicable laws, ordinances and are Borrower’s sole offices and places of business; regulations; (c) Borrower has Debtor will keep the rightCollateral in first class order, power repair, running and capacity marketable condition (normal wear and is duly authorized tear excepted), at Debtor's sole cost and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; expense; (d) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and The Secured Party shall at all reasonable times hereafter own property which, at a fair valuation, is greater than have free access to and right of inspection of the sum Collateral and any records pertaining thereto (and the right to make extracts from and to receive from Debtor originals or true copies of its debts; (g) Borrower is not such records and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially papers and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect instruments relating to any indenture, loan agreement, mortgage, deed or other similar agreement relating Collateral upon request therefor) and Debtor hereby grants to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant Secured Party a security interest in orall such records, papers and instruments to secure the payment, performance and observance of the Obligations; (ie) unsecured trade debt in The Collateral is now and shall remain personal property, is not now a fixture and Debtor will not permit any Collateral which is not now a fixture to become a fixture without prior written notice to and consent of the ordinary course of business; (ii) renewalsSecured Party and without first making all arrangements, extensions and delivering, or refinancings in causing to be delivered, to the same amount of existing indebtedness Secured Party all instruments and interest thereon; documents, including, without limitation, waivers and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor by any landlords or mortgagees, requested by and satisfactory to the payment of Borrower’s Liabilities; Secured Party to preserve and protect the primary security interest granted herein against all persons; (f) be Debtor, at its sole cost and expense, will insure the Collateral in the name of and with loss or become subject at any time damage payable solely to any lawthe Secured Party, regulationas its interest may appear, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business against such risks, with Borrower or fail to provide documentary such companies and other evidence of Borrower’s identity in such amounts, as may be required by Bank at the Installment Sale Agreement (as defined in the Indenture) and Debtor will deliver to the Secured Party the original or duplicate policies, or certificates or other evidence satisfactory to the Secured Party attesting thereto, and Debtor will promptly notify the Secured Party of any time loss or damage to enable Bank to verify Borrowers’ identity any Collateral or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and arising from its use; (g) make any changes to Debtor will, at its state of organizationsole cost and expense, organizational structureand at all times, location of principal executive office, principal place of business pay and other offices discharge all taxes and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheld. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared assessments in accordance with generally accepted accounting principlesthe terms of the Installment Sale Agreement and keep the Collateral free and clear of any and all liens, consistently appliedsecurity interests or encumbrances, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; other than Permitted Liens (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit defined in the form Reimbursement Agreement), perform all acts and execute all documents requested by the Secured Party from time to time to evidence, perfect, maintain or enforce the Secured Party's primary security interest granted herein or otherwise in furtherance of Schedule 7.3; the provisions of this Security Agreement; (h) At any time and (d) such other data and information (financial and otherwise) as Bank, from time to time, Debtor shall, at its sole cost and expense, execute and deliver to the Secured Party such financing statements pursuant to the Uniform Commercial Code ("UCC"), applications for certificate of title and other papers, documents or instruments as may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as be requested by the Bank may reasonably requireSecured Party in connection with this Security Agreement, and Debtor hereby authorizes the Secured Party to discuss Borrower’s businessexecute and file at any time and from time to time one or more financing statements or copies thereof or of this Security Agreement with respect to the Collateral signed only by the Secured Party; (i) In its discretion, operationsthe Secured Party may, at any time and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” from time to time, after a Default (as hereinafter defined) has occurred and is continuing, in excess its name or Debtor's or otherwise, notify any account debtor or obligor of Fifteen Million any account, contract, document, instrument, chattel paper or general intangible included in the Collateral to make payment to the Secured Party; (j) In its discretion, Secured Party may, at any time and No/100 Dollars from time to time, after a Default has occurred and is continuing, demand, xxx for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable by Secured Party with respect to, any Collateral, and/or extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release, any Collateral or Obligations, all without notice to or consent by Debtor and without otherwise discharging or affecting the Obligations, the Collateral or the security interest granted herein; ($15,000,000). Tangible Capital Funds k) In its discretion, Secured Party may, at any time and from time to time, for the account of Debtor, pay any amount or do any act required of Debtor hereunder and which Debtor fails to do or pay, and any such payment shall mean be deemed an advance by Secured Party to Debtor payable on demand together with interest at the sum of (a) the book value highest rate then payable on any of the net worth Obligations; (l) Debtor will pay Secured Party for any sums, costs, and expenses which Secured Party may pay or incur pursuant to the provisions of Borrower as determined this Security Agreement or in accordance negotiating, executing, perfecting, defending, or protecting the security interest granted herein or in enforcing payment of the Obligations or otherwise in connection with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheetprovisions hereof, including shareholder receivables but not limited to court costs, collection charges, travel expenses, and loans reasonable attorneys' fees, all of which, together with interest at the highest rate then payable on any of the Obligations, shall be part of the Obligations and be payable on demand; (m) All proceeds of any other assets reasonably deemed intangible Collateral received by BankDebtor after the occurrence of a Default shall not be commingled with other property of Debtor, plus but shall be segregated, held by Debtor in trust for Secured Party, and immediately delivered to Secured Party in the form received, duly endorsed in blank where appropriate to effectuate the provisions hereof, the same to be held by Secured Party as additional Collateral hereunder or, at Secured Party's option, to be applied to payment of the Obligations, whether or not due and in any order; and (cn) In its sole discretion, Secured Party may, at any debt that is formally subordinated time and from time to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigationtime, claimsassign, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower transfer or deliver to withdraw from, or the institution any transferee of any steps to terminateObligations, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement pointCollateral, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch whereupon Secured Party shall be maintained at such bank or branch. 7.7 Borrower warrants fully discharged from all responsibility and represents to and covenants with Bank that the proceeds from the Revolving Credit transferee shall be used for the working capital vested with all powers and general business needs rights of BorrowerSecured Party hereunder with respect thereto, but Secured Party shall retain all rights and powers with respect to any Collateral not assigned, transferred or delivered.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and Debtor warrants, represents to and covenants with Bank that: : (a) Borrower is The chief executive office and other places of business of Debtor, the Collateral and the books and records relating to the Collateral and the Collateral are, and have been during the four month period prior to the date hereof (or in the case of a corporation duly organizednew business, validly existing from the date of commencement of said business), located at the address(es) set forth below and in good standing under Debtor will not change the laws same, or merge or consolidate with any person or change its name, without prior written notice to and consent of Delaware having federal tax identification number 000000000 and corporation identification number 3439619the Secured Party: Addresses: 000 Xxxxxxx Xxxxxx, Bennington, Vermont 05201; 000 Xxxxxxx Xxxx, Guild, New Hampshire (b) Borrower’s principal executive officeDebtor will use the Collateral for lawful and business purposes only, principal place of business with all reasonable care and other offices caution and places of business are set forth on Schedule 7.1(a) attached hereto in conformity with all applicable laws, ordinances and are Borrower’s sole offices and places of business; regulations; (c) Borrower has Debtor will keep the rightCollateral in first-class order, power repair, running and capacity marketable condition, at Debtor's sole cost and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; expense; (d) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and The Secured Party shall at all times hereafter own property which, at a fair valuation, is greater than have free access to and right of inspection of the sum Collateral and any records pertaining thereto (and the right to make extracts from and to receive from Debtor originals or true copies of its debts; (g) Borrower is not such records and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially papers and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect instruments relating to any indenture, loan agreement, mortgage, deed or other similar agreement relating Collateral upon request therefor) and Debtor hereby grants to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant Secured Party a security interest in orall such records, papers and instruments to secure the payment, performance and observance of the Obligations; (ie) unsecured trade debt in The Collateral is now and shall remain personal property, is not now a fixture and Debtor will not permit any Collateral which is not now a fixture to become a fixture without prior written notice to and consent of the ordinary course of business; (ii) renewalsSecured Party and without first making all arrangements, extensions and delivering, or refinancings in causing to be delivered, to the same amount of existing indebtedness Secured Party all instruments and interest thereon; documents, including, without limitation, waivers and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor by any landlords or mortgagees, requested by and satisfactory to the payment of Borrower’s Liabilities; Secured Party to preserve and protect the primary security interest granted herein against all persons; (f) be Debtor, at its sole cost and expense, will insure the Collateral in the name of and with loss or become subject at any time damage payable solely to any lawthe Secured Party, regulationas its interest may appear, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business against such risks, with Borrower or fail to provide documentary such companies and other evidence of Borrower’s identity in such amounts, as may be required by Bank at any the Secured Party from time to enable Bank time (all such policies providing ten (10) days minimum written notice of cancellation to verify Borrowers’ identity the Secured Party) and Debtor will deliver to the Secured Party the original or duplicate policies, or certificates or other evidence satisfactory to comply with the Secured Party attesting thereto, and Debtor will promptly notify the Secured Party of any applicable law loss or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and damage to any Collateral or arising from its use; (g) make Debtor will, at its sole cost and expense, and at all times, pay and discharge all taxes and assessments and keep the Collateral free and clear of any changes to its state and all liens, security interests or encumbrances (other than in favor of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(athe Secured Party), without perform all acts and execute all documents requested by the prior written consent Secured Party from time to time to evidence, perfect, maintain or enforce the Secured Party's primary security interest granted herein or otherwise in furtherance of Bank, which shall not be unreasonably withheld.the provisions of this Security Agreement; 7.3 Borrower warrants (h) At any time and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, Debtor shall, at its sole cost and expense, execute and deliver to the Secured Party such financing statements pursuant to the Uniform Commercial Code ("UCC"), applications for certificate of title and other papers, documents or instruments as may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as be requested by the Bank may reasonably requireSecured Party in connection with this Security Agreement, and Debtor hereby authorizes the Secured Party to discuss Borrower’s businessexecute and file at any time and from time to time one or more financing statements or copies thereof or of this Security Agreement with respect to the Collateral signed only by the Secured Party; (i) In its discretion, operationsthe Secured Party may, at any time and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” from time to time, after a Default (as hereinafter defined) has occurred and is continuing, in excess its name or Debtor's or otherwise, notify any account debtor or obligor of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principlesany account, minus (b) the aggregate book value of contract, document, instrument, chattel paper or general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated in the Collateral to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related make payment to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.Secured Party;

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower Dealer warrants and represents to DFS and covenants and agrees with Bank thatDFS that (except as otherwise specified in this Agreement: (a) Borrower is a corporation Inventory will be at all times subject to DFS' duly organized, validly existing and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619perfected first priority security interest; (b) Borrower’s principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a) attached hereto and are Borrower’s sole offices and places of businessInventory will be kept only at the following locations: ______________________________________________________ ______________________________; (c) Borrower has on or before the right10th day of each month and, power in any event, immediately upon each demand by DFS therefor, Dealer will execute and capacity deliver to DFS schedules specifying Dealer's cost of Inventory, the selling price thereof and is duly authorized such other matters and empowered information relating to enter into, execute, deliver and perform this Agreement and the Other Agreements; Inventory as DFS may from time to time request: (d) Dealer now keeps and will keep correct and accurate records itemizing and describing the executionkind, delivery and/or performance by Borrower type, quality and quantity of this Agreement Inventory, Dealer's cost therefor and the Other Agreements shall not, by the lapse of timeselling price thereof, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; daily withdrawals therefrom and the additions thereto: (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (g) Borrower Inventory is not and will not bebe stored with a bailee, repairman, warehouseman or similar party without DFS' prior written consent, and Dealer will, concurrently with delivery to such party, cause any such party to issue and deliver to DFS, in form acceptable to DFS, warehouse receipts, in DFS' name evidencing the storage Of such Inventory, and waivers of warehouseman's liens in favor of DFS; (f) DFS and its agents and representatives may, from time to time upon demand, during Dealer's usual business hours and upon 24 hour advance written notice to dealer and any warehouseman, inspect and examine Inventory and check and test the term hereofsame as to quality, in violation quantity, Value and condition, and any collection by DFS of any applicable federalamounts Dealer owes DFS under this Agreement at or during DFS' examination of the Inventory will not relieve Dealer of its continuing obligation to pay its obligations owed to DFS in strict accordance with the terms of this Agreement; (g) Dealer will pay all taxes, state or local statuterents, regulation or ordinance that in any respect materially business taxes, and adversely affects its business, property, assets, operations or condition, financial or otherwisethe like on the premises where the Inventory is located; and (h) Borrower is Dealer will not in default with respect rent, lease, lend, demonstrate, pledge, transfer or secrete any of the Inventory or use any of the Inventory for any purpose other than exhibition and sale to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt buyers in the ordinary course of business; (ii) renewals, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the DFS' prior written consent of Bank, which shall not be unreasonably withheldconsent. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and warrants, represents to and covenants with Bank that: : (a) The chief executive office and other places of business of Borrower, the Collateral and the books and records relating to the Collateral and the Collateral are, and have been during the four month period prior to the date hereof (or in the case of a new business, from the date of commencement of said business), located at the address(es) set forth below and Borrower is a corporation duly organizedwill not change the same, validly existing or merge or consolidate with any person or change its name, without prior written notice to and in good standing under consent of the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619Bank: Addresses: 968 Albany Shaker Road, Latham, New York 12110; [OTHER ADXXXXXXX XX XX XXXXXXXX] (b) Borrower’s principal executive officeBorrower will use the Collateral for lawful and business purposes only, principal place of business with all reasonable care and other offices caution and places of business are set forth on Schedule 7.1(a) attached hereto in conformity with all applicable laws, ordinances and are Borrower’s sole offices and places of business; regulations; (c) Borrower has will keep the rightCollateral in good order, power repair, running and capacity marketable condition as used in the ordinary course of business, at Borrower's sole cost and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; expense; (d) The Bank shall at all times have free access to and right of inspection of the executionCollateral and any records pertaining thereto, delivery and/or and the right to make extracts from and to receive from Borrower originals or true copies of such records and any papers and instruments relating to any Collateral upon request therefor (which rights shall, except after the occurrence of an Event of Default, be exercised only upon reasonable notice during regular business hours), and Borrower hereby grants to the Bank a security interest in all such records, papers and instruments to secure the payment, performance and observance of the Obligations; (e) Borrower, at its sole cost and expense, will insure the Collateral in the name of and with loss or damage payable solely to the Bank, as its interest may appear, against such risks, with such companies and in such amounts, as may be required by the Bank from time to time (all such policies providing ten (10) days minimum written notice of cancellation to the Bank) and Borrower will deliver to the Bank the original or duplicate policies, or certificates or other evidence satisfactory to the Bank attesting thereto, and Borrower will promptly notify the Bank of any loss or damage to any Collateral or arising from its use; (f) Borrower will, at its sole cost and expense, and at all times, pay and discharge all taxes and assessments and keep the Collateral free and clear of any and all liens, security interests or encumbrances (other than in favor of the Bank), perform all acts and execute all documents requested by the Bank from time to time to evidence, perfect, maintain or enforce the Bank's primary security interest granted herein or otherwise in furtherance of the provisions of this Agreement Security Agreement; (g) At any time and from time to time, Borrower shall, at its sole cost and expense, execute and deliver to the Other Agreements shall notBank such financing statements pursuant to the Uniform Commercial Code ("UCC"), applications for certificate of title and other papers, documents or instruments as may be requested by the lapse Bank in connection with this Security Agreement, and Borrower hereby authorizes the Bank to execute and file at any time and from time to time one or more financing statements or copies thereof or of this Security Agreement with respect to the Collateral signed only by the Bank; (h) In its discretion, the Bank may, at any time and from time to time, after a Default (as hereinafter defined) or an event which but for the passage of time, the giving of notice or both would constitute a Default has occurred and is continuing, in its name or Borrower's or otherwise, constitute a violation notify any account debtor or obligor of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporationaccount, By-Laws or similar contract, document, instrument, chattel paper or contained general intangible included in any material agreement, instrument or document the Collateral to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (g) Borrower is not and will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating make payment to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or; (i) unsecured trade debt in In their discretion, the ordinary course of business; (ii) renewalsBank may, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheld. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. after a Default has occurred and is continuing, demand sue for, collect or receive any money or property at any txxx payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable by the Bank with respect to, any Collateral, and/or extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release, any Collateral or Obligations, all without notice to or consent by Borrower and without otherwise discharging or affecting the Obligations, the Collateral or the security interest granted herein; (j) In their discretion, the Bank may, at any time and from time to time, for the account of Borrower, pay any amount or do any act required of Borrower hereunder and which Borrower fails to do or pay, and any such payment shall permit be deemed an advance by the Bank to inspect Borrower payable on demand together with interest at the highest rate then payable on any of the Obligations; (k) Borrower will pay the Bank for any sums, costs, and copy Borrower’s business records at such times and at such intervals during usual business hours as expenses which the Bank may reasonably requirepay or incur pursuant to the provisions of this Security Agreement or in negotiating, executing, perfecting, defending, or protecting the security interest granted herein or in enforcing payment of the Obligations or otherwise in connection with the provisions hereof, including but not limited to court costs, collection charges, travel expenses, and to discuss reasonable attorneys' fees, all of which, together with interest at the highest rate then payable on any of the Obligations, shall be part of the Obligations and be payable on demand; (l) All proceeds of any other Collateral received by Borrower after the occurrence of a Default shall not be commingled with other property of Borrower’s business, operationsbut shall be segregated, held by Borrower in trust for the Bank, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall immediately delivered to the Bank in the form received, duly endorsed in blank where appropriate to effectuate the provisions hereof, the same to be held by the Bank as additional Collateral hereunder or, at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value Bank's option, to be applied to payment of the net worth Obligations, whether or not due and in any order; and (m) In their sole discretion, the Bank may, subject to the terms of Borrower as determined in accordance with the generally accepted accounting principlesCredit Agreement, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheetat any time and from time to time, including shareholder receivables and loans and assign, transfer or deliver to any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution transferee of any steps to terminateObligations, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to Collateral, whereupon the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants fully discharged from all responsibility and represents to and covenants with Bank that the proceeds from the Revolving Credit transferee shall be used for vested with all powers and rights of the working capital Bank hereunder with respect thereto, but the Bank shall retain all rights and general business needs of Borrowerpowers with respect to any Collateral not assigned, transferred or delivered.

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants and In order to induce Bank to enter into this Agreement, the Undersigned warrants, represents to and covenants and, until all of the Obligations have been satisfied in full, continues to warrant, represent and covenant, as follows: 3.1 The Undersigned will execute upon Bank's request such UCC financing statements, lease assignment forms, lessee notifications, Account Debtor (which is herein defined as any and all persons obligated as makers, endorsers, guarantors or sureties on any Account, Chattel Paper or Instrument) notifications and other documents as are deemed necessary or desirable to perfect and maintain perfected the liens and security interests granted herein. 3.2 If the Collateral includes any property for which a Document or Certificate of Title is issuable, the Undersigned will present to Bank an appropriate Document or Certificate of Title for such Collateral, within three days after the Undersigned obtains possession of such Collateral, and the Undersigned will cause a notation of the lien and security interest granted to Bank herein to be made and noted on such Document or Certificate of Title. 3.3 If any or all of the Collateral is purchased or to be purchased by the Undersigned with the proceeds of any of the Obligations, the Undersigned will join with Bank that: (a) Borrower is in executing all notices and other documents necessary to enable Bank to obtain a corporation duly organizedPurchase Money Security Interest in such Collateral, validly existing subject to any prior lien of Coast Business Credit, Inc. and in good standing under the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal executive officeMedallion Capital, Inc. 3.4 The Undersigned's principal place of business and other offices the place where the Undersigned keeps the Collateral and places of business are set forth on Schedule 7.1(aits Books and Records (as defined in Subparagraph 3.5 below) attached hereto relating to its Inventory, Accounts, Chattel Paper and are Borrower’s sole offices and places of business; (c) Borrower has Instruments is the right, power and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and address stated after the Other Agreements; (d) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership name of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Bank; (f) Borrower is now, and at all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (g) Borrower is not and Undersigned above. The Undersigned will not be, during the term hereof, in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change in the financial condition of Borrower. 7.2 Borrower warrants and represents to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt in the ordinary course of business; (ii) renewals, extensions or refinancings in the same amount of existing indebtedness and interest thereon; and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheld. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform immediately advise Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminatechange in any of the Undersigned's place(s) of business, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach the opening of any provision new or additional place(s) of this Agreement or any other agreement related to business, and the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover locations of all places wherein the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in Undersigned keeps the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branch. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.Undersigned's

WARRANTIES, REPRESENTATIONS AND COVENANTS. 7.1 Borrower warrants 3.1 Debtor represents, warrants, covenants and represents to and covenants with Bank agrees that: : (a) Borrower is a corporation duly organized, validly existing and in good standing under Debtor owns the laws of Delaware having federal tax identification number 000000000 and corporation identification number 3439619; (b) Borrower’s principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a) attached hereto and are Borrower’s sole offices and places of business; (c) Borrower has the right, power and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements; (d) the execution, delivery and/or performance by Borrower of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation, By-Laws or similar document, or contained in any material agreement, instrument or document to which Borrower is now or hereafter a party or by which it is or may be bound; (e) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, Collateral free and clear of all any restrictions, liens, claims, security interests interest granted herein constitutes a legal, valid, binding and encumbrances except those (upon filing of Bankthe UCC-1 financing statement executed concurrently herewith and the delivery of the subordination agreement referred to above) perfected first priority lien on the Collateral; 4 5 (fb) Borrower is nowDebtor shall keep the Inventory and the Equipment only at its current facilities identified to Debtor, or such other locations as to which Debtor has given Secured Party at least 15 days prior written notice; (c) Other than in the ordinary and usual course of business, the Inventory shall not at any time or times hereafter be stored with a bailee, warehouseman or similar party without Secured Party's prior written consent; (d) After the occurrence of an Event of Default, Secured Party shall have the right, during Debtor's usual business hours, to inspect and examine the Inventory and the equipment and to check and test the same as to quantity and condition; and (e) Debtor shall promptly notify Secured Party of any change of Debtor's address from the addresses indicated in Section 1.5 of this Agreement. 3.2 Debtor will not, without Secured Party's prior written consent, do, authorize or permit any of the following: (a) Other than in the ordinary and usual course of Debtor's business as presently conducted, sell, lease, or otherwise dispose of, move, relocate or transfer, whether by sale or otherwise, any of the Collateral, without giving Secured Party at least 15 days prior written notice; (b) Change Debtor's name or add any fictitious business name without giving Secured Party at least 15 days prior written notice; or (c) Suspend or go out of business. 3.3 Debtor will collect, in standard machine-readable formats, copies of all works subject to copyright and mask work protection, and at of all times hereafter shall be, solvent and generally paying its debts as they mature and Borrower now owns and shall at all times hereafter own property which, at a fair valuation, is greater than the sum of its debts; (g) Borrower is not and will not be, during the term hereof, technical trade secrets used in violation of any applicable federal, state or local statute, regulation or ordinance that in any respect materially and adversely affects its business, property, assets, operations or condition, financial or otherwise; (h) Borrower is not in default with respect a place where the same are easily accessible to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound; (i) all of Borrower’s trademark registrations, patents and patent applications and copyright registrations are listed on Schedule 7.1(i) attached hereto; and (j) since December 31, 2005, there has been no material adverse change Secured Party in the financial condition event of Borrower. 7.2 Borrower warrants and represents a Default hereunder. At Secured Party's election, Debtor shall deposit at debtor's expense such copies with such escrow holder as Secured Party shall choose, to and covenants with Bank that Borrower shall not, without Bank’s prior written consent thereto: (a) grant a security interest in or (i) unsecured trade debt be released to Secured Party in the ordinary course event of business; (ii) renewals, extensions or refinancings in the same amount of existing indebtedness such default and interest thereon; shall execute such written agreements and (iii) indebtedness that is unsecured and is to Persons who execute and deliver to Bank in form and substance acceptable to Bank and its counsel subordination agreements subordinating their claims against Borrower therefor to the payment of Borrower’s Liabilities; (f) be or become subject at any time to any law, regulation, or list of any government agency (including the U.S. Office of Foreign Asset Control List) that prohibits or limits Bank from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or fail to provide documentary and other evidence of Borrower’s identity undertakings as may be required by Bank at any time to enable Bank to verify Borrowers’ identity or to comply with any applicable law or regulation, including Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318; and (g) make any changes to its state of organization, organizational structure, location of principal executive office, principal place of business and other offices and places of business are set forth on Schedule 7.1(a), without the prior written consent of Bank, which shall not be unreasonably withheld. 7.3 Borrower warrants and represents to and covenants with Bank that Borrower shall furnish to Bank: (a) as soon as available but not later than one hundred twenty (120) days after the close of each fiscal year of Borrower, financial statements, which shall include, but not be limited to, balance sheets, income statements and statements of cash flow of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, audited by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Bank; (b) as soon as available but not later than sixty (60) days after the end of each quarterly fiscal period of Borrower, financial statements of Borrower, certified by an officer of Borrower to be prepared in accordance with generally accepted accounting principles, consistently applied, and to fairly present the financial position and results of operations of Borrower for such period; (c) as soon as available but not later than fifteen (15) days after the close of each month during which borrowing is outstanding under the Revolving Credit, a monthly borrowing base certificate with accompanying accounts receivable agings when borrowing under the Revolving Credit in the form of Schedule 7.3; and (d) such other data and information (financial and otherwise) as Bank, from time to time, may reasonably request. Borrower shall permit Bank to inspect and copy Borrower’s business records at such times and at such intervals during usual business hours as the Bank may reasonably require, and to discuss Borrower’s business, operations, and financial condition with Borrower’s officers and accountants. 7.4 Borrower shall at all times maintain “Tangible Capital Funds” (as hereinafter defined) in excess of Fifteen Million and No/100 Dollars ($15,000,000). Tangible Capital Funds shall mean the sum of (a) the book value of the net worth of Borrower as determined in accordance with the generally accepted accounting principles, minus (b) the aggregate book value of general intangible assets of Borrower included on its balance sheet, including shareholder receivables and loans and any other assets reasonably deemed intangible by Bank, plus (c) any debt that is formally subordinated to Bank through a subordination agreement. 7.5 Borrower shall inform Bank in writing promptly upon obtaining knowledge of (a) all existing and all threatened litigation, claims, investigations, administrative proceedings and similar actions affecting Borrower which could materially adversely affect the financial condition of Borrower; (b) the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have liability; and (c) any alleged breach of any provision of this Agreement or any other agreement related to the Revolving Credit. 7.6 Borrower covenants and agrees to use Bank as its primary depository and disbursement point, maintaining demand deposit balances sufficient to cover the cost of non-credit services in accordance with Bank’s determination. Borrower shall not maintain any depository accounts in the United States at any bank or financial institution other than Bank, except xxxxx cash accounts located in cities other than Chicago and located in the same city with an office or factory operated by Borrower. Any such xxxxx cash accounts at banks in cities in which Bank or other subsidiaries of Bank’s shareholder operates a bank or branch shall be maintained at such bank or branchcustomary in favor of escrow holders in escrows involving similar property and terms of release. 7.7 Borrower warrants and represents to and covenants with Bank that the proceeds from the Revolving Credit shall be used for the working capital and general business needs of Borrower.