CITIZENS BANK OF MASSACHUSETTS THE LENDER UFP TECHNOLOGIES, INC. MOULDED FIBRE TECHNOLOGY, INC. THE BORROWER

Exhibit 10.38.20

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LOAN AGREEMENT

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CITIZENS BANK OF MASSACHUSETTS
THE LENDER

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UFP TECHNOLOGIES, INC.
MOULDED FIBRE TECHNOLOGY, INC.
THE BORROWER

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August 13, 1999

TABLE OF CONTENTS

ARTICLE 1 - DEFINITIONS:

ARTICLE 2 - THE REVOLVING CREDIT:
2-1. ESTABLISHMENT OF REVOLVING CREDIT......................................................... 14
2-2. ESTABLISHMENT OF ACQUISITION LINE OF CREDIT................................................ 14
2-3. LOAN REQUESTS.............................................................................. 15
2-4. MAKING OF LOANS UNDER CREDITS.............................................................. 16
2-5. THE LOAN ACCOUNT........................................................................... 17
2-6. THE REVOLVING CREDIT NOTE.................................................................. 18
2-7. THE ACQUISITION CREDIT NOTE................................................................ 18
2-8. PAYMENT OF THE LOAN ACCOUNT................................................................ 18
2-9. INTEREST RATES. ........................................................................... 19
2-10. LINE (UNUSED) FEE. (a) ................................................................. 20
2-11. PROCEDURES FOR ISSUANCE OF L/C'S........................................................... 20
2-12. CHANGED CIRCUMSTANCES...................................................................... 20
2-13. INCREASED COSTS............................................................................ 21

ARTICLE 3 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
3-1. PAYMENT AND PERFORMANCE OF LIABILITIES..................................................... 22
3-2. DUE ORGANIZATION - CORPORATE AUTHORIZATION - NO CONFLICTS.................................. 22
3-3. DEPOSIT ACCOUNT............................................................................ 23
3-4. YEAR 2000 COMPLIANCE....................................................................... 23
3-5. TITLE TO ASSETS............................................................................ 24
3-6. INDEBTEDNESS............................................................................... 24
3-7. INSURANCE POLICIES......................................................................... 24
3-8. REQUIREMENTS OF LAW........................................................................ 24
3-9. MAINTAIN PROPERTIES........................................................................ 24
3-10. PAY TAXES.................................................................................. 25
3-11. NO MARGIN STOCK............................................................................ 25
3-12. ERISA...................................................................................... 25
3-13. HAZARDOUS MATERIALS........................................................................ 26
3-14. LITIGATION................................................................................. 26
LOANS...................................................................................... 27
3-16. PROTECTION OF ASSETS....................................................................... 27
3-17. AFFILIATE TRANSACTIONS..................................................................... 27
3-18. ADEQUACY OF DISCLOSURE..................................................................... 27
3-19. OTHER COVENANTS............................................................................ 28

ARTICLE 4 - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
4-1. MAINTAIN RECORDS........................................................................... 28
4-2. ACCESS TO RECORDS.......................................................................... 29
4-3. QUARTERLY REPORTS.......................................................................... 29
4-4. ANNUAL REPORTS............................................................................. 29
4-5. OFFICERS' CERTIFICATES..................................................................... 29
4-6. ADDITIONAL FINANCIAL INFORMATION........................................................... 30
4-7. FINANCIAL PERFORMANCE COVENANTS............................................................ 30

ARTICLE 5 - EVENTS OF DEFAULT:
5-1. FAILURE TO PAY CREDITS..................................................................... 31
5-2. FAILURE TO MAKE OTHER PAYMENTS............................................................. 31
5-3. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD).................................... 31
5-4. MISREPRESENTATION.......................................................................... 31
5-5. ACCELERATION OF OTHER DEBT. BREACH OF LEASE................................................ 31
5-6. DEFAULT UNDER OTHER AGREEMENTS............................................................. 32
5-7. UNINSURED CASUALTY LOSS.................................................................... 32
5-8. JUDGMENT. RESTRAINT OF BUSINESS........................................................... 32
5-9. BUSINESS FAILURE........................................................................... 32
5-10. BANKRUPTCY................................................................................. 32
5-11. MATERIAL ADVERSE CHANGE.................................................................... 33
5-12. INDICTMENT - FORFEITURE.................................................................... 33
5-13. CHANGE IN CONTROL.......................................................................... 33

ARTICLE 6 - RIGHTS AND REMEDIES UPON DEFAULT:
6-1. RIGHTS OF ENFORCEMENT...................................................................... 33
6-2. RIGHTS AND REMEDIES........................................................................ 33

ARTICLE 7 - NOTICES:
7-1. NOTICE ADDRESSES........................................................................... 34
7-2. NOTICE GIVEN............................................................................... 35

ARTICLE 8 - TERM:
8-1. TERMINATION OF CREDITS..................................................................... 35
8-2. PAYMENT S AT MATURITY...................................................................... 36

ARTICLE 9 - GENERAL:
9-1. SUCCESSORS AND ASSIGNS..................................................................... 36
9-2. SEVERABILITY............................................................................... 36
9-3. AMENDMENTS. COURSE OF DEALING............................................................. 36
9-4. LENDER'S COSTS AND EXPENSES................................................................ 37
9-5. COPIES AND FACSIMILES...................................................................... 37
9-6. MASSACHUSETTS LAW.......................................................................... 37
9-7. CONSENT TO JURISDICTION.................................................................... 38
9-8. INDEMNIFICATION............................................................................ 38
9-9. RULES OF CONSTRUCTION...................................................................... 38
9-10. INTENT..................................................................................... 40
9-11. RIGHT OF SET-OFF........................................................................... 40
9-12. MAXIMUM INTEREST RATE...................................................................... 40
9-13. WAIVERS. .................................................................................. 40

EXHIBITS

2-6 : Revolving Credit Note
2-7 : Acquisition Credit Note
3-2 : Related Entities
3-5 : Encumbrances
3-6 : Indebtedness
3-7 : Insurance Policies
3-10 : Taxes
3-14 : Litigation
3-15 : Loans
4-7 : Financial Performance Covenants

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LOAN AGREEMENT CITIZENS BANK OF MASSACHUSETTS
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August 13, 1999

THIS AGREEMENT is made between

Citizens Bank of Massachusetts (hereinafter, the "Lender") a
Massachusetts bank with offices at 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000

and

UFP Technologies, Inc. (hereinafter, "UFP"), a Delaware
corporation with its principal executive offices at 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000

and

Moulded Fibre Technology, Inc. (hereinafter, "MFT"), a Maine
corporation with its principal executive offices at 000 X.X. Xxxxx 0,
Xxxxxxxxxxx, Xxxxx 00000.

UFP and MFT shall be referred to herein from time to time jointly and
severally as the "Borrower".

in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,

WITNESSETH:

ARTICLE 1 - DEFINITIONS:

As herein used, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:

"ACQUISITION CREDIT": Is defined in Section 2-2.

"ACQUISITION CREDIT CEILING": $10,000,000.00.

"ACQUISITION CREDIT NOTE": Is defined in Section 2-7.

"AFFILIATE": With respect to any two Persons, a relationship in which
(a) one holds, directly or indirectly, not less than Twenty Five
Percent (25%) of the capital stock, beneficial interests,
partnership interests, or other equity interests of the other; or
(b) one has, directly or indirectly, the right, under ordinary
circumstances, to vote for the election of a majority of the
directors (or other body or Person who has those powers
customarily vested in a board of directors of a corporation); or
(c) not less than Twenty Five Percent (25%) of their respective
ownership is directly or indirectly held by the same third
Person.

"APPLICABLE MARGIN" means initially, the rates set forth below:

----------------------------------
Prime Margin Libor Margin
----------------------------------

0% 1.25%
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Upon the receipt by the Lender of the Borrower's financial statement
for the fiscal quarter ending June 30, 1999 required to be delivered to the
Lender pursuant to Section 4-3 of this Agreement, the Applicable Margin shall be
adjusted based upon the performance covenants set forth below. Thereafter, the
Applicable Margin shall be adjusted quarterly after the delivery of the
financial statements required to be delivered to the Lender pursuant to Section
4-3 of this Agreement.

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Total Funded Prime Margin Libor Margin
Debt/EBITDA
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greater than 3.0 to 1 0% 2.00%
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less than or equal to 3.0 0% 1.75%
to 1.0 but greater than 2.5
to 1.0
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less than or equal to 2.5 0% 1.50%
to 1.0 but greater than or
equal to 2.0 to 1.0
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less than 2.0 to 1.0 0% 1.25%
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"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.

"BORROWER": Is defined in the Preamble.

"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b)
any day on which banks in Boston, Massachusetts, generally are
not open to the general public for the purpose of conducting
commercial banking business; or (c) a day on which the Lender is
not open to the general public to conduct business.

"CHANGE IN CONTROL": The occurrence of any of the following:

(a) The acquisition, by any group of persons (within the
meaning of the Securities Exchange Act of 1934, as amended) or by
any Person, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission) of greater than
50% of the issued and outstanding capital stock of the Borrower
having the right, under ordinary circumstances, to vote for the
election of directors of the Borrower.

(b) More than half of the persons who were directors of the
Borrower on the first day of any period consisting of Twelve (12)
consecutive calendar months (the first of which Twelve (12) month
periods commencing with the first day of the month during which
this Agreement was executed), cease, for any reason other than
death or disability, to be directors of the Borrower.

"COSTS OF COLLECTION": Includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred by
the Lender's attorneys, and all reasonable costs incurred by the
Lender in the administration of the Liabilities and/or the Loan
Documents, which costs and expenses are directly or indirectly
related to or in respect of the Lender's: administration and
management of the Liabilities; negotiation, documentation, and
amendment of any Loan Document; or efforts to preserve, protect,
collect, or enforce any collateral, the Liabilities, and/or the
Lender's Rights and Remedies and/or any of the Lender's rights
and remedies against or in respect of any guarantor or other
person liable in respect of the Liabilities (whether or not suit
is instituted in connection with such efforts).

"CREDITS": The Revolving Credit and the Acquisition Credit,
collectively.

"EBITDA": The Borrower's earnings before interest, taxes,
depreciation, and amortization, each as determined in accordance
with GAAP. As calculated herein, EBITDA shall be calculated on a
rolling four quarter basis, including adjusted historical EBITDA
for acquired entities.

"EMPLOYEE BENEFIT PLAN": As defined in ERISA.

"ENCUMBRANCE": Each of the following:

(a) Any security interest, mortgage, pledge, hypothecation,
lien, attachment, or charge of any kind (including any agreement
to give any of the foregoing); the interest of a lessor under a
Capital Lease; conditional sale or other title retention
agreement; sale of accounts receivable or chattel paper; or other
arrangement pursuant to which any Person is entitled to any
preference or priority with respect to the property or assets of
another Person or the income or profits of such other Person or
which constitutes an interest in property to secure an
obligation; each of the foregoing whether consensual or
non-consensual and whether arising by way of agreement, operation
of law, legal process or otherwise.

(b) The filing of any financing statement under the UCC or
comparable law of any jurisdiction.

"END DATE": The date upon which both (a) all Liabilities have been
paid in full and (b) all obligations of the Lender to make loans
and advances and to provide other financial accommodations to the
Borrower hereunder shall have been irrevocably terminated.

"ENVIRONMENTAL LAWS": All of the following:

(a) Any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements which regulate or relate to, or
impose any standard of conduct or liability on account of or in
respect to environmental protection matters, including, without
limitation, Hazardous Materials, as are now or hereafter in
effect.

(b) The common law relating to damage to
Persons or property from Hazardous Materials.

"ERISA": The Employee Retirement Security Act of 1974, as amended.

"ERISA AFFILIATE": Any Person which is under common control with the
Borrower within

the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which would be treated as a single
employer under Section 414 of the Internal Revenue Code of 1986,
as amended.

"EVENTS OF DEFAULT": Is defined in Article 5.

"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is being
made, PROVIDED, HOWEVER, in the event of a Material Accounting
Change, then unless otherwise specifically agreed to by the
Lender, (a) the Borrower's compliance with the financial
performance covenants imposed pursuant to Section 4-7 shall be
determined as if such Material Accounting Change had not taken
place and (b) the Borrower shall include, with its quarterly, and
annual financial statements a schedule, certified by the
Borrower's chief financial officer, on which the effect of such
Material Accounting Change to the statement with which provided
shall be described.

"HAZARDOUS MATERIALS": Any (a) hazardous materials, hazardous waste,
hazardous or toxic substances, petroleum products, which (as to
any of the foregoing) are defined or regulated as a hazardous
material in or under any Environmental Law and (b) oil in any
physical state.

"INDEBTEDNESS": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:

(a) In respect of money borrowed (including any indebtedness
which is non-recourse to the credit of such Person but which is
secured by an Encumbrance on any asset of such Person) whether or
not evidenced by a promissory note, bond, debenture or other
written obligation to pay money.

(b) In connection with any letter of credit or acceptance
transaction (including, without limitation, the face amount of
all letters of credit and acceptances issued for the account of
such Person or reimbursement on account of which such Person
would be obligated).

(d) On account of deposits or advances. "Indebtedness" also
includes:

(x) Indebtedness of others secured by an Encumbrance on any
asset of such Person, whether or not such Indebtedness is assumed
by such Person.

(y) Any guaranty, endorsement, suretyship or other
undertaking pursuant to which that Person may be liable on
account of any obligation of any third party.

(z) The Indebtedness of a partnership or joint venture in
which such Person is a general partner or joint venturer.

"INDEMNIFIED PERSON": Is defined in Section 9-8.

"INTEREST PAYMENT DATE": With reference to:

Each Libor Loan: The last day of the Interest Period
relating thereto; the last day of the third month of any Interest
Period which consists of more than three months; the Termination
Date; and the End Date.

Each Prime Rate Loan: the first day of each month; the
Termination Date; and the End Date.

"INTEREST PERIOD": (a) With respect to each Libor Loan: Subject to
Subsection (c), below, the period commencing on the date of the
making or continuation of, or conversion to, the subject Libor
Loan and ending one, two, three, six or twelve months thereafter,
as the Borrower may elect by notice (pursuant to Section 2.4(a)
to the Lender.

(b) With respect to each Prime Rate Loan: Subject
to Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Prime Rate
Loan and ending on that date (i) as of which the subject Prime
Rate Loan is converted to a Libor Loan, as the Borrower may elect
by notice (pursuant to Section 2-4(a) to the Lender, or (ii) on
which the subject Prime Rate Loan is paid by the Borrower.

(i) Any Interest Period for a Prime Rate Loan
which would otherwise end on a day which is not a
Business Day shall be extended to the next
succeeding Business Day.

(ii) Any Interest Period for a Libor Loan which
would otherwise end on a day that is not a Business
Day shall be extended to the next

succeeding Business Day, unless that succeeding
Business Day is in the next calendar month, in
which event such Interest Period shall end on the
last Business Day of the month during which the
Interest Period ends.

(iii) Subject to Subsection (iv), below, any
Interest Period applicable to a Libor Loan, which
Interest Period begins on a day for which there is
no numerically corresponding day in the calendar
month during which such Interest Period ends, shall
end on the last Business Day of the month during
which that Interest Period ends.

(iv) Any Interest Period which would otherwise
end after the Termination Date shall end on the
Termination Date.

(v) The number of Interest Periods in effect
at any one time is subject to Section 2-9(d)
hereof.

"ISSUER": The Lender as issuer of any L/C.

"L/C": Any letter of credit, the issuance of which is procured by the
Lender for the account of the Borrower and any acceptance made on
account of such letter of credit.

"LEASE": Any lease or other agreement, no matter how styled or
structured, pursuant to which the Borrower is entitled to the use
or occupancy of any space.

"LENDER": Is defined in the Preamble to the within Agreement.

"LENDER'S RIGHTS AND REMEDIES": Is defined in Section 6-2.

"LIABILITIES" (in the singular, "LIABILITY"):Includes, without
limitation, all and each of the following, whether now existing
or hereafter arising:

(a) Any and all direct and indirect liabilities,
debts, and obligations of the Borrower to the Lender, each of
every kind, nature, and description.

(b) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by the Borrower to the Lender (including all
future advances whether or not made pursuant to a commitment
by the Lender), whether or not any of such are liquidated,
unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, contingent, or of any other type, nature,
or description, or by reason of any cause of action which the
Lender may hold against the Borrower.

(c) All notes and other obligations of the Borrower
now or hereafter assigned to or held by the Lender, each of
every kind, nature, and description.

(d) All interest, fees, and charges and other amounts
which may be charged by the Lender to the Borrower and/or
which may be due from the Borrower to the Lender from time to
time.

(e) All reasonable costs and expenses incurred or
paid by the Lender in respect of any agreement between the
Borrower and the Lender or instrument furnished by the
Borrower to the Lender (including, without limitation, Costs
of Collection, attorneys' reasonable fees, and all court and
litigation costs and expenses).

(f) Any and all covenants of the Borrower to or with
the Lender and any and all obligations of the Borrower to act
or to refrain from acting in accordance with any agreement
between the Borrower and the Lender or instrument furnished by
the Borrower to the Lender.

(g) Each of the foregoing as if each reference to the
"Lender" therein were to each Affiliate of the Lender.

"LIBOR BUSINESS DAY": Any day which is both a Business Day and a day
on which the principal interbank market for Libor deposits in
London in which the Lender participates is open for dealings in
United States Dollar deposits.

"LIBOR LOAN": Any Revolving Credit Loan which bears interest at a
Libor Rate.

"LIBOR OFFER RATE": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the Lender to
be the highest prevailing rate per annum at which deposits in
U.S. Dollars are offered to the Lender, by first-class banks in
the London interbank market in which the Lender participates at
or about 10:00AM (Boston Time) Two (2) Libor Business Days before
the first day of the Interest Period for the subject Libor Loan,
for a deposit approximately in the amount of the subject loan for
a period of time approximately equal to such Interest Period.

"LIBOR MARGIN": See definition of Applicable Margin.

"LIBOR RATE": That per annum rate (calculated on a 360 day year and
actual days elapsed) which is the aggregate of the Libor Offer
Rate PLUS the Libor Margin EXCEPT THAT, in the event that it is
determined by the Lender that the Lender may be subject to the

Reserve Percentage, the "Libor Rate" shall mean, with respect to
any Libor Loans then outstanding (from the date on which that
Reserve Percentage first became applicable to such loans), and
with respect to all Libor Loans thereafter made, an interest rate
per annum equal the sum of (a) plus (b), where:

(a) is the decimal equivalent of the following
fraction:

LIBOR OFFER RATE
----------------
1 minus Reserve Percentage

(b) the Applicable Libor Margin.

"LINE (UNUSED) FEE": Is defined in Section 2-10.

"LOAN ACCOUNT": Is defined in Section 2-5.

"LOAN DOCUMENTS": This Agreement, each instrument and document
executed and/or delivered as contemplated herein, and each other
instrument or document from time to time executed and/or
delivered in connection with the arrangements contemplated hereby
or in connection with any transaction with the Lender or any
Affiliate of the Lender, including, without limitation, any
transaction which arises out of any cash management, depository,
investment, letter of credit, interest rate protection, or
equipment leasing services provided by the Lender or any
Affiliate of the Lender, as each may be amended from time to
time.

"LOANS": A term of convenience which refers to so much of the unpaid
principal balance of the Loan Account as bears the same rate of
interest for the same Interest Period. (SEE Section 2-9(c).

"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to
accounting periods subsequent to the Borrower's fiscal year most
recently completed prior to the execution of this Agreement,
which change has a material effect on the Borrower's financial
condition or operating results, as reflected on financial
statements and reports prepared by or for the Borrower, when
compared with such condition or results as if such change had not
taken place or where preparation of the Borrower's statements and
reports in compliance with such change results in the breach of a
financial performance covenant imposed pursuant to Section 4-7
where such a

breach would not have occurred if such change had not taken place
or VISA VERSA.

"MATERIAL ADVERSE CHANGE": Any event, fact, circumstance, change in,
or effect on, the business of, the Borrower which, individually
or in the aggregate or on a cumulative basis with any other
circumstances, changes in, or effects on, the Borrower or its
assets which:

(a) Is, or could reasonably be expected to be,
materially adverse to the business, operations, assets or
liabilities (including, without limitation, contingent
liabilities), employee relationships, customer or supplier
relationships, results of operations or the condition
(financial or otherwise) of the Borrower.

(b) Could reasonably be expected to materially
adversely affect the ability of the Borrower to operate or
conduct business in all material respects in the manner in
which it is currently operated or conducted by the Borrower or
to perform its obligations under the Loan Documents .

(c) Could reasonably be expected to have a material
adverse effect or result in an adverse change in the value,
enforceability, collectability or the nature of its assets.

"MATURITY DATE": July 31, 2002.

"PARTICIPANT": Is defined in Section 9-11, hereof.

"PERMITTED ENCUMBRANCES": The following:
(a) Encumbrances in favor of the Lender.
(b) Those Encumbrances (if any) listed on
EXHIBIT 3-5, annexed hereto.
(c) The interest of any of the Borrower's
landlords in any of the Borrower's Equipment which is so
affixed to the real estate of that landlord that an interest
therein arises under real estate law.

(d) Any limitation, included in a Lease, upon the
right of the Borrower to encumber the Borrower's interest in
that Lease.

(e) Purchase money security interests (as defined in
the UCC) in Equipment.

(f) Liens securing the payment of taxes, either not
yet overdue or the validity of which are being contested as
permitted by Section 3-10; non-consensual statutory liens
(other than liens securing the payment of taxes) arising in
the ordinary course of Borrower's business to the extent: such
liens secure indebtedness which is

not overdue or such liens secure indebtedness relating to
claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk
of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to
Borrower, in each instance prior to the commencement of
foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on the
Borrower's books (PROVIDED, HOWEVER, the inclusion of any of
the foregoing as "Permitted Encumbrances" shall not affect
their respective relative priorities vis a vis the security
interests created herein), zoning restrictions, easements,
licenses, covenants and other restrictions affecting the use
of real property which do not interfere in any material
respect with the use of such real property or ordinary
conduct of the business of Borrower as presently conducted
thereon or materially impair the value of the real property
which may be subject thereto.

"PERSON": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other enterprise
or entity.

"PRIME": The Prime Rate announced from time to time by the Lender. In
the event that the Lender ceases to announce such a rate, "Prime"
shall refer to that rate or index announced or published from
time to time as the Lender, in good faith, designates as the
functional equivalent to said Prime Rate. Any change in "Prime"
shall be effective, for purposes of the calculation of interest
due hereunder, when such change is made effective generally by
the bank on whose rate or index "Prime" is being set. In all
events, interest which is determined by reference to Prime (or
any successor to Prime) shall be calculated on a 360 day year and
actual days elapsed.

"PRIME MARGIN": See definition of Applicable Margin.

"PRIME RATE": Prime plus the applicable Prime Margin.

"PRIME RATE LOAN": Each Loan while bearing interest at Prime plus the
applicable Prime Margin.

"RELATED ENTITY": (a) Any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise which: is
a parent, brother-sister, subsidiary, or affiliate, of the
Borrower; could have such enterprise's tax returns or financial

statements consolidated with the Borrower's; could be a member of
the same controlled group of corporations (within the meaning of
Section 1563(a)(1), (2) and (3) of the Internal Revenue Code of
1986, as amended from time to time) of which the Borrower is a
member; controls or is controlled by the Borrower or by any
Affiliate of the Borrower.

(b) Any Affiliate.

"REQUIREMENT OF LAW": As to any Person:

(a)(i) All statutes, rules, regulations, orders, or
other requirements having the force of law and (ii) all court
orders and injunctions, arbitrator's decisions, and/or similar
rulings, in each instance ((i) and (ii)) of or by any federal,
state, municipal, and other governmental authority, or court,
tribunal, panel, or other body which has or claims
jurisdiction over such Person, or any property of such Person,
or of any other Person for whose conduct such Person would be
responsible.

(b) That Person's charter, certificate of
incorporation, articles of organization, and/or other
organizational documents, as applicable; and (c) that Person's
by-laws and/or other instruments which deal with corporate or
similar governance, as applicable.

"RESERVE PERCENTAGE": The decimal equivalent of that rate applicable
to the Lender under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining
the maximum reserve requirement of that Lender with respect to
"Eurocurrency liabilities" as defined in such regulations. The
Reserve Percentage applicable to a particular Eurodollar Loan
shall be based upon that in effect during the subject Interest
Period, with changes in the Reserve Percentage which take effect
during such Interest Period to take effect (and to consequently
change any interest rate determined with reference to the Reserve
Percentage) if and when such change is applicable to such loans.

"REVOLVING CREDIT": Is defined in Section 2-1.

"REVOLVING CREDIT CEILING": $8,000,000.00.

"REVOLVING CREDIT NOTE": Is defined in Section 2-6.

"SENIOR FUNDED DEBT": means total of (i) indebtedness or liability for
borrowed

money; (ii) obligations as lessee under capital leases; (iii)
obligations under letters of credit issued for the account of the
Borrower, and (iv) obligations secured by any lien on property
owned by the Borrower whether or not the obligations have been
assumed by a third party, unless any of the foregoing described
in (i) through (iv), above, are subordinated in favor of the
Lender on terms and conditions acceptable to the Lender.

"STATED AMOUNT": The maximum amount for which an L/C may be honored.

"SUSPENSION EVENT": Any occurrence, circumstance, or state of facts
which (a) is an Event of Default; or (b) would become an Event of
Default if any requisite notice were given and/or any requisite
period of time were to run and such occurrence, circumstance, or
state of facts were not absolutely cured within any applicable
grace period.

"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 5-9 hereof; or
(c) date set by notice by the Lender to the Borrower, which
notice sets the Termination Date on account of the occurrence
of any Event of Default other than as described in Section 5-9
hereof.

"TOTAL FUNDED DEBT": means all borrowed money as reflected in the
Borrower's consolidated financial statements.

"UCC": The Uniform Commercial Code as presently in effect in
Massachusetts (Mass. Gen. Laws, Ch. 106).

"YEAR 2000 COMPLIANT": Computer applications, imbedded microchips, and
other systems and subsystems which properly recognize and perform
their intended function without any adverse effect on account of
their respective inability to recognize certain dates prior to,
on, and after December 31, 1999 or on account of their treating
any date prior to, on, or after December 31, 1999 other than as
the specific date in question.

ARTICLE 2 - THE REVOLVING CREDIT:
2-1. ESTABLISHMENT OF REVOLVING CREDIT.

(a) The Lender hereby establishes a revolving line of credit
(the "REVOLVING CREDIT") in the Borrower's favor pursuant to which the Lender,
subject to, and in accordance with,

this Agreement, shall make loans and advances and otherwise provide financial
accommodations to and for the account of the Borrower as provided herein. The
amount available for borrowing under the Revolving Credit may be repaid and
reborrowed but shall not at any time exceed the the Revolving Credit Ceiling.

(b) The proceeds of borrowings under the Revolving Credit
shall be used solely for working capital purposes of the Borrower and in to
cover the honoring of L/C's.

2-2. ESTABLISHMENT OF ACQUISITION LINE OF CREDIT.

(a) The Lender hereby establishes an acquisition line of
credit (the "ACQUISITION CREDIT") in the Borrower's favor pursuant to which the
Lender, subject to, and in accordance with, this Agreement, shall make loans and
advances and otherwise provide financial accommodations to and for the account
of the Borrower as provided herein. The amount available for borrowing under the
Acquisition Credit may be repaid and reborrowed but shall not exceed the
Acquisition Credit Ceiling. Mandatory repayments of the Acquisition Credit shall
also be made in accordance with subsection (c), below.

(b) The proceeds of borrowings under the Acquisition Credit
shall be used solely for financing of acquisitions of property, plant or
equipment, or any business or businesses to be acquired.

(c) Principal payments shall be made within nine (9) months of
any borrowing under the Acquisition Credit in accordance with a term facility to
be subject to such repayment terms and grant of collateral, if the grant of
collateral is otherwise required under subparagraph (d), below, as may be agreed
upon between the Lender and the Borrower.

(d) If any quarterly or annual financial statements furnished
by the Borrower pursuant to Section 4-3 or 4-4, below reflect the ratio of
Senior Funded Debt to EBITDA in excess of 2.5 to 1.0 at any time the Borrower
shall promptly grant to the Lender a security interest in assets satisfactory to
the Lender and the Borrower to secure the Acquisition Credit. If, thereafter, in
a subsequent quarter or year end, the Borrower's financial statements furnished
in accordance with Section 4-3 or 4-4, below evidence the ratio of Senior Funded
Debt to EBITDA of less than 2.5 to 1.0, and provided that no Event of Default is
then occurring, the Lender will release such security interests upon the request
of the Borrower.

2-3. LOAN REQUESTS.

(a) Subject to the provisions of this Agreement, a loan or
advance under the Credits duly and timely requested by the Borrower shall be
made pursuant hereto, PROVIDED THAT the Credits have not been suspended as
provided in Section 2-4(h).

(b) Requests for loans and advances under the Credits may be
requested by the

Borrower in such manner as may from time to time be acceptable to the Lender.

(c) Subject to the provisions of this Agreement, the Borrower
may request a Loan and elect an interest rate and Interest Period to be
applicable to Loan by giving the Lender notice no later than the following:

(i) If such Loan is or is to be converted to a Prime
Rate Loan: By 11:30AM on the Business Day on which the subject Loan is
to be made or is to be so converted. Prime Rate Loans requested by the
Borrower, other than those resulting from the conversion of a Libor
Loan, shall not be less than $10,000.00.

(ii) If such Loan is, or is to be continued as, or
converted to, a Libor Loan: By 1:00PM Three (3) Libor Business Days
before the end of the then applicable Interest Period. Libor Loans and
conversions to Libor Loans shall each be not less than $250,000.00 and
in increments of $50,000.00 in excess of such minimum.

(iii) Any Libor Loan which matures while a Suspension
Event is extant shall be converted, at the option of the Lender to a
Prime Rate Loan notwithstanding any notice from the Borrower that such
Loan is to be continued as a Libor Loan.

(d) Any request for a Loan or for the conversion of a Loan
which is made after the applicable deadline therefor, as set forth above, shall
be deemed to have been made at the opening of business on the then next Business
Day or Libor Business Day, as applicable. Each request for a Loan or for the
conversion of a Loan shall be made in such manner as may from time to time be
acceptable to the Lender

(e) The Borrower may request that the Lender cause the
issuance of L/C's for the account of the Borrower as provided in Section 2-11.

(f) The Lender may rely on any request for a loan or advance,
or other financial accommodation under the Credits which the Lender, in good
faith, believes to have been made by a Person duly authorized to act on behalf
of the Borrower and may decline to make any such requested loan or advance, or
issuance, or to provide any such financial accommodation pending the Lender's
being furnished with such documentation concerning that Person's authority to
act as may be satisfactory to the Lender.

(g) A request by the Borrower for loan or advance, or other
financial accommodation under the Credits shall be irrevocable and shall
constitute certification by the Borrower that as of the date of such request,
each of the following is true and correct:

(i) There has been no Material Adverse Change since
the most recent financial information furnished Lender pursuant to this
Agreement.

(ii) The Borrower is in compliance with, and has not
breached any of, its covenants contained in this Agreement.

(iii) Each representation which is made herein or in
any of the Loan

Documents (defined below) is then true and complete as of and as if
made on the date of such request.

(iv) No Suspension Event is then extant.

(h) Upon the occurrence from time to time of any Suspension Event:
(i) The Lender may suspend the Credits immediately.
(ii) The Lender shall not be obligated, during such
suspension, to make any loans or advance, or to provide any financial
accommodation hereunder or to seek the issuance of any L/C.

(iii) The Lender may suspend the right of the
Borrower to request any Libor Loan or to convert any Prime Rate Loan to
a Libor Loan.

2-4. MAKING OF LOANS UNDER CREDITS.

(a) A loan or advance under the Credits shall be made by the
transfer of the proceeds of such loan or advance to an operating account with
the Lender or as otherwise instructed by the Borrower.

(b) A loan or advance shall be deemed to have been made under
the Credits (and the Borrower shall be indebted to the Lender for the amount
thereof immediately) at the following:

(i) The Lender's initiation of the transfer of the
proceeds of such loan or advance in accordance with the Borrower's
instructions (if such loan or advance is of funds requested by the
Borrower).

(ii) The charging of the amount of such loan to the
Loan Account (in all other circumstances).

(i) Any delay in the making of any loan or advance
requested under the Credits.

(ii) Any delay in the proceeds of any such loan or
advance constituting collected funds.

(iii) Any delay in the receipt, and/or any loss, of
funds which constitute a loan or advance under the Credits, the wire
transfer of which was properly initiated by the Lender in accordance
with wire instructions provided to the Lender by the Borrower.

2-5. THE LOAN ACCOUNT.

(a) An account ("LOAN ACCOUNT") shall be opened on the books
of the Lender. A record may be kept in the Loan Account of all loans made under
or pursuant to this Agreement and of all payments thereon.

(b) The Lender may also keep a record (either in the Loan
Account or elsewhere, as the Lender may from time to time elect) of all
interest, fees, service charges, costs, expenses, and other debits owed the
Lender on account of the Liabilities and of all credits against such amounts so
owed.

(c) All credits against the Liabilities shall be conditional
upon final payment to the Lender of the items giving rise to such credits. The
amount of any item credited against the Liabilities which is charged back
against the Lender for any reason or is not so paid shall be a Liability and
shall be added to the Loan Account, whether or not the item so charged back or
not so paid is returned.

(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which the Borrower is obligated hereunder are
payable on demand. The Lender, without the request of the Borrower, may advance
under the Credits any interest, fee, service charge, or other payment to which
the Lender is entitled from the Borrower pursuant hereto and may charge the same
to the Loan Account and shall bear interest at the Prime Rate.

(e) Any statement rendered by the Lender to the Borrower
concerning the Liabilities shall be considered correct and accepted by the
Borrower and shall be conclusively binding upon the Borrower unless the Borrower
provides the Lender with written objection thereto within twenty (20) days from
the mailing of such statement, which written objection shall indicate, with
particularity, the reason for such objection. The Loan Account and the Lender's
books and records concerning the loan arrangement contemplated herein and the
Liabilities shall be prima facie evidence and proof of the items described
therein.

2-6. THE REVOLVING CREDIT NOTE. The obligation to repay loans and
advances under the Revolving Credit, with interest as provided herein, shall be
evidenced by a note (the "REVOLVING CREDIT NOTE") in the form of EXHIBIT 2-6,
annexed hereto, executed by the Borrower. Neither the original nor a copy of the
Revolving Credit Note shall be required, however, to establish or prove any
Liability. In the event that the Revolving Credit Note is ever lost, mutilated,
or destroyed, the Borrower shall execute a replacement thereof and deliver such
replacement to the Lender.

2-7. THE ACQUISITION CREDIT NOTE. The obligation to repay loans and
advances under the Acquisition Credit, with interest as provided herein, shall
be evidenced by a note (the "ACQUISITION CREDIT NOTE") in the form of EXHIBIT
2-7, annexed hereto, executed by the Borrower. Neither the original nor a copy
of the Acquisition Credit Note shall be required, however, to establish or prove
any Liability. In the event that the Acquisition Credit Note is ever lost,
mutilated, or destroyed, the Borrower shall execute a replacement thereof and
deliver such replacement to the Lender.

2-8. PAYMENT OF THE LOAN ACCOUNT.

(a) The Borrower may repay all or any portion of the principal
balance of the Loan Account from time to time until the Termination Date. Unless
notified otherwise by the Borrower, such payments shall be applied first to
Prime Rate Loans and only then to Libor Loans

(b) The Lender shall endeavor to cause those application of
payments (if any), pursuant to Sections 2-8(a) and 2-8(b) against Libor Loans
then outstanding in such manner as results in the least cost to the Borrower,
but shall not have any affirmative obligation to do so nor liability on account
of the Lender's failure to have done so. In no event shall action or inaction
taken by the Lender excuse the Borrower from any indemnification obligation
under Section 2-8(e).

(c) The Borrower shall repay the then entire unpaid balance of
the Loan Account and all other Liabilities on the Termination Date.

(d) The Borrower shall indemnify the Lender and hold the
Lender harmless from and against any loss, cost or expense (including loss of
anticipated profits) which the Lender may sustain or incur (including, without
limitation, by virtue of acceleration after the occurrence of any Event of
Default) as a consequence of the following:

(i) Default by the Borrower in payment of the
principal amount of or any interest on any Libor Loan as and when due
and payable, including any such loss or expense arising from interest
or fees payable by the Lender to lenders of funds obtained by it in
order to maintain its Libor Loans

(ii) Default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have given) a
request for a Loan or a request to convert a Loan from one applicable
interest rate to another.

(iii) The making of any payment on a Libor Loan or
the making of any conversion of any such Loan to a Prime Rate Loan on a
day that is not the last day of the applicable Interest Period with
respect thereto, including interest or fees payable by the Lender to
lenders of funds obtained by it in order to maintain any such Loans as
"breakage fees" (so-called).

2-9. INTEREST RATES.

(a) Each Loan shall bear interest at the Prime Rate unless
timely notice is given (as provided in Section 2-4(a)) that the subject Loan (or
a portion thereof) is, or is to be converted to, a Libor Loan.

(b) Each Loan which consists of a Libor Loan shall bear
interest at the applicable Libor Rate.

cause all or a part of the unpaid principal balance of the Loan Account to bear
interest at the Prime Rate or the Libor Rate as specified from time to time by
the Borrower. For ease of reference and administration, each part of the Loan
Account which bears interest at the same interest and for the same Interest
Period is referred to herein as if it were a separate " Loan".

(d) The Borrower shall not select, renew, or convert any
interest rate for a Loan such that, in addition to interest at the Prime Rate,
there is more than ten (10) Libor Rates applicable to the Loans at any one time.

(e) The Borrower shall pay accrued and unpaid interest on each
Loan in arrears as follows:
(i) On the applicable Interest Payment Date for
that Loan.
(ii) On the Termination Date and on the End Date.
(iii) Following the occurrence of any Event of
Default, with such frequency as may be determined by the Lender.

(f) Following the occurrence of any Event of Default (and
whether or not the Lender exercises the Lender's rights on account thereof), all
Loans shall bear interest, at the option of the Lender at rate which is the
aggregate of the Prime Rate PLUS Two Percent (2%) per annum.

2-10. LINE (UNUSED) FEE.

(a) The Borrower shall pay the Lender a REVOLVING LINE
(UNUSED) FEE (so referred to herein) in arrears, on the first day of each
quarter (and on the Termination Date). The Line (Unused) Fee shall be equal to
0.25% per annum of the average difference, during the quarter just ended (or
relevant period with respect to the payment being made on the Termination Date)
between the Revolving Credit Ceiling and the unpaid principal balance of the
Loan Account attributable to the Revolving Credit.

(b) Commencing August 1, 2000, the Borrower shall pay the
Lender an ACQUISITION LINE (UNUSED) FEE (so referred to herein) in arrears, on
the first day of each quarter (and on the Termination Date). The Line (Unused)
Fee shall be equal to 0.25% per annum of the average difference, during the
quarter just ended (or relevant period with respect to the payment being made on
the Termination Date) between the Acquisition Credit Ceiling and the unpaid
principal balance of the Loan Account and any other promissory notes
attributable to the Acquisition Credit.

2-11. PROCEDURES FOR ISSUANCE OF L/C'S.

The Borrower may request that the Lender issue L/C's for the account of
the Borrower. Each such request shall be in such manner as may from time to time
be acceptable to the Lender. The Lender may issue any L/C so requested by the
Borrower, PROVIDED THAT, at the time that the request

is made, the Credits have not been suspended as provided in Section 2-4(h) and
if so issued:

(a) The aggregate Stated Amount of all L/C's then outstanding,
does not exceed an amount to be determined by the Lender.

(b) The expiry of the L/C is not later than a date approved by
the Lender. (c) The Borrower shall execute such additional documents
and any such fees as may be established by the Lender in connection
with the issuance of any L/C.

2-12. CHANGED CIRCUMSTANCES.

(a) The Lender may give the Borrower notice of the
occurrence of the following:
(i). The Lender shall have determined in good faith
(which determination shall be final and conclusive) on any day on which
the rate for a Libor Loan would otherwise be set, that adequate and
fair means do not exist for ascertaining such rate.
(ii). The Lender shall have determined in good faith
(which determination shall be final and conclusive) that:

(A) The continuation of or conversion of any
Loan to a Libor Loan has been made impracticable or unlawful
by the occurrence of a contingency that materially and
adversely affects the applicable market or compliance by the
Lender in good faith with any applicable law or governmental
regulation, guideline or order or interpretation or change
thereof by any governmental authority charged with the
interpretation or administration thereof or with any request
or directive of any such governmental authority (whether or
not having the force of law).

(B) The indices on which the interest rates for
Libor Loans are based shall no longer represent the effective
cost to the Lender for U.S. dollar deposits in the interbank
market for deposits in which it regularly participates.

(b) In the event that the Lender gives the Borrower notice of
an occurrence described in Section 2-12(a), then, until the Lender notifies the
Borrower that the circumstances giving rise to such notice no longer apply:

(i) The obligation of the Lender to make Libor Loans
of the type affected by such changed circumstances or to permit the
Borrower to select the affected interest rate as otherwise applicable
to any Loans shall be suspended.

(ii) Any notice which the Borrower had given the
Lender with respect to any Libor Loan, the time for action with respect
to which has not occurred prior to the Lender's having given notice
pursuant to Section 2-12(a), shall be deemed at the option of the
Lender to not having been given.

2-13. INCREASED COSTS. If, as a result of any requirement of law, or of
the

interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof, whether or
not having the force of law, which:

(a) subjects the Lender to any taxes or changes the basis of
taxation, or increases any existing taxes, on payments of principal,
interest or other amounts payable by the Borrower to the Lender under
this Agreement (except for taxes on the Lender's overall net income or
capital imposed by the jurisdiction in which the Lender's principal or
lending offices are located);

(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by,
or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of the Lender;

(c). imposes on the Lender any other condition with respect to
any Loan Document; or

(d) imposes on the Lender a requirement to maintain or
allocate capital in relation to the Liabilities;
and the result of any of the foregoing, in the Lender's reasonable opinion, is
to increase the cost to the Lender of making or maintaining any loan, advance or
financial accommodation or to reduce the income receivable by the Lender in
respect of any loan, advance or financial accommodation by an amount which the
Lender deems to be material, then upon the Lender's giving written notice
thereof, from time to time, to the Borrower (such notice to set out in
reasonable detail the facts giving rise to and a summary calculation of such
increased cost or reduced income), the Borrower shall forthwith pay to the
Lender , upon receipt of such notice, that amount which shall compensate the
Lender for such additional cost or reduction in income.

ARTICLE 3 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:

To induce the Lender to establish the loan arrangement contemplated
herein and to make loans and advances and to provide financial accommodations
under the Credits (each of which loans shall be deemed to have been made in
reliance thereupon) the Borrower, in addition to all other representations,
warranties, and covenants made by the Borrower in any other Loan Document, makes
those representations, warranties, and covenants included in this Agreement.

3-1. PAYMENT AND PERFORMANCE OF LIABILITIES.

The Borrower shall pay each Liability when due (or when
demanded if payable on demand) and shall promptly, punctually, and faithfully
perform each other Liability.

3-2. DUE ORGANIZATION - CORPORATE AUTHORIZATION - NO CONFLICTS.

(a) UFP presently is and shall hereafter remain in good
standing as a Delaware corporation. MFT presently is and shall hereafter remain
in good standing as a Maine corporation. The Borrower is and shall hereafter
remain duly qualified and in good standing in every other State in which, by
reason of the nature or location of the Borrower's assets or operation of the
Borrower's business, such qualification may be necessary. The Borrower is not an
"Investment Company" withing the meaning of the Investment Company Act.

(b) Each Related Entity is listed on EXHIBIT 3-2, annexed
hereto. Each Related Entity is and shall hereafter remain in good standing in
the State in which incorporated and is and shall hereafter remain duly qualified
in which other State in which, by reason of that entity's assets or the
operation of such entity's business, such qualification may be necessary. The
Borrower shall provide the Lender with prior written notice of any entity's
becoming or ceasing to be a Related Entity.

(d) The Borrower has all requisite corporate power and
authority to execute and deliver all Loan Documents to which the Borrower is a
party and has and will hereafter retain all requisite corporate power to perform
all Liabilities.

(e) The execution and delivery by the Borrower of each Loan
Document to which it is a party; the Borrower's consummation of the transactions
contemplated by such Loan Documents (including, without limitation, the creation
of security interests by the Borrower as contemplated hereby); the Borrower's
performance under those of the Loan Documents to which it is a party; the
borrowings hereunder; and the use of the proceeds thereof:

(i) Have been duly authorized by all necessary
corporate action.
(ii) Do not, and will not, contravene in any
material respect any provision of any Requirement of Law or obligation
of the Borrower.

(iii) Will not result in the creation or imposition
of, or the obligation to create or impose, any Encumbrance upon any
assets of the Borrower pursuant to any Requirement of Law or
obligation, except pursuant to the Loan Documents.

(f) The Loan Documents have been duly executed and delivered
by Borrower and are the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms.

3-3. DEPOSIT ACCOUNT. In order to permit the Lender to monitor the
Borrower's financial condition and compliance with this Agreement, the Borrower
shall maintain its primary deposit

account with the Lender.

3-4. YEAR 2000 COMPLIANCE.

(a) The Borrower has (i) undertaken a detailed inventory,
review, and assessment of all areas within its business and operations that
could be adversely affected by the failure of the Borrower to be Year 2000
Compliant on a timely basis; (ii) developed a detailed plan and timeline for
becoming Year 2000 Compliant on a timely basis; and (iii) to date, implemented
that plan in accordance with that timetable in all material respects. The
Borrower reasonably anticipates that it will be Year 2000 Compliant on a timely
basis.

3-5. TITLE TO ASSETS. The Borrower is, and shall hereafter remain, the
owner its assets free and clear of all Encumbrances with the exceptions of
Permitted Encumbrances, which include those Encumbrances described on EXHIBIT
3-5, annexed hereto.

3-6. INDEBTEDNESS. The Borrower does not and shall not hereafter have
any Indebtedness with the exceptions of:

(a) Any Indebtedness to the Lender .

(b) The Indebtedness (if any) listed on EXHIBIT 3-6, annexed
hereto.

3-7. INSURANCE POLICIES.

(a) EXHIBIT 3-7, annexed hereto, is a schedule of all insurance
policies owned by the Borrower or under which the Borrower is the named insured.
Each of such policies is in full force and effect. Neither the issuer of any
such policy nor the Borrower is in default or violation of any such policy.

(b) The Borrower shall have and maintain at all times insurance
covering such risks, in such amounts, containing such terms, in such form, for
such periods, and written by such companies as may be satisfactory to the Lender
. The coverage reflected on EXHIBIT 3-7 presently satisfies the foregoing
requirements, it being recognized by the Borrower, HOWEVER, that such
requirements may change hereafter to reflect changing circumstances.

3-8. REQUIREMENTS OF LAW. The Borrower is in compliance with, and shall
hereafter comply with and use its assets in compliance with, all Requirements of
Law. The Borrower has not received any notice of any violation of any
Requirement of Law (whether or not such violation is material), which violation
has not been cured or otherwise remedied.

3-9. MAINTAIN PROPERTIES. The Borrower shall:

(a) Keep its assets in good order and repair (ordinary reasonable
wear and tear and insured casualty excepted).

(b) Not suffer or cause the waste or destruction of any material
part of its assets.

(d) Except in the ordinary course of business, not sell, lease, or
otherwise dispose of any of its assets, other than the following:

(i) The sale of Inventory in compliance with this Agreement.

(ii) The disposal of Equipment which is obsolete, worn out,
or damaged beyond repair, which Equipment is replaced to the extent
necessary to preserve or improve the operating efficiency of the
Borrower.

3-10. PAY TAXES.

(a) Except as disclosed on EXHIBIT 3-10, there are no
examinations of or with respect to the Borrower presently being conducted by the
Internal Revenue Service or any other taxing authority.

(b) The Borrower has, and hereafter shall: pay, as they become
due and payable, all taxes and unemployment contributions and other charges of
any kind or nature levied, assessed or claimed against the Borrower or its
assets by any person or entity whose claim could result in an Encumbrance upon
any asset of the Borrower or by any governmental authority; properly exercise
any trust responsibilities imposed upon the Borrower by reason of withholding
from employees' pay or by reason of the Borrower's receipt of sales tax or other
funds for the account of any third party; timely make all contributions and
other payments as may be required pursuant to any Employee Benefit Plan now or
hereafter established by the Borrower; and timely file all tax and other returns
and other reports with each governmental authority to whom the Borrower is
obligated to so file PROVIDED, HOWEVER, the Borrower may timely contest in good
faith and by appropriate proceedings, any amount which it is obligated to pay as
provided in this Section 3-10(b), but only if and for so long as no lien on any
of its assets is filed with respect to any such amount.

3-11. NO MARGIN STOCK. Except for credit extended under the Borrower's
option plans, the Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying any margin stock (within the meaning
of Regulations U, T, and X of the Board of Governors of the Federal Reserve
System of the United States). No part of the proceeds of any borrowing hereunder
will be used at any time to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock.

3-12. ERISA. Neither the Borrower nor any ERISA Affiliate ever has or
hereafter shall:

(a) Violate or fail to be in full compliance with the Borrower's
Employee Benefit Plan.

(b) Fail timely to file all reports and filings required by ERISA
to be filed by the Borrower.

(d) Engage in, or commit, any act such that a tax or penalty could
be imposed upon the Borrower on account thereof pursuant to ERISA.

(e) Accumulate any material funding deficiency within the meaning
of ERISA. (f) Terminate any Employee Benefit Plan such that a lien could be
asserted against any assets of the Borrower on account thereof pursuant to
ERISA.

(g) Be a member of, contribute to, or have any obligation under
any Employee Benefit Plan which is a multiemployer plan within the meaning of
Section 4001(a) of ERISA.

3-13. HAZARDOUS MATERIALS.
(a) The Borrower has never:

(i) Been legally responsible for any release or threat
of release of any Hazardous Material.

(ii) Received notification of any release or threat of
release of any Hazardous Material from any site or vessel occupied or
operated by the Borrower and/or of the incurrence of any expense or
loss in connection with the assessment, containment, or removal of any
release or threat of release of any Hazardous Material from any such
site or vessel.

(b) The Borrower shall:

(i) Dispose of any Hazardous Material only in compliance
with all Environmental Laws.

(ii) Not store on any site or vessel occupied or operated
by the Borrower and not transport or arrange for the transport of any
Hazardous Material, except if such storage or transport is in the
ordinary course of the Borrower's business and is in compliance with
all Environmental Laws.

(c) The Borrower shall provide the Lender with written notice
upon the Borrower's obtaining knowledge of any incurrence of any expense or loss
by any governmental authority or other Person in connection with the assessment,
containment, or removal of any Hazardous Material, for which expense or loss the
Borrower may be liable.

3-14. LITIGATION. Except as described in EXHIBIT 3-14, annexed hereto,
there is not

presently pending or threatened by or against the Borrower any suit, action,
proceeding, or investigation which, if determined adversely to the Borrower,
would result in a Material Adverse Change.

3-15. LOANS. The Borrower shall not make any loans or advances to, nor
acquire the Indebtedness of, any Person, PROVIDED, HOWEVER, the foregoing does
not prohibit any of the following:

(a) Advance payments made to the Borrower's suppliers in the
ordinary course.

(b) Advances to the Borrower's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of the Borrower, which
expenses are properly substantiated by the person seeking such advance and
properly reimbursable by the Borrower.

(d) Loans described on EXHIBIT 3-15, annexed hereto.

3-16. PROTECTION OF ASSETS. The Lender, in the Lender's discretion, and
from time to time, may discharge any tax or Encumbrance on any of its assets, or
take any other action that the Lender may deem necessary or desirable to repair,
insure, maintain, preserve, collect, or realize upon any of its assets. The
Lender shall not have any obligation to undertake any of the foregoing and shall
have no liability on account of any action so undertaken except where there is a
specific finding in a judicial proceeding (in which the Lender has had an
opportunity to be heard), from which finding no further appeal is available,
that the Lender had acted in actual bad faith or in a grossly negligent manner.
The Borrower shall pay to the Lender, on demand, or the Lender, in its
discretion, may add to the Loan Account, all amounts paid or incurred by the
Lender pursuant to this section. The obligation of the Borrower to pay such
amounts is a Liability.

3-17. AFFILIATE TRANSACTIONS. The Borrower shall not make any payment,
nor give any value to any Related Entity except for goods and services actually
purchased by the Borrower from, or sold by the Borrower to, such Related Entity
for a price and on terms which shall

(a) be competitive and fully deductible as an "ordinary and
necessary business expense" and/or fully depreciable under the Internal Revenue
Code of 1986 and the Treasury Regulations, each as amended; and

(b) no be less favorable from those which would have been charged
in an arms length transaction.

3-18. ADEQUACY OF DISCLOSURE.

(a) All financial statements furnished to the Lender by the
Borrower have been prepared in accordance with GAAP consistently applied and
present fairly the condition of the Borrower at the date(s) thereof and the
results of operations and cash flows for the period(s) covered. There has been
no change in the financial condition, results of operations, or cash flows of
the Borrower since the date(s) of such financial statements, other than changes
in the ordinary course of business, which changes have not been materially
adverse, either singularly or in the aggregate.

(b) The Borrower does not have any contingent obligations or
obligation under any Lease or Capital Lease which is not noted in the Borrower's
financial statements furnished to the Lender prior to the execution of this
Agreement.

(c) No document, instrument, agreement, or paper now or hereafter
given the Lender by or on behalf of the Borrower in connection with the
execution of this Agreement by the Lender contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements therein not misleading. There is no
fact known to the Borrower which has, or which, in the foreseeable future could
have result in a Material Adverse Change which has not been disclosed in writing
to the Lender.

3-19. OTHER COVENANTS. The Borrower shall not indirectly do or cause to
be done any act which, if done directly by the Borrower, would breach any
covenant contained in this Agreement.

ARTICLE 4 - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:

4-1. MAINTAIN RECORDS. The Borrower shall:

(a) At all times, keep proper books of account, in which full,
true, and accurate entries shall be made of all of the Borrower's transactions,
all in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrower at the close of, and its results
of operations for, the periods in question.

(b) Timely provide the Lender with those financial reports,
statements, and schedules required by this Article 4 or otherwise, each of which
reports, statements and schedules shall be prepared, to the extent applicable,
in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrower at the close of, and its results
of operations for, the period(s) covered therein.

reasonably satisfactory to the Lender and instruct such accountants to fully
cooperate with, and be available to, the Lender to discuss the Borrower's
financial performance, financial condition, operating results, controls, and
such other matters, within the scope of the retention of such accountants, as
may be raised by the Lender.

4-2. ACCESS TO RECORDS. The Borrower shall accord the Lender and the
Lender's representatives with access from time to time upon forty-eight (48)
hours prior notice from the Lender, prior to the occurrence of any Event of
Default and thereafter without notice, as the Lender and such representatives
may require to all properties owned by or over which the Borrower has control.
The Lender and the Lender's representatives shall have the right, and the
Borrower will permit the Lender and such representatives from time to time as
the Lender and such representatives may request, to examine, inspect, copy, and
make extracts from any and all of the Borrower's books, records, electronically
stored data, papers, and files. The Borrower shall make all of the Borrower's
copying facilities available to the Lender.

4-3. QUARTERLY REPORTS. Quarterly, within Forty Five (45) days
following the end of each of the Borrower's fiscal quarters, the Borrower shall
provide the Lender with an original counterpart of a management prepared
financial statement of the Borrower for the period from the beginning of the
Borrower's then current fiscal year through the end of the subject quarter, with
comparative information for the same period of the previous fiscal year, which
statement shall include, at a minimum, a balance sheet, income statement,
statement of changes in shareholders' equity, and cash flows and comparisons for
the corresponding quarter of the then immediately previous year.

4-4. ANNUAL REPORTS.

(a) Annually, within ninety (90) days following the end of the
Borrower's fiscal year, the Borrower shall furnish the Lender with an original
signed counterpart of the Borrower's annual financial statement, which statement
shall have been prepared by, and bear the unqualified opinion of, the Borrower's
independent certified public accountants (i.e. said statement shall be
"certified" by such accountants). Such annual statement shall include, at a
minimum (with comparative information for the then prior fiscal year) a balance
sheet, income statement, statement of changes in shareholders' equity, and cash
flows.

(b) Each annual statement shall be accompanied by such
accountant's Certificate indicating that, in the preparation of such annual
statement, such accountants did not conclude that any Suspension Event had
occurred during the subject fiscal year (or if one or more had occurred, the
facts and circumstances thereof).

4-5. OFFICERS' CERTIFICATES. The Borrower shall cause the
Borrower's Chief Financial Officer to provide such Person's Certificate with
those quarterly and annual statements to be furnished pursuant to this
Agreement, which Certificate shall:

(a) Indicate that the subject statement was prepared in accordance
with GAAP consistently applied and presents fairly the financial condition of
the Borrower at the close of, and the results of the Borrower's operations and
cash flows for, the period(s) covered, SUBJECT, HOWEVER to the following:

(i) usual year end adjustments (this exception shall not be
included in the Certificate which accompanies such annual statement).

(ii) Material Accounting Changes (in which event, such
Certificate shall include a schedule (in reasonable detail) of the
effect of each such Material Accounting Change) not previously
specifically taken into account in the determination of the financial
performance covenant imposed pursuant to Section 4-7.

(b) Indicate either that (i) no Suspension Event has occurred or
(ii) if such an event has occurred, its nature (in reasonable detail) and the
steps (if any) being taken or contemplated by the Borrower to be taken on
account thereof.

(c) Include calculations concerning the Borrower's compliance (or
failure to comply) at the date of the subject statement with each of the
financial performance covenants included in Section 4-7 hereof.

4-6. ADDITIONAL FINANCIAL INFORMATION.

(a) In addition to all other information required to be provided
pursuant to this Article 4, the Borrower promptly shall provide the Lender, with
such other and additional information concerning the Borrower, its assets, the
operation of the Borrower's business, and the Borrower's financial condition,
including original counterparts of financial reports and statements, as the
Lender may from time to time reasonably request from the Borrower.

(b) The Borrower may provide the Lender, from time to time
hereafter, with updated projections of the Borrower's anticipated performance
and operating results.

(c) In all events, annually, within ninety (90) days following
the end of the Borrower's fiscal year, the Borrower shall furnish the Lender
with an updated and extended projection which shall go out at least through the
end of the then next fiscal year.

4-7. FINANCIAL PERFORMANCE COVENANTS. The Borrower shall observe and
comply with those financial performance covenants set forth on EXHIBIT 4-7,
annexed hereto. Compliance with such financial performance covenants shall be
made as if no Material Accounting Changes had

been made (other than any Material Accounting Changes specifically taken into
account in the setting of such covenants). The Lender may determine the
Borrower's compliance with such covenants based upon financial reports and
statements provided by the Borrower to the Lender (whether or not such
financial reports and statements are required to be furnished pursuant to
this Agreement) as well as by reference to interim financial information
provided to, or developed by, the Lender.

ARTICLE 5 - EVENTS OF DEFAULT:

The occurrence of any event described in this Article 5 respectively
shall constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event
of Default described in Section 5-9, any and all Liabilities shall become due
and payable without any further act on the part of the Lender. Upon the
occurrence of any other Event of Default, any and all Liabilities shall become
immediately due and payable, at the option of the Lender and without notice or
demand. The occurrence of any Event of Default shall also constitute, without
notice or demand, a default under all other agreements between the Lender and
the Borrower and instruments and papers given the Lender by the Borrower,
whether such agreements, instruments, or papers now exist or hereafter arise.

5-1. FAILURE TO PAY CREDITS. The failure by the Borrower to pay any
amount within three (3) business days of when due under the Credits.

5-2. FAILURE TO MAKE OTHER PAYMENTS. The failure by the Borrower to pay
within three (3) business days of when due(or within three (3) business days of
demand, if payable on demand) any payment Liability other than under the
Credits.

5-3. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The
failure by the Borrower, upon Thirty (30) days written notice by the Lender , to
cure the Borrower's failure to promptly, punctually and faithfully perform,
discharge, or comply with any covenant or Liability not described in Sections
5-1 or 5-2 hereof.

5-4. MISREPRESENTATION. Any representation or warranty at any time made
by the Borrower to the Lender, was not true or complete in all material respects
when given.

5-5. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence of any
event such that

any Indebtedness in excess of $50,000.00 to any creditor other than the Lender
has been accelerated.

5-6. DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach or
default under any agreement between the Lender and the Borrower or instrument or
paper given the Lender by the Borrower, whether such agreement, instrument, or
paper now exists or hereafter arises (notwithstanding that the Lender may not
have exercised its rights upon default under any such other agreement,
instrument or paper).

5-7. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss,
theft, damage, or destruction of or to any material portion of the Borrower's
assets.

5-8. JUDGMENT. RESTRAINT OF BUSINESS.

(a) The service of process upon the Lender or any Participant
seeking to attach, by trustee, mesne, or other process, any of the Borrower's
funds in excess of $50,000.00 on deposit with, or assets of the Borrower in the
possession of, the Lender or such Participant.

(b) The entry of any judgment against the Borrower in excess of
$50,000.00, which judgment is not satisfied (if a money judgment) or appealed
from (with execution or similar process stayed) within fifteen (15) days of its
entry.

5-9. BUSINESS FAILURE. Any act by, against, or relating to the
Borrower, or its property or assets, which act constitutes the application for,
consent to, or sufferance of the appointment of a receiver, trustee, or other
person, pursuant to court action or otherwise, over all, or any part of the
Borrower's property; the granting of any trust mortgage or execution of an
assignment for the benefit of the creditors of the Borrower, or the occurrence
of any other voluntary or involuntary liquidation or extension of debt agreement
for the Borrower; the offering by or entering into by the Borrower of any
composition, extension, or any other arrangement seeking relief from or
extension of the debts of the Borrower; or the initiation of any judicial or
non-judicial proceeding or agreement by, against, or including the Borrower
which seeks or intends to accomplish a reorganization or arrangement with
creditors; and/or the initiation by or on behalf of the Borrower of the
liquidation or winding up of all or any part of the Borrower's business or
operations.

5-10. BANKRUPTCY. The failure by the Borrower to generally pay the
debts of the Borrower as they mature; adjudication of bankruptcy or insolvency
relative to the Borrower; the entry of an order for relief or similar order with
respect to the Borrower in any proceeding pursuant to the Bankruptcy Code or any
other federal bankruptcy law; the filing of any complaint, application, or
petition by the Borrower initiating any matter in which the Borrower is or may
be granted any relief

from the debts of the Borrower pursuant to the Bankruptcy Code or any other
insolvency statute or procedure; the filing of any complaint, application, or
petition against the Borrower initiating any matter in which the Borrower is or
may be granted any relief from the debts of the Borrower pursuant to the
Bankruptcy Code or any other insolvency statute or procedure, which complaint,
application, or petition is not timely contested in good faith by the Borrower
by appropriate proceedings or, if so contested, is not dismissed within sixty
(60) days of when filed.

5-11. MATERIAL ADVERSE CHANGE. The occurrence of any Material Adverse
Change.

5-12. INDICTMENT - FORFEITURE. The indictment of, or institution of any
legal process or proceeding against, the Borrower, under any federal, state,
municipal, and other civil or criminal statute, rule, regulation, order, or
other requirement having the force of law where the relief, penalties, or
remedies sought or available include the forfeiture of any property of the
Borrower and/or the imposition of any stay or other order, the effect of which
could be to restrain in any material way the conduct by the Borrower of its
business in the ordinary course.

5-13. CHANGE IN CONTROL. Any Change in Control.

ARTICLE 6 - RIGHTS AND REMEDIES UPON DEFAULT:

In addition to all of the rights, remedies, powers, privileges, and
discretions which the Lender is provided prior to the occurrence of an Event of
Default, the Lender shall have the following rights and remedies upon the
occurrence of any Event of Default and at any time thereafter. No stay which
otherwise might be imposed pursuant to Section 362 of the Bankruptcy Code or
otherwise shall stay, limit, prevent, hinder, delay, restrict, or otherwise
prevent the Lender's exercise of any of such rights and remedies.

6-1. RIGHTS OF ENFORCEMENT. The Lender shall have the right to
exercise all or any of the rights, remedies, powers, privileges, and discretions
under all or any of the Loan Documents.

6-2. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges, and
discretions of the Lender hereunder (herein, the " LENDER'S RIGHTS AND
REMEDIES") shall be cumulative and not exclusive of any rights or remedies which
it would otherwise have. No delay or omission by the Lender in exercising or
enforcing any of the Lender's Rights and Remedies shall operate as, or
constitute, a waiver thereof. No waiver by the Lender of any Event of Default or
of any default under

any other agreement shall operate as a waiver of any other default hereunder or
under any other agreement. No single or partial exercise of any of the Lender's
Rights or Remedies, and no express or implied agreement or transaction of
whatever nature entered into between the Lender and any person, at any time,
shall preclude the other or further exercise of the Lender 's Rights and
Remedies. No waiver by the Lender of any of the Lender's Rights and Remedies on
any one occasion shall be deemed a waiver on any subsequent occasion, nor shall
it be deemed a continuing waiver. All of the Lender's Rights and Remedies and
all of the Lender's rights, remedies, powers, privileges, and discretions under
any other agreement or transaction are cumulative, and not alternative or
exclusive, and may be exercised by the Lender at such time or times and in such
order of preference as the Lender in its sole discretion may determine. The
Lender's Rights and Remedies may be exercised without resort or regard to any
other source of satisfaction of the Liabilities.

ARTICLE 7 - NOTICES:

7-1. NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of this Agreement (other than a request for a loan or advance or
other financial accommodation under the Credits) shall be made to the following
addresses, each of which may be changed upon seven (7) days written notice to
all others given by certified mail, return receipt requested:

If to the Lender:

Citizens Bank of Massachusetts
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xx. Xxxxxxx X. Xxxxx
Vice President
Fax : 000 000-0000

WITH A COPY TO:

Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxxx X. Xxxx, Esquire
Fax : 000 000-0000

If to the Borrower:

UFP Technologies, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000

Attention : Xx. Xxxxxx Xxxxxxxx
Fax : 000 000-0000

WITH A COPY TO: Lynch, Brewer, Xxxxxxx & Sands, LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxx X. Xxxxx, Esquire
Fax: :000 000-0000

7-2. NOTICE GIVEN.

(a) Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times being
local to the place of delivery or receipt):

(i) By mail: the sooner of when actually received or
Three (3) days following deposit in the United States mail, postage
prepaid.

(ii) By recognized overnight express delivery: the
Business Day following the day when sent.

(iii) By Hand: If delivered on a Business Day after
9:00 AM and no later than Three (3) hours prior to the close of
customary business hours of the recipient, when delivered.

Otherwise, at the opening of the then next Business Day.

(iv) By Facsimile transmission (which must include a
header on which the party sending such transmission is indicated): If
sent on a Business Day after 9:00 AM and no later than Three (3) hours
prior to the close of customary business hours of the recipient, one
(1) hour after being sent. Otherwise, at the opening of the then next
Business Day.

(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due notice
was given shall each be deemed receipt of the notice sent.

ARTICLE 8 - TERM:

8-1. TERMINATION OF CREDITS.

(a) The Credits shall remain in effect (subject to suspension
as provided in Section 2-3(h) hereof) until the Termination Date.

(b) On the Termination Date, the Borrower shall pay the Lender
(whether or not then due), in immediately available funds, the then entire
balance of the Loan Account; all accrued and unpaid interest thereon; any
payments due on account of the indemnification obligations included in Section
2-8(e);and shall make such arrangements concerning any L/C's then outstanding
are reasonably satisfactory to the Lender.

8-2. PAYMENT S AT MATURITY Until all payments due under this Agreement
have been paid or provided for in accordance with Section 8-1, all provisions of
this Agreement, other than those contained in Article 2 which place an
obligation on the Lender to make any loans or advances or to provide financial
accommodations under the Credits or otherwise, shall remain in full force and
effect until all Liabilities shall have been paid in full.

ARTICLE 9 - GENERAL:

9-1. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrower and the Borrower's representatives, successors, and assigns and shall
enure to the benefit of the Lender and the Lender's successors and assigns. In
the event that the Lender assigns or transfers its rights under this Agreement,
the assignee shall thereupon succeed to and become vested with all rights,
powers, privileges, and duties of the Lender hereunder and the Lender shall
thereupon be discharged and relieved from its duties and obligations hereunder.

9-2. SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.

9-3. AMENDMENTS. COURSE OF DEALING.

(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between the Borrower and the Lender, either
express or implied, concerning the matters included herein and in such other
instruments, any custom, usage, or course of dealings to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course of
dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by the Lender to give notice to the Borrower of the Borrower's having
failed to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the amendment
of the subject Loan Document. No change made by the Lender in the manner by
which Availability is determined shall obligate the Lender to continue to
determine Availability in that manner.

(b) The Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Lender. No consent, modification,
amendment, or waiver of any provision of any Loan Document shall be effective
unless executed in writing by or on behalf of the party to be charged with such
modification, amendment, or waiver (and if such party is the Lender, then by a

duly authorized officer thereof). Any modification, amendment, or waiver
provided by the Lender shall be in reliance upon all representations and
warranties theretofore made to the Lender by or on behalf of the Borrower and
consequently may be rescinded in the event that any of such representations or
warranties was not true and complete in all material respects when given.

9-4. LENDER'S COSTS AND EXPENSES.

(a) The Borrower shall pay on demand all Costs of Collection
and all reasonable expenses of the Lender in connection with the preparation,
execution, and delivery of this Agreement and of any other Loan Documents,
whether now existing or hereafter arising, and all other reasonable expenses
which may be incurred by the Lender in preparing or amending this Agreement and
all other agreements, instruments, and documents related thereto, or otherwise
incurred with respect to the Liabilities, and all costs and expenses of the
Lender which relate to the credit facility contemplated hereby.

(b) The Borrower authorizes the Lender to pay all such fees
and expenses and in the Lender's discretion, to add such reasonable fees and
expenses to the Loan Account.

(c) The undertaking on the part of the Borrower in this
Section 9-4 shall survive payment of the Liabilities and/or any termination,
release, or discharge executed by the Lender in favor of the Borrower, other
than a termination, release, or discharge which makes specific reference to this
Section 9-4.

9-5. COPIES AND FACSIMILES. This Agreement and all documents which
relate thereto, which have been or may be hereinafter furnished the Lender may
be reproduced by the Lender by any photographic, microfilm, xerographic, digital
imaging, or other process, and the Lender may destroy any document so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made in the
regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such
transmission was received.

9-6. MASSACHUSETTS LAW. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of The Commonwealth of Massachusetts.

9-7. CONSENT TO JURISDICTION.

(a) The Borrower agrees that any legal action, proceeding, case,
or controversy against the Borrower with respect to any Loan Document may be
brought in the Superior Court of Suffolk County Massachusetts. By execution and
delivery of this Agreement, the Borrower, for itself and in respect of its
property, accepts, submits, and consents generally and unconditionally, to the
jurisdiction of the aforesaid courts.

(b) The Borrower agrees that any action commenced by the Borrower
asserting any claim or counterclaim arising under or in connection with this
Agreement or any other Loan Document shall be brought solely in the Superior
Court of Suffolk County, sitting in Boston, Massachusetts, and that such Courts
shall have exclusive jurisdiction with respect to any such action.

9-8. INDEMNIFICATION. The Borrower shall indemnify, defend, and hold
the Lender and any employee, officer, or agent of the Lender (each, an
"INDEMNIFIED PERSON") harmless of and from any claim brought or threatened
against any Indemnified Person by the Borrower, or any other Person (as well as
from attorneys' reasonable fees and expenses in connection therewith) on account
of the relationship of the Borrower with the Lender (each of claims which may be
defended, compromised, settled, or pursued by the Indemnified Person with
counsel of the Lender's selection, but at the expense of the Borrower) other
than any claim as to which a final determination is made in a judicial
proceeding (in which the Lender and any other Indemnified Person has had an
opportunity to be heard), which determination includes a specific finding that
the Indemnified Person seeking indemnification had acted in a grossly negligent
manner or in actual bad faith. This indemnification shall survive payment of the
Liabilities and/or any termination, release, or discharge executed by the Lender
in favor of the Borrower, other than a termination, release, or discharge which
makes specific reference to this Section 9-8.

9-9. RULES OF CONSTRUCTION. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:

(a) Words in the singular include the plural and words in the
plural include the singular.

(b) Titles, headings (indicated by being UNDERLINED or shown in
Small Capitals) and any Table of Contents are solely for convenience of
reference; do not constitute a part of the instrument in which included; and do
not affect such instrument's meaning, construction, or effect.

(d) Text which follows the words "including, without limitation"
(or similar words) is illustrative and not limitational.

(e) Except where the context otherwise requires or where the
relevant

subsections are joined by "or", compliance with any Section or provision of any
Loan Document which constitutes a warranty or covenant requires compliance with
all subsections (if any) of that Section or provision. Except where the context
otherwise requires, compliance with any warranty or covenant of any Loan
Document which includes subsections which are joined by "or" may be accomplished
by compliance with any of such subsections.

(f) Text which is shown in ITALICS, shown in BOLD, shown IN ALL
CAPITAL LETTERS, or in any combination of the foregoing, shall be deemed to be
conspicuous.

(g) The words "may not" are prohibitive and not permissive.

(h) The word "or" is not exclusive.

(i) Any reference to a Person's "knowledge" (or words of similar
import) are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent investigation with respect to the subject of such
"knowledge" (whether or not such investigation has actually been undertaken).

(j) Terms which are defined in one section of any Loan Document
are used with such definition throughout the instrument in which so defined.

(k) The symbol "$" refers to United States Dollars.

(l) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.

(m) References to "this Agreement" or to any other Loan Document
is to the subject instrument as amended to the date on which application of such
reference is being made.

(n) Except as otherwise specifically provided, all references to
time are to Boston time.

(o) In the determination of any notice, grace, or other period of
time prescribed or allowed hereunder:

(i) Unless otherwise provided (I) the day of the act, event,
or default from which the designated period of time begins to run shall
not be included and the last day of the period so computed shall be
included unless such last day is not a Business Day, in which event the
last day of the relevant period shall be the then next Business Day and
(II) the period so computed shall end at 5:00 PM on the relevant
Business Day.

(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but
excluding".
(iv) The word "through" means "to and including".

(p) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section 9-9
hereof, PROVIDED, HOWEVER, in the event of any inconsistency between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall govern and control.

9-10. INTENT. It is intended that:

(a) This Agreement take effect as a sealed instrument.

(b) All reasonable costs and expenses incurred by the Lender in
connection with the Lender's relationship(s) with the Borrower shall be borne by
the Borrower.

9-11. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to the Borrower from the Lender or any participant (a
"PARTICIPANT") in the credit facility contemplated hereby or any from any
Affiliate of the Lender or any Participant and any cash, securities, instruments
or other property of the Borrower in the possession of the Lender any
Participant or any such Affiliate, whether for safekeeping or otherwise
(regardless of the reason such Person had received the same) shall at all times
constitute security for all Liabilities and for any and all obligations of the
Borrower to the Lender or any Participant or any such Affiliate and may be
applied or set off against the Liabilities and against such obligations at any
time after the occurrence of an Event of Default.

9-12. MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, the Lender shall never be entitled to contract for, charge, receive,
collect, or apply as interest on any Liability, any amount in excess of the
maximum rate imposed by applicable law. Any payment which is made which, if
treated as interest on a Liability would result in such interest's exceeding
such maximum rate shall be held, to the extent of such excess, as collateral for
the Liabilities.

9-13. WAIVERS.

(a) The Borrower make each of the waivers included in Section
9-13(b), below, knowingly, voluntarily, and intentionally, and understands that
the Lender, in entering into the financial arrangements contemplated hereby and
in providing loans and other financial accommodations to or for the account of
the Borrower as provided herein, whether not or in the future, is relying on
such waivers.

(b) THE BORROWER WAIVES THE FOLLOWING:

(i) Except as otherwise specifically required hereby, notice
of non-payment, demand, presentment, protest and all forms of demand
and notice, both with respect to the Liabilities and its assets.

(ii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE LENDER IS OR BECOMES A PARTY (WHETHER SUCH
CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE LENDER OR IN WHICH
THE LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY

ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN
THE BORROWER OR ANY OTHER PERSON AND THE LENDER (AND THE LENDER
LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR
CONTROVERSY).

(iii) Any claim to consequential, special, or punitive
damages.

UFP TECHNOLOGIES, INC.
("BORROWER")

By_________________________________

Print Name:________________________________

Title:________________________________

MOULDED FIBRE TECHNOLOGY, INC.
("BORROWER")

By_________________________________

Print Name:________________________________

Title:________________________________

CITIZENS BANK OF MASSACHUSETTS
("LENDER")

By_________________________________

Print Name:________________________________

Title:________________________________

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CITIZENS BANK OF MASSACHUSETTS THE LENDER UFP TECHNOLOGIES, INC. MOULDED FIBRE TECHNOLOGY, INC. THE BORROWER

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