EXHIBIT 10.2

                          LOAN AND SECURITY AGREEMENT

     WCMA LOAN AND SECURITY  AGREEMENT NO. 885-07D32 ("Loan Agreement") dated as
of November 25, 2003, between ATLAS TECHNOLOGIES,  INC., a corporation organized
and existing under the laws of the State of Michigan having its principal office
at 201 S. Alloy Dr. Fenton,  MI 48430  ("Customer"),  and MERRILL LYNCH BUSINESS
FINANCIAL SERVICES INC., a corporation  organized and existing under the laws of
the State of Delaware  having its principal  office at 222 North LaSalle Street,
Chicago, IL 60601 ("MLBFS").

     Pursuant to that certain WORKING CAPITAL  MANAGEMENT(r)  ACCOUNT  AGREEMENT
NO. 885-07D32 and the accompanying  Program  Description (as the same may be, or
have been,  amended,  modified or supplemented,  the "WCMA  Agreement")  between
Customer  and  MLBFS'  affiliate,   MERRILL  LYNCH,   PIERCE,   FENNER  &  SMITH
INCORPORATED ("MLPF&S"),  Customer opened, or shall prior to the Activation Date
open, a Working Capital  Management  Account  pursuant to the "WCMA Service" and
the  "WCMA   Program"   described  in  the  WCMA  Agreement  and  any  documents
incorporated therein. The WCMA Agreement is by this reference  incorporated as a
part hereof. In conjunction therewith and as part of the WCMA Program,  Customer
has requested that MLBFS provide, and subject to the terms and conditions herein
set forth MLBFS has agreed to provide, a commercial line of credit for Customer.

     Accordingly,  and in  consideration  of  the  premises  and  of the  mutual
covenants of the parties hereto, Customer and MLBFS hereby agree as follows:

                             ARTICLE I. DEFINITIONS

     1.1 Specific  Terms.  In addition to terms  defined  elsewhere in this Loan
Agreement,  when used  herein  the  following  terms  shall  have the  following
meanings:

     "Activation Date" shall mean the date upon which MLBFS shall cause the WCMA
Line of Credit to be fully  activated  under MLPF&S'  computer system as part of
the WCMA  Program.  "Bankruptcy  Event" shall mean any of the  following:  (i) a
proceeding  under  any  bankruptcy,  reorganization,   arrangement,  insolvency,
readjustment of debt,  liquidation,  winding up or  receivership  law or statute
shall be commenced,  filed or consented to by any Credit Party; or (ii) any such
proceeding shall be filed against any Credit Party and shall not be dismissed or
withdrawn  within sixty (60) days after filing;  or (iii) any Credit Party shall
make a general assignment for the benefit of creditors; or (iv) any Credit Party
shall  generally  fail to pay or admit in writing its inability to pay its debts
as they become due; or (v) any Credit Party shall be  adjudicated  a bankrupt or
insolvent;  or (vi) any Credit  Party shall take  advantage  of any other law or
procedure  for the relief of debtors or shall take any action for the purpose of
or with a view  towards  effecting  any of the  foregoing;  or (vii) a receiver,
trustee, custodian, fiscal agent or similar official for any Credit Party or for
any  substantial  part of any of their  respective  property or assets  shall be
sought by such Credit Party or appointed.

     "Business  Day" shall mean any day other than a Saturday,  Sunday,  federal
holiday or other day on which the New York Stock  Exchange is regularly  closed.
"Business Guarantor" shall mean every Guarantor that is not a natural person.

     "Certificate of Compliance"  shall mean, as applicable,  that duly executed
certificate,  substantially  the same form as Exhibit B  attached  hereto to the
extent such certificate shall be applicable,  of the president,  chief financial
officer or chief executive officer of Customer, certifying as to the matters set
forth in such certificate.

     "Collateral"  shall mean the WCMA  Account,  all Accounts,  Chattel  Paper,
Contract Rights, Inventory,  Equipment,  Fixtures, General Intangibles,  Deposit
Accounts,  Documents,  Instruments,  Investment Property,  Financial Assets, and
Letter-of-Credit  Rights of Customer,  howsoever  arising,  whether now owned or
existing or hereafter acquired or arising,  and wherever located;  together with
all parts  thereof  (including  spare parts),  all  accessories  and  accessions
thereto,  all books and records  (including  computer  records) directly related
thereto,  all proceeds thereof (including,  without limitation,  proceeds in the
form of Accounts,  insurance  proceeds and all rights to payment and performance
under that certain Letter of Credit Number  LC322190300791  issued by HSBC), and
the additional collateral described in Section 3.6 (b) hereof.

     "Commitment Expiration Date" shall mean December 15, 2003.

     "Credit   Party"  and  "Credit   Parties"  shall  mean,   individually   or
collectively,  the Customer,  all Guarantors and all Pledgors.  "Default"  shall
mean either an "Event of Default" as defined in Section 3.5 hereof,  or an event
which with the giving of notice, passage of time, or both, would constitute such
an Event of Default.

     "Default  Rate" shall mean an annual  interest rate equal to the lesser of:
(i) two percentage  points over the Interest Rate; or (ii) the highest  interest
rate  allowed by  applicable  law.  "Event of Loss"  shall  mean the  occurrence
whereby  any  tangible  Collateral  is  damaged  beyond  repair,  lost,  totally
destroyed or confiscated.

     "Excess Interest" shall mean any amount or rate of interest  (including the
Default Rate and, to the extent that they may be deemed to constitute  interest,
any prepayment fees, late charges and other fees and charges)  payable,  charged
or received  in  connection  with any of the Loan  Documents  which  exceeds the
maximum amount or rate of interest  permitted under applicable law. "GAAP" shall
mean the generally accepted accounting principles in effect in the United States
of America from time to time.  "General Funding  Conditions"  shall mean each of
the following conditions to any WCMA Loan by MLBFS hereunder: (i) Customer shall
have  validly  subscribed  to and  continued  to maintain  the WCMA Account with
MLPF&S,  and the WCMA Account shall then be reflected as an active  "commercial"
WCMA  Account  (i.e.,  one with line of credit  capabilities)  on  MLPF&S'  WCMA
computer system;  (ii) no Default or Event of Default shall have occurred and be
continuing or would result from the making of any WCMA Loan  hereunder by MLBFS;
(iii) there shall not have  occurred  and be  continuing  any  material  adverse
change in the business or  financial  condition  of any Credit  Party;  (iv) all
representations  and warranties of all of the Credit Parties herein or in any of
the Loan Documents shall then be true and correct in all material respects;  (v)
MLBFS  shall  have  received  this  Loan  Agreement  and all of the  other  Loan
Documents  duly executed and filed or recorded  where  applicable,  all of which
shall be in form and  substance  satisfactory  to MLBFS;  (vi) MLBFS  shall have
received  evidence  satisfactory to it as to the ownership of the Collateral and
the perfection and priority of MLBFS' liens and security interests  thereon,  as
well as the  ownership  of and the  perfection  and priority of MLBFS' liens and
security  interests  on any  other  collateral  for  the  Obligations  furnished
pursuant to any of the Loan Documents;  (vii) MLBFS shall have received evidence
satisfactory  to it of the  insurance  required  hereby  or by  any of the  Loan
Documents;  and (viii) any additional  conditions specified in the "WCMA Line of
Credit  Approval"  letter  executed  by MLBFS with  respect to the  transactions
contemplated   hereby  shall  have  been  met  to  the  satisfaction  of  MLBFS.
"Guarantor"  shall mean each Person  obligated under a guaranty,  endorsement or
other undertaking by which such Person  guarantees or assumes  responsibility in
any capacity for the payment or performance of any of the Obligations.  "Initial
Maturity Date" shall mean the first date upon which the WCMA Line of Credit will
expire  (subject  to  renewal  in  accordance  with the terms  hereof);  to wit:
December 31, 2004.

     "Individual  Guarantor"  shall mean each Guarantor who is a natural person.
"Interest  Due Date" shall mean the first  Business Day of each  calendar  month
during the term hereof.

     "Interest  Rate" shall mean a variable per annum rate of interest  equal to
the sum of 2.85% plus the One-Month LIBOR.  "One-Month  LIBOR" shall mean, as of
the date of any determination, the interest rate then most recently published in
the "Money Rates"  section of The Wall Street  Journal as the  one-month  London
Interbank  Offered  Rate.  The  Interest  Rate  will  change  as of the  date of
publication  in The Wall Street  Journal of a One-Month  LIBOR that is different
from that  published  on the  preceding  Business  Day, if more than one rate is
published,  then the  highest of such  rates.  In the event that The Wall Street
Journal  shall,  for any reason,  fail or cease to publish the One-Month  LIBOR,
MLBFS will choose a  reasonably  comparable  index or source to use as the basis
for the Interest Rate.

     "Line Fee" shall mean a fee of $40,000.00 payable  periodically by Customer
to  MLBFS in  accordance  with the  provisions  of  Section  2.2  hereof.  "Loan
Documents" shall mean this Loan Agreement, any indenture, any guaranty of any of
the  Obligations  and all other  security  and other  instruments,  assignments,
certificates,  certifications  and agreements of any kind relating to any of the
Obligations,  whether obtained,  authorized,  authenticated,  executed,  sent or
received  concurrently  with or  subsequent  to this  Loan  Agreement,  or which
evidence the creation,  guaranty or  collateralization of any of the Obligations
or the granting or perfection of liens or security interests upon any Collateral
or any  other  collateral  for the  Obligations,  including  any  modifications,
amendments or restatements of the foregoing.

     "Location  of Tangible  Collateral"  shall mean the address of Customer set
forth at the beginning of this Loan  Agreement,  together with any other address
or  addresses  set forth on an exhibit  hereto as being a Location  of  Tangible
Collateral.  "Maturity  Date" shall mean the date of expiration of the WCMA Line
of Credit.

     "Maximum WCMA Line of Credit"  shall mean, as of any date of  determination
thereof,  an amount  equal to the lesser of:  (A)  $4,000,000.00,  or (B) 80% of
Customer's Accounts and Chattel Paper, as shown on its regular books and records
(excluding  Accounts over 90 days old,  Accounts directly or indirectly due from
any person or entity not domiciled in the United States or from any shareholder,
officer or employee of Customer or any  affiliated  entity),  50% of  Customer's
Inventory   as  shown  on  its  regular   books  and  records   (excluding   all
work-in-process  inventory),  and a percentage,  to be determined by MLBFS at it
sole discretion, of Customer's Eligible Foreign Account, as shown on its regular
books and record.  For the purposes hereof,  the term "Eligible Foreign Account"
shall mean that certain Account due to Customer from Yuejin Motor Group Imp. and
Exp.  Co., Ltd,  provided that (i) such Account is credit  enhanced by letter of
credit  #LC322190300791 having a face amount of $667,500 and issued by HSBC Bank
USA (the "LOC");  (ii) MLBFS has a first priority lien and security  interest on
the proceeds of the Letter-of-Credit Rights of such LOC; and (iii) HBSC Bank USA
has  consented in writing to pay to MLBFS all proceeds of such  Letter-of-Credit
Rights of the LOC.  "Obligations"  shall mean all liabilities,  indebtedness and
other obligations of Customer to MLBFS, howsoever created, arising or evidenced,
whether now existing or hereafter arising, whether direct or indirect,  absolute
or contingent,  due or to become due,  primary or secondary or joint or several,
and, without limiting the generality of the foregoing,  shall include principal,
accrued  interest  (including  without  limitation  interest  accruing after the
filing of any  petition in  bankruptcy),  all  advances  made by or on behalf of
MLBFS under the Loan Documents, collection and other costs and expenses incurred
by or on behalf of MLBFS,  whether  incurred  before or after  judgment  and all
present and future  liabilities,  indebtedness and obligations of Customer under
this Loan Agreement,  under that certain Term Loan and Security  Agreement dated
as of November 25, 2003 and that certain Term Loan and Security  Agreement Dated
as of November 25, 2003.

     "Permitted Liens" shall mean with respect to the Collateral:  (i) liens for
current taxes not yet due and payable, other non-consensual liens arising in the
ordinary  course of  business  for sums not due,  and,  if MLBFS'  rights to and
interest in the Collateral are not  materially and adversely  affected  thereby,
any such liens for taxes or other  non-consensual  liens arising in the ordinary
course of business  being  contested in good faith by  appropriate  proceedings;
(ii) liens in favor of MLBFS;  (iii)  liens  which will be  discharged  with the
proceeds of the initial WCMA Loan; and (iv) any other liens expressly  permitted
in writing by MLBFS. "Person" shall mean any natural person and any corporation,
partnership (general,  limited or otherwise),  limited liability company, trust,
association,  joint venture,  governmental body or agency or other entity having
legal  status of any kind.  "Pledgor"  shall  mean each  Person  who at any time
provides  collateral,  or otherwise now or  hereinafter  agrees to grant MLBFS a
security interest in any assets as security for Customer's Obligations.

     "Renewal  Year"  shall mean and refer to the  12-month  period  immediately
following the Initial Maturity Date and each 12-month period  thereafter.  "WCMA
Account"  shall  mean and refer to the  Working  Capital  Management  Account of
Customer  with MLPF&S  identified  as Account No.  885-07D32  and any  successor
Working Capital Management Account of Customer with MLPF&S.

     "WCMA Line of Credit"  shall mean a line of credit  funded by MLBFS through
the WCMA Account.  "WCMA Loan" shall mean each advance made by MLBFS pursuant to
this Loan  Agreement.  "WCMA Loan  Balance"  shall  mean an amount  equal to the
aggregate  unpaid  principal  amount of all WCMA  Loans.  "UCC"  shall  mean the
Uniform Commercial Code of Illinois as in effect in Illinois from time to time.

     1.2 Other Terms.  Except as otherwise defined herein: (i) all terms used in
this Loan  Agreement  which are defined in the UCC shall have the  meanings  set
forth in the UCC,  and (ii)  capitalized  terms used herein which are defined in
the WCMA Agreement (including,  without limitation,  "Money Accounts",  "Minimum
Money Accounts  Balance",  and "WCMA Directed  Reserve  Program") shall have the
meanings set forth in the WCMA Agreement, and (iii) accounting terms not defined
herein shall have the meaning ascribed to them in GAAP.

     1.3 UCC  Filing.  Customer  hereby  authorizes  MLBFS to file a  record  or
records (as defined or otherwise  specified under the UCC),  including,  without
limitation,  financing  statements,  in all  jurisdictions  and with all  filing
offices  as MLBFS  may  determine,  in its sole  discretion,  are  necessary  or
advisable  to  perfect  the  security  interest  granted to MLBFS  herein.  Such
financing statements may describe the Collateral in the same manner as described
herein or may contain an indication or description of collateral  that describes
such  property  in any  other  manner  as  MLBFS  may  determine,  in  its  sole
discretion,  is necessary,  advisable or prudent to ensure the perfection of the
security interest in the Collateral granted to the MLBFS herein.

                      ARTICLE II. THE WCMA LINE OF CREDIT

     2.1 WCMA PROMISSORY  NOTE. FOR VALUE RECEIVED,  Customer hereby promises to
pay to the order of MLBFS, at the times and in the manner set forth in this Loan
Agreement,  or in such other  manner  and at such  place as MLBFS may  hereafter
designate in writing, the following: (a) on the Maturity Date, or if earlier, on
the date of termination of the WCMA Line of Credit,  the WCMA Loan Balance;  (b)
interest at the Interest  Rate (or, if  applicable,  at the Default Rate) on the
outstanding WCMA Loan Balance,  from and including the date on which the initial
WCMA Loan is made until the date of  payment of all WCMA Loans in full;  and (c)
on demand,  all other sums payable  pursuant to this Loan Agreement,  including,
but not limited to, the periodic  Line Fee.  Except as otherwise  expressly  set
forth herein,  Customer hereby waives presentment,  demand for payment,  protest
and notice of protest,  notice of dishonor,  notice of  acceleration,  notice of
intent to accelerate and all other notices and  formalities  in connection  with
this WCMA Promissory Note and this Loan Agreement.

     2.2 WCMA LOANS

     (a) Activation  Date.  Provided that:  (i) the Commitment  Expiration  Date
shall not then have  occurred,  and (ii) Customer  shall have  subscribed to the
WCMA Program and its  subscription  to the WCMA Program shall then be in effect,
the  Activation  Date shall occur on or promptly  after the date,  following the
acceptance of this Loan  Agreement by MLBFS at its office in Chicago,  Illinois,
upon which each of the General Funding  Conditions and the Real Property Funding
Condition  shall have been met or satisfied to the  reasonable  satisfaction  of
MLBFS.  No activation  by MLBFS of the WCMA Line of Credit for a nominal  amount
shall be deemed evidence of the satisfaction of any of the conditions herein set
forth,  or a waiver of any of the terms or conditions  hereof.  Customer  hereby
authorizes  MLBFS to pay out of and  charge to  Customer's  WCMA  Account on the
Activation Date any and all amounts necessary to fully pay off any bank or other
financial  institution  having a lien upon any of the  Collateral  other  than a
Permitted Lien.

     (b) WCMA  Loans.  Subject to the terms and  conditions  hereof,  during the
period from and after the Activation  Date to the first to occur of the Maturity
Date or the date of termination of the WCMA Line of Credit pursuant to the terms
hereof,  and in  addition  to  WCMA  Loans  automatically  made  to pay  accrued
interest,  as hereafter provided:  (i) MLBFS will make WCMA Loans to Customer in
such amounts as Customer may from time to time  request in  accordance  with the
terms hereof,  up to an aggregate  outstanding  amount not to exceed the Maximum
WCMA Line of Credit,  and (ii)  Customer may repay any WCMA Loans in whole or in
part at any time,  and request a  re-borrowing  of amounts repaid on a revolving
basis.  Customer may request such WCMA Loans by use of WCMA Checks, FTS, Visa(r)
charges,  wire  transfers,  or such  other  means of  access to the WCMA Line of
Credit as may be permitted by MLBFS from time to time; it being  understood that
so long as the WCMA Line of Credit  shall be in  effect,  any charge or debit to
the WCMA Account  which but for the WCMA Line of Credit would under the terms of
the WCMA Agreement result in an overdraft, shall be deemed a request by Customer
for a WCMA Loan.

     (c) Conditions of WCMA Loans.  Notwithstanding  the foregoing,  MLBFS shall
not be obligated to make any WCMA Loan,  and may without  notice refuse to honor
any such request by Customer,  if at the time of receipt by MLBFS of  Customer's
request:  (i) the making of such WCMA Loan would cause the Maximum  WCMA Line of
Credit to be exceeded;  or (ii) the Maturity  Date shall have  occurred,  or the
WCMA Line of Credit shall have otherwise been  terminated in accordance with the
terms hereof;  or (iii)  Customer's  subscription to the WCMA Program shall have
been  terminated;  or (iv) an event shall have occurred and be continuing  which
shall have caused any of the General  Funding  Conditions  to not then be met or
satisfied to the reasonable  satisfaction  of MLBFS.  The making by MLBFS of any
WCMA Loan at a time when any one or more of said conditions  shall not have been
met  shall  not in any  event be  construed  as a waiver  of said  condition  or
conditions or of any Default, and shall not prevent MLBFS at any time thereafter
while any  condition  shall not have been met from refusing to honor any request
by Customer for a WCMA Loan.

     (d) Limitation of Liability. MLBFS shall not be responsible, and shall have
no liability  to Customer or any other party,  for any delay or failure of MLBFS
to honor any request of Customer for a WCMA Loan or any other act or omission of
MLBFS,  MLPF&S or any of their  affiliates  due to or resulting  from any system
failure, error or delay in posting or other clerical error, loss of power, fire,
Act of God or other cause beyond the reasonable control of MLBFS,  MLPF&S or any
of their  affiliates  unless directly arising out of the willful wrongful act or
active gross  negligence of MLBFS. In no event shall MLBFS be liable to Customer
or any other party for any incidental or consequential  damages arising from any
act or omission by MLBFS,  MLPF&S or any of their  affiliates in connection with
the WCMA Line of Credit or this Loan Agreement.

     (e) Interest.

          (i) An amount equal to accrued interest on the daily WCMA Loan Balance
     shall be payable by Customer monthly on each Interest Due Date,  commencing
     with the  first  Interest  Due  Date  after  the  Activation  Date.  Unless
     otherwise  hereafter  directed in writing by MLBFS on or after the first to
     occur of the Maturity Date or the date of  termination  of the WCMA Line of
     Credit  pursuant to the terms hereof,  such interest will be  automatically
     charged to the WCMA Account on the  applicable  Interest Due Date,  and, to
     the extent not paid with free credit  balances or the  proceeds of sales of
     any Money Accounts then in the WCMA Account, as hereafter provided, paid by
     a WCMA Loan and  added to the WCMA  Loan  Balance.  All  interest  shall be
     computed  for the  actual  number  of days  elapsed  on the basis of a year
     consisting of 360 days.

          (ii) Upon the  occurrence  and during the  continuance of any Default,
     but without limiting the rights and remedies  otherwise  available to MLBFS
     hereunder  or waiving  such  Default,  the  interest  payable  by  Customer
     hereunder shall at the option of MLBFS accrue and be payable at the Default
     Rate. The Default Rate,  once  implemented,  shall continue to apply to the
     Obligations  under this Loan Agreement and be payable by Customer until the
     date MLBFS gives  written  notice  that such  Default has been cured to the
     satisfaction of MLBFS.

          (iii) Notwithstanding any provision to the contrary in any of the Loan
     Documents,  no provision  of any of the Loan  Documents  shall  require the
     payment or permit the collection of Excess Interest. If any Excess Interest
     is provided  for, or is  adjudicated  as being  provided for, in any of the
     Loan Documents, then: (A) Customer shall not be obligated to pay any Excess
     Interest;  and (B)  any  Excess  Interest  that  MLBFS  may  have  received
     hereunder or under any of the Loan Documents shall, at the option of MLBFS,
     be either  applied as a credit against the then unpaid WCMA Loan Balance or
     refunded to the payor thereof.

     (f)  Payments.  All payments  required or permitted to be made  pursuant to
this Loan Agreement  shall be made in lawful money of the United States.  Unless
otherwise directed by MLBFS, payments on account of the WCMA Loan Balance may be
made by the delivery of checks (other than WCMA  Checks),  or by means of FTS or
wire transfer of funds (other than funds from the WCMA Line of Credit) to MLPF&S
for credit to  Customer's  WCMA  Account.  Notwithstanding  anything in the WCMA
Agreement to the contrary,  Customer hereby  irrevocably  authorizes and directs
MLPF&S to apply  available  free  credit  balances  in the WCMA  Account  to the
repayment of the WCMA Loan Balance prior to  application  for any other purpose.
Payments to MLBFS from funds in the WCMA  Account  shall be deemed to be made by
Customer  upon the same  basis  and  schedule  as funds are made  available  for
investment  in the  Money  Accounts  in  accordance  with the  terms of the WCMA
Agreement.  All funds  received by MLBFS from MLPF&S  pursuant to the  aforesaid
authorization  shall be applied by MLBFS to repayment of the WCMA Loan  Balance.
The acceptance by or on behalf of MLBFS of a check or other payment for a lesser
amount  than  shall be due  from  Customer,  regardless  of any  endorsement  or
statement  thereon or transmitted  therewith,  shall not be deemed an accord and
satisfaction  or anything  other than a payment on account,  and MLBFS or anyone
acting on  behalf  of MLBFS  may  accept  such  check or other  payment  without
prejudice  to the  rights of MLBFS to recover  the  balance  actually  due or to
pursue any other remedy under this Loan  Agreement  or  applicable  law for such
balance.  All checks  accepted by or on behalf of MLBFS in  connection  with the
WCMA Line of Credit are subject to final collection.

     (g) Irrevocable  Instructions to MLPF&S. In order to minimize the WCMA Loan
Balance, Customer hereby irrevocably authorizes and directs MLPF&S, effective on
the  Activation  Date and  continuing  thereafter so long as this Loan Agreement
shall be in effect:  (i) to immediately  and prior to application  for any other
purpose  pay to MLBFS to the extent of any WCMA Loan  Balance  or other  amounts
payable by Customer  hereunder all available  free credit  balances from time to
time in the WCMA Account;  and (ii) if such available  free credit  balances are
insufficient to pay the WCMA Loan Balance and such other amounts,  and there are
in the WCMA Account at any time any  investments in Money  Accounts  (other than
any investments  constituting  any Minimum Money Accounts Balance under the WCMA
Directed Reserve Program),  to immediately liquidate such investments and pay to
MLBFS to the  extent  of any  WCMA  Loan  Balance  and such  other  amounts  the
available proceeds from the liquidation of any such Money Accounts.

     (h) Late  Charge.  Any  payment or deposit  required to be made by Customer
pursuant  to the Loan  Documents  not paid or made  within  ten (10) days of the
applicable  due date shall be subject to a late charge in an amount equal to the
lesser of: (a) 5% of the overdue amount,  or (b) the maximum amount permitted by
applicable law. Such late charge shall be payable on demand, or, without demand,
may in the sole  discretion of MLBFS be paid by a Subsequent WCMA Loan and added
to the WCMA Loan  Balance in the same  manner as  provided  herein  for  accrued
interest with respect to the WCMA Line of Credit.

     (i)  Statements.  MLPF&S will include in each  monthly  statement it issues
under the WCMA Program  information with respect to WCMA Loans and the WCMA Loan
Balance.  Any questions that Customer may have with respect to such  information
should be directed to MLBFS;  and any questions with respect to any other matter
in such  statements or about or affecting the WCMA Program should be directed to
MLPF&S.

     (j) Use of WCMA Loan Proceeds.  The proceeds of each WCMA Loan initiated by
Customer  shall be used by Customer  solely for working  capital in the ordinary
course of its business,  or, with the prior written consent of MLBFS,  for other
lawful business purposes of Customer not prohibited hereby. Customer agrees that
under no  circumstances  will the  proceeds  of any WCMA  Loan be used:  (i) for
personal,  family or  household  purposes of any person  whatsoever,  or (ii) to
purchase,  carry or trade in  securities,  or repay debt  incurred to  purchase,
carry or trade in securities, whether in or in connection with the WCMA Account,
another  account of Customer  with MLPF&S or an account of Customer at any other
broker  or dealer in  securities,  or (iii)  unless  otherwise  consented  to in
writing by MLBFS, to pay any amount to Merrill Lynch and Co., Inc. or any of its
subsidiaries,  other than Merrill Lynch Bank USA, Merrill Lynch Bank & Trust Co.
or any  subsidiary of either of them  (including  MLBFS and Merrill Lynch Credit
Corporation).

     (k) Renewal at Option of MLBFS;  Right of Customer to Terminate.  MLBFS may
at any time, in its sole discretion and at its sole option,  renew the WCMA Line
of Credit for one or more Renewal  Years or extend the Maturity  Date;  it being
understood, however, that no such renewal or extension shall be effective unless
set forth in a writing executed by a duly authorized representative of MLBFS and
delivered to Customer.  Unless any such renewal or extension is accompanied by a
proposed  change  in the  terms  of the  WCMA  Line of  Credit  (other  than the
extension  of the  Maturity  Date),  no  Customer  approval  shall be  required.
Customer shall,  however, have the right to terminate the WCMA Line of Credit at
any time upon written notice to MLBFS.  Concurrently  with any such termination,
Customer  shall  pay to  MLBFS  the  entire  WCMA  Loan  Balance  and all  other
Obligations.

          (l) Line Fees.

               (i) In  consideration of the extension of the WCMA Line of Credit
          by MLBFS to Customer during the period from the Activation Date to the
          Initial Maturity Date,  Customer has paid or shall pay the Line Fee to
          MLBFS.  If the  Line Fee has not  heretofore  been  paid by  Customer,
          Customer hereby  authorizes  MLBFS, at its option, to either cause the
          Line  Fee to be paid  on the  Activation  Date  with a WCMA  Loan,  or
          invoice  Customer for such Line Fee (in which event Customer shall pay
          said fee within 5 Business  Days after  receipt of such  invoice).  No
          delay in the Activation Date, howsoever caused, shall entitle Customer
          to any rebate or reduction in the Line Fee or to any  extension of the
          Initial Maturity Date.

               (ii) Customer shall pay to MLBFS an additional  Line Fee for each
          Renewal  Year,  or an extension  fee for any extension of the Maturity
          Date (each  extension fee shall be equal to the pro rata amount of the
          Line Fee  corresponding  to the length of the  extension  period).  In
          connection therewith, Customer hereby authorizes MLBFS, at its option,
          to either cause each such fee to be paid with a WCMA Loan on or at any
          time after the first  Business  Day of such  Renewal Year or extension
          period, as applicable,  or invoiced to Customer at such time (in which
          event  Customer  shall pay such Line Fee within 5 Business  Days after
          receipt of such  invoice).  Each Line Fee and  extension  fee shall be
          deemed fully  earned by MLBFS on the date payable by Customer,  and no
          termination  of the  WCMA  Line of  Credit,  howsoever  caused,  shall
          entitle  Customer  to any rebate or refund of any portion of such fee;
          provided,  however,  that if Customer shall terminate the WCMA Line of
          Credit not later than 5 Business Days after the receipt by Customer of
          notice  from MLBFS of a renewal  of the WCMA Line of Credit,  Customer
          shall be entitled to a refund of any Line Fee charged by MLBFS for the
          ensuing Renewal Year.

                         ARTICLE III. GENERAL PROVISIONS

     3.1 REPRESENTATIONS AND WARRANTIES

     Customer represents and warrants to MLBFS that:

     (a) Organization and Existence.  Customer is a corporation,  duly organized
and validly  existing in good  standing  under the laws of the State of Michigan
and is qualified  to do business and in good  standing in each other state where
the nature of its business or the property  owned by it make such  qualification
necessary;  and, where  applicable,  each Business  Guarantor is duly organized,
validly  existing  and in good  standing  under  the  laws of the  state  of its
formation  and is qualified  to do business  and in good  standing in each other
state  where the nature of its  business or the  property  owned by it make such
qualification  necessary. (b) Execution,  Delivery and Performance.  Each Credit
Party has the  requisite  power and authority to enter into and perform the Loan
Documents. The Customer holds all necessary permits,  licenses,  certificates of
occupancy and other governmental  authorizations and approvals required in order
to own  and  operate  the  Customer's  business.  The  execution,  delivery  and
performance  by Customer of this Loan  Agreement and by each of the other Credit
Parties of such of the other  Loan  Documents  to which it is a party:  (i) have
been duly authorized by all requisite  action,  (ii) do not and will not violate
or conflict with any law, order or other governmental requirement, or any of the
agreements,  instruments  or documents  which formed or govern any of the Credit
Parties,  and (iii) do not and will not breach or violate any of the  provisions
of, and will not result in a default by any of the  Credit  Parties  under,  any
other  agreement,  instrument  or document to which it is a party or is subject.
(c) Notices and Approvals.  Except as may have been given or obtained, no notice
to or consent or approval of any  governmental  body or authority or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection with the execution, delivery or performance by any Credit Party of
such of this Loan Agreement and the Loan  Documents to which it is a party.  (d)
Enforceability.  The Loan Documents to which any Credit Party is a party are the
respective  legal,   valid  and  binding   obligations  of  such  Credit  Party,
enforceable  against it or them,  as the case may be, in  accordance  with their
respective  terms,  except as  enforceability  may be limited by bankruptcy  and
other  similar laws  affecting  the rights of creditors  generally or by general
principles of equity.  (e)  Collateral.  Except for  priorities  afforded to any
Permitted  Liens:  (i) Customer has good and marketable title to the Collateral,
(ii) none of the  Collateral  is subject to any lien,  encumbrance  or  security
interest,  and (iii) upon the filing of all Uniform  Commercial  Code  financing
statements authenticated or otherwise authorized by Customer with respect to the
Collateral in the appropriate jurisdiction(s) and/or the completion of any other
action  required by applicable law to perfect its liens and security  interests,
MLBFS will have valid and perfected first liens and security  interests upon all
of the Collateral.  (f) Financial  Statements.  Except as expressly set forth in
Customer's  or any Business  Guarantor's  financial  statements,  all  financial
statements of Customer and each Business Guarantor  furnished to MLBFS have been
prepared  in  conformity   with  generally   accepted   accounting   principles,
consistently applied, are true and correct in all material respects,  and fairly
present the  financial  condition  of it as at such dates and the results of its
operations for the periods then ended (subject, in the case of interim unaudited
financial statements, to normal year-end adjustments); and since the most recent
date covered by such financial  statements,  there has been no material  adverse
change in any such financial  condition or operation.  All financial  statements
furnished to MLBFS of any Guarantor other than a Business Guarantor are true and
correct in all material respects and fairly represent such Guarantor's financial
condition as of the date of such financial statements, and since the most recent
date of such financial statements,  there has been no material adverse change in
such  financial  condition.  (g)  Litigation;   Compliance  With  All  Laws.  No
litigation, arbitration,  administrative or governmental proceedings are pending
or, to the knowledge of Customer,  threatened  against any Credit  Party,  which
would, if adversely determined,  materially and adversely affect (i) such Credit
Party's interest in the Collateral or the liens and security  interests of MLBFS
hereunder or under any of the Loan Documents, or (ii) the financial condition of
any Credit Party or its continued operations. Each Credit Party is in compliance
in all material respects with all laws, regulations,  requirements and approvals
applicable to such Credit Party. (h) Tax Returns.  All federal,  state and local
tax  returns,  reports and  statements  required to be filed by any Credit Party
have been filed with the appropriate governmental agencies and all taxes due and
payable by any Credit Party have been timely paid (except to the extent that any
such failure to file or pay will not materially and adversely  affect (i) either
the liens and  security  interests  of MLBFS  hereunder or under any of the Loan
Documents,  (ii) the  financial  condition  of any  Credit  Party,  or (iii) its
continued  operations).  (i) Collateral Location. All of the tangible Collateral
is located at a Location of Tangible Collateral. (j) No Default. No "Default" or
"Event of Default"  (each as defined in this Loan  Agreement or any of the other
Loan Documents) has occurred and is continuing.  (k) No Outside  Broker.  Except
for employees of MLBFS,  MLPF&S or one of their affiliates,  Customer has not in
connection  with the  transactions  contemplated  hereby  directly or indirectly
engaged or dealt  with,  and was not  introduced  or  referred  to MLBFS by, any
broker  or  other  loan  arranger.  Each of the  foregoing  representations  and
warranties:  (i) has been and will be relied upon as an  inducement  to MLBFS to
provide  the WCMA Line of  Credit,  and (ii) is  continuing  and shall be deemed
remade by Customer concurrently with each request for a WCMA Loan.

     3.2 FINANCIAL AND OTHER INFORMATION

     (a)  Customer  shall  furnish or cause to be  furnished to MLBFS during the
term  of  this  Loan  Agreement  all  of the  following:  (i)  Annual  Financial
Statements.  Within 120 days after the close of each fiscal year of Customer,  a
copy of the annual  audited  financial  statements  of  Customer,  including  in
reasonable  detail, a balance sheet and statement of retained earnings as at the
close of such  fiscal year and  statements  of profit and loss and cash flow for
such fiscal year; (ii) Certificate of Compliance. Within 45 days after the close
of each fiscal quarter of Customer,  a Certificate of Compliance,  duly executed
by an authorized officer of Customer,  in the form of Exhibit B attached hereto,
or such  other form as  reasonably  required  by MLBFS from time to time;  (iii)
Annual Collateral Audit.  Within 120 days after the close of each fiscal year of
Customer,  receipt and  satisfactory  review of a collateral  audit of controls,
accounts receivable and inventory,  prepared by a third party firm acceptable to
MLBFS.  The costs associated with the audit will be the sole  responsibility  of
Customer.  (iv) Interim Financial Statements.  Within 45 days after the close of
each fiscal quarter of Customer,  a copy of the interim financial  statements of
Customer for such fiscal quarter  (including in reasonable detail both a balance
sheet as of the close of such fiscal  period,  and  statement of profit and loss
for the  applicable  fiscal  period);  (v) A/R Agings.  Within 15 days after the
close of each fiscal month of Customer,  a copy of the Accounts Receivable Aging
of Customer as of the end of such fiscal month; (vi) Inventory  Reports.  Within
15 days  after  the  close  of each  fiscal  month  of  Customer,  a copy of the
Inventory  Report (as and to the extent  applicable,  breaking out  Inventory by
location,  and  separately  reporting any work in process) of Customer as of the
end of such fiscal month; (vii) Borrowing Base Certificate. Within 15 days after
the close of each fiscal month of Customer,  a Borrowing Base Certificate,  duly
executed  by an  authorized  officer of  Customer,  in the form of  Exhibit  B-1
attached hereto, or such other form as reasonably required by MLBFS from time to
time;  (viii) SEC Reports.  Customer  shall  furnish or cause to be furnished to
MLBFS not later than 10 days after the date of filing  with the  Securities  and
Exchange Commission ("SEC"), a copy of each 10-K, 10-Q and other report required
to be filed with the SEC during the term hereof by each Business Guarantor; (ix)
Paid Tax Bills.  A copy of each real estate tax bill on or issued in  connection
with the Real Property,  together with evidence of payment of such tax bill; and
(x) Other  Information.  Such other  information  as MLBFS may from time to time
reasonably request relating to Customer, any Credit Party or the Collateral.

     (b) General  Agreements  With  Respect to Financial  Information.  Customer
agrees that  except as  otherwise  specified  herein or  otherwise  agreed to in
writing by MLBFS: (i) all annual financial  statements  required to be furnished
by  Customer  to  MLBFS  hereunder  will  be  prepared  by  either  the  current
independent accountants for Customer or other independent accountants reasonably
acceptable to MLBFS,  and (ii) all other  financial  information  required to be
furnished  by Customer to MLBFS  hereunder  will be  certified as correct in all
material  respects by the party who has prepared such  information,  and, in the
case of internally prepared information with respect to Customer or any Business
Guarantor, certified as correct by their respective chief financial officer.

     3.3 OTHER COVENANTS

     Customer  further  covenants  and  agrees  during  the  term of  this  Loan
Agreement that:

     (a)  Financial  Records;  Inspection.  Each  Credit  Party  (other than any
Individual  Guarantor)  will:  (i) maintain at its  principal  place of business
complete and  accurate  books and  records,  and  maintain all of its  financial
records  in  a  manner  consistent  with  the  financial  statements  heretofore
furnished  to MLBFS,  or  prepared  on such other  basis as may be  approved  in
writing by MLBFS; and (ii) permit MLBFS or its duly authorized  representatives,
upon reasonable  notice and at reasonable times, to inspect its properties (both
real and personal), operations, books and records.

     (b) Taxes. Each Credit Party will pay when due all of its respective taxes,
assessments and other governmental charges,  howsoever designated, and all other
liabilities and obligations,  except to the extent that any such failure to file
or pay will not  materially  and adversely  affect either the liens and security
interests of MLBFS hereunder or under any of the Loan  Documents,  the financial
condition of any Credit Party or its continued operations.

     (c) Compliance With Laws and  Agreements.  No Credit Party will violate (i)
any law, regulation or other governmental requirement,  any judgment or order of
any court or governmental agency or authority; (ii) any agreement, instrument or
document  which is material to its  operations or to the operation or use of any
Collateral,  in each case as contemplated  by the Loan  Documents;  or (iii) any
agreement,  instrument  or  document  to  which  it is a party or by which it is
bound,  if any such  violation will  materially and adversely  affect either the
liens  and  security  interests  of MLBFS  hereunder  or  under  any of the Loan
Documents,  the  financial  condition  of any  Credit  Party,  or its  continued
operations.

     (d) No Use of  Merrill  Lynch  Name.  No  Credit  Party  will  directly  or
indirectly publish,  disclose or otherwise use in any advertising or promotional
material,  or press  release or  interview,  the name,  logo or any trademark of
MLBFS, MLPF&S, Merrill Lynch and Co., Incorporated or any of their affiliates.

     (e)  Notification  By Customer.  Customer  shall  provide MLBFS with prompt
written  notification  of: (i) any Default;  (ii) any material adverse change in
the business,  financial  condition or operations of any Credit Party; (iii) any
information  which  indicates that any financial  statements of any Credit Party
fail in any  material  respect to present  fairly the  financial  condition  and
results of  operations  purported to be presented in such  statements;  (iv) any
threatened or pending  litigation  involving any Credit Party;  (v) any casualty
loss,  attachment,  lien,  judicial  process,  encumbrance or claim affecting or
involving  $25,000 or more of any Collateral;  and (vi) any change in Customer's
outside accountants. Each notification by Customer pursuant hereto shall specify
the  event  or  information  causing  such  notification,  and,  to  the  extent
applicable,  shall specify the steps being taken to rectify or remedy such event
or information.

     (f) Entity  Organization.  Each  Credit  Party  which is an entity will (i)
remain  (A)  validly  existing  and  in  good  standing  in  the  state  of  its
organization and (B) qualified to do business and in good standing in each other
state  where the nature of its  business or the  property  owned by it make such
qualification  necessary,  and (ii) maintain all governmental permits,  licenses
and  authorizations.  Customer  shall  give  MLBFS not less  than 30 days  prior
written notice of any change in name  (including  any fictitious  name) or chief
executive office, place of business,  or as applicable,  the principal residence
of any Credit Party.

(g)  Merger,  Change in  Business.  Except upon the prior
written consent of MLBFS Customer shall not cause or permit any Credit Party to:
(i) be a party to any merger or  consolidation  with,  or purchase or  otherwise
acquire  all or  substantially  all of the  assets  of, or any  material  stock,
partnership,  joint  venture or other equity  interest in, any Person,  or sell,
transfer or lease all or any substantial part of its assets;  (ii) engage in any
material business substantially  different from its business in effect as of the
date of  application by Customer for credit from MLBFS,  or cease  operating any
such material  business;  or (iii) cause or permit any other Person to assume or
succeed to any material  business or operations of such Credit Party.

     (h) Fixed Charge Coverage.  Customer's  "Fixed Charge Coverage  Ratio",  as
defined and calculated as set forth in Exhibit B attached  hereto,  shall at all
times exceed 1.50 to 1.

     (i) Minimum  Tangible Net Worth.  As of December  31, 2003,  the sum of (x)
Customer's  aggregate  subordinated debt and (y) Customer's "Tangible Net Worth"
("Minimum  Tangible Net Worth")  shall exceed  $2,400,000.  As of June 30, 2004,
Customer's  Minimum  Tangible  Net Worth  shall not be less than  $2,650,000.00.
After June 30, 2004,  and as and as of the close of each fiscal year of Customer
thereafter,  Customer's  Minimum  Tangible  Net  Worth  shall  not be less  than
$250,000  higher  than the  Minimum  Tangible  Net  Worth of  Customer  required
hereunder as of the close of the immediately  preceding  fiscal year of Customer
(so that as of December 31, 2004,  such Minimum  Tangible Net Worth shall be not
less than  $2,900,000.00,  as of December  31, 2005,  such Minimum  Tangible Net
Worth shall be not less than  $3,150,000.00,  etc.).  For the  purposes  hereof,
subordinated  debt shall mean any debt of Obligors for  borrowed  money which is
subordinated  in right of payment and is payable on terms and conditions  junior
to MLBFS.  The term  "Tangible Net Worth" shall mean Obligors net worth as shown
on Obligors' regular combined financial  statements  prepared in accordance with
GAAP, but excluding an amount equal to: (i) any Intangible  Assets, and (ii) any
amounts now or hereafter  directly or indirectly  owing to Obligors by officers,
shareholders or affiliates of Obligors. "Intangible Assets" shall mean the total
amount of goodwill,  patents,  trade names, trade or service marks,  copyrights,
experimental  expense,  organization  expense,  unamortized  debt  discount  and
expense,  the  excess of cost of shares  acquired  over  book  value of  related
assets, and such other assets as are properly  classified as "intangible assets"
of the Obligors determined in accordance with GAAP.

     (j)  Total  Liabilities  To  Tangible  Net  Worth  and  Subordinated  Debt.
Customer's  "Leverage  Ratio" shall not at any time exceed 5.75 to 1. As of June
30, 2004,  Customer's  Leverage Ratio shall not exceed 4.00 to 1. As of December
31, 2004 and anytime thereafter, Customer's Leverage Ratio shall not exceed 3.50
to 1.  For  purposes  hereof,  "Leverage  Ratio"  shall  mean  the  ratio of (i)
Customer's total liabilities less any subordinated debt of Customer, to (ii) the
sum of Customer's Tangible Net Worth plus any subordinated debt of Customer. The
term "Tangible Net Worth" shall mean Customer's net worth as shown on Customer's
regular financial  statements prepared in accordance with GAAP, but excluding an
amount  equal  to:  (i) any  Intangible  Assets,  and  (ii) any  amounts  now or
hereafter directly or indirectly owing to Customer by officers,  shareholders or
affiliates  of  Customer.  "Intangible  Assets"  shall mean the total  amount of
goodwill, patents, trade names, trade or service marks, copyrights, experimental
expense, organization expense, unamortized debt discount and expense, the excess
of cost of shares  acquired  over book value of related  assets,  and such other
assets  as are  properly  classified  as  "intangible  assets"  of the  Customer
determined in  accordance  with GAAP.  Subordinated  debt shall mean any debt of
Customer for  borrowed  money which is  subordinated  in right of payment and is
payable  on terms  and  conditions  junior to  MLBFS,  and in a form and  manner
acceptable to MLBFS.

     (k) No  Loans/Guarantees  To  Affiliates.  Except  upon the  prior  written
consent of MLBFS,  no Credit Party shall directly or indirectly  lend any moneys
to, or  guaranty  the debt of, any  affiliated  person or entity  other than the
existing loans and guarantees  existing as of the date hereof that are consented
to by MLBFS and reflected on Exhibit A attached hereto.

     (l) No Loans/Transfers Of Assets.  Except upon the prior written consent of
MLBFS,  Customer shall not directly or indirectly  lend any moneys,  or transfer
any assets or  property,  to any  unaffiliated  person or entity other than arms
length transfers for fair consideration in the ordinary course of business.

     (m)  Productivity  Technologies  Corporation  Management Fee  Forebearance.
Until further notice and only upon the prior written consent of MLBFS,  Customer
shall suspend monthly accrual and payment of any management fees to Productivity
Technologies Corporation.

     (n) No  Change  In  Management.  Customer  will  maintain  experienced  and
competent professional senior management,  including Samuel N. Seidman and Jesse
A. Levine.

     (o)  Borrowed  Debt.  Except upon the prior  written  consent of MLBFS,  no
Credit Party shall  directly or indirectly  incur or permit to exist any debt of
any  Credit  Party  for  borrowed  money or the lease  under a capital  lease or
deferred  purchase  price of real or personal  property  other than: (i) debt to
MLBFS and (ii) debt  existing  as of the date hereof  that are  consented  to by
MLBFS and reflected on Exhibit A attached hereto.

(p)  Distributions  to  Shareholders.
Except upon the prior written consent of MLBFS, Customer shall not in any fiscal
year directly or indirectly pay any dividends or make any other distributions on
account  of  its  stock  to its  shareholders.

     3.4 COLLATERAL

     (a)  Pledge  of  Collateral.  To  secure  payment  and  performance  of the
Obligations, Customer hereby pledges, assigns, transfers and sets over to MLBFS,
and grants to MLBFS first liens and  security  interests  in and upon all of the
Collateral, subject only to priorities afforded to Permitted Liens.

     (b) Liens.  Except upon the prior written consent of MLBFS,  Customer shall
not create or permit to exist any lien, encumbrance or security interest upon or
with  respect  to any  Collateral  now owned or  hereafter  acquired  other than
Permitted Liens.

     (c)  Performance  of  Obligations.   Customer  shall  perform  all  of  its
obligations  owing on account of or with  respect  to the  Collateral;  it being
understood that nothing herein,  and no action or inaction by MLBFS,  under this
Loan  Agreement or  otherwise,  shall be deemed an assumption by MLBFS of any of
Customer's said obligations.

     (d) Sales and Collections.  Customer shall not sell,  transfer or otherwise
dispose of any Collateral, except that so long as no Event of Default shall have
occurred and be continuing, Customer may in the ordinary course of its business:
(i) sell any Inventory  normally held by Customer for sale,  (ii) use or consume
any materials and supplies normally held by Customer for use or consumption, and
(iii) collect all of its Accounts.

     (e) Account  Schedules.  Upon the request of MLBFS,  which may be made from
time to time,  Customer  shall  deliver  to  MLBFS,  in  addition  to the  other
information required hereunder, a schedule identifying, for each Account and all
Chattel  Paper  subject to MLBFS'  security  interests  hereunder,  each account
debtor by name and address and  amount,  invoice or contract  number and date of
each  invoice or  contract.  Customer  shall  furnish  to MLBFS such  additional
information with respect to the Collateral,  and amounts received by Customer as
proceeds  of any of the  Collateral,  as MLBFS may from time to time  reasonably
request.

     (f) Alterations and  Maintenance.  Except upon the prior written consent of
MLBFS,  Customer  shall  not make or  permit  any  material  alterations  to any
tangible  Collateral which might materially reduce or impair its market value or
utility.  Customer  shall at all times (i) keep the tangible  Collateral in good
condition  and  repair,  reasonable  wear and tear  excepted,  (ii)  protect the
Collateral against loss, damage or destruction and (iii) pay or cause to be paid
all obligations  arising from the repair and maintenance of such Collateral,  as
well as all  obligations  with  respect to any  Location of Tangible  Collateral
(e.g., all obligations under any lease, mortgage or bailment agreement),  except
for  any  such  obligations  being  contested  by  Customer  in  good  faith  by
appropriate proceedings.

     (g)  Location.  Except for  movements  required in the  ordinary  course of
Customer's business,  Customer shall give MLBFS 30 days' prior written notice of
the placing at or movement of any tangible Collateral to any location other than
a Location of Tangible  Collateral.  In no event shall  Customer cause or permit
any material  tangible  Collateral to be removed from the United States  without
the express  prior  written  consent of MLBFS.  Customer will keep its books and
records at its principal office address specified in the first paragraph of this
Loan Agreement. Customer will not change the address where books and records are
kept, or change its name or taxpayer  identification number. Customer will place
a legend  acceptable  to MLBFS on all Chattel  Paper that is  Collateral  in the
possession or control of Customer from time to time  indicating that MLBFS has a
security interest therein.

     (h) Insurance. Customer shall insure all of the tangible Collateral under a
policy or policies of physical damage insurance for the full  replacement  value
thereof against such perils as MLBFS shall reasonably require and also providing
that losses will be payable to MLBFS as its interests  may appear  pursuant to a
lender's or mortgagee's  long form loss payable  endorsement and containing such
other provisions as may be reasonably required by MLBFS.  Customer shall further
provide  and  maintain a policy or  policies  of  commercial  general  liability
insurance  naming  MLBFS  as an  additional  party  insured.  Customer  and each
Business Guarantor shall maintain such other insurance as may be required by law
or is  customarily  maintained  by companies in a similar  business or otherwise
reasonably  required by MLBFS.  All such  insurance  policies shall provide that
MLBFS  will  receive  not  less  than  10  days  prior  written  notice  of  any
cancellation,  and shall  otherwise be in form and amount and with an insurer or
insurers  reasonably  acceptable to MLBFS.  Customer  shall furnish MLBFS with a
copy or certificate of each such policy or policies and, prior to any expiration
or cancellation, each renewal or replacement thereof.

     (i)  Event of Loss.  Customer  shall at its  expense  promptly  repair  all
repairable  damage to any  tangible  Collateral.  In the event  that there is an
Event of Loss and the  affected  Collateral  had a value  prior to such Event of
Loss of $25,000.00 or more, then, on or before the first to occur of (i) 90 days
after the  occurrence  of such Event of Loss, or (ii) 10 Business Days after the
date on which either  Customer or MLBFS shall  receive any proceeds of insurance
on  account of such  Event of Loss,  or any  underwriter  of  insurance  on such
Collateral shall advise either Customer or MLBFS that it disclaims  liability in
respect of such Event of Loss,  Customer  shall,  at Customer's  option,  either
replace the Collateral subject to such Event of Loss with comparable  Collateral
free of all liens other than  Permitted  Liens (in which event Customer shall be
entitled to utilize the  proceeds of  insurance on account of such Event of Loss
for such  purpose,  and may retain any excess  proceeds of such  insurance),  or
permanently  prepay the  Obligations by an amount equal to the actual cash value
of such Collateral as determined by either the insurance company's payment (plus
any  applicable  deductible)  or, in absence of insurance  company  payment,  as
reasonably  determined  by  MLBFS;  it being  further  understood  that any such
permanent prepayment shall cause an immediate permanent reduction in the Maximum
WCMA Line of Credit in the  amount of such  prepayment  and shall not reduce the
amount of any future  reductions  in the Maximum WCMA Line of Credit that may be
required hereunder.  Notwithstanding the foregoing, if at the time of occurrence
of such  Event  of Loss or any time  thereafter  prior  to  replacement  or line
reduction,  as  aforesaid,  an Event  of  Default  shall  have  occurred  and be
continuing hereunder, then MLBFS may at its sole option, exercisable at any time
while such Event of Default  shall be  continuing,  require  Customer  to either
replace such  Collateral or prepay the  Obligations  and reduce the Maximum WCMA
Line of Credit, as aforesaid.

     (j) Notice of Certain Events. Customer shall give MLBFS immediate notice of
any  attachment,  lien,  judicial  process,  encumbrance  or claim  affecting or
involving $25,000.00 or more of the Collateral.

     (k)  Indemnification.  Customer  shall  indemnify,  defend  and save  MLBFS
harmless  from and against any and all claims,  liabilities,  losses,  costs and
expenses  (including,   without  limitation,   reasonable  attorneys'  fees  and
expenses) of any nature  whatsoever which may be asserted against or incurred by
MLBFS  arising  out  of or in  any  manner  occasioned  by  (i)  the  ownership,
collection,  possession, use or operation of any Collateral, or (ii) any failure
by Customer to perform any of its  obligations  hereunder;  excluding,  however,
from said indemnity any such claims,  liabilities,  etc. arising directly out of
the willful  wrongful act or active gross  negligence of MLBFS.  This  indemnity
shall survive the  expiration or  termination  of this Loan  Agreement as to all
matters arising or accruing prior to such expiration or termination.

     3.5 EVENTS OF DEFAULT The  occurrence of any of the following  events shall
constitute an "Event of Default" under this Loan Agreement:

     (a)  Exceeding  the Maximum  WCMA Line of Credit.  If the WCMA Loan Balance
shall at any time exceed the Maximum WCMA Line of Credit and Customer shall fail
to  deposit  sufficient  funds  into the WCMA  Account  to reduce  the WCMA Loan
Balance  below the Maximum  WCMA Line of Credit  within five (5)  Business  Days
after written notice thereof shall have been given by MLBFS to Customer.

     (b) Other  Failure to Pay.  Customer  shall fail to pay to MLBFS or deposit
into the WCMA  Account when due any other amount owing or required to be paid or
deposited by Customer under this Loan Agreement or any of the Loan Documents, or
shall fail to pay when due any other  Obligations,  and any such  failure  shall
continue for more than five (5) Business Days after written notice thereof shall
have been given by MLBFS to Customer.

     (c) Failure to Perform.  Any Credit Party shall default in the  performance
or  observance  of any  covenant or  agreement  on its part to be  performed  or
observed under any of the Loan Documents (not  constituting  an Event of Default
under any  other  clause  of this  Section),  and such  default  shall  continue
unremedied  for ten (10) Business Days (i) after  written  notice  thereof shall
have been given by MLBFS to  Customer,  or (ii) from  Customer's  receipt of any
notice or knowledge of such default from any other source.

     (d) Breach of Warranty.  Any  representation or warranty made by any Credit
Party contained in this Loan Agreement or any of the Loan Documents shall at any
time prove to have been incorrect in any material respect when made.

     (e) Default Under Other ML Agreement.  A default or event of default by any
Credit Party shall occur under the terms of any other  agreement,  instrument or
document  with or  intended  for the  benefit  of MLBFS,  MLPF&S or any of their
affiliates,  and any required notice shall have been given and required  passage
of time shall have elapsed,  or the WCMA  Agreement  shall be terminated for any
reason.

     (f) Bankruptcy Event. Any Bankruptcy Event shall occur.

     (g) Material Impairment. Any event shall occur which shall reasonably cause
MLBFS to in good faith believe that the prospect of full payment or  performance
by the Credit  Parties of any of their  respective  liabilities  or  obligations
under any of the Loan Documents has been materially  impaired.  The existence of
such a material  impairment shall be determined in a manner  consistent with the
intent of Section 1-208 of the UCC.

     (h) Default Under Other Agreements.  Any event shall occur which results in
any  default  of any  material  agreement  involving  any  Credit  Party  or any
agreement  evidencing  any  indebtedness  of any Credit Party of  $100,000.00 or
more.

     (i)  Collateral   Impairment.   The  loss,  theft  or  destruction  of  any
Collateral,  the occurrence of any material  deterioration  or impairment of any
Collateral or any material  decline or depreciation in the value or market price
thereof (whether actual or reasonably anticipated), which causes any Collateral,
in the sole opinion of MLBFS, to become unsatisfactory as to value or character;
or any levy, attachment,  seizure or confiscation of the Collateral which is not
released within ten (10) Business Days.

     (j)  Contested  Obligation.  (i) Any of the Loan  Documents  shall  for any
reason cease to be, or are asserted by any Credit Party not to be a legal, valid
and binding  obligations  of any Credit Party,  enforceable  in accordance  with
their terms;  or (ii) the validity,  perfection or priority of MLBFS' first lien
and security  interest on any of the  Collateral is contested by any Person;  or
(iii) any Credit Party shall or shall attempt to repudiate,  revoke,  contest or
dispute,  in whole or in part,  such Credit Party's  obligations  under any Loan
Document.

     (k)  Judgments.  A judgment  shall be entered  against any Credit  Party in
excess of $25,000 and the judgment is not paid in full and discharged, or stayed
and bonded to the satisfaction of MLBFS.

     (l) Change in  Control/Change  in  Management.  (i) Any direct or  indirect
sale,  conveyance,  assignment  or other  transfer  of or  grant  of a  security
interest in any ownership interest of any Credit Party which results,  or if any
rights  related  thereto  were  exercised  would  result,  in any  change in the
identity of the  individuals or entities in control of any Credit Party; or (ii)
the owner(s) of the controlling  equity interest of any Credit Party on the date
hereof shall cease to own and control such Credit Party; or (iii) any Person (or
a replacement  who is  satisfactory  to MLBFS in its sole  discretion)  named in
Section 3.3 (n) hereof,  on the date hereof shall for any reason cease to be the
chief executive officer or senior manager of Productivity Technologies Corp.

     (m) Withdrawal, Death, etc. The incapacity, death, withdrawal, dissolution,
or the filing for  dissolution of: (i) any Credit Party; or (ii) any controlling
shareholder, partner, or member of any Credit Party.

     3.6 REMEDIES

     (a) Remedies Upon Default.  Upon the occurrence and during the  continuance
of any Event of Default,  MLBFS may at its sole option do any one or more or all
of the  following,  at such  time and in such  order  as  MLBFS  may in its sole
discretion choose:

          (i)  Termination.  MLBFS may without notice terminate the WCMA Line of
     Credit and all  obligations  to extend any credit to or for the  benefit of
     Customer (it being  understood,  however,  that upon the  occurrence of any
     Bankruptcy Event all such obligations shall automatically terminate without
     any action on the part of MLBFS).

          (ii) Acceleration.  MLBFS may declare the principal of and interest on
     the WCMA Loan Balance,  and all other  Obligations  to be forthwith due and
     payable,  whereupon all such amounts shall be immediately  due and payable,
     without  presentment,  demand for  payment,  protest and notice of protest,
     notice of dishonor, notice of acceleration,  notice of intent to accelerate
     or other notice or formality of any kind, all of which are hereby expressly
     waived; provided, however, that upon the occurrence of any Bankruptcy Event
     all such  principal,  interest and other  Obligations  shall  automatically
     become due and payable without any action on the part of MLBFS.

          (iii)  Exercise  Other  Rights.  MLBFS may  exercise any or all of the
     remedies of a secured party under applicable law and in equity,  including,
     but not  limited  to,  the  UCC,  and any or all of its  other  rights  and
     remedies under the Loan Documents.

          (iv) Possession. MLBFS may require Customer to make the Collateral and
     the records  pertaining  to the  Collateral  available  to MLBFS at a place
     designated by MLBFS which is reasonably convenient to Customer, or may take
     possession of the Collateral  and the records  pertaining to the Collateral
     without the use of any  judicial  process  and without any prior  notice to
     Customer.

          (v)  Sale.  MLBFS may sell any or all of the  Collateral  at public or
     private sale upon such terms and  conditions as MLBFS may  reasonably  deem
     proper,  whether for cash, on credit, or for future delivery, in bulk or in
     lots. MLBFS may purchase any Collateral at any such sale free of Customer's
     right of redemption,  if any, which Customer expressly waives to the extent
     not  prohibited by  applicable  law. The net proceeds of any such public or
     private sale and all other amounts actually  collected or received by MLBFS
     pursuant  hereto,  after  deducting all costs and expenses  incurred at any
     time in the collection of the Obligations and in the protection, collection
     and  sale  of  the  Collateral,  will  be  applied  to the  payment  of the
     Obligations,  with any remaining  proceeds paid to Customer or whoever else
     may be entitled  thereto,  and with Customer and each  Guarantor  remaining
     jointly and  severally  liable for any amount  remaining  unpaid after such
     application.

          (vi)  Delivery of Cash,  Checks,  Etc.  MLBFS may require  Customer to
     forthwith upon receipt, transmit and deliver to MLBFS in the form received,
     all cash,  checks,  drafts and other  instruments  for the payment of money
     (properly endorsed,  where required, so that such items may be collected by
     MLBFS)  which may be  received  by  Customer at any time in full or partial
     payment of any Collateral, and require that Customer not commingle any such
     items which may be so  received by Customer  with any other of its funds or
     property  but instead  hold them  separate and apart and in trust for MLBFS
     until delivery is made to MLBFS.

          (vii)  Notification of Account  Debtors.  MLBFS may notify any account
     debtor  that its  Account or Chattel  Paper has been  assigned to MLBFS and
     direct such account debtor to make payment directly to MLBFS of all amounts
     due or becoming  due with  respect to such  Account or Chattel  Paper;  and
     MLBFS may enforce payment and collect,  by legal  proceedings or otherwise,
     such Account or Chattel Paper.

          (viii) Control of Collateral.  MLBFS may otherwise take control in any
     lawful  manner of any cash or  non-cash  items of  payment or  proceeds  of
     Collateral and of any rejected, returned, stopped in transit or repossessed
     goods included in the Collateral and endorse Customer's name on any item of
     payment on or proceeds of the Collateral.

     (b) Set-Off.  MLBFS shall have the further  right upon the  occurrence  and
during the continuance of an Event of Default to set-off,  appropriate and apply
toward payment of any of the Obligations,  in such order of application as MLBFS
may  from  time to time and at any  time  elect,  any  cash,  credit,  deposits,
accounts,  financial  assets,  investment  property,  securities  and any  other
property of  Customer  which is in transit to or in the  possession,  custody or
control of MLBFS, MLPF&S or any agent,  bailee, or affiliate of MLBFS or MLPF&S.
Customer hereby  collaterally  assigns and grants to MLBFS a continuing security
interest in all such property as Collateral  and as additional  security for the
Obligations.  Upon the  occurrence  and  during the  continuance  of an Event of
Default,  MLBFS shall have all rights in such  property  available to collateral
assignees and secured  parties under all  applicable  laws,  including,  without
limitation, the UCC.

     (c)  Power of  Attorney.  Effective  upon the  occurrence  and  during  the
continuance of an Event of Default,  Customer hereby irrevocably  appoints MLBFS
as its attorney-in-fact, with full power of substitution, in its place and stead
and in its name or in the name of MLBFS,  to from  time to time in  MLBFS'  sole
discretion  take any action and to execute any  instrument  which MLBFS may deem
necessary or advisable to accomplish the purposes of this Loan Agreement and the
other Loan  Documents,  including,  but not limited to, to receive,  endorse and
collect all checks,  drafts and other  instruments for the payment of money made
payable to Customer  included in the Collateral.  The powers of attorney granted
to MLBFS in this Loan Agreement are coupled with an interest and are irrevocable
until the Obligations  have been  indefeasibly  paid in full and fully satisfied
and all obligations of MLBFS under this Loan Agreement have been terminated

     (d) Remedies are Severable and Cumulative. All rights and remedies of MLBFS
herein are  severable  and  cumulative  and in addition to all other  rights and
remedies  available in the Loan Documents,  at law or in equity,  and any one or
more  of  such  rights  and  remedies  may  be   exercised   simultaneously   or
successively.

     (e) No  Marshalling.  MLBFS  shall be under  no duty or  obligation  to (i)
preserve,  protect or  marshall  the  Collateral;  (ii)  preserve or protect the
rights of any Credit  Party or any other  Person  claiming  an  interest  in the
Collateral; (iii) realize upon the Collateral in any particular order or manner,
(iv) seek repayment of any Obligations from any particular  source;  (v) proceed
or not proceed  against any Credit  Party  pursuant to any  guaranty or security
agreement or against any Credit Party under the Loan Documents,  with or without
also realizing on the  Collateral;  (vi) permit any  substitution or exchange of
all or any part of the  Collateral;  or (vii) release any part of the Collateral
from the Loan Agreement or any of the other Loan Documents,  whether or not such
substitution or release would leave MLBFS adequately secured.

     (f) Notices.  To the fullest extent  permitted by applicable law,  Customer
hereby irrevocably waives and releases MLBFS of and from any and all liabilities
and  penalties  for  failure  of MLBFS to  comply  with any  statutory  or other
requirement  imposed upon MLBFS relating to notices of sale,  holding of sale or
reporting  of any  sale,  and  Customer  waives  all  rights  of  redemption  or
reinstatement  from any such sale.  Any notices  required  under  applicable law
shall  be  reasonably  and  properly  given to  Customer  if given by any of the
methods  provided herein at least 5 Business Days prior to taking action.  MLBFS
shall have the right to  postpone or adjourn  any sale or other  disposition  of
Collateral at any time without  giving notice of any such postponed or adjourned
date.  In  the  event  MLBFS  seeks  to  take  possession  of  any or all of the
Collateral by court process,  Customer further irrevocably waives to the fullest
extent  permitted by law any bonds and any surety or security  relating  thereto
required  by any  statute,  court  rule  or  otherwise  as an  incident  to such
possession,  and any demand for possession prior to the commencement of any suit
or action.

     3.7 MISCELLANEOUS

     (a) Non-Waiver.  No failure or delay on the part of MLBFS in exercising any
right,  power or remedy pursuant to this Loan Agreement or any of the other Loan
Documents shall operate as a waiver thereof,  and no single or partial  exercise
of any such right,  power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. Neither any waiver
of any provision of any of the Loan Documents,  nor any consent to any departure
by Customer  therefrom,  shall be effective  unless the same shall be in writing
and signed by MLBFS.  Any waiver of any provision of this Loan  Agreement or any
of the other Loan  Documents  and any consent to any  departure by Customer from
the terms of this Loan  Agreement  or any of the other Loan  Documents  shall be
effective only in the specific  instance and for the specific  purpose for which
given.  Except as otherwise expressly provided herein, no notice to or demand on
Customer  shall in any case entitle  Customer to any other or further  notice or
demand in similar or other circumstances.

     (b) Disclosure.  Customer hereby  irrevocably  authorizes MLBFS and each of
its affiliates,  including without limitation MLPF&S, to at any time (whether or
not an Event of Default  shall have  occurred)  obtain from and disclose to each
other, and to any third party in connection with Section 3.7 (g) herein, any and
all financial and other  information  about  Customer.  In connection  with said
authorization,  the  parties  recognize  that in order to provide a WCMA Line of
Credit certain  information about Customer is required to be made available on a
computer network  accessible by certain  affiliates of MLBFS,  including MLPF&S.
Customer further irrevocably authorizes MLBFS to contact,  investigate,  inquire
and obtain consumer  reports,  references and other information on Customer from
consumer  reporting  agencies and other  credit  reporting  services,  former or
current creditors, and other persons and sources (including, without limitation,
any  Affiliate of MLBFS) and to provide to any  references,  consumer  reporting
agencies,  credit  reporting  services,  creditors and other persons and sources
(including,  without limitation,  affiliates of MLBFS) all financial, credit and
other information obtained by MLBFS relating to the Customer.

     (c) Communications.  Delivery of an agreement, instrument or other document
may,  at the  discretion  of MLBFS,  be by  electronic  transmission.  Except as
required by law or  otherwise  provided  herein or in a writing  executed by the
party  to be  bound,  all  notices  demands,  requests,  accountings,  listings,
statements, advices or other communications to be given under the Loan Documents
shall be in writing and shall be served  either  personally,  by deposit  with a
reputable  overnight  courier with charges prepaid,  or by deposit in the United
States mail by certified mail, return receipt required. Notices may be addressed
to Customer as set forth at its address shown in the preamble hereto,  or to any
office to which billing or account  statements are sent; to MLBFS at its address
shown in the preamble hereto, or at such other address  designated in writing by
MLBFS.  Any such  communication  shall be deemed to have been given upon, in the
case of personal  delivery the date of delivery,  one Business Day after deposit
with an overnight  courier,  two (2) Business  Days after  deposit in the United
States by certified  mail (return  receipt  required),  or receipt of electronic
transmission  (which  shall be  presumed  to be three  hours  after  the time of
transmission unless an error message is received by the sender), except that any
notice of change of address shall not be effective until actually received.

     (d) Fees,  Expenses and Taxes.  Customer shall pay or reimburse  MLBFS for:
(i) all UCC,  real  property  or other  filing,  recording,  and search fees and
expenses  incurred by MLBFS in connection with the  verification,  perfection or
preservation  of  MLBFS'  rights  hereunder  or in any  Collateral  or any other
collateral  for the  Obligations;  (ii) any and all stamp,  transfer,  mortgage,
intangible,  document,  filing,  recording  and other taxes and fees  payable or
determined  to be payable in  connection  with the  borrowings  hereunder or the
execution, delivery, filing and/or recording of the Loan Documents and any other
instruments  or  documents  provided  for herein or delivered or to be delivered
hereunder  or in  connection  herewith;  and  (iii)  all fees and  out-of-pocket
expenses  (including,  attorneys' fees and legal expenses)  incurred by MLBFS in
connection  with  the  preparation,   execution,   administration,   collection,
enforcement,  protection,  waiver or amendment of this Loan Agreement, the other
Loan  Documents  and such other  instruments  or  documents,  and the rights and
remedies of MLBFS  thereunder  and all other  matters in  connection  therewith.
Customer hereby  authorizes  MLBFS,  at its option,  to either cause any and all
such fees,  expenses and taxes to be paid with a WCMA Loan, or invoice  Customer
therefore (in which event Customer  shall pay all such fees,  expenses and taxes
within 5  Business  Days after  receipt of such  invoice).  The  obligations  of
Customer  under this  paragraph  shall survive the  expiration or termination of
this Loan Agreement and the discharge of the other Obligations.

     (e) Right to Perform  Obligations.  If Customer shall fail to do any act or
thing  which it has  covenanted  to do under  any of the Loan  Documents  or any
representation  or  warranty  on the  part of  Customer  contained  in the  Loan
Documents shall be breached, MLBFS may, in its sole discretion, after 5 Business
Days  written  notice is sent to Customer (or such lesser  notice,  including no
notice, as is reasonable under the circumstances), do the same or cause it to be
done or remedy any such breach,  and may expend its funds for such purpose.  Any
and all  reasonable  amounts so expended by MLBFS shall be repayable to MLBFS by
Customer upon demand,  with interest at the Interest Rate during the period from
and  including the date funds are so expended by MLBFS to the date of repayment,
and all such amounts shall be additional Obligations. The payment or performance
by MLBFS of any of Customer's  obligations  hereunder shall not relieve Customer
of said  obligations or of the  consequences  of having failed to pay or perform
the same, and shall not waive or be deemed a cure of any Default.

     (f) Further Assurances.  Customer agrees to do such further acts and things
and to execute and deliver to MLBFS such additional agreements,  instruments and
documents as MLBFS may  reasonably  require or deem  advisable to effectuate the
purposes  of the Loan  Documents,  to  confirm  the  WCMA  Loan  Balance,  or to
establish,  perfect and maintain  MLBFS'  security  interests and liens upon the
Collateral, including, but not limited to: (i) executing financing statements or
amendments thereto when and as reasonably requested by MLBFS; and (ii) if in the
reasonable  judgment of MLBFS it is  required  by local law,  causing the owners
and/or mortgagees of the real property on which any Collateral may be located to
execute and deliver to MLBFS waivers or subordinations  reasonably  satisfactory
to MLBFS with respect to any rights in such Collateral.

     (g) Binding  Effect.  This Loan Agreement and the Loan  Documents  shall be
binding  upon,  and shall  inure to the  benefit  of MLBFS,  Customer  and their
respective  successors and assigns.  MLBFS reserves the right, at any time while
the Obligations  remain  outstanding,  to sell,  assign,  syndicate or otherwise
transfer or dispose of any or all of MLBFS' rights and interests  under the Loan
Documents.  MLBFS also reserves the right at any time to pool the WCMA Loan with
one or more  other  loans  originated  by  MLBFS  or any  other  Person,  and to
securitize  or offer  interests  in such pool on whatever  terms and  conditions
MLBFS shall determine.  Customer consents to MLBFS releasing financial and other
information  regarding  Credit  Parties,  the  Collateral  and the WCMA  Loan in
connection  with any  such  sale,  pooling,  securitization  or other  offering.
Customer  shall not assign any of its rights or delegate any of its  obligations
under this Loan Agreement or any of the Loan Documents without the prior written
consent of MLBFS.  Unless  otherwise  expressly agreed to in a writing signed by
MLBFS,  no such  consent  shall  in any  event  relieve  Customer  of any of its
obligations under this Loan Agreement or the Loan Documents.

     (h)  Interpretation;  Construction.  (i) Captions and section and paragraph
headings in this Loan  Agreement are inserted  only as a matter of  convenience,
and shall not affect the interpretation  hereof;  (ii) no provision of this Loan
Agreement shall be construed  against a particular Person or in favor of another
Person  merely  because  of which  Person  (or its  representative)  drafted  or
supplied the wording for such provision;  and (iii) where the context  requires:
(a) use of the singular or plural  incorporates  the other, and (b) pronouns and
modifiers in the  masculine,  feminine or neuter gender shall be deemed to refer
to or include the other genders.

     (i) Governing Law. This Loan  Agreement,  and, unless  otherwise  expressly
provided therein, each of the Loan Documents,  shall be governed in all respects
by the  laws of the  State  of  Illinois,  not  including  its  conflict  of law
provisions.

     (j) Severability of Provisions.  Whenever possible,  each provision of this
Loan Agreement and the other Loan Documents  shall be interpreted in such manner
as to be effective  and valid under  applicable  law. Any provision of this Loan
Agreement or any of the Loan Documents which is prohibited or  unenforceable  in
any  jurisdiction  shall, as to such  jurisdiction,  be ineffective  only to the
extent  of  such  prohibition  or  unenforceability   without  invalidating  the
remaining  provisions of this Loan Agreement and the Loan Documents or affecting
the validity or enforceability of such provision in any other jurisdiction.

     (k) Term. This Loan Agreement  shall become  effective on the date accepted
by MLBFS at its office in Chicago,  Illinois,  and, subject to the terms hereof,
shall continue in effect so long  thereafter as the WCMA Line of Credit shall be
in effect or there shall be any Obligations outstanding.  Customer hereby waives
notice of acceptance of this Loan Agreement by MLBFS.

     (l) Exhibits.  The exhibits to this Loan Agreement are hereby  incorporated
and made a part hereof and are an integral part of this Loan Agreement

     (m)  Counterparts.  This  Loan  Agreement  may be  executed  in one or more
counterparts which, when taken together, constitute one and the same agreement.

     (n) Jurisdiction; Waiver. Customer acknowledges that this Loan Agreement is
being accepted by MLBFS in partial  consideration of MLBFS' right and option, in
its  sole  discretion,  to  enforce  this  Loan  Agreement  and all of the  Loan
Documents  in either the State of  Illinois or in any other  jurisdiction  where
Customer or any Collateral may be located.  Customer  irrevocably submits itself
to jurisdiction in the State of Illinois and venue in any state or federal court
in the County of Cook for such purposes,  and Customer waives any and all rights
to contest said  jurisdiction  and venue and the  convenience of any such forum,
and any and all  rights to remove  such  action  from  state to  federal  court.
Customer  further  waives any rights to commence any action against MLBFS in any
jurisdiction except in the County of Cook and State of Illinois. Customer agrees
that all such service of process shall be made by mail or messenger  directed to
it in the same manner as provided for notices to Customer in this Loan Agreement
and that  service so made shall be deemed to be  completed  upon the  earlier of
actual  receipt  or three (3) days  after  the same  shall  have been  posted to
Customer or Customer's agent. Nothing contained herein shall affect the right of
MLBFS to serve legal process in any other manner  permitted by law or affect the
right of MLBFS to  bring  any  action  or  proceeding  against  Customer  or its
property in the courts of any other jurisdiction. Customer waives, to the extent
permitted by law, any bond or surety or security upon such bond which might, but
for this  waiver,  be required of MLBFS.  Customer  further  waives the right to
bring any non-compulsory counterclaims.

     (o) Jury Waiver. MLBFS and Customer hereby each expressly waive any and all
rights to a trial by jury in any action,  proceeding or counterclaim  brought by
either of the  parties  against  the other  party  with  respect  to any  matter
relating  to,  arising  out of or in any way  connected  with the  WCMA  Line of
Credit, the Obligations,  this Loan Agreement,  any of the Loan Documents and/or
any of the transactions which are the subject matter of this Loan Agreement.

     (p)  Integration.  This  Loan  Agreement,  together  with  the  other  Loan
Documents,  constitutes  the entire  understanding  and  represents the full and
final  agreement  between the parties with respect to the subject matter hereof,
and may not be  contradicted  by evidence of prior written  agreements or prior,
contemporaneous  or  subsequent  oral  agreements  of the parties.  There are no
unwritten  oral  agreements  of the parties.  Without  limiting  the  foregoing,
Customer  acknowledges that: (i) no promise or commitment has been made to it by
MLBFS, MLPF&S or any of their respective employees, agents or representatives to
extend the  availability  of the WCMA Line of Credit or the Maturity Date, or to
increase the Maximum WCMA Line of Credit,  or to make any WCMA Loan on any terms
other than as expressly set forth herein or to otherwise extend any other credit
to Customer or any other  party;  (ii) no  purported  extension  of the Maturity
Date,  increase  in the  Maximum  WCMA  Line of  Credit  or other  extension  or
agreement to extend credit shall be valid or binding unless  expressly set forth
in a  written  instrument  signed  by  MLBFS;  and  (iii)  this  Loan  Agreement
supersedes  and replaces any and all  proposals,  letters of intent and approval
and commitment letters from MLBFS to Customer, none of which shall be considered
a Loan Document.  No amendment or  modification  of any of the Loan Documents to
which Customer is a party shall be effective  unless in a writing signed by both
MLBFS and Customer.

     (q) Survival.  All  representations,  warranties,  agreements and covenants
contained in the Loan  Documents  shall  survive the signing and delivery of the
Loan  Documents,  and all of the waivers  made and  indemnification  obligations
undertaken by Customer shall survive the termination,  discharge or cancellation
of the Loan Documents.

     (r)  Customer's   Acknowledgments.   The  Customer  acknowledges  that  the
Customer:  (i) has had ample  opportunity to consult with counsel and such other
parties as deemed  advisable prior to signing and delivering this Loan Agreement
and the other Loan  Documents;  (ii)  understands  the  provisions  of this Loan
Agreement and the other Loan Documents, including all waivers contained therein;
and (iii) signs and delivers this Loan  Agreement  and the other Loan  Documents
freely and voluntarily, without duress or coercion.


(SIGNATURE PAGE TO FOLLOW)
<PAGE>

     This Loan  Agreement and the other Loan  Documents are executed  under seal
and are intended to take effect as sealed instruments.

     IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and
year first above written.

ATLAS TECHNOLOGIES, INC.


By:
   --------------------------------     ------------------------------
   Signature (1)                        Signature (2)


   --------------------------------     ------------------------------
   Printed Name                         Printed Name


   --------------------------------     ------------------------------
   Title                                Title


Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.


By:
   ---------------------------------------


<PAGE>

                                   EXHIBIT A

     ATTACHED TO AND HEREBY MADE A PART OF WCMA LOAN AND SECURITY  AGREEMENT NO.
885-07D32  BETWEEN  MERRILL  LYNCH  BUSINESS  FINANCIAL  SERVICES INC. AND ATLAS
TECHNOLOGIES, INC.


Additional Locations of Tangible Collateral:

         201 S. Alloy Dr. Fenton, MI 48430


         3100 Copper Avenue
         Fenton, MI 48430


Existing loans and Guarantees (Section 3.3 (k)):




Existing Debt (Section 3.3 (o)):