EXHIBIT 10.3


                        TERM LOAN AND SECURITY AGREEMENT

     TERM LOAN AND SECURITY  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").

     In consideration  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:

     "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against any Credit Party and shall not be  dismissed  or withdrawn  within sixty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.

     "Closing Date" shall mean the date upon which all  conditions  precedent to
MLBFS'  obligation to make the Loan shall have been met to the  satisfaction  of
MLBFS.

     "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.

     "Commitment  Fee" shall mean a fee of $5,000.00  due to MLBFS in connection
with this Loan Agreement.

     "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.

     "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 each loan or advance by MLBFS
hereunder:  (i) no  Default  or Event of  Default  shall  have  occurred  and be
continuing or would result from the making of any such loan or advance hereunder
by MLBFS;  (ii) there shall not have  occurred  and be  continuing  any material
adverse change in the business or financial condition of any Credit Party; (iii)
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;
(iv) MLBFS shall have  received  this Loan  Agreement  and all of the other Loan
Documents (including,  without limitation,  each of the Loan Documents described
in the definition of "Real Property Funding Condition"), duly executed and filed
or  recorded  where  applicable,  all of which  shall  be in form and  substance
satisfactory to MLBFS; (v) the Commitment Fee shall have been paid in full; (vi)
MLBFS shall have received, as and to the extent applicable,  copies of invoices,
bills of sale, loan payoff letters and/or other evidence satisfactory to it that
the proceeds of the Loan will satisfy the Loan  Purpose;  (vii) 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; (viii) MLBFS shall have received evidence
satisfactory  to it of the  insurance  required  hereby  or by  any of the  Loan
Documents;  and (ix) any  additional  conditions  specified  in the  "Term  Loan
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.

     "Loan" shall mean a  thirty-six-month  term  installment  loan in an amount
equal to the lesser of: (A) the aggregate amount which Customer shall request be
advanced by MLBFS on account of the Loan Purpose, or (B) $500,000.00.

     "Loan  Agreement"  shall  mean this  agreement  as  titled  in the  initial
paragraph hereof and shall specifically  include that number to be designated by
MLBFS as the Customer's "Loan No" in reference to this Loan Agreement, and which
number and designation  MLBFS shall provide to Customer upon the initial invoice
generated by MLBFS. At all times thereafter, such numerical loan number shall be
included and be deemed to be a part of the title of this Loan Agreement.

     "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.

     "Loan  Purpose"  shall mean the purpose for which the  proceeds of the Loan
will be used; to wit: to refinance existing, unencumbered equipment.

     "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.

     "Obligations"  shall mean all liabilities,  indebtedness and 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 the Note and the
Loan  Documents,  under that  certain  Term Loan and  Security  Agreement  dated
November 25, 2003,  and under that certain WCMA Loan and Security  Agreement No.
885-07D32.

     "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 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 grants MLBFS a security  interest in any
assets as security for Customer's Obligations.

     "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, all terms used in this
Loan Agreement which are defined in the UCC shall have the meanings set forth in
the UCC; 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 LOAN

     2.1 Commitment.  Subject to the terms and conditions  hereof,  MLBFS hereby
agrees to make the Loan to Customer for the Loan Purpose, and Customer agrees to
borrow all amounts  borrowed to satisfy the Loan Purpose from MLBFS.  The entire
proceeds of the Loan shall be disbursed  on the Closing Date either  directly to
the  applicable  third  party or parties  on  account of the Loan  Purpose or to
reimburse  Customer  for  amounts  directly  expended  by it; all as directed by
Customer in a Closing  Certificate  to be executed by Customer and  delivered to
MLBFS prior to the Closing Date.

     2.2 Note.  The Loan will be evidenced by and repayable in  accordance  with
that certain  Collateral  Installment Note made by Customer payable to the order
of MLBFS and issued  pursuant to this Loan Agreement  (the "Note").  The Note is
hereby incorporated as a part hereof as if fully set forth herein.

     2.3 Conditions of MLBFS' Obligation. The Closing Date and MLBFS' obligation
to make the Loan on the  Closing  Date are subject to the prior  fulfillment  of
each of the  following  conditions:  (a) MLBFS  shall  have  received  a written
request  from  Customer  that the Loan be  funded in  accordance  with the terms
hereof,  together  with a written  direction  from  Customer as to the method of
payment and payee(s) of the proceeds of the Loan,  which  request and  direction
shall have been  received by MLBFS not less than two Business  Days prior to any
requested funding date; (b) MLBFS shall have received a copy of invoices,  bills
of sale, payoff letters or other applicable evidence reasonably  satisfactory to
it that the proceeds of the Loan will satisfy or fulfill the Loan  Purpose;  (c)
the Commitment Expiration Date shall not then have occurred; and (d) each of the
General Funding  Conditions and the Real Property  Funding  Condition shall then
have been met or satisfied to the reasonable satisfaction of MLBFS.

     2.4 Use of  Loan  Proceeds.  The  proceeds  of the  Loan  shall  be used by
Customer solely for a Loan Purpose, 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 the Loan be used:  (a)
for personal,  family or household purposes of any person whatsoever,  or (b) to
purchase,  carry or trade in  securities,  or repay debt  incurred to  purchase,
carry or trade in securities, or (c) 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).

     2.5 Commitment  Fee. In  consideration  of the agreement by MLBFS to extend
the Loan to  Customer  in  accordance  with and  subject  to the  terms  hereof,
Customer has paid or shall,  on or before the Closing  Date pay, the  Commitment
Fee to MLBFS.  Customer acknowledges and agrees that the Commitment Fee has been
fully  earned  by  MLBFS,  and  that it will  not  under  any  circumstances  be
refundable.

                        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  or  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,  the Note and the other 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
such  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,  Merrill Lynch,  Pierce,  Fenner & Smith
Incorporated  ("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
make the Loan,  and (ii) is continuing and shall be deemed remade by Customer on
the Closing Date.

     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;  (xi)
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; (iii) 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);  (iv) 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; (v) 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; (vi) 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;
(vii)  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 (viii) 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 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.

     (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",
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 $2,400,000.00.  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) 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.

     (k) 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.

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

     (n)  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.

     (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
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 Loan in
the  amount of such  prepayment  and shall not  reduce  the amount of any future
reductions  in the Loan  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, 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) Failure to Pay. Customer shall fail to pay when due any amount owing by
Customer  to MLBFS under the Note or this Loan  Agreement,  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.

     (b) 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 this Loan Agreement,  the Note or any of the other 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.

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

     (d) 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.

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

     (f) 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 this Loan  Agreement,  the Note or any of the other Loan Documents or such
Guarantor  is a party 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.

     (g) 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.

     (h)  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.

     (i)  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.

     (j)  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.

     (k) 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  previously 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 hereof on the date hereof shall for any reason cease to be the chief
executive officer or senior manager of Productivity Technologies Corp.

     (l) 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 its obligation 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 and
     any premium on the Note, 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,   premium  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 Note, the other 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,  the Note 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 this Loan Agreement, the Note or any of the other
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,  the  Note or any of the  other  Loan
Documents  and any consent to any  departure by Customer  from the terms of this
Loan  Agreement,  the Note 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 (h) herein, any and
all financial and other information about Customer. 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 upon demand 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;  (iii) any and all fees and  out-of-pocket
expenses  to  third  parties  incurred  by MLBFS in  connection  with the  title
insurance,  environmental  audit,  appraisal,  survey and other  instruments  or
documents referred to in the definition of Real Property Funding Condition;  and
(iv) 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,  or under  any of 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.  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 this Loan Agreement or any of the Loan
Documents,  or any  representation or warranty on the part of Customer contained
in this Loan  Agreement or any of 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" (as that item is defined in the Note) 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) Late Charge.  Any payment  required to be made by Customer  pursuant to
this Loan  Agreement or any of the Loan  Documents not paid within ten (10) days
of the  applicable due date shall be subject to a late charge in an amount equal
to the lesser of:  (i) 5% of the  overdue  amount,  or (ii) the  maximum  amount
permitted by applicable law. Such late charge shall be payable on demand.

     (g) 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 this Loan Agreement, the Note or any of the other Loan Documents, 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.

     (h)  Binding  Effect.  This Loan  Agreement,  the Note and the  other  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
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 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, the Note or any of the other 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,  the  Note or any of the  other  Loan
Documents.

     (i)  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.

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

     (k) Severability of Provisions.  Whenever possible,  each provision of this
Loan  Agreement,  the Note 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,  the Note or any of the  other  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,  the Note
and the other Loan Documents or affecting the validity or enforceability of such
provision in any other jurisdiction.

     (l) Term. This Loan Agreement shall become effective when accepted by MLBFS
at its office in  Chicago,  Illinois,  and  subject to the terms  hereof,  shall
continue  in  effect  so long  thereafter  as there  shall be any  moneys  owing
hereunder  or  under  the  Note,  or  there  shall  be  any  other   Obligations
outstanding.  Customer hereby waives notice of acceptance of this Loan Agreement
by MLBFS.

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

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

     (o) 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  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.

     (p) 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  Loan,  the
Obligations,  this Loan Agreement, any of the other Loan Documents and/or any of
the transactions which are the subject matter of this Loan Agreement.

     (q)  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
make any Loan on any terms other than as expressly set forth herein,  or to make
any other loan or  otherwise  extend any other  credit to  Customer or any other
party;  and (ii)  except  as  otherwise  expressly  provided  herein,  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.

     (r) 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.

     (s)  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.

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

     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 TERM LOAN AND  SECURITY  AGREEMENT
DATED AS OF NOVEMBER 25, 2003 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)):