UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 27,, 2003

OR

[     ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


For the Transition Period From ____________________To ____________________

Commission File Number 000-01859KNAPE & VOGT MANUFACTURING COMPANY
(Exact name of registrant as specified in its charter)

|Michigan
(State of Incorporation)
2700 Oak Industrial Drive, NE
Grand Rapids, Michigan
(Address of principal executive offices) | 38-0722920
(IRS Employer Identification No.)
49505
(Zip Code)
|------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------

(616) 459-3311
(Telephone Number)

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES X   
NO

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

YES    
NO X

As of October 17, 2003, Knape & Vogt Manufacturing Company had 2,315,294 shares of Common Stock
outstanding and 2,201,105 shares of Class B Common Stock outstanding.



---



KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

                                                               INDEX

|                                                                    | 
|------------------------------------------------------------------- | 
|                                                                    | 
|PART I.  FINANCIAL INFORMATION                                      | 
|                                                                   
|Item 1.  Financial Statements                                       | 
|                                                                   
|Condensed Consolidated Balance Sheets                               | 
|--September 27, 2003 and June 28, 2003                              | 
|                                                                   
|Condensed Consolidated Statements of Income                         | 
|--Three Months Ended September 27, 2003 and September 28, 2002      | 
|                                                                   
|Condensed Consolidated Statement of Stockholders' Equity            | 
|--Three Months Ended September 27, 2003                             | 
|                                                                   
|Condensed Consolidated Statements of Cash Flows                     | 
|--Three Months Ended September 27, 2003 and September 28, 2002      | 
|                                                                   
|Notes to Condensed Consolidated Financial Statements                | 
|                                                                   
|Item 2.  Management's Discussion and Analysis of Financial          | 
|Condition and Results of Operations                                 | 
|                                                                   
|Item 3.  Quantitative and Qualitative Disclosures About Market Risk | 
|                                                                   
|Item 4.  Controls and Procedures                                    | 
|                                                                   
|PART II. OTHER INFORMATION                                          | 
|                                                                   
|Item 1.  Legal Proceedings                                          | 
|                                                                   
|Item 6.  Exhibits and Reports on Form 8-K                           | 
|                                                                   
|SIGNATURES                                                          | 
|                                                                   
|EXHIBIT INDEX                                                       | 

1

---



KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                              |  |                           |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | -
|                                                                                                                              |  | (Unaudited)Sept. 27, 2003 |  
|                                                                                                                              |  |                           |  
|Assets                                                                                                                        |  |                           |  
|Current assets                                                                                                                |  |                           |  
|Cash                                                                                                                          |  | $   3,813,471             |  
|Accounts receivable - net                                                                                                     |  | 20,389,533                |  
|Inventories                                                                                                                   |  | 18,329,561                |  
|Prepaid expenses                                                                                                              |  | 584,212                   |  
|                                                                                                                              |  |                           |  
|Total current assets                                                                                                          |  | 43,116,777                |  
|                                                                                                                              |  |                           |  
|Property, plant and equipment                                                                                                 |  | 83,785,993                |  
|Less accumulated depreciation                                                                                                 |  | 51,250,320                |  
|                                                                                                                              |  |                           |  
|Net property, plant and equipment                                                                                             |  | 32,535,673                |  
|                                                                                                                              |  |                           |  
|Goodwill                                                                                                                      |  | 4,772,837                 |  
|Prepaid pension cost                                                                                                          |  | 12,417,666                |  
|Other assets                                                                                                                  |  | 324,939                   |  
|                                                                                                                              |  |                           |  
|                                                                                                                              |  | $ 93,167,892              |  
|                                                                                                                              |  |                           |  
|Liabilities and Stockholders' Equity                                                                                          | 
|Current liabilities                                                                                                           | 
|Accounts payable                                                                                                              |  | $ 11,372,555              |  
|Other accrued liabilities                                                                                                     |  | 8,274,243                 |  
|                                                                                                                              |  |                           |  
|Total current liabilities                                                                                                     |  | 19,646,798                |  
|Long-term debt and capital leases                                                                                             |  | 25,235,525                |  
|Deferred income taxes and other long-term liabilities                                                                         |  | 13,332,358                |  
|                                                                                                                              |  |                           |  
|Total liabilities                                                                                                             |  | 58,214,681                |  
|                                                                                                                              |  |                           |  
|Stockholders' Equity                                                                                                          | 
|Common stock (Common - 2,314,244 and 2,293,433 shares issued and outstanding, Class B common - 2,202,105 and 2,222,202 shares | 
|issued and outstanding)                                                                                                       |  | 9,032,698                 |  
|Preferred stock -unissued                                                                                                     |  | --                        |  
|Additional paid-in capital                                                                                                    |  | 7,544,749                 |  
|Unearned stock grant                                                                                                          |  | (94,500                   | )
|Accumulated other comprehensive loss                                                                                          |  | (2,748,833                | )
|Retained earnings                                                                                                             |  | 21,219,097                |  
|                                                                                                                              |  |                           |  
|Total stockholders' equity                                                                                                    |  | 34,953,211                |  
|                                                                                                                              |  |                           |  
|                                                                                                                              |  | $ 93,167,892              |  
|                                                                                                                              |  |                           |  

See accompanying notes.

2

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KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

|                                      |  |                           
|------------------------------------- |  | --------------------------
|                                      |  | For the Three Months Ended
|                                     
|                                      |  | Sept. 27, 2003            
|                                     
|Net sales                             |  | $36,125,237               
|                                     
|Cost of sales                         |  | 28,960,702                
|                                      |  |                           
|                                     
|Gross profit                          |  | 7,164,535                 
|                                     
|Selling and administrative expenses   |  | 5,900,448                 
|                                     
|Severance                             |  | --                        
|                                      |  |                           
|                                     
|Operating income                      |  | 1,264,087                 
|                                     
|Interest and other expenses, net      |  | 392,929                   
|                                      |  |                           
|                                     
|Income before income taxes            |  | 871,158                   
|                                     
|Income taxes                          |  | 201,283                   
|                                      |  |                           
|                                     
|Net income                            |  | $     669,875             
|                                      |  |                           
|                                     
|Basic and diluted earnings per share: |  | $           0.15          
|                                      |  |                           
|                                     
|Weighted average shares outstanding   |  | 4,515,925                 
|                                     
|Cash dividend - common stock          |  | $           .165          
|                                     
|Cash dividend - Class B common stock  |  | $             .15         

See accompanying notes.

3

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KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)

|                                        |  |              |  |                          |  |                   
|--------------------------------------- |  | ------------ |  | ------------------------ |  | ------------------
|                                        |  | Common Stock |  | Additionalpaid-incapital |  | Unearnedstockgrant
|                                       
|Balance, June 28, 2003                  |  | $9,031,270   |  | $7,538,684               |  | $(94,500          
|                                       
|Comprehensive income (loss)             | 
|Net income                              |  | --           |  | --                       |  | --                
|Foreign currency translation adjustment |  | --           |  | --                       |  | --                
|Gain on derivative instrument           |  | --           |  | --                       |  | --                
|                                        |  |              |  |                          |  |                   
|Other comprehensive income              |  | --           |  | --                       |  | --                
|                                        |  |              |  |                          |  |                   
|Comprehensive income                    |  |              |  |                          |  |                   
|                                        |  |              |  |                          |  |                   
|Cash dividends                          |  | --           |  | --                       |  | --                
|Restricted stock issued                 |  | 1,428        |  | 6,065                    |  | --                
|                                       
|Balance, Sept. 27, 2003                 |  | $9,032,698   |  | $7,544,749               |  | $(94,500          
|                                       

See accompanying notes.

4

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KNAPE & VOGT MANUFACTURING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                     |  |                   |  
|---------------------------------------------------- |  | ----------------- | -
|                                                     |  | Three Month Ended
|                                                     |  | Sept. 27, 2003    |  
|                                                     |  |                   |  
|Operating Activities:                                |  |                   |  
|Net income                                           |  | $      669,875    |  
|Non-cash items:                                      | 
|Depreciation and amortization                        |  | 1,630,766         |  
|Deferred income taxes                                |  | 354,373           |  
|Other long-term liabilities                          |  | 64,800            |  
|Severance                                            |  | --                |  
|Loss on disposal of fixed assets                     |  | 26,661            |  
|Changes in operating assets and liabilities:         | 
|Accounts receivable                                  |  | (3,580,931        | )
|Inventories                                          |  | 649,495           |  
|Other current assets                                 |  | 147,235           |  
|Accounts payable and accrued expenses                |  | (8,235            | )
|                                                     |  |                   |  
|Net cash provided by (used in) operating activities  |  | (45,961           | )
|                                                     |  |                   |  
|Investing Activities:                                | 
|Additions to property, plant and equipment           |  | (440,487          | )
|Proceeds from sales of property, plant and equipment |  | 800               |  
|Other                                                |  | (17,765           | )
|                                                     |  |                   |  
|Net cash used for investing activities               |  | (457,452          | )
|                                                     |  |                   |  
|Financing Activities:                                | 
|Dividends paid                                       |  | (712,174          | )
|Borrowings on long-term debt                         |  | 11,339,040        |  
|Payments on long-term debt and capital leases        |  | (10,153,120       | )
|                                                     |  |                   |  
|Net cash provided by (used for) financing activities |  | 473,746           |  
|                                                     |  |                   |  
|Effect of Exchange Rate Changes on Cash              |  | (3,473            | )
|                                                     |  |                   |  
|Net Increase/ (Decrease) in Cash and Equivalents     |  | (33,140           | )
|Cash and equivalents, beginning of year              |  | 3,846,611         |  
|                                                     |  |                   |  
|Cash and equivalents, end of period                  |  | $   3,813,471     |  
|                                                     |  |                   |  
|Cash Paid During the Period - interest               |  | $      388,394    |  

See accompanying notes.

5

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

# Note 1  Summary of
Significant Accounting Policies

The accompanying unaudited condensed
consolidated financial statements and related notes have been prepared reflecting all
adjustments, which are, in the opinion of management, necessary for a fair presentation of
the statements of financial position, results of operations and cash flows and consist of
only normal recurring adjustments. Interim results are not necessarily indicative of the
results for the year-end and are subject to year-end adjustments, and audit by independent
public accountants. The condensed consolidated financial statements and notes should be
read in conjunction with the Companys 2003 annual report.

The Company utilizes a 52- or 53-week
fiscal year, which ends on the Saturday nearest the end of June. The fiscal year ended
June 28, 2003 contained 52 weeks, while the fiscal year ending July 3, 2004 will contain
53 weeks. Both three-month periods ended on September 27, 2003 and September 28, 2002
contained 13 weeks.

Certain prior year information has
been reclassified to conform to the current year presentation.

# Note 2  New
Accounting Standards

In April 2003, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. SFAS 149 amends and clarifies financial
accounting and reporting for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. It is
effective for contracts entered into or modified after June 30, 2003, except as
stated within the statement, and should be applied prospectively. Management does not
expect this statement to have a material effect on the financial statements.

In May 2003, the FASB issued SFAS No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS No. 150 clarifies the accounting for certain
financial instruments that, under previous guidance, issuers could account for as equity.
This statement affects the accounting for three types of freestanding financial
instruments:

|o |  | Mandatorily redeemable shares;
|- |  | ------------------------------

|o |  | Put options and forward purchase contracts involving instruments that require or may
require the issuer to buy back some of its shares;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------

|o |  | and obligations that can be settled with shares
|- |  | -----------------------------------------------

This statement does not apply to
features that are embedded in a financial instrument that is not a derivative in its
entirety. It is effective for financial instruments entered into or modified after
May 31, 2003. The Company does not have any of the instruments covered by this
statement; therefore, management does not expect this statement to have a material effect
on the financial statements.

6

---



# Note 3  Derivative
Instrument

The Company uses an interest rate
swap agreement to modify a portion of the variable rate revolving line of credit to a
fixed rate obligation, thereby reducing the exposure to market rate fluctuations. The
interest rate swap agreement is designated as a hedge, and effectiveness is determined by
matching the principal balance and terms with that specific obligation. Amounts currently
due to or from interest-rate-swap-counter parties are recorded in interest expense in the
period in which they accrue. The derivative was recognized as a liability on the balance
sheet at its fair value of $2,202,287 at September 27, 2003 and $2,554,980 at June 28,
2003.

# Note 4  Common
Stock and Per Share Information

The Company has 6,000,000 shares of
common stock and 4,000,000 shares of Class B common stock authorized. All of the stock is
$2 par/share.

The following are the numerators and
denominators used in the calculations of basic and diluted earnings per share (EPS) for
each of the periods presented:

|                               |  |                           
|------------------------------ |  | --------------------------
|                               |  | For the three months ended
|                               |  | Sept. 27, 2003            
|                               |  |                           
|Numerators:                    |  |                           
|Numerator for both basic and   | 
|diluted EPS, net income        |  | $   669,875               
|                               |  |                           
|Denominators:                  | 
|Denominator for both basic and | 
|diluted EPS,weighted-average   | 
|common shares outstanding      |  | 4,515,925                 
|                               |  |                           

The following exercisable stock
options were not included in the computation of diluted EPS because the option prices were
greater than average quarterly market prices.

|               |  |               
|-------------- |  | --------------
|               |  | Sept. 27, 2003
|               |  |               
|Exercise Price |  |               
|$13.64         |  | 6,875         
|$14.09         |  | 8,525         
|$16.74         |  | 6,962         
|$18.18         |  | 6,325         
|$18.41         |  | 130,240       
|$18.48         |  | 206,183       
|$26.54         |  | --            

7

---



# Note 5  Inventories

Inventories are valued at the lower
of FIFO (first-in, first-out) cost or market. Inventories are summarized as follows:

|                  |  |               
|----------------- |  | --------------
|                  |  | Sept. 27, 2003
|                 
|Finished products |  | $13,153,260   
|Work in process   |  | 1,810,558     
|Raw materials     |  | 3,365,743     
|                  |  |               
|Total             |  | $18,329,561   
|                  |  |               

# Note 6  Warranty
Disclosure

The Company estimates the amount of
warranty claims on sold product that may be incurred based on current and historical data.
The actual warranty expense could differ from the estimates made by the Company based on
product performance. The following table presents the changes in the Companys
product warranty liability:

|                                            |  |               
|------------------------------------------- |  | --------------
|                                            |  | Sept. 27, 2003
|                                           
|Accrued warranty costs at beginning of year |  | $ 275,195     
|Payments made for warranty costs            |  | (58,864       
|Accrual for product warranty                |  | 58,670        
|                                           
|Accrued warranty costs at end of period     |  | $ 275,001     
|                                           

# Note 7 
Comprehensive Income

Comprehensive income represents net
income and other revenues, expenses, gains and losses that are excluded from net income
and recognized directly as a component of stockholders equity.

Comprehensive income and its
components consist of the following:

|                                        |  |                           
|--------------------------------------- |  | --------------------------
|                                        |  | For the Three Months Ended
|                                        |  | Sept. 27, 2003            
|                                        |  |                           
|Net income                              |  | $ 669,875                 
|Other comprehensive income:             | 
|Foreign currency translation adjustment |  | (3,536                    
|Gain (loss) on derivative instrument    |  | 229,693                   
|Minimum SERP liability adjustment       |  | --                        
|                                        |  |                           
|Comprehensive income                    |  | $ 896,032                 
|                                        |  |                           

8

---



Other comprehensive income (loss)
related to the interest rate swap agreement consisted of the following components:

|                                            |  |                            |   |               
|------------------------------------------- |  | -------------------------- | - | --------------
|                                            |  | For the Three Months Ended
|                                            |  | Sept. 27, 2003             |   | Sept. 28, 2002
|                                            |  |                           
|                                            |  | Pre-Tax                    |   | After-Tax     
|                                            |  |                           
|Change in fair  value of interest rate swap |  | $ 603,527                  |   | $ 392,293     
|Settlement to interest expense              |  | (250,834                   | ) | (162,600      
|                                            |  |                           
|Other comprehensive income (loss)           |  | $ 352,693                  |   | $ 229,693     
|                                            |  |                           

# Note 8  Segment
Information

The following table presents
information about the results of operations for each of the Companys reportable
segments for the three months ended September 27, 2003 and September 28, 2002,
respectively.

|                                |  |                 |   |                             
|------------------------------- |  | --------------- | - | ----------------------------
|                                |  | Office Products |   | Home and Commercial Products
|For the Three Months Ended:     | 
|Sept. 27, 2003:                 |  |                
|Net sales to external customers |  | $ 11,880,877    |   | $24,244,360                 
|Income tax expense (benefit)    |  | (499,725        | ) | 1,281,844                   
|Net income (loss)               |  | (872,516        | ) | 2,099,298                   
|Total assets                    |  | 12,458,321      |   | 26,102,386                  
|Goodwill                        |  | 4,250,936       |   | 521,901                     
|Depreciation and amoritization  |  | 24,435          |   | 27,840                      
|Capital expenditures            |  | 52,711          |   | --                          
|                               
|Sept. 28, 2002:                 | 
|Net sales to external customers |  | 9,551,709       |   | 21,446,475                  
|Income tax expense (benefit)    |  | 2,541           |   | 1,150,614                   
|Net income (loss)               |  | 2,574           |   | 1,969,064                   
|Goodwill                        |  | 4,250,936       |   | 521,901                     

# Note 9  Revolving
Line of Credit Agreement

On August 28, 2003, the Company
entered into a new $35 million revolving credit facility that matures on November 1, 2006.
The new three-year revolving credit facility is unsecured and replaces a $45 million
credit facility that would have expired in 2004. Interest rates on outstanding loans under
the revolving credit facility are either based on the London Interbank Offering Rate
(LIBOR), plus a negotiated spread over LIBOR, or at the U.S. prime rate. The new agreement
requires the Company to pay a non-use fee on amounts not outstanding under the credit
facility based on a ratio of the Companys adjusted total debt (funded debt less cash
and cash equivalents) to EBITDA (earnings before interest, income taxes, depreciation and
amortization).

9

---



# Note 10  Legal
Contingencies

The Canada Customs and Revenue Agency
(CCRA) has performed an audit of the Companys sales to its wholly-owned
subsidiary, Knape & Vogt Canada. Preliminary results from a joint review by the
Company and its customs broker indicate that the Company may be liable for certain customs
transactions, however, the amount of any such potential liability is unknown at this time.
The Company is defending its position that Knape & Vogt Canada is the importer of
record for all Knape & Vogt goods shipped into Canada and management believes, that
based on the information available at this time, any liability owed to the CCRA will not
have a material adverse effect on the Companys earnings.

The Company was sued in the Kent
County, Michigan Circuit Court in 1997 by a former employee seeking additional benefits
under an executive retirement plan. The Circuit Court ruled in favor of the plaintiff, but
in June 2002, the Circuit Court was reversed on the Companys appeal to the Michigan
Court of Appeals. The plaintiff filed a delayed request for leave to appeal to the
Michigan Supreme Court. In August 2002, the plaintiff filed a lawsuit seeking these
retirement benefits in the Federal District Court for the Western District of Michigan.
During the fourth quarter of fiscal 2003, the plaintiffs request for leave to appeal
to the Michigan Supreme Court was denied. The Company moved to dismiss the federal
litigation based on the statute of limitations. In September 2003, the Federal District
Court dismissed the litigation.

The Company is also subject to other
legal proceedings and claims, which arise in the ordinary course of business.

10

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Certain matters discussed in this
section include forward-looking statements involving risks and uncertainties. When used in
this document, the words believes, expects,
anticipates, goal, think, forecast,
project, and similar expressions identify forward-looking statements.
Forward-looking statements include, but are not limited to, statements concerning future
revenue and net income growth. Such statements are subject to certain risks and
uncertainties, which would cause actual results to differ materially from those expressed
or implied by such forward-looking statements. Readers are cautioned not to place undue
reliance on those forward-looking statements that speak only as of the date of this
report.

# RESULTS OF OPERATIONS

# Net Sales

Net sales for the first quarter of
fiscal 2004 were $36.1 million compared to $31.0 million for the same period in the prior
year.

During the first quarter of fiscal
2004, the Home and Commercial division had net sales of $24.2 million compared to $21.4
million in the first quarter of fiscal 2003. The increase over the prior year reflected
sales growth in almost all of the channels served by this division. In particular, the
Company experienced strong growth in the consumer and distribution channels. New products,
including the Shelf Made Instant Shelves, the new line of display ledges and the
Work@Ease line of ergonomic products helped to boost sales to the consumer channel
and were a key factor in expanding the sales to one of the largest customers in this
channel. New products, along with value-added services such as the vendor managed
inventory program, were the primary reason for growth in the distribution channel.

The Office Products division had net
sales of $11.9 million for the first quarter of fiscal 2004, compared to $9.6 million for
the same period in the prior year. While the Business and Institutional Furniture
Manufacturers Association (BIFMA) results for the months of July and August 2003,
continued to show a slight decline in shipments, the Company recorded increased sales to
both the original equipment manufacturer channel and the dealer channel. New products,
including precision drawer slides specifically designed for individual customers and the
new heavy-duty 8800 precision slide with the patented interlock system, provided the
opportunities to grow sales and gain market share.

In total, the Company had new product
sales of $5.5 million in the first quarter of fiscal 2004 compared to $2.7 million in the
same period in fiscal 2003.

# Gross Profit

Gross profit, as a percentage of net
sales, was 19.8% for the first quarter of fiscal 2004 compared to 22.8% for the same
period in the prior year. During the first quarter, the Company began shipping new
products to three of its largest consumer accounts. As part of the new commitments with
these customers, the Company had to pay amounts to clear the shelves at the retailers,
either in the of form product buybacks or in markdown allowances. These one-time payments
reduced margins by 1.6%. In addition, the Company recorded additional obsolescence
reserves for certain slow moving products, these reserves reduced margins by approximately
1% in the first three months of fiscal 2004.

11

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

(Continued)

# Operating Expenses

Selling and administrative expenses,
as a percentage of net sales, were 16.3% for the first quarter of fiscal 2004 compared to
19.8% for the same period in the prior year. While the Company is committed to investing
in both its sales force and the launch of its new products, during the first quarter of
fiscal 2004, it was able to effectively leverage the fixed portion of its selling and
administrative costs.

During the first quarter of fiscal
2003, the Company recorded $271,325 pre-tax of severance costs, primarily related to the
resignation of two of its executive officers in August 2002.

# Interest and Other
Expenses, net

Interest expense was $389,931 for the
quarter ended September 27, 2003, compared to $357,438 for the same period in the prior
year. The increase reflects the higher level of borrowings outstanding under the
Companys revolving credit facility.

# Income Taxes

The effective tax rate for the
quarter ended September 27, 2003 was 23.1% compared with the rate of 37.7% for the same
period in the prior year. The effective rate for the first quarter of fiscal 2004 was
favorably impacted by review and subsequent adjustment of certain deferred tax valuation
reserves that were deemed to no longer be necessary.

# Net Income

Net income for the first quarter of
fiscal 2004 was $669,875, or $0.15 per diluted share compared to $196,963, or $0.04 per
diluted share for the same quarter of last year. Higher sales volumes, combined with the
ability to leverage certain fixed selling and administrative expenses, were responsible
for the improved results in the first quarter of fiscal 2004.

# Liquidity and Capital
Resources

Net cash used by operating activities
for the first three months of fiscal 2004 was $45,961 as compared to cash provided by
operating activities of $2,202,599 for the first three months of fiscal 2003. The month of
September 2003 was a high volume sales month and resulted in a large ending receivable
balance at September 27, 2003, as many of the retail and distribution customers have at
least 30-day payment terms.

12

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

(Continued)

Cash used for investing activities
was $457,452 for the first three months of fiscal 2004, compared to $799,440 used in the
same period in the prior year. Capital expenditures totaled $440,487 for the three months
ended September 27, 2003, compared to $1,014,967 for the first three months of the prior
year. The capital expenditures for the first three months of fiscal 2004 represented
investments in tooling for new products, including certain new custom precision slides.
There were no significant capital expenditure commitments at September 27, 2003. Capital
expenditures for the fiscal year are anticipated to be approximately $4 million.

Cash provided by financing activities
for the three months ended September 27, 2003 was $ 473,746, compared with cash used in
financing activities of $711,846 for the first quarter of the prior year.

Anticipated cash flows from
operations and available balances on the revolving credit line are expected to be adequate
to fund working capital, capital expenditures, stock repurchases and dividend payments.

The following table summarizes
long-term obligations as of September 27, 2003.

|                                   |  |                        |  |                 
|---------------------------------- |  | ---------------------- |  | ----------------
|                                   |  | Payments due by period
|                                   | 
|                                   |  | Total                  |  | Less than 1 year
|                                   | 
|                                   |  |                        |  |                 
|                                   | 
|Long-term debt                     |  | $25,189,040            |  | $         --    
|Capital lease                      |  | 72,201                 |  | 16,988          
|Operating leases                   |  | 238,632                |  | 171,864         
|Purchase obligations               |  | 349,065                |  | 349,065         
|                                   | 
|Total contractual cash obligations |  | 25,848,938             |  | 537,917         
|                                   | 

In addition, we are a party to certain
other agreements that contractually and unconditionally commit us to pay certain amounts
in the future. While we believe it is probable that amounts will be spent in the future
under such contracts, the amount and/or the timing of such future payments will vary
depending on certain provisions of the applicable contract. The agreements to which we are
a party that fall into this category include certain royalty agreements under which we pay
a royalty based on the sales volume of certain products that we manufacture and sell.

# Legal Proceedings

The Canada Customs and Revenue Agency
(CCRA) has performed an audit of the Companys sales to its wholly-owned
subsidiary, Knape & Vogt Canada. Preliminary results from a joint review by the
Company and its customs broker indicate that the Company may be liable for certain customs
transactions, however, the amount of any such potential liability is unknown at this time.
The Company is defending its position that Knape & Vogt Canada is the importer of
record for all Knape & Vogt goods shipped into Canada and management believes, that
based on the information available at this time, any liability owed to the CCRA will not
have a material adverse effect on the Companys earnings.

13

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

(Continued)

The Company was sued in the Kent
County, Michigan Circuit Court in 1997 by a former employee seeking additional benefits
under an executive retirement plan. The Circuit Court ruled in favor of the plaintiff, but
in June 2002, the Circuit Court was reversed on the Companys appeal to the Michigan
Court of Appeals. The plaintiff filed a delayed request for leave to appeal to the
Michigan Supreme Court. In August 2002, the plaintiff filed a lawsuit seeking these
retirement benefits in the Federal District Court for the Western District of Michigan.
During the fourth quarter of fiscal 2003, the plaintiffs request for leave to appeal
to the Michigan Supreme Court was denied. The Company moved to dismiss the federal
litigation based on the statute of limitations. In September 2003, the Federal District
Court dismissed the litigation.

The Company is also subject to other
legal proceedings and claims, which arise in the ordinary course of business.

# New Accounting Standards

In April 2003, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. SFAS 149 amends and clarifies financial
accounting and reporting for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. It is
effective for contracts entered into or modified after June 30, 2003, except as
stated within the statement, and should be applied prospectively. Management does not
expect this statement to have a material effect on the financial statements.

In May 2003, the FASB issued SFAS No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS No. 150 clarifies the accounting for certain
financial instruments that, under previous guidance, issuers could account for as equity.
This statement affects the accounting for three types of freestanding financial
instruments:

|o |  | Mandatorily redeemable shares;
|- |  | ------------------------------

|o |  | Put options and forward purchase contracts involving instruments that require or may
require the issuer to buy back some of its shares;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------

|o |  | and obligations that can be settled with shares
|- |  | -----------------------------------------------

This statement does not apply to
features that are embedded in a financial instrument that is not a derivative in its
entirety. It is effective for financial instruments entered into or modified after
May 31, 2003. The Company does not have any of the instruments covered by this
statement; therefore, management does not expect this statement to have a material effect
on the financial statements.

14

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

(Continued)

# Critical Accounting
Policies

This discussion and analysis of the
Companys financial condition and results of its operations is based upon its
consolidated financial statements. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts. On an
ongoing basis, management evaluates the estimates, including those related to bad debts,
inventories, long-lived assets, income taxes, self-insurance reserves, retirement benefits
and contingencies and litigation. Management bases the estimates on historical experience
and on various other assumptions and factors that they believe to be reasonable under the
circumstances. Based on managements ongoing review, they make adjustments that they
consider appropriate under the facts and circumstances. The accompanying condensed
consolidated financial statements are prepared using the same critical accounting policies
discussed in the 2003 Annual Report on Form 10-K.

15

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIESQUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market
risks, which include changes in the foreign currency exchange rate as measured against the
U.S. dollar and changes in U.S. interest rates. The Company holds a derivative instrument
in the form of an interest rate swap, which is viewed as a risk management tool and is not
used for trading or speculative purposes. The intent of the interest rate swap is to
effectively fix the interest rate on part of the borrowings under the Companys
variable rate revolving credit agreement. The derivative was recognized as a liability on
the balance sheet at its fair value of $2,202,287 at September 27, 2003 and $2,554,980 at
June 28, 2003.

The following table provides
information on the Companys fixed maturity investments as of September 27, 2003 that
are sensitive to changes in interest rates. The table also presents the corresponding
interest rate swap on this debt. Since the interest rate swap effectively fixes the
interest rate on the notional amount of debt, changes in interest rates have no current
effect on the interest expense recorded by the Company on the portion of the debt covered
by the interest rate swap.

|                                                                                                                                                                                                                                                                     |  |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|Liability                                                                                                                                                                                                                                                            |  | Amount     
|Variable rate revolving credit                                                                                                                                                                                                                                       | 
|agreement                                                                                                                                                                                                                                                            |  | $25,189,040
|First $20,000,000 at an interest rate  of 1.14% plus weighted average
  credit spread of .95%;
Next $5,000,000 at an interest rate of    1.11% plus weighted average   credit spread of .95%;
Amounts in excess of $25,000,000   at the prime rate, currently  4.00%
|Interest Rate Swap                                                                                                                                                                                                                                                   | 
|Notional amount                                                                                                                                                                                                                                                      |  | $20,000,000
|Pay fixed/Receive variable - 1.14%                                                                                                                                                                                                                                   | 
|Pay fixed interest rate - 6.25%                                                                                                                                                                                                                                      | 

The Company has a sales office
located in Canada. Sales are typically denominated in Canadian dollars, thereby creating
exposures to changes in exchange rates. The changes in the Canadian/U.S. exchange rate may
positively or negatively affect the Companys sales, gross margins and retained
earnings. The Company attempts to minimize currency exposure through working capital
management. The Company does not hedge its exposure to translation gains and losses
relating to foreign currency net asset exposures.

16

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES CONTROLS AND PROCEDURES

Item 4. Controls and
Procedures

(a) Evaluation of
Disclosure Controls and Procedures

| |  | The
Companys Chief Executive Officer and the Vice President of Finance, after evaluating
the effectiveness of the Companys disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d as of the end of the period covered by this Form 10-Q
Quarterly Report have concluded that the Companys disclosure controls and procedures
were adequate and effective to ensure that material information relating to the Company
would be made known to them by others within the Company, particularly during the period
in which this Form 10-Q Quarterly Report was being prepared.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)Changes in Internal
Controls

| |  | During
the period covered by this report, there have been no changes in the Companys
internal control over financial reporting that have materially affected or are reasonably
likely to materially affect the Companys internal control over financial reporting.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# PART II. OTHER
INFORMATION

Item 1. Legal Proceedings

The Canada
Customs and Revenue Agency (CCRA) has performed an audit of the Companys
sales to its wholly-owned subsidiary, Knape & Vogt Canada. Preliminary results from a
joint review by the Company and its customs broker indicate that the Company may be liable
for certain customs transactions, however, the amount of any such potential liability is
unknown at this time. The Company is defending its position that Knape & Vogt Canada
is the importer of record for all Knape & Vogt goods shipped into Canada and
management believes, that based on the information available at this time, any liability
owed to the CCRA will not have a material adverse effect on the Companys earnings.

The
Company was sued in the Kent County, Michigan Circuit Court in 1997 by a former employee
seeking additional benefits under an executive retirement plan. The Circuit Court ruled in
favor of the plaintiff, but in June 2002, the Circuit Court was reversed on the
Companys appeal to the Michigan Court of Appeals. The plaintiff filed a delayed
request for leave to appeal to the Michigan Supreme Court. In August 2002, the plaintiff
filed a lawsuit seeking these retirement benefits in the Federal District Court for the
Western District of Michigan. During the fourth quarter of fiscal 2003, the
plaintiffs request for leave to appeal to the Michigan Supreme Court was denied. The
Company moved to dismiss the federal litigation based on the statute of limitations. In
September 2003, the Federal District Court dismissed the litigation.

The
Company is also subject to other legal proceedings and claims, which arise in the ordinary
course of business. <PRE> Item 6. Exhibits and Reports on Form 8-K

|(a) | Exhibits | 
|--- | -------- | 

| | 10(a) | - Loan agreement with Comerica Bank dated August 28, 2003 filed herewith.
| | ----- | -------------------------------------------------------------------------

| | 31.1 | Certificate of the Chairman and Chief Executive Officer of Knape & Vogt Manufacturing
Company
pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certificate of the Vice President of Finance of Knape & Vogt Manufacturing
Company
pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.1 | Certificate of the
Chief Executive Officer of Knape & Vogt Manufacturing Company
                               pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
                               Oxley Act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 | Certificate of the Vice President of Finance of Knape & Vogt Manufacturing Company
                               pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
                               Oxley Act of 2002.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



# KNAPE & VOGT
MANUFACTURING COMPANY AND SUBSIDIARIES

# PART II. OTHER
INFORMATION

(Continued)

|    |                                                                                           | 
|--- | ----------------------------------------------------------------------------------------- | 
|(b) | Reports on Form 8-K                                                                       | 
|   
|    | Knape & Vogt furnished the following Form 8-K during the quarter ended September 27, 2003
|   
|    | Date of Report                                                                            | 
|   
|    | August 7, 2003                                                                            | 

19

---



# SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

|                       | 
|---------------------- | 
|                       | 
|                      
|                      
|                      
|Date: October 24, 2003 | 
|Date: October 24, 2003 | 

20

---



EXHIBIT INDEX

|        | 
|------- | 
|Exhibit | 
|       
|10(a)   | 
|       
|31.1    | 
|       
|31.2    | 
|       
|32.1    | 
|       
|32.2    | 

21

---



# Exhibit 10(a)

---

# KNAPE & VOGT
MANUFACTURING COMPANY

# CREDIT AGREEMENT

# DATED AS OF AUGUST 28,
2003

# COMERICA BANK

---

Execution Copy



---



# CREDIT AGREEMENT

THIS
CREDIT AGREEMENT, made as of the 28th day of August, 2003, by and between KNAPE & VOGT
MANUFACTURING COMPANY, a Michigan corporation (herein called Company) and
COMERICA BANK, a Michigan banking corporation (herein called Bank).

# RECITALS:

A.       
          Company desires to obtain certain credit facilities from Bank.

B.       
          Bank is willing to extend such credit to Company on the terms and conditions
          herein set forth.

NOW,
THEREFORE, Bank and Company agree as follows:

WITNESSETH:

# DEFINITIONS

For
the purposes of this Agreement the following terms will have the following meanings:

Adjusted
Total Debt shall mean as of any date of determination, Funded Debt as of such
date, less cash and cash equivalents as of such date.

Adjusted
Total Debt to EBITDA Ratio shall mean as of any date of determination a ratio
the numerator of which is Adjusted Total Debt as of such date and the denominator of which
is EBITDA as of such date.

Advance
shall mean a borrowing requested by Company and made by Bank under Section 2 of this
Agreement, including any refunding or conversions of such borrowings pursuant to Section
3.3 hereof, and shall include a Eurodollar-based Advance and a Prime-based Advance.

Affiliate
shall mean, with respect to any Person, any other Person directly or indirectly
controlling (including but not limited to all directors and executive officers of such
Person), controlled by, or under direct or indirect common control with such Person. A
Person shall be deemed to control a corporation for the purposes of this definition if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such corporation
or (ii) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or otherwise.

Applicable Fee Percentage shall mean, as of any date of determination
thereof, the applicable percentage used to calculate certain of the fees due and payable
hereunder, determined by reference to the appropriate columns in the Pricing Matrix
attached to this Agreement as Schedule 1.1.



---



Applicable
Interest Rate shall mean the Eurodollar-based Rate or the Prime-based Rate, as
selected by Company from time to time subject to the terms and conditions of this
Agreement.

Applicable
L/C Commission Rate shall mean one percent (1%) per annum.

Applicable Margin
shall mean, as of any date of determination thereof, the applicable interest rate margin,
determined by reference to the appropriate columns in the Pricing Matrix attached to this
Agreement as Schedule 1.1.

Business
Day shall mean any day on which commercial banks are open for domestic and
international business (including dealings in foreign exchange) in Detroit, London and New
York.

Capital
Expenditure shall mean, without duplication, any payment made directly or
indirectly for the purpose of acquiring or constructing fixed assets, real property or
equipment which in accordance with GAAP would be added as a debit to the fixed asset
account of Company, including, without limitation, amounts paid or payable under any
conditional sale or other title retention agreement or under any lease or other periodic
payment arrangement which is of such a nature that payment obligations of Company or a
Subsidiary, as applicable, thereunder would be required by GAAP to be capitalized and
shown as liabilities on the balance sheet of Company and its consolidated Subsidiaries.

Capital
Lease shall mean any lease of any property (whether real, personal or mixed) by
Company or any Subsidiary as lessee which, in conformity with GAAP, is, or is required to
be accounted for as a capital lease on the balance sheet of Company and its consolidated
Subsidiaries.

Consolidated
or Consolidating shall mean, when used with reference to any financial
term in this Agreement, the aggregate for two or more Persons of the amounts signified by
such term for all such Persons determined on a consolidated or combined, as applicable,
basis in accordance with GAAP. Unless otherwise specified herein, references to
Consolidated financial statements or data of Company includes consolidation with its
Subsidiaries in accordance with GAAP.

Domestic
Subsidiary shall mean any direct or indirect Subsidiary of Company incorporated
under the laws of the United States of America, or any state, territory, possession or
other political subdivision thereof which is a domestic Subsidiary for purposes of Section
956 of the Internal Revenue Code; and Domestic Subsidiaries shall mean any or
all of them.

EBITDA
shall mean, as of any date of determination, the sum of the net income of Company and its
Consolidated Subsidiaries, for the four preceding fiscal quarters ending on such date of
determination, plus, to the extent deducted in computating such net income, (i) income
taxes for that period, (ii) interest expense for that period and (iii) depreciation and
amortization expense for that period, in each case determined in accordance with GAAP.



---



Environmental
Laws shall mean all federal, state and local laws including statutes,
regulations, ordinances, codes, rules, and other governmental restrictions and
requirements, relating to environmental pollution, contamination or other impairment of
the environment or any hazardous or toxic substances of any nature. These Environmental
Laws shall include but not be limited to the Federal Solid Waste Disposal Act, the Federal
Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery
Act of 1976, the Federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980, and the Federal Superfund Amendments and Reauthorization Act of 1986.

ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended, or any
successor act or code.

Eurodollar-based
Advance shall mean an Advance which bears interest at the Eurodollar-based Rate.

Eurodollar-based Rate
shall mean a per annum interest rate which is the Applicable Margin plus the
quotient of:

| | (a) | the per annum interest rate at which Banks Eurodollar Lending Office
          offers deposits to prime banks in the eurodollar market in an amount
          comparable to the relevant Eurodollar-based Advance and for a period equal to
          the relevant Interest Period at approximately the time Company requests
          such Advance on the first day of such Interest Period; divided by                                                                                                                                                                                                                                         
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | a percentage equal to 100% minus the maximum rate on such date at which Bank
          is required to maintain reserves on Euro-currency
          Liabilities as defined in and pursuant to Regulation D of the Board of
          Governors of the Federal Reserve System or, if such regulation or
          definition is modified, and as long as Bank is required to maintain
          reserves against a category of liabilities which includes eurodollar deposits
          or includes a category of assets which includes eurodollar loans, the
          rate at which such reserves are required to be maintained on such category;

all as conclusively determined by
Bank, such sum to be rounded upward, if necessary, to the nearest whole multiple of 1/16th
of 1%.

Eurodollar
Lending Office shall mean Banks office located at Grand Cayman, British
West Indies or such other branch of Bank, domestic or foreign, as it may hereafter
designate as its Eurodollar Lending Office by notice to Company.

Event
of Default shall mean any of the Events of Default specified in Section 10
hereof.

Foreign
Subsidiaries shall mean all of Companys direct or indirect Subsidiaries
other than the Domestic Subsidiaries.

Funded
Debt shall mean, without duplication, (a) all indebtedness of Company and its
consolidated Subsidiaries for borrowed money or for the deferred purchase price of
property or services as of such date (other than operating leases and trade liabilities
incurred in the ordinary course of business and payable in accordance with customary
practices) or which is evidenced by a note, bond, debenture or similar instrument, (b) the
principal component of all obligations of Company and its consolidated Subsidiaries under
Capitalized Leases, (c) all reimbursement obligations (actual, contingent or otherwise) of
such Person in respect of letters of credit, acceptances or similar obligations issued or
created for the account of Company and its consolidated Subsidiaries, (d) all liabilities
secured by any liens on any property owned by Company and its consolidated Subsidiaries as
of such date even though they have not assumed or otherwise become liable for the payment
thereof, in each case determined in accordance with GAAP; provided however that so long as
such Person is not personally liable for such liabilities, the amount of such liability
shall be deemed to be the lesser of the fair market value at such date of the property
subject to the lien securing such liability and the amount of the liability secured, and
(e) all guarantee obligations in respect of any liability which constitutes Funded Debt;
provided, however that Funded Debt shall not include any interest rate swap transaction,
basis swap transaction, forward rate transaction, commodity swap transaction, equity
transaction, equity index transaction, foreign exchange transaction, cap transaction,
floor transaction (including any option with respect to any of these transactions and any
combination of any of the foregoing) entered into by Company and its consolidated
Subsidiaries prior to the occurrence of a termination event with respect thereto.



---



FYE
shall mean with respect to any fiscal year of Company, the last day of such fiscal year.

GAAP
shall mean, as of any applicable date of determination, generally accepted accounting
principles consistently applied, as in effect on the date of this Agreement.

Guaranties
shall mean the guaranties of the Indebtedness by Companys Subsidiaries in the form
attached hereto as Exhibit C.

Guarantors
shall mean each of Companys existing Domestic Subsidiaries and each Subsidiary
required to execute a Guaranty pursuant to the provisions of Section 7.13 hereof.

Indebtedness
shall mean all loans, advances, indebtedness, obligations and liabilities of Company to
Bank under this Agreement, together with all other indebtedness, obligations and
liabilities whatsoever of Company to Bank arising under or in connection with this
Agreement, whether matured or unmatured, liquidated or unliquidated, direct or indirect,
absolute or contingent, joint or several, due or to become due, now existing or hereafter
arising.

Interest
Period shall mean a period of one (1), two (2), three (3), four (4), five (5),
six (6), nine (9) or twelve (12) months as selected by Company pursuant to the provisions
of this Agreement commencing on the day a Eurodollar-based Advance is made, or on the
effective date of an election of the Eurodollar-based Rate made under Section 3.1.

Letter
of Credit shall have the meaning set forth in Section 2.5.

Letter of
Credit Reserve shall mean as of any date of determination, an amount equal to
the aggregate principal amount of all undrawn Letters of Credit issued by Bank for the
account of Company under and pursuant to this Agreement and the amount of all draws under
Letters of Credit paid by Bank and not reimbursed by Company.



---



Leverage
Ratio shall mean as of any date of determination thereof, a ratio the numerator
of which is total liabilities of Company and its consolidated Subsidiaries as of such
date, as determined in accordance with GAAP and the denominator of which is Tangible Net
Worth as of such date.

Loan
Documents shall mean collectively, this Agreement, the Note, and any other
instruments or agreements executed at any time pursuant to or in connection with any such
documents.

Net
Worth shall mean as of any date of determination the stockholders equity
of Company and its consolidated Subsidiaries as of such date as determined in accordance
with GAAP.

Permitted
Acquisition shall mean an acquisition of all or any material part of the
business assets of another Person which meets the following requirements:

| | (a) | the acquired business is in a business the same as or related to Companys
               business;                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | the consideration for the acquisition (including assumption of debt and payments
               under non-competition agreements) does not exceed $5,000,000; and
| | (c) | after giving pro forma effect to the acquisition, no Event of Default under this
               Agreement shall have occurred and be continuing.                 

Permitted
Liens shall mean with respect to any Person:

| | (a) | liens for taxes not yet due and payable or which are being contested in good
          faith by appropriate proceedings diligently pursued, provided that provision for
          the payment of all such taxes has been made on the books of such Person as may
          be required by generally accepted accounting principles, consistently applied;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | mechanics, materialmens, bankers, carriers,
          warehousemens and similar liens and encumbrances arising in the ordinary
          course of business and securing obligations of such Person that are not overdue
          for a period of more than 60 days or are being contested in good faith by
          appropriate proceedings diligently pursued, provided that in the case of any
          such contest (i) any proceedings commenced for the enforcement of such liens and
          encumbrances shall have been duly suspended; and (ii) such provision for the
          payment of such liens and encumbrances has been made on the books of such Person
          as may be required by generally accepted accounting principles, consistently
          applied;                                                                                                                                                                                                                                                                                  
| | (c) | liens arising in connection with workers compensation, unemployment
          insurance, old age pensions and social security benefits and similar statutory
          obligations which are not overdue or are being contested in good faith by
          appropriate proceedings diligently pursued, provided that in the case of any
          such contest (i) any proceedings commenced for the enforcement of such liens
          shall have been duly suspended; and (ii) such provision for the payment of such
          liens has been made on the books of such Person as may be required by generally
          accepted accounting principles, consistently applied;                                                                                                                                                                                                                                                                                                                                                                                              
| | (d) | (i) liens incurred in the ordinary course of business to secure the performance
          of statutory obligations arising in connection with progress payments or advance
          payments due under contracts with the United States government or any agency
          thereof entered into in the ordinary course of business and (ii) liens incurred
          or deposits made in the ordinary course of business to secure the performance of
          statutory obligations, bids, leases, fee and expense arrangements with trustees
          and fiscal agents and other similar obligations (exclusive of obligations
          incurred in connection with the borrowing of money, any lease-purchase
          arrangements or the payment of the deferred purchase price of property),
          provided that full provision for the payment of all such obligations set forth
          in clauses (i) and (ii) has been made on the books of such Person as may be
          required by generally accepted accounting principles, consistently applied; and
| | (e) | minor survey exceptions or minor encumbrances, easements or reservations, or
          rights of others for rights-of-way, utilities and other similar purposes, or
          zoning or other restrictions as to the use of real properties, which do not
          materially interfere with the business of such Person.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



---



Person
or person shall mean any individual, corporation, partnership, joint
venture, limited liability company, association, trust, unincorporated association, joint
stock company, government, municipality, political subdivision or agency, or other entity.

Prime
Rate shall mean the per annum interest rate established by Bank as its prime
rate for its borrowers as such rate may vary from time to time, which rate is not
necessarily the lowest rate on loans made by Bank at any such time.

Prime-based
Advance shall mean an Advance which bears interest at the Prime-based Rate.

Prime-based Rate
shall mean for any day a per annum interest rate which is the Prime Rate plus or minus the
Applicable Margin.

Request
for Advance shall mean a Request for Advance issued by Company under this
Agreement in the form annexed to this Agreement as Exhibit A.

Revolving
Credit Maturity Date shall mean November 1, 2006.

Revolving Credit
Note or Note shall mean the Note described in Section 2.1 hereof
made by Company to Bank in the form annexed to this Agreement as Exhibit
B.

Subordinated
Debt shall mean all indebtedness of Company for borrowed money which is
subordinated to Companys indebtedness to Bank pursuant to a written subordination
agreement in form and substance acceptable to Bank and which otherwise is on terms
acceptable to Bank in the exercise of it sole discretion.

Subsidiary
shall mean a corporation or other entity of which more than fifty percent (50%) of the
outstanding voting stock or equivalent equity interests are owned by Company, either
direct or indirectly, through one or more intermediaries.

Tangible
Net Worth shall mean as of any date Net Worth less the Intangible Assets of the
Company and its consolidated Subsidiaries, all determined as of such date. For purposes of
this Agreement, Intangible Assets means the amount (to the extent reflected in
determining such Net Worth) of (i) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business) in the book value of any
asset owned by Company and its consolidated Subsidiaries, (ii) loans or advances to
Affiliates and receivables from Affiliates, (iii) all investments in unconsolidated
Subsidiaries of the Company and all equity investments in Persons which are not
Subsidiaries of Company and (iv) all unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible assets.



---



Uniform
Commercial Code or UCC shall mean the Uniform Commercial Code of any
applicable state and unless specified otherwise shall mean the Uniform Commercial Code as
in effect in the State of Michigan.

# 2. THE INDEBTEDNESS:
Revolving Credit

|2.1 |  | Bank agrees to make Advances to Company at any time and from time to time from the
effective date hereof until the Revolving Credit Maturity Date, not to exceed Thirty Five
Million Dollars ($35,000,000) in aggregate principal amount at any one time outstanding.
All of the Advances under this Section 2 shall be evidenced by the Revolving Credit Note
under which Advances, repayments and readvances may be made, subject to the terms and
conditions of this Agreement.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.2 |  | The Revolving Credit Note shall mature on the Revolving Credit Maturity Date and each
Advance from time to time outstanding thereunder shall bear interest at its Applicable
Interest Rate. The amount and date of each Advance, its Applicable Interest Rate, its
Interest Period, if applicable, and the amount and date of any repayment shall be noted on
Banks records, which records will be conclusive evidence thereof absent manifest
error.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.3 |  | Company may request an Advance under this Section 2 upon the delivery to Bank of a Request
for Advance executed by an authorized officer of Company, subject to the following:
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | each such Request for Advance shall set forth the information required on the
          Request for Advance form annexed hereto as Exhibit A;                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | each such Request for Advance shall be delivered to Bank by 2:00 p.m. on the
          proposed date of Advance;                                                                                                                                                                                                                         
| | (c) | the principal amount of such Advance, plus the amount of any outstanding
          indebtedness to be then combined therewith having the same Applicable Interest
          Rate and Interest Period, if any, shall be in the case of a Eurodollar-based
          Advance at least $500,000 or any larger amount in $100,000 increments;
| | (d) | a Request for Advance, once delivered to Bank, shall not be revocable by
          Company.                                                                                                                                                                                                                                              

| | Bank
may, at its option, lend under this Section 2 upon the telephone request of an authorized
officer of Company and, in the event Bank makes any such advance upon a telephone request,
the requesting officer shall, if so requested by Bank, mail to Bank, on the same day as
such telephone request, a Request for Advance in the form attached as Exhibit
A. Company hereby authorizes Bank to disburse Advances under this Section 2
pursuant to the telephone instructions of any person purporting to be an authorized
officer of Company and Company shall bear all risk of loss resulting from disbursements
made upon any telephone request. Each telephone request for an Advance shall constitute a
certification of the matters set forth in the Request for Advance form as of the date of
such requested Advance.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|2.4 |  | Company may prepay all or part of the outstanding balance of the Prime-based Advance(s)
under the Revolving Credit Note at any time. Upon one (1) Business Day prior notice to
Bank, Company may prepay all or part of any Eurodollar-based Advance, provided that the
amount of any such partial prepayment shall be at least $250,000 and the unpaid portion of
such Advance which is refunded or converted under Section 3.3 shall be subject to the
limitations of Section 2.3(c) hereof. Any prepayment of a Prime-based Advance or a
Eurodollar-based Advance on the last day of the Interest Period therefor made in
accordance with this Section shall be without premium, penalty or prejudice to
Companys right to reborrow under the terms of this Agreement. Any other prepayment
shall be subject to the provisions of Section 4.1 hereof.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.5 |  | In addition to Advances under the Revolving Credit Note to be provided to Company by Bank
under and pursuant to Section 2.1 of this Agreement, Bank further agrees to issue, or
commit to issue, from time to time, standby letters of credit for the account of Company
(herein individually called a Letter of Credit and collectively Letters
of Credit) in aggregate undrawn amounts not to exceed Two Million Five Hundred
Thousand Dollars ($2,500,000) at any one time outstanding; provided, however that the sum
of the aggregate amount of Advances outstanding under the Revolving Credit Note plus the
Letter of Credit Reserve shall not exceed Thirty Five Million Dollars ($35,000,000) at any
one time; and provided further that no Letter of Credit shall, by its terms, have an
expiration date which extends beyond the fifth (5th) Business Day before the Revolving
Credit Maturity Date or one (1) year after issuance, whichever first occurs. In addition
to the terms and conditions of this Agreement, the issuance of any Letters of Credit shall
also be subject to the terms and conditions of any letter of credit applications and
agreements executed and delivered by Company to Bank with respect thereto. Company shall
pay to Bank annually in advance a per annum fee equal to the Applicable L/C Commission
Rate of the amount of each standby Letter of Credit.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.6 |  | Company agrees to pay to Bank a commitment fee on the average daily balance of the unused
portion of the revolving credit commitment at the rate of the Applicable Commitment Fee
per annum, computed on the actual number of days elapsed using a year of 360 days. The
commitment fee shall be payable quarterly in arrears on the first day of each July,
October, January and April (commencing January 1, 2004) and on the Revolving Credit
Maturity Date. For purposes of calculating the commitment fee, outstanding Letters of
Credit shall be considered usage of the commitment.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.7 |  | Proceeds of Advances under the Revolving Credit Note shall be used solely for working
capital purposes, for Capital Expenditures and to repay existing indebtedness owed to
Fifth Third Bank, West Michigan.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 3. INTEREST, INTEREST
PERIODS, CONVERSIONS, PREPAYMENTS.

|3.1 |  | The Revolving Credit Note and the Advances thereunder shall bear interest from the date
thereof on the unpaid principal balance thereof from time to time outstanding, at a rate
per annum equal to the Prime-based Rate or the Eurodollar-based Rate, as the Company may
elect subject to the provisions of this Agreement. Interest on each Prime-based Advance
shall be payable monthly on the first Business Day of each month, commencing on the first
Business Day following the month during which such Advance is made, and at maturity.
Interest on each Eurodollar-based Advance shall be payable on the last day of the Interest
Period applicable thereto (unless sooner accelerated in accordance with the terms of this
Agreement); provided, however, if such Interest Period in respect of any such
Eurodollar-based Advance is more than three (3) months, interest thereon shall also be
payable at intervals of three (3) months from the date of such Advance. Notwithstanding
the foregoing, from and after the occurrence of any Event of Default and solely during the
continuation thereof, the Advances shall bear interest, payable on demand, at a rate per
annum equal to: (i) in the case of Prime-based Advances, three percent (3%) above the
Prime-based Rate; and (ii) in the case of a Eurodollar-based Advance, three percent (3%)
above the rate which would otherwise be applicable under this Section 3.1 until the end of
the then current Interest Period, at which time such Advance shall bear interest at the
rate provided for in clause (i) of this Section 3.1. Interest on all Advances shall be
calculated on the basis of a 360 day year for the actual number of days elapsed. The
interest rate with respect to any Prime-based Advance shall change on the effective date
of any change in the Prime-based Rate.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|3.2 |  | Each Interest Period for a Eurodollar-based Advance shall commence on the date such
Eurodollar-based Advance is made or is converted from an Advance of another type pursuant
to Section 3.3 hereof or on the last day of the immediately preceding Interest Period for
such Eurodollar-based Advance, and shall end on the date one, two, three, four, five, six,
nine or twelve months thereafter, as the Company may elect as set forth below, subject to
the following:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)  |  | no Interest Period shall extend beyond the Revolving Credit Maturity Date; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) |  | any Interest Period which would otherwise end on a day which is not a Business
               Day shall be extended to the next succeeding Business Day unless the next
               succeeding Business Day falls in another calendar month, in which case, such
               Interest Period shall end on the immediately preceding Business Day and when an
               Interest Period begins on a day which has no numerically corresponding day in
               the calendar month during which such Interest Period is to end, it shall end on
               the last Business Day of such calendar month.

| | The
Company shall elect the initial Interest Period applicable to a Eurodollar-based Advance
by its Request for Advance given to the Bank pursuant to Section 2.3 or by its notice of
conversion given to the Bank pursuant to Section 3.3, as the case may be. Provided that no
Event of Default shall have occurred and be continuing, the Company may elect to continue
an Advance as a Eurodollar-based Advance by giving irrevocable written, telephonic or
telegraphic notice thereof to the Bank, before 11:00 a.m. on the last day of the then
current Interest Period applicable to such Eurodollar-based Advance, specifying the
duration of the succeeding Interest Period therefor. If the Bank does not receive timely
notice of the election and the Interest Period elected by the Company, the Company shall
be deemed to have elected to convert such Eurodollar-based Advance to a Prime-based
Advance at the end of the then current Interest Period. No more than three (3) Interest
Periods shall be in effect at any one time with respect to the Revolving Credit Note.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



3.3Provided that no Event of Default shall have occurred and be continuing, the
Company may, on any Business Day, convert any outstanding Advance into an Advance of
another type in the same aggregate principal amount, provided that any conversion of a
Eurodollar-based Advance shall be made only on the last Business Day of the then current
Interest Period applicable to such Advance. If the Company desires to convert an Advance,
it shall give the Bank written, telephonic or telegraphic notice, specifying the date of
such conversion, the Advances to be converted, the type of Advance elected and, if the
conversion is into a Eurodollar-based Advance, the duration of the first Interest Period
therefor, which notice shall be given not later than 11:00 a.m. on the applicable date of
conversion.

4.    
          SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION.

|4.1 |  | If Company makes any payment of principal with respect to any Eurodollar-based Advance on
any day other than the last day of the Interest Period applicable thereto (whether
voluntarily, by acceleration, or otherwise), or if Company fails to borrow any
Eurodollar-based Advance after notice has been given by Company to Bank in accordance with
the terms hereof requesting such Advance, or if Company fails to make any payment of
principal or interest when due in respect of a Eurodollar-based Advance, Company shall
reimburse Bank on demand for any resulting loss, cost or expense incurred by Bank as a
result thereof, including, without limitation, any such loss, cost or expense incurred in
obtaining, liquidating, employing or redeploying deposits from third parties, whether or
not Bank shall have funded or committed to fund such Advance. Such amount payable by
Company to Bank may include, without limitation, an amount equal to the excess, if any, of
(a) the amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, refunded or converted, for the period from the date of such prepayment or of
such failure to borrow, refund or convert, through the last day of the relevant Interest
Period, at the applicable rate of interest for said Advance(s) provided under this
Agreement, over (b) the amount of interest (as reasonably determined by Bank) which would
have accrued to Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. Calculation of any amounts
payable to Bank under this paragraph shall be made as though Bank shall have actually
funded or committed to fund the relevant Eurodollar-based Advance through the purchase of
an underlying deposit in an amount equal to the amount of such Advance and having a
maturity comparable to the relevant Interest Period; provided, however, that Bank may fund
any Eurodollar-based Advance in any manner it deems fit and the foregoing assumptions
shall be utilized only for the purpose of the calculation of amounts payable under this
paragraph. Upon the written request of Company, Bank shall deliver to Company a
certificate setting forth the basis for determining such losses, costs and expenses, which
certificate shall be conclusively presumed correct, absent manifest error.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 |  | For any Interest Period for which the Applicable Interest Rate is the Eurodollar-based
Rate, if Bank shall designate a Eurodollar Lending Office which maintains books separate
from those of the rest of Bank, Bank shall have the option of maintaining and carrying the
relevant Advance on the books of such Eurodollar Lending Office.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | If with respect to any Interest Period Bank reasonably determines that, by reason of
circumstances affecting the foreign exchange and interbank markets generally, deposits in
Eurodollars in the applicable amounts are not being offered to the Bank for such Interest
Period, then Bank shall forthwith give notice thereof to the Company. Thereafter, until
Bank notifies Company that such circumstances no longer exist, the obligation of Bank to
make Eurodollar-based Advances, and the right of Company to convert an Advance to or
refund an Advance as a Eurodollar-based Advance shall be suspended.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|4.4 |  | If, after the date hereof, the introduction or implementation of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration thereof by
any governmental authority charged with the interpretation or administration thereof, or
compliance by Bank (or its Eurodollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, shall make it unlawful or
impossible for the Bank (or its Eurodollar Lending Office) to honor its obligations
hereunder to make or maintain any Advance with interest at the Eurodollar-based Rate, Bank
shall forthwith give notice thereof to Company. Thereafter (a) the obligations of Bank to
make Eurodollar-based Advances and the right of Company to convert an Advance or refund an
Advance as a Eurodollar-based Advance shall be suspended and thereafter Company may select
as Applicable Interest Rates only those which remain available, and (b) if Bank may not
lawfully continue to maintain an Advance to the end of the then current Interest Period
applicable thereto, the Prime-based Rate shall be the Applicable Interest Rate for the
remainder of such Interest Period.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.5 |  | If the adoption or implementation after the date hereof, or any change after the date
hereof in, any applicable law, rule or regulation of any governmental authority, central
bank or comparable agency charged with the interpretation or administration thereof, or
compliance by Bank (or its Eurodollar Lending Office) with any request or directive
(whether or not having the force of law) made by any such authority, central bank or
comparable agency after the date hereof:
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) |  | shall subject Bank (or its Eurodollar Lending Office) to any tax, duty or other
               charge with respect to any Advance or any Note or shall change the basis of
               taxation of payments to Bank (or its Eurodollar Lending Office) of the principal
               of or interest on any Advance or the Note or any other amounts due under this
               Agreement in respect thereof (except for changes in the rate of tax on the
               overall net income of Bank or its Eurodollar Lending Office imposed by any
               jurisdiction in which Bank is organized or engaged in business); or
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | shall impose, modify or deem applicable any reserve (including, without
               limitation, any imposed by the Board of Governors of the Federal Reserve
               System), special deposit or similar requirement against assets of, deposits with
               or for the account of, or credit extended by Bank (or its Eurodollar Lending
               Office) or shall impose on Bank (or its Eurodollar Lending Office) or the
               foreign exchange and interbank markets any other condition affecting any Advance
               or the Note;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | and
the result of any of the foregoing is to increase the costs to Bank of maintaining any
part of the indebtedness hereunder or to reduce the amount of any sum received or
receivable by Bank under this Agreement or under the Note, by an amount deemed by the Bank
to be material, then Bank shall promptly notify Company of such fact and demand
compensation therefor and, within fifteen days after demand by Bank, Company agrees to pay
to Bank such additional amount or amounts as will compensate Bank for such increased cost
or reduction. Bank will promptly notify Company of any event of which it has knowledge
which will entitle Bank to compensation pursuant to this Section. A certificate of Bank
setting forth the basis for determining such additional amount or amounts necessary to
compensate Bank shall be conclusively presumed to be correct save for manifest error. Bank
agrees that, as promptly as practical after it becomes aware of the occurrence of any
event or the existence of a condition that will cause Bank to be entitled to compensation
under this Section, it will, to the extent not inconsistent with Banks internal
policies, use reasonable efforts to make, fund or maintain any affected Eurodollar-based
Advance through another lending office of Bank if as a result thereof the additional
monies which would otherwise be required to be paid in respect of such Eurodollar-based
Advance would be materially reduced and if, as determined by Bank, in its reasonable
discretion, the making, funding or maintaining of such Eurodollar-based Advance through
such other lending office would not materially adversely affect such Advance or Bank.
Company shall pay all reasonable expenses incurred by Bank in utilizing another lending
office pursuant to this Section.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|4.6 |  | In the event that at any time after the date of this Agreement any change in law such as
described in Section 4.5, hereof, shall, in the reasonable opinion of Bank require that
the credit provided under Section 2 of this Agreement be treated as an asset or otherwise
be included for purposes of calculating the appropriate amount of capital to be maintained
by Bank or any corporation controlling Bank and such change has or would have the effect
of reducing the rate of return on Banks or Banks parents capital or
assets as a consequence of the Banks obligations hereunder to a level below that
which Bank or Banks parent would have achieved but for such change, then Bank shall
notify Company and demand compensation therefor and, within fifteen days after demand by
Bank, Company agrees to pay to Bank such additional amount or amounts as will compensate
Bank for such reduction. Bank will promptly notify Company of any event of which it has
knowledge which will entitle Bank to compensation pursuant to this Section. A certificate
of Bank setting forth the basis for determining such additional amount or amounts
necessary to compensate Bank shall be conclusively presumed to be correct save for
manifest error.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.7 |  | A late installment charge equal to five percent (5%) of each late installment under any
Note may be charged on any installment payment not received by Bank within ten (10)
calendar days after the installment due date but acceptance of this charge shall not waive
any default or Event of Default under this Agreement.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.8 |  | Adjustments to the Applicable Margin based on Schedule 1.1 shall be implemented quarterly as follows:
|--- |  | -----------------------------------------------------------------------------------------------------

(a)Such
adjustments shall be given prospective effect only, effective as to all on the first day
of the fiscal quarter occurring after the date of delivery of the financial statements
under Sections 7.1(a) and 7.1(b) hereunder and the covenant compliance report under
Section 7.9 hereof, in each case establishing applicability of the appropriate adjustment,
in each case with no retroactivity or claw-back. In the event the Company fails timely to
deliver such financial statements or the covenant compliance report, then (but without
affecting the Event of Default resulting therefrom) from the date delivery of such
financial statements and report was required until such financial statements and report
are delivered, the margins shall be at the highest level (Level 1) on the Pricing Matrix
attached to this Agreement as Schedule 1.1.

From the date of execution of this
Agreement until the adjustment date occurring following the delivery of the Companys
financial statements for the fiscal quarter ending June 30, 2003, the margins shall be
those set forth under the Level 2 column of the Pricing Matrix attached to this Agreement
as Schedule 1.1. Thereafter, all margins shall be based upon the Companys financial
statements and covenant compliance reports, subject to recalculation as provided in
subsection 4.8(a) above.



---



# 5. CONDITIONS

|5.1 |  | Company agrees to furnish Bank prior to the initial borrowing under this
Agreement, in form and substance to be satisfactory to Bank, with (i) certified copies of
resolutions of the Directors of Company evidencing approval of the borrowings and
transactions contemplated hereunder; (ii) a certificate of good standing from the state of
Companys incorporation and from the state(s) in which it is required to be qualified
to do business; (iii) an opinion of Companys legal counsel; and (iv) such other
documents and instruments as Bank may reasonably require.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 6. REPRESENTATIONS AND
WARRANTIES

Company
represents and warrants and such representations and warranties shall be deemed to be
continuing representations and warranties during the entire life of this Agreement:

|6.1 |  | Company is a corporation duly organized and existing in good standing under the laws of
the State of Michigan; Company and each of its Subsidiaries is in good standing in each
jurisdiction in which it is required to be qualified to do business, except where the
failure to be so qualified would not have a material adverse effect on the financial
condition of Company and its Subsidiaries or their ability to carry on their business;
execution, delivery and performance of this Agreement and other documents and instruments
required under this Agreement, and the issuance of the Note by Company are within its
powers, have been duly authorized, are not in contravention of law or the terms of
Companys Articles of Incorporation or Bylaws, and do not require the consent or
approval of any governmental body, agency or authority; and this Agreement and other
documents and instruments required under this Agreement and Note, when issued and
delivered, will be valid and binding on the Company in accordance with their terms.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.2 |  | The execution, delivery and performance of this Agreement and any other documents and
instruments required under this Agreement, and the issuance of the Notes by Company are
not in contravention of the unwaived terms of any indenture, agreement or undertaking to
which Company is a party or by which it is bound.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.3 |  | No litigation or other proceeding before any court or administrative agency is pending, or
to the knowledge of the officers of Company is threatened against Company or any of its
Subsidiaries, the outcome of which would reasonably be expected to materially impair
Companys or any Subsidiarys financial condition or the ability of Company or
any Subsidiary to carry on its business.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.4 |  | There are no security interests in, liens, mortgages, or other encumbrances on any of
Companys or any Subsidiarys assets, except to Bank or as otherwise permitted
by this Agreement.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.5 |  | Neither Company nor any Subsidiary maintains or contributes to any employee pension
benefit plan subject to title IV of the Employee Retirement Income Security Act of
1974 (herein called ERISA), except those set forth in attached
Schedule 6.5. There was no unfunded past service liability of any pension
plan maintained by the Company as of June 28, 2003, and there is no accumulated funding
deficiency within the meaning of ERISA, or any existing material liability with respect to
any pension plan owed to the Pension Benefit Guaranty Corporation (PBGC) or
any successor thereto, except any funding deficiency for which an application to the PBGC
for waiver is pending or for which a waiver has been granted by the PBGC.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|6.6 |  | The financial statements of the Company dated June 28, 2003, previously furnished to Bank,
fairly present in all material respects the financial condition of the Company and its
consolidated Subsidiaries as of such date; since said date there has been no material
adverse change in the financial condition of the Company and its consolidated
Subsidiaries; to the best of the knowledge of Companys officers, Company does not
have any material contingent obligations (including any liability for taxes) not disclosed
by or reserved against in said balance sheet, and at the present time there are no
material unrealized or anticipated losses from any present commitment of Company or any of
its Subsidiaries.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.7 |  | To the best knowledge of Company, the financial projections previously furnished by
Company to Bank were as of the date thereof and are as of the date of execution of this
Agreement reasonable in all material respects taking into account all facts and
information known or reasonably available to Company.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.8 |  | All tax returns and tax reports of Company and its consolidated Subsidiaries required by
law to have been filed have been duly filed or extensions obtained, and all taxes,
assessments and other governmental charges or levies (other than those presently payable
without penalty and those currently being contested in good faith for which adequate
reserves have been established) upon Company and its consolidated Subsidiaries (or any of
its or their properties) which are due and payable and for which the failure to pay would
materially adversely affect its business or the value of its property or assets have been
paid. The charges, accruals and reserves on the books of Company in respect of the Federal
income tax for all periods are adequate in the opinion of Company.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.9 |  | Except as set forth in Schedule 6.9, there are no subsidiaries of Company.
|--- |  | --------------------------------------------------------------------------



---



|6.10 |  | Except as set forth in Schedule 6.10
|---- |  | ------------------------------------

| | (a) |  | Company and each of its Subsidiaries, in the conduct of its business, is in
               compliance in all material respects with all federal, state or local laws,
               statutes, ordinances and regulations applicable to any of them, the enforcement
               of which, if such Person were not in compliance, would reasonably be expected to
               materially adversely affect its business or the value of its property or assets.
               Company and its Subsidiaries have all approvals, authorizations, consents,
               licenses, orders and other permits of all governmental agencies and authorities,
               whether federal, state or local, required to permit the operation of their
               business as presently conducted, except such approvals, authorizations,
               consents, licenses, orders and other permits with respect to which the failure
               to have would not reasonably be expected to materially adversely affect their
               business or the value of their property or assets (taken as a whole).
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | Neither Company nor any Subsidiary is a party to any litigation or
               administrative proceeding, nor so far as is known by Company is any litigation
               or administrative proceeding threatened against Company or any Subsidiary, the
               outcome of which would reasonably be expected to have a material adverse effect
               on the Company or any Subsidiary which in either case (i) asserts or alleges
               that Company or any Subsidiary violated Environmental Laws, (ii) asserts or
               alleges that Company or any Subsidiary is required to clean up, remove, or take
               remedial or other response action due to the disposal, depositing, discharge,
               leaking or other release of any hazardous substances or materials, (iii) asserts
               or alleges that Company or any Subsidiary is required to pay all or a portion of
               the cost of any past, present, or future cleanup, removal or remedial or other
               response action which arises out of or is related to the disposal, depositing,
               discharge, leaking or other release of any hazardous substances or materials by
               Company or any Subsidiary.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) |  | Neither Company nor any Subsidiary is subject to any judgment, decree, order or
               citation related to or arising out of applicable Environmental Laws which would
               reasonably be expected to materially adversely affect its business or the value
               of its property or assets and to the best knowledge of the Company, neither
               Company nor any Subsidiary has been named or listed as a potentially responsible
               party by any governmental body or agency in a matter arising under any
               applicable Environmental Laws which would reasonably be expected to materially
               adversely affect its business or the value of its property or assets.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) |  | To the best of Companys knowledge, Company and its Subsidiaries have all
               permits, licenses and approvals required under applicable Environmental Laws,
               the failure of which to have would have a material adverse effect on the
               operation of their business as presently conducted and as proposed to be
               conducted.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.11Company is not an investment company within the meaning of the
Investment Company Act of 1940, as amended. Company is not engaged principally, or as one
of its important activities, directly or indirectly, in the business of extending credit
for the purpose of purchasing or carrying margin stock, and none of the proceeds of any of
the loans hereunder will be used, directly or indirectly, for any purpose which would
violate the provisions of Regulation U or X of the Board of Governors of the Federal
Reserve System. Terms for which meanings are provided in Regulation U of the Board of
Governors of the Federal Reserve System or any regulations substituted therefor, as from
time to time in effect, are used in this paragraph with such meanings.

# 7. AFFIRMATIVE COVENANTS

Company
covenants and agrees that it will, so long as Bank may make any advance under this
Agreement and thereafter so long as any indebtedness remains outstanding under this
Agreement:



---



|7.1 |  | Furnish Bank:
|--- |  | -------------

|(a) |  | within ninety (90) days after and as of the end of each fiscal year of Company
               and its consolidated Subsidiaries, a detailed consolidated audit report of
               Company certified to by independent certified public accountants satisfactory to
               Bank;
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | within forty five (45) days after and as of the end of each fiscal quarter,
               consolidated balance sheets and statements of profit and loss of Company and its
               consolidated Subsidiaries certified by an authorized officer of Company as being
               correct and accurate to the best of his knowledge;
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | within thirty (30) days prior to July 1 of each year, financial projections for
               the Company and its consolidated Subsidiaries in the form previously supplied to
               Bank;
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) |  | as soon as available, Companys 8-K, 10-Q and 10-K reports filed with the
               federal Securities and Exchange Commission, and in any event, with respect to
               the 10-Q report, within forty five (45) days of the end of each of the first
               three fiscal quarters of each of Companys fiscal years, and with respect
               to the 10-K report, within ninety (90) days after and as of the end of each of
               Companys fiscal years; and as soon as available, copies of all material
               filings, reports or other documents filed by Company or any of its Subsidiaries
               with the federal Securities and Exchange Commission or other federal regulator
               or taxing agencies or authorities in the United States, or comparable agencies
               or authorities in foreign jurisdictions, or any stock exchanges in such
               jurisdiction;
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) |  | promptly, and in form to be satisfactory to Bank, such other information as Bank
               may reasonably request from time to time.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------

|7.2 |  | Pay and discharge, and cause its
               Subsidiaries to pay and discharge, all taxes and other governmental charges, and
               all contractual
obligations calling for the payment of money, before the same shall become overdue, unless
and to the extent only that such payment is being contested in good faith.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.3 |  | Maintain, and cause its Subsidiaries to maintain, insurance coverage on their physical
assets and against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the event of
acquisition of additional property, real or personal, or of incurrence of additional risks
of any nature, increase such insurance coverage in such manner and to such extent as
prudent business judgment and present practice would dictate; and in the case of all
policies covering property mortgaged or pledged to Bank or property in which Bank shall
have a security interest of any kind whatsoever, other than those policies protecting
against casualty liabilities to strangers, all such insurance policies shall provide that
the loss payable thereunder shall be payable to Company and Bank (as mortgagee) as their
respective interests may appear, all said policies or copies thereof, including all
endorsements thereon and those required hereunder, to be deposited with Bank.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.4 |  | Permit Bank, through its authorized attorneys, accountants and representatives, to examine
Companys and each Subsidiarys books, accounts, records, ledgers and assets of
every kind and description at all reasonable times upon oral or written request of Bank.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.5 |  | Promptly notify Bank of any condition or event which constitutes or with the running of
time and/or the giving of notice would constitute an event of default under this
Agreement, and promptly inform Bank of the existence or occurrence of any condition or
event (other than conditions having an effect on the economy in general) which could have
a material adverse effect upon Companys or any Subsidiarys financial
condition.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|7.6 |  | Maintain, and cause its Subsidiaries to maintain, in good standing all licenses required
by the State of Michigan or any agency thereof, or other governmental authority that may
be necessary or required for Company and its Subsidiaries to carry on its general business
objects and purposes.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.7 |  | Comply, and cause its Subsidiaries to comply, with all material requirements imposed by
ERISA as presently in effect or hereafter promulgated, including but not limited to, the
minimum funding requirements of any Pension Plan.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.8 |  | Promptly notify Bank after the occurrence thereof in writing of any of the following events:
|--- |  | --------------------------------------------------------------------------------------------

|(a) |  | the termination of a Pension Plan pursuant to Subtitle C of Title IV of ERISA or otherwise;
|--- |  | -------------------------------------------------------------------------------------------

|(b) |  | the appointment of a trustee by a United States District Court to administer a Pension Plan;
|--- |  | --------------------------------------------------------------------------------------------

|(c) |  | the commencement by the Pension Benefit Guaranty Corporation, or any successor
               thereto of any proceeding to terminate a Pension Plan;
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(d) |  | the failure of a Pension Plan to satisfy the minimum funding requirements for
               any plan year as established in Section 412 of the Internal Revenue Code of
               1954, as amended or any similar provision under the Internal Revenue Code of
               1986, as amended;
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) |  | the withdrawal of Company or any Subsidiary from a Pension Plan; or (f) a
               reportable event, within the meaning of Title IV of ERISA.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|7.9 |  | Furnish to the Bank concurrently with the delivery of each of the financial statements
required by Section 7.1(a) and Section 7.1(b), a statement prepared and certified by the
chief financial officer of Company (or in such officers absence, a responsible
senior officer of Company) (a) setting forth all computations necessary to show compliance
by Company with the financial covenants contained in Section 7.10, 7.11 and 7.12 hereof,
(b) stating that as of the date thereof, no condition or event which constitutes an event
of default hereunder or which with the running of time and/or the giving of notice would
constitute an event of default hereunder has occurred and is continuing, or if any such
event or condition has occurred and is continuing or exists, specifying in detail the
nature and period of existence thereof and any action with respect thereto taken or
contemplated to be taken by Company and (c) stating that the signer has personally
reviewed this Agreement and that such certificate is based on an examination sufficient to
assure that such certificate is accurate.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.10 |  | Maintain as of the end of each fiscal quarter a Leverage Ratio of not more than 2.0 to 1.0.
|---- |  | -------------------------------------------------------------------------------------------

|7.11 |  | Maintain as of the end of each
fiscal quarter, an Adjusted Total Debt to EBITDA Ratio of not more than 2.25 to 1.0.
|---- |  | -------------------------------------------------------------------------------------------------------------------



---



|7.12 |  | Maintain as of the end of each fiscal year Tangible Net Worth of not less than the
following amounts:
|---- |  | -----------------------------------------------------------------------------------------------------

|                              | 
|----------------------------- | 
|Fiscal Year End               | 
|2004                          | 
|2005                          | 
|2006                          | 
|2007 and each year thereafter | 

Notwithstanding the above, on the
last day of each fiscal year of Company, the required Tangible Net Worth floor shall be
adjusted to be equal to the amount stated above or, in the event Net Income is greater
than $5,600,000, the Tangible Net Worth requirement for the fiscal year ending on such day
plus an amount equal to 50% of net income of Company and its consolidated Subsidiaries for
the fiscal year then ended, whichever is greater.

|7.13 |  | With respect to each Person which becomes a Domestic Subsidiary of Company
subsequent to the date of this Agreement and on the date a new Domestic Subsidiary is
created or acquired, as the case may be, cause each such Subsidiary to execute and deliver
to Bank, a Guaranty of the Indebtedness in form and substance acceptable to Bank.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 8. NEGATIVE COVENANTS

Company
covenants and agrees that, so long as Bank may make any Advances under this Agreement and
thereafter so long as any Indebtedness remains outstanding under this Agreement, it will
not, and will cause its Subsidiaries not to, without the prior written consent of Bank:

|8.1 |  | Enter into any merger or consolidation or sell, lease, transfer, or dispose of all,
substantially all, or any part of its assets, except sales of inventory in the ordinary
course of its business and sales and other dispositions of obsolete machinery and
equipment in the ordinary course of business.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8.2 |  | Guarantee, endorse, or otherwise become secondarily liable for or upon the obligations of
others, except (a) by endorsement for deposit in the ordinary course of business, (b)
guaranties in favor of Bank and (c) unsecured guaranties by Company of lease obligations
of a Subsidiary of Company.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8.3 |  | Purchase or otherwise acquire or become obligated for the purchase of all or substantially
all of the assets or business interests of any person, firm or corporation or any shares
of stock of any corporation, trusteeship or association or in any other manner effectuate
or attempt to effectuate an expansion of present business by acquisition, except for
Permitted Acquisitions and except for the formation of Domestic Subsidiaries which are
Guarantors.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8.4 |  | Affirmatively pledge or mortgage any of its assets, whether now owned or hereafter
acquired, or create, suffer or permit to exist any lien, security interest in, or
encumbrance thereon, except:
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | to Bank;
|--- |  | --------

|(b) |  | the Permitted Liens;
|--- |  | --------------------

|(c) |  | liens described in attached Schedule 8.4; and
|--- |  | ---------------------------------------------

|(d) |  | liens and security interests upon fixed assets acquired by Company after the
               date of this Agreement (including by virtue of a Capital Lease) provided that
               (i) any such lien or security interest is created solely for the purpose of
               securing indebtedness representing, or incurred to finance, the cost of the item
               of property subject thereto; (ii) the principal amount of the indebtedness
               secured by such lien does not exceed 100% of the fair value of the property at
               the time it was acquired, and (iii) the lien or security interest does not cover
               any property other than such item of property.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|8.5 |  | Sell, assign, transfer or confer a security interest in any account, contract, note, trade
acceptance or other receivable, except to Bank.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------

|8.6 |  | Materially alter the character of its business from that conducted as of the date of this Agreement.
|--- |  | ----------------------------------------------------------------------------------------------------

|8.7 |  | Make any Capital Expenditure during any fiscal year if after giving effect thereto the aggregate amount of all Capital
Expenditures
made by Company and its Subsidiaries during such fiscal year would exceed $5,000,000.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8.8 |  | Enter into any transaction or series of transactions with any Affiliate other than on
terms and conditions as favorable to Company as would be obtainable in a comparable
arms-length transaction with a Person other than an Affiliate.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8.9 |  | Make or allow to remain outstanding any investment (whether such investment shall be of
the character of investment in shares of stock, evidence of indebtedness or other
securities or otherwise) in, or any loans or advances or extensions of credit to, any
person, firm, corporation or other entity or association, except:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | investments of surplus cash in cash equivalents;
|--- |  | ------------------------------------------------

|(b) |  | sales on open account and
          in the ordinary course of business;
|--- |  | -----------------------------------------------------------------------

|(c) |  | deposits made in the ordinary course of
          business in order to obtain goods or services;
|--- |  | ------------------------------------------------------------------------------------------------

|(d) |  | Companys existing
          investments in its Foreign Subsidiaries;
|--- |  | ---------------------------------------------------------------------

|(e) |  | Companys investments in
          Domestic Subsidiaries;
|--- |  | ---------------------------------------------------------

|(f) |  | other loans, advances and investments not exceeding
          $500,000 in the aggregate at any time outstanding.
|--- |  | ----------------------------------------------------------------------------------------------------------------

|8.10 |  | Enter into or become
          subject to any agreement (other than this Agreement) (i) prohibiting the
          creation or assumption of
any
lien or encumbrance upon the properties or assets of Company or (ii) requiring an
obligation to become secured (or further secured) if another obligation is secured or
further secured.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8.11 |  | Become or remain obligated for any indebtedness for borrowed money, or for any
indebtedness incurred in connection with the acquisition of any property, real or
personal, tangible or intangible, except:
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | indebtedness to Bank;
|--- |  | ---------------------

|(b) |  | current unsecured trade payables and accrued liabilities arising in the ordinary
               course of Companys business (including, without limitation, obligations
               under operating leases);
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | indebtedness described in attached Schedule 8.11;
|--- |  | -------------------------------------------------

|(d) |  | Subordinated Debt;
|--- |  | ------------------

|(e) |  | purchase money indebtedness incurred in connection with the acquisition of fixed
               assets in an aggregate amount not exceeding $250,000 incurred during any single
               fiscal year of Company.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



# 9.0 ENVIRONMENTAL
PROVISIONS

|9.1 |  | Company shall comply, and shall cause its Subsidiaries to comply, with all applicable
Environmental Laws except for such non-compliance which would reasonably not be expected
to materially adversely affect its business or the value of its property or assets.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9.2 |  | Company shall provide to Bank, promptly upon receipt, copies of any correspondence,
notice, pleading, citation, indictment, complaint, order, decree, or other document from
any source asserting or alleging a circumstance or condition which requires or may require
a financial contribution by Company or any Subsidiary to a cleanup, removal, remedial
action, or other response by or on the part of Company or any Subsidiary under applicable
Environmental Laws or which seeks damages or civil, criminal or punitive penalties from
Company for an alleged violation of Environmental Laws, where such contribution, response
or damages would reasonably be expected to materially adversely affect its business or the
value of its property or assets.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9.3 |  | Company shall promptly notify Bank in writing as soon as Company becomes aware of the
occurrence or existence of any condition or circumstance which makes the environmental
warranties contained in this Agreement incomplete or inaccurate in any material respect as
of any date.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9.4 |  | In the event of any condition or circumstance that makes any environmental warranty,
representation and/or agreement incomplete or inaccurate in any material respect as of any
date, Company shall, at the reasonable request of Bank, at its sole expense, retain an
environmental consultant, reasonably acceptable to Bank, to conduct a thorough and
complete investigation regarding the changed condition and/or circumstance. A copy of the
environmental consultants report will be promptly delivered to both Bank and Company
upon completion.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9.5 |  | At any time Company, directly or indirectly through any environmental consultant or other
representative, determines to undertake an environmental audit, assessment or
investigation relating to any fact, event or condition which would reasonably be expected
to materially adversely affect its business or the value of its property or assets,
Company shall promptly provide Bank with written notice of the initiation of the
environmental audit, fully describing the purpose and intended scope of the environmental
audit. Upon receipt, Company will promptly provide to Bank copies of all final findings
and conclusions of any such environmental investigation.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9.6 |  | Company hereby indemnifies, saves and holds Bank and any of its past, present and future
officers, directors, shareholders, employees, representatives and consultants harmless
from any and all loss, damages, suits, penalties, costs, liabilities and expenses
(including but not limited to reasonable investigation, environmental audit(s), and legal
expenses) arising out of any claim, loss or damage to any property, injuries to or death
of persons, contamination of or adverse affects on the environment, or any violation of
any applicable Environmental Laws, caused by or in any way related to any property owned
or operated by Company, or due to any acts of Company or such persons, officers,
directors, shareholders, employees, consultants and/or representatives; provided, however,
that the foregoing indemnification shall not be applicable when arising solely from events
or conditions occurring while the Bank is in sole possession (subject to the rights of any
creditors of Company) of such property. In no event shall Company be liable hereunder for
any loss, damages, suits, penalties, costs, liabilities or expenses arising from any act
of gross negligence of Bank, or its agents or employees.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



It
is expressly understood and agreed that the indemnifications granted herein are intended
to protect Bank, its past, present and future officers, directors, shareholders,
employees, consultants and representatives from any claims that may arise by reason of the
security interest, liens and/or mortgages granted to Bank, or under any other document or
agreement given to secure repayment of any indebtedness from Company, whether or not such
claims arise before or after Bank has foreclosed upon and/or otherwise become the owner of
any such property.

It
is expressly agreed and understood that the provisions hereof shall and are intended to be
continuing and shall survive the repayment of any indebtedness from Company to Bank.

9.7Company shall maintain,
and shall cause its Subsidiary to maintain, all permits, licenses and approvals required
under applicable Environmental Laws except such permits, licenses and approvals the
failure of which to have would reasonably not be expected to materially adversely affect
its business or the value of its property or assets.



---



# 10. EVENTS OF DEFAULT

10.1
Upon occurrence of any of the following events of default:

|(a) |  | non-payment of any installment of the principal of the Note when due or any
               reimbursement obligation with respect to any Letter of Credit when due;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | non-payment of any interest on the Note when due in accordance with the terms
               thereof, or upon non-payment of any other outstanding Indebtedness when due in
               accordance with the terms thereof and continuance thereof for five (5) days;
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | default in the observance or performance of any of the conditions, covenants or
               agreements of Company set forth in Section 7.5, 7.10, 7.11, 7.12 or set forth in
               Section 8;
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) |  | default in the observance or performance of any of the conditions, covenants or
               agreements of Company set forth in Section 7.1(a), (b), (c), (d) or 7.9 and
               continuance thereof for ten (10) days;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) |  | default in observance or performance of any of the other conditions, covenants
               or agreements of Company herein set forth, and continuance thereof for thirty
               (30) days after written notice to Company by Bank;
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) |  | any material representation or warranty made by Company or any other Person
               herein or in any instrument submitted pursuant hereto proves untrue in any
               material respect when made or deemed made;
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) |  | default in the payment of any other obligation of Company or any Subsidiary for
               borrowed money in an aggregate amount in excess of One Hundred Thousand Dollars
               ($100,000), or in the observance or performance of any conditions, covenants or
               agreements related or given with respect to any obligations for borrowed money
               in an aggregate amount in excess of One Hundred Thousand Dollars ($100,000)
               sufficient to permit the holder thereof to accelerate the maturity of such
               obligation;
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(h) |  | judgments for the payment of money in excess of the sum of One Hundred Thousand
               Dollars ($100,000) in the aggregate shall be rendered against Company or any
               Subsidiary and such judgments shall remain unpaid, unvacated, unbonded or
               unstayed by appeal or otherwise for a period of thirty (30) consecutive days
               from the date of its entry and such judgment is not covered by insurance from a
               solvent insurer who is defending such action without reservation of rights;
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(i) |  | the occurrence of any reportable event, as defined in the Employee
               Retirement Income Security Act of 1974 and any amendments thereto, which is
               determined to constitute grounds for termination by the Pension Benefit Guaranty
               Corporation of any employee pension benefit plan maintained by or on behalf of
               Company or any Subsidiary for the benefit of any of its employees or for the
               appointment by the appropriate United States District Court of a trustee to
               administer such plan and is reasonably likely that the occurrence of such event
               would result in a material adverse effect on Company, and such reportable event
               is not corrected and such determination is not revoked within thirty (30) days
               after notice thereof has been given to the plan administrator or Company; or the
               institution of proceedings by the Pension Benefit Guaranty Corporation to
               terminate any such employee benefit pension plan or to appoint a trustee to
               administer such plan; or the appointment of a trustee by the appropriate United
               States District Court to administer any such employee benefit pension plan;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(j) |  | if there shall be any change for any reason in the management, ownership or
               control of Company or any Subsidiary which in the sole reasonable judgment of
               Bank materially adversely affects Company;
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(k) |  | the revocation of any of the Guaranties;
|--- |  | ----------------------------------------



---



then, or at any time thereafter,
unless such default is remedied, Bank may give notice to Company declaring all outstanding
indebtedness hereunder and under the Note to be due and payable, whereupon all
Indebtedness then outstanding hereunder and under the Note and any Letters of Credit shall
immediately become due and payable without further notice and demand, and Bank shall not
be obligated to make further Advances or issue any Letter of Credit hereunder.

|10.2 |  | If a creditors committee shall have been appointed for the business of Company or
any Subsidiary in connection with any bankruptcy or insolvency; or if Company or any
Subsidiary shall have made a general assignment for the benefit of creditors or shall have
been adjudicated bankrupt, or shall have filed a voluntary petition in bankruptcy or for
reorganization or to effect a plan or arrangement with creditors; or shall file an answer
to a creditors petition or other petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or for reorganization; or shall have
applied for or permitted the appointment of a receiver, or trustee or custodian for any of
its property or assets; or such receiver, trustee or custodian shall have been appointed
for any of its property or assets (otherwise than upon application or consent of Company
or any Subsidiary, as applicable), and such receiver, trustee or custodian so appointed
shall not have been discharged within sixty (60) days after the date of his appointment or
if an order shall be entered and shall not be dismissed or stayed within sixty (60) days
from its entry, approving any petition for reorganization of Company or any Subsidiary,
then the Note and all Indebtedness then outstanding hereunder and under any Letters of
Credit shall automatically become immediately due and payable and Bank shall not be
obligated to make further Advances or issue any Letters of Credit under this Agreement.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|10.3 |  | Upon the occurrence and during the continuance of an Event of Default, unless all of the
Indebtedness is then immediately fully paid, Bank shall have and may exercise any one or
more of the rights and remedies for which provision is made by law or in equity,
including, without limitation, the right to set off against the Indebtedness any amount
owing by Bank to Company and/or any property of Company in possession of Bank.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | The remedies provided for herein are cumulative to the remedies for collection of the
Indebtedness as provided by law, in equity or by any other document contemplated hereby.
Nothing herein contained is intended, nor shall it be construed, to preclude Bank from
pursuing any other remedy for the recovery of any other sum to which Bank may be or become
entitled for the breach of this Agreement by Company.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Upon the occurrence and during the continuance of any Event of Default, Company shall
immediately upon demand by Bank deposit with Bank cash collateral in the amount equal to
the maximum amount available to be drawn at any time under any Letter of Credit then
outstanding.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 11. MISCELLANEOUS

|11.1 |  | This Agreement shall be binding upon and shall inure to the benefit of Company and Bank
and their respective successors and assigns, except that the credit provided for under
this Agreement and no part thereof and no obligation of Bank hereunder shall be assignable
or otherwise transferable by Company.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.2 |  | Company shall pay all closing costs and expenses, including, by way of description and not
limitation, reasonable attorney fees and lien search fees incurred by Bank in connection
with the commitment, consummation and closing of this Agreement. All of said amounts
required to be paid by Company may, at Banks option, be charged by Bank as an
advance against the proceeds of the Note. All costs, including reasonable attorney fees
incurred by Bank in protecting or enforcing any of its or any of the Banks rights
against Company or any collateral or in defending Bank from any claims or liabilities by
any party or otherwise incurred by Bank in connection with an event of default or the
enforcement of this Agreement or the related documents, including by way of description
and not limitation, such charges in any court or bankruptcy proceedings or arising out of
any claim or action by any person against Bank which would not have been asserted were it
not for Banks relationship with Company hereunder, shall also be paid by Company.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.3 |  | Where the character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation is required
to be made for the purposes of this Agreement, it shall be done in accordance with GAAP.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.4 |  | No delay or failure of Bank in exercising any right, power or privilege hereunder shall
affect such right, power or privilege, nor shall any single or partial exercise thereof
preclude any further exercise thereof, or the exercise of any other power, right or
privilege. The rights of Bank under this Agreement are cumulative and not exclusive of any
right or remedies which Bankwould otherwise have.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|11.5 |  | Except as expressly provided otherwise in this Agreement, all notices and other
communications provided to any party hereto under this Agreement shall be in writing and
shall be given by personal delivery, by mail, by reputable overnight courier, by telex or
by facsimile and addressed or delivered to it at its address set forth below or at such
other address as may be designated by such party in a notice to the other parties that
complies as to delivery with the terms of this Section 11.5. Any notice, if personally
delivered or if mailed and properly addressed with postage prepaid and sent by registered
or certified mail, shall be deemed given when received; any notice, if given to a
reputable overnight courier and properly addressed, shall be deemed given two (2) Business
Days after the date on which it was sent, unless it is actually received sooner by the
named addressee; and any notice, if transmitted by telex or facsimile, shall be deemed
given when received (answerback confirmed in the case of telexes and receipt confirmed in
the case of telecopies). Bank may, but shall not be required to, take any action on the
basis of any notice given to it by telephone, but Company shall promptly confirm such
notice in writing or by telex or facsimile, and such notice will not be deemed to have
been received until such confirmation is deemed received in accordance with the provisions
of this Section set forth above. If such telephonic notice conflicts with any such
confirmation, the terms of such telephonic notice shall control.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | To Company:
2700 Oak Industrial Dr., NE
Grand Rapids, Michigan 49505
Attention: Leslie J. Cummings
Fax No. (616) 459-3467
To Bank:
99 Monroe N.W., Suite 1000
Grand Rapids, Michigan 49503
Attention: Bryce E. Tallant
Fax No. (616) 776-7885
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.6 |  | This Agreement and the Notes have been delivered at Detroit, Michigan, and shall be
governed by and construed and enforced in accordance with the laws of the State of
Michigan. Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.7 |  | No amendments or waiver of any provisions of this Agreement nor consent to any departure
by Company therefrom shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No amendment,
waiver or consent with respect to any provision of this Agreement shall affect any other
provision of this Agreement.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|11.8 |  | All sums payable by Company to Bank under this Agreement or the other documents
contemplated hereby shall be paid directly to Bank at its principal office set forth in
Section 11.5 hereof in immediately available United States funds, without set off,
deduction or counterclaim. In its sole discretion, Bank may charge any and all deposit or
other accounts (including without limit an account evidenced by a certificate of deposit)
of Company with Bank for all or a part of any Indebtedness then due; provided, however,
that this authorization shall not affect Companys obligation to pay, when due, any
Indebtedness whether or not account balances are sufficient to pay amounts due.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.9 |  | Any payment of the Indebtedness made by mail will be deemed tendered and received only
upon actual receipt by Bank at the address designated for such payment, whether or not
Bank has authorized payment by mail or any other manner, and shall not be deemed to have
been made in a timely manner unless received on the date due for such payment, time being
of the essence. Company expressly assumes all risks of loss or liability resulting from
non-delivery or delay of delivery of any item of payment transmitted by mail or in any
other manner. Acceptance by Bank of any payment in an amount less than the amount then due
shall be deemed an acceptance on account only, and the failure to pay the entire amount
then due shall be and continue to be an Event of Default, and at any time thereafter and
until the entire amount then due has been paid, Bank shall be entitled to exercise any and
all rights conferred upon it herein upon the occurrence of an Event of Default. Upon the
occurrence and during the continuance of an Event of Default, Company waives the right to
direct the application of any and all payments at any time or times hereafter received by
Bank from or on behalf of Company. Upon the occurrence and during the continuance of an
Event of Default, Company agrees that Bank shall have the continuing exclusive right to
apply and to reapply any and all payments received at any time or times hereafter against
the Indebtedness in such manner as Bank may deem advisable, notwithstanding any entry by
Bank upon any of its books and records. Company expressly agrees that to the extent that
Bank receives any payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set aside or is
required to be repaid to a trustee, receiver, or any other party under any bankruptcy act,
state or federal law, common law or equitable cause, then to the extent of such payment or
benefit, the Indebtedness or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if such payment or benefit had not been made and,
further, any such repayment by Bank, to the extent that Bank did not directly receive a
corresponding cash payment, shall be added to and be additional Indebtedness payable upon
demand by Bank.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.10 |  | In the event Companys obligation to pay interest on the principal balance of the
Note is or becomes in excess of the maximum interest rate which Company is permitted by
law to contract or agree to pay, giving due consideration to the execution date of this
Agreement, then, in that event, the rate of interest applicable shall be deemed to be
immediately reduced to such maximum rate and all previous payments in excess of such
maximum rate shall be deemed to have been payments in reduction of principal and not of
interest.
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



|11.11 |  | COMPANY AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT
THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL
BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE
PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.12 |  | This Agreement shall become
effective upon the execution hereof by Bank and Company.
|----- |  | ------------------------------------------------------------------------------------

WITNESS
the due execution hereof as of the day and year first above written.

|                                                                     |                                                                                                            
|-------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------
|COMERICA BANK
By:________________________________Its: Vice President | KNAPE & VOGT MANUFACTURING COMPANY
By:________________________________Its:_________________________________



---



# SCHEDULE 1.1

# Applicable Margin (Expressed in basis
points)

|                                    |       |            |            |      
|----------------------------------- | ----- | ---------- | ---------- | -----
|Adjusted Total Debt to EBITDA Ratio | Prime | Eurodollar | Unused Fee | Level
|2.0 to 1.0                         | 25    | 125        | 20         | 1    
|<2.0 to 1.0and1.75 to 1.0          | 0     | 95         | 17.5       | 2    
|<1.75 to 1.0and1.50 to 1.0         | 0     | 85         | 15         | 3    
|<1.50 to 1.0and1.25 to 1.0         | -25   | 75         | 12.5       | 4    
|<1.25 to 1.0and1.0 to 1.0          | -50   | 65         | 12.5       | 5    
|<1.0 to 1.0                         | -75   | 60         | 12.5       | 6    



---



# EXHIBIT A

# REQUEST FOR ADVANCE

Pursuant
to the Credit Agreement dated as of August 28, 2003, (herein called
Agreement), the undersigned hereby requests COMERICA BANK to make a(an)
__________1 Advance to the undersigned on ____________, ____, in the amount of
________________________DOLLARS, ($________) under the Revolving Credit Note dated August
28, 2003, issued by the undersigned to said Bank (herein called Note). The
Interest Period for the requested Advance, if applicable, shall be
___________2. The last day of the Interest Period for the amounts being
converted or refunded hereunder, if applicable, is ________, ___.

The
undersigned certifies that no event has occurred or condition exists which constitutes, or
with the passage of time and/or giving of notice would constitute, a default under the
Agreement or the Note, and none will exist upon the making of the Advance requested
hereunder. The undersigned further certifies that upon advancing the sum requested
hereunder, the aggregate principal amount outstanding under the Note will not exceed the
face amount thereof or any advance formula applicable to Advances under such Note. If the
amount advanced to the undersigned under the Note shall at any time exceed the face amount
thereof or any Advance formula applicable to Advances under such Note, the undersigned
will pay such excess amount on demand.

The
undersigned hereby authorizes said Bank to disburse the proceeds of this Request for
Advance by crediting the account of the undersigned with Bank separately designated by the
undersigned or as the undersigned may otherwise direct, unless this Request for Advance is
being submitted for a conversion or refunding, in which case it shall refund or convert
that portion stated above of the existing outstandings under the Note.

Dated
this ___day of ___________, _____.

| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | KNAPE &VOGT MANUFACTURING COMPANY
By:_________________________________
Its:_________________________________

_______________________

i Insert, as applicable,
"Eurodollar-based", or "Prime-based".ii For a Eurodollar-based Advance insert,
as applicable, "one month", "two months", "three months", "four months", "five months",
"six months", "nine months", or "twelve months".



---



# EXHIBIT B

# REVOLVING CREDIT NOTE

|            |                                 
|----------- | --------------------------------
|$35,000,000 | Detroit, MichiganAugust 28, 2003

On
or before the Revolving Credit Maturity Date FOR VALUE RECEIVED, Knape & Vogt
Manufacturing Company, a Michigan corporation, (herein called Company)
promises to pay to the order of COMERICA BANK, a Michigan banking corporation (herein
called Bank) at its Main Office at 500 Woodward Avenue, Detroit, Michigan, in
lawful money of the United States of America the indebtedness or so much of the sum of
Thirty Five Million Dollars ($35,000,000) as may from time to time have been advanced and
then be outstanding hereunder pursuant to the Credit Agreement dated as of August 28,
2003, made by and between Company and Bank (as the same may be amended or modified from
time to time, herein called Agreement), together with interest thereon as
hereinafter set forth.

Each
of the Advances hereunder shall bear interest at the Applicable Interest Rate from time to
time applicable thereto under the Agreement or as otherwise determined thereunder, and
interest shall be computed, assessed and payable as set forth in the Agreement.

This
Note is a note under which advances, repayments and readvances may be made from time to
time, subject to the terms and conditions of the Agreement. This Note evidences borrowing
under, is subject to, is secured in accordance with, and may be matured under, the terms
of the Agreement, to which reference is hereby made. As additional security for this Note,
Company grants Bank a lien on all property and assets including deposits and other credits
of the Company, at any time in possession or control of or owing by Bank for any purpose.

Company
hereby waives presentment for payment, demand, protest and notice of dishonor and
nonpayment of this Note and agrees that no obligation hereunder shall be discharged by
reason of any extension, indulgence, or forbearance granted by any holder of this Note to
any party now or hereafter liable hereon. Any transferees of, or endorser, guarantor or
surety paying this Note in full shall succeed to all rights of Bank, and Bank shall be
under no further responsibility for the exercise thereof or the loan evidenced hereby.
Nothing herein shall limit any right granted Bank by other instrument or by law.



---



All
capitalized terms used but not defined herein shall have the meanings ascribed to them in
the Agreement.

| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | KNAPE &VOGT MANUFACTURING COMPANY
By:_________________________________
Its:_________________________________



---



# SCHEDULE 6.5

# ERISA PLANS



---



# SCHEDULE 6.9

# SUBSIDIARIES



---



# SCHEDULE 6.10

# NONCOMPLIANCE WITH
LAWS; LITIGATION; JUDGMENTS;
ENVIRONMENTAL LICENSES



---



# SCHEDULE 8.4

# OTHER PERMITTED
ENCUMBRANCES



---



# SCHEDULE 8.11

# OTHER PERMITTED DEBT



---



# EXHIBIT 31.1

I, William R. Dutmers, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Knape & Vogt
          Manufacturing Company;
|-- | ---------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this report does not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this report;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting, to the
          registrants auditors and the audit committee of the registrants
          board of directors (or persons performing the equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | all significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |                                                                                            
|---------------------- | -------------------------------------------------------------------------------------------
|Date: October 24, 2003 | /s/ William R. Dutmers
William R. Dutmers
Chairman of the Board and Chief Executive Officer



---



# EXHIBIT 31.2

I, Leslie J. Cummings, certify that:

|1. | I have reviewed this quarterlyl report on Form 10-Q of Knape & Vogt
          Manufacturing Company;
|-- | ----------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this report does not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this report;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting, to the
          registrants auditors and the audit committee of the registrants
          board of directors (or persons performing the equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | all significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |                                                                                  
|---------------------- | ---------------------------------------------------------------------------------
|Date: October 24, 2003 | /s/ Leslie J. Cummings
Leslie J. Cummings
Vice President of Finance and Treasurer



---



# EXHIBIT 32.1

| | I,
William R. Dutmers, Chairman of the Board and Chief Executive Officer of Knape & Vogt
Manufacturing Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) |  | the Quarterly Report on Form 10-Q for the three months ended September 27, 2003
               which this statement accompanies fully complies with the requirements of Section
               13(a) or 15(d) of the Securities Act of 1934, and
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | the information contained in the Quarterly Report on Form 10-Q for the three
               months ended September 27, 2003 fairly presents, in all material respects, the
               financial condition and results of operations of Knape & Vogt Manufacturing
               Company.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |                                                                                            
|---------------------- | -------------------------------------------------------------------------------------------
|Date: October 24, 2003 | /s/ William R. Dutmers
William R. Dutmers
Chairman of the Board and Chief Executive Officer



---



# EXHIBIT 32.2

| | I,
Leslie J. Cummings, Vice President of Finance and Treasurer of Knape & Vogt
Manufacturing Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) |  | the Quarterly Report on Form 10-Q for the three months ended September 27, 2003
               which this statement accompanies fully complies with the requirements of Section
               13(a) or 15(d) of the Securities Act of 1934, and
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | the information contained in the Quarterly Report on Form 10-Q for the three
               months ended September 27, 2003 fairly presents, in all material respects, the
               financial condition and results of operations of Knape & Vogt Manufacturing
               Company.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |                                                                                  
|---------------------- | ---------------------------------------------------------------------------------
|Date: October 24, 2003 | /s/ Leslie J. Cummings
Leslie J. Cummings
Vice President of Finance and Treasurer