Document:

Greystone
        Business Credit II LLC

      
        
          

        

      

    

     

    GUARANTY

     

    
      	
              Borrower:

            	
              Rousseau
                Controls, Inc., a
                corporation organized under the laws of Canada

            
	 	 
	
              Borrower:

            	
              Hydramen
                Fluid Power Limited, a
                corporation organized under the laws of Ontario

            
	 	 
	
              Guarantor:

            	
              Pneutech
                Inc., a
                corporation organized under the laws of Canada

            

    

    

    Each
      Borrower, as a debtor under an insolvency proceeding commenced in the Commercial
      Division of the Superior Court of the Province of Quebec, District of Montreal,
      under the Companies' Creditors Arrangement Act R.S.C. 1985, c. C-36 (the
      "CCAA"),
      and
      each of which is continuing to operate its business and manage its properties
      pursuant to the provisions of the CCAA, has requested that GREYSTONE
      BUSINESS CREDIT II LLC ("Lender")
      provide certain financial accommodations to such Borrower pursuant to the terms
      of a Loan and Security Agreement between such Borrower and Lender, each dated
      of
      even date herewith (as amended from time to time, the "Loan
      Agreements"
      and
      each individually a "Loan
      Agreement").
      As
      one of the conditions to providing financing to each Borrower, Lender has
      required that Guarantor, also a debtor under an insolvency proceeding commenced
      in the Commercial Division of the Superior Court of the Province of Quebec,
      District of Montreal, under the CCAA and continuing to operate its business
      and manage its properties pursuant to the provisions of the CCAA, guaranty
      all
      obligations of each Borrower to Lender.

    

    For
      value
      received and in consideration of any loan, advance or financial accommodation
      of
      any kind whatsoever heretofore, now or hereafter made, given or granted to
      each
      Borrower by Lender pursuant to the Loan Agreements, Guarantor unconditionally
      jointly
      and severally (solidarily) guaranties
      the full and prompt payment when due, whether at maturity or earlier, by reason
      of acceleration or otherwise, and at all times thereafter, of the indebtedness,
      liabilities and obligations of every kind and nature of each Borrower to Lender
      (including, without limitation, all interest accruing after the filing of a
      proceeding under the Bankruptcy Code (as defined in the Loan Agreements) whether
      or not allowed by the court in such proceeding, and all other indebtedness,
      liabilities and obligations arising after the filing of any proceeding under
      the
      Bankruptcy Code), howsoever created, arising or evidenced, whether direct or
      indirect, absolute or contingent, joint or several, now or hereafter existing,
      or due or to become due, in each case arising under the Loan Agreements or
      the
      other Loan Documents (as defined in the Loan Agreements), plus all costs and
      expenses (including, without limitation, all court costs and reasonable
      attorneys' and paralegals' fees and expenses) paid or incurred by Lender in
      endeavoring to collect all or any part of such indebtedness, liabilities and
      obligations from, or in prosecuting any action against, Guarantor or any other
      guarantor of all or any part of such indebtedness, liabilities and obligations
      (all such indebtedness, liabilities, obligations, costs and expenses being
      hereinafter referred to as "Borrower's
      Obligations"
      for
      each individual Borrower and "Borrowers'
      Obligations"
      for all
      Borrowers). All sums becoming due under this Guaranty shall bear interest from
      the due date thereof until paid at the highest rate charged with respect to
      any
      of any Borrowers' Obligations under the Loan Agreements. Guarantor
      expressly renounces to the benefits of division and discussion.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Guarantor
      agrees that its obligations under this Guaranty are unconditional, irrespective
      of (i) the validity or enforceability of Borrowers' Obligations or any note
      or
      other instrument evidencing Borrowers' Obligations, (ii) the absence of any
      attempt by Lender to collect any of Borrowers' Obligations from any Borrower
      or
      any other guarantor, (iii) Lender's waiver or consent with respect to any
      provision of the Loan Documents, (iv) Lender's failure to perfect or maintain
      its security interests in, or to preserve its rights with respect to, any of
      the
      Collateral (as defined in the Loan Agreements), (v) Lender's election, in any
      proceeding under Chapter 11 of the Bankruptcy Code or other applicable
      insolvency law, of the application of Section 1111(b)(2) of the Bankruptcy
      Code
      or similar provision of any other applicable insolvency law, (vi) any borrowing
      or grant of a security interest by any Borrower as debtor-in-possession under
      Section 364 of the Bankruptcy Code or similar provision of any other applicable
      insolvency law, (vii) the disallowance, under Section 502 of the Bankruptcy
      Code
      or similar provision of any other applicable insolvency law, of all or any
      of
      Lender's claims for repayment of Borrowers' Obligations, (viii)
      any lack or limitation of power, incapacity or disability on the part of either
      Borrower or of the directors, partners or agents thereof, (ix) any change or
      changes in the name, corporate existence or structure of either Borrower or
      the
      link or relationship between Guarantor and either Borrower, or (ix)
      any
      other circumstance that might constitute a legal or equitable discharge or
      defense of any Borrower or any guarantor.

     

    No
      payment made by or for the account or benefit of Guarantor (including, without
      limitation, (i) a payment made by any Borrower in respect of any such Borrower's
      Obligations, (ii) a payment made by any person under any other guaranty of
      any
      of Borrowers' Obligations or (iii) a payment made by means of set off,
      compensation or other application of funds by Lender) shall entitle Guarantor,
      by subrogation or otherwise, to any payment by any Borrower or from or out
      of
      any property of any such Borrower, and Guarantor shall not exercise any rights
      or remedies against any Borrower or any property of any such Borrower including,
      without limitation, any right of contribution, indemnity or reimbursement by
      reason of any performance by Guarantor under this Guaranty, all of such rights
      of subrogation, contribution, indemnity and reimbursement being hereby waived
      by
      Guarantor. The provisions of this paragraph shall survive the termination of
      this Guaranty or the release or discharge of Guarantor from liability hereunder.
      Each Borrower is a third party beneficiary of the provisions of this
      paragraph.

     

    Guarantor
      hereby waives diligence, presentment, demand for payment, filing of claims
      with
      a court in the event of receivership or bankruptcy of any Borrower, protest
      or
      notice with respect to Borrowers' Obligations and all demands whatsoever, and
      covenants that this Guaranty will not be discharged, except by complete and
      irrevocable payment and performance of the obligations and liabilities contained
      herein. No notice to any party, including Guarantor, shall be required for
      Lender to make demand hereunder. Such demand shall constitute a mature and
      liquidated claim against Guarantor. At any time after maturity of any Borrower's
      Obligations, whether by acceleration or otherwise, Lender may, at its sole
      election, proceed directly and at once, without notice, against Guarantor to
      collect and recover the full amount or any portion of any such Borrower's
      Obligations, without first proceeding against any such Borrower or any other
      person or against any of the Collateral. Lender shall have the exclusive right
      to determine the application of payments and credits, if any, from Guarantor,
      any Borrower or any other person, on account of any such Borrower's
      Obligations.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    Lender
      is
      hereby authorized, without notice or demand to Guarantor and without affecting
      or impairing the liability of Guarantor hereunder, to from time to time (i)
      renew, extend, accelerate or otherwise change the time for payment of, or other
      terms relating to, any Borrower's Obligations or otherwise modify, amend or
      change the terms of any promissory note or other agreement, document or
      instrument now or hereafter executed by any Borrower and delivered to Lender;
      (ii) accept partial payments on any Borrower's Obligations; (iii) take and
      hold
      Collateral for the payment of any Borrower's Obligations, or for the payment
      of
      this Guaranty, or for the payment of any other guaranties of any Borrower's
      Obligations or other liabilities of any Borrower, and exchange, enforce, waive
      and release any Collateral; (iv) apply Collateral and direct the order or manner
      of sale thereof as it may determine in its sole discretion; and (v) settle,
      release, compromise, collect or otherwise liquidate any Borrower's Obligations
      and any Collateral in any manner.

     

    At
      any
      time after maturity of any Borrower's Obligations, Lender may, in its sole
      discretion, without notice to Guarantor and regardless of the acceptance of
      any
      Collateral for the payment hereof, appropriate and apply toward payments of
      any
      such Borrower's Obligations, (i) any indebtedness due or to become due from
      Lender to Guarantor and (ii) any moneys, credits or other property belonging
      to
      Guarantor at any time held by or coming into the possession of Lender or any
      affiliates of Lender, whether for deposit or otherwise.

     

    Guarantor
      assumes responsibility for keeping itself informed of the financial condition
      of
      each Borrower and all other guarantors of all or any of Borrowers' Obligations,
      and of all other circumstances bearing upon the risk of nonpayment of any
      Borrowers' Obligations or any part thereof that diligent inquiry might reveal,
      and Guarantor agrees that Lender shall have no duty to advise Guarantor of
      information known to Lender regarding any of the foregoing. Guarantor
      acknowledges familiarity with each Borrower's financial condition and represents
      that it has not relied on any statements made, or information furnished, by
      Lender or its agents in obtaining such familiarity. If Lender provides any
      such
      information to Guarantor, Lender shall be under no obligation to (i) undertake
      any investigation not a part of its regular business routine, (ii) disclose
      any
      information which, pursuant to accepted or reasonable commercial finance
      practices, Lender wishes to maintain confidential or (iii) make any other or
      future disclosures of any information to Guarantor.

     

    Notwithstanding
      any contrary provision of this Guaranty, it is intended that neither this
      Guaranty nor any liens, hypothecs or security interests securing this Guaranty
      constitute a "Fraudulent
      Conveyance"
      (as
      defined below). Consequently, Guarantor agrees that if this Guaranty or any
      liens, hypothecs or security interests securing this Guaranty would, but for
      the
      application of this sentence, constitute a Fraudulent Conveyance, this Guaranty
      and each such lien and security interest shall be valid and enforceable only
      to
      the maximum extent that would not cause this Guaranty or such lien or security
      interest to constitute a Fraudulent Conveyance, and this Guaranty shall
      automatically be deemed to have been amended accordingly at all relevant times.
      For purposes hereof, a "Fraudulent
      Conveyance"
      means a
      fraudulent conveyance under Section 548 of the Bankruptcy Code or a fraudulent
      conveyance or fraudulent transfer under any applicable fraudulent conveyance
      or
      fraudulent transfer law or similar law of any state or other governmental unit
      as in effect from time to time or similar provision of any other applicable
      insolvency law,
      including the Bankruptcy and Insolvency Act (Canada).

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    Guarantor
      waives the right to assert the doctrine of marshaling with respect to any of
      the
      Collateral securing any Borrower's Obligations. Guarantor further agrees that,
      to the extent any Borrower makes one or more payments to Lender, or Lender
      receives any proceeds of Collateral, which are subsequently invalidated,
      declared to be fraudulent or preferential, set aside or required to be repaid
      to
      any such Borrower, its estate, trustee, receiver or any other party under the
      Bankruptcy Code or other law, that portion of any such Borrower's Obligations
      which has been paid, reduced or satisfied by such payment or proceeds shall
      be
      reinstated and continued in full force and effect as of the date such initial
      payment, reduction or satisfaction occurred and this Guaranty shall continue
      to
      be in existence and in full force and effect, irrespective of whether any
      evidence of indebtedness or this Guaranty has been surrendered or
      canceled.

     

    Guarantor
      agrees that all payments hereunder shall be made without setoff, compensation
      or
      counterclaims and Guarantor waives all presentments, demands for performance,
      notices of nonperformance, protests, notices of protest, notices of dishonor
      and
      notices of acceptance of this Guaranty. Guarantor further waives all notices
      of
      the existence, creation or incurring of new or additional indebtedness, arising
      either from additional loans extended to any Borrower or otherwise, and also
      waives all notices that the principal amount, or any portion thereof, or any
      interest on any instrument or document evidencing all or any part of any
      Borrowers' Obligations is due, notices of any and all proceedings to collect
      from the maker, any endorser or any other guarantor of all or any part of any
      Borrowers' Obligations, or from anyone else, and, to the extent permitted by
      law, notices of exchange, sale, foreclosure, realization, surrender or other
      handling of any Collateral securing any Borrower's Obligations.

     

    No
      delay
      on the part of Lender in the exercise of any right or remedy shall operate
      as a
      waiver thereof, and no single or partial exercise by Lender of any right or
      remedy shall preclude any further exercise thereof except as expressly set
      forth
      in a writing duly signed and delivered on Lender's behalf by an authorized
      officer or agent of Lender; nor shall any modification or waiver of any of
      the
      provisions of this Guaranty be binding upon Lender, except as expressly set
      forth in a writing duly signed and delivered on Lender's behalf by an authorized
      officer or agent of Lender. Lender's failure at any time or times hereafter
      to
      require strict performance by any Borrower or Guarantor of any of the
      provisions, warranties, terms and conditions contained in any promissory note,
      security agreement, deed of hypothec, agreement, guaranty, instrument or
      document now or at any time or times hereafter executed by any Borrower or
      Guarantor and delivered to Lender, shall not waive, affect or diminish any
      right
      of Lender at any time or times hereafter to demand strict performance thereof
      and such right shall not be deemed to have been waived by any act or knowledge
      of Lender, or its respective agents, officers or employees, unless such waiver
      is contained in an instrument in writing signed by an officer or agent of
      Lender, and directed to any such Borrower or Guarantor, as applicable,
      specifying such waiver. No waiver by Lender of any default shall operate as
      a
      waiver of any other default or the same default on a future occasion, and no
      action by Lender permitted hereunder shall in any way affect or impair Lender's
      rights or the obligations of Guarantor under this Guaranty. Any determination
      by
      a court of competent jurisdiction of the amount of any principal or interest
      owing by any Borrower to Lender shall be conclusive and binding on Guarantor
      irrespective of whether Guarantor was a party to the suit or action in which
      such determination was made.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    Guarantor
      hereby represents and warrants that (i) it is in Guarantor's direct
      interest to assist each Borrower in procuring credit, because any such Borrower
      is an affiliate of Guarantor, furnishes goods or services to Guarantor,
      purchases or acquires goods or services from Guarantor, and/or otherwise has
      a
      direct or indirect corporate or business relationship with Guarantor,
      (ii) this Guaranty has been duly and validly authorized, executed and
      delivered and constitutes the valid and binding obligation of Guarantor,
      enforceable in accordance with its terms, and (iii) the execution and
      delivery of this Guaranty does not violate or constitute a default under (with
      or without the giving of notice, the passage of time, or both) any order,
      judgment, decree, instrument or agreement to which Guarantor is a party or
      by
      which it or its assets are affected or bound.

     

    Each
      payment to be made under this Guaranty will be made in US dollars (the
      "Specified
      Currency").
      To
      the fullest extent permitted by applicable law, any obligation of Guarantor
      to
      make payments under this Guaranty in the Specified Currency will not be
      discharged or satisfied by any tender in any currency other than the Specified
      Currency. To the fullest extent permitted by applicable law, if any judgment
      or
      order expressed in a currency other than the Specified Currency is rendered
      for
      any payment of any amount owing in respect of this Guaranty, Lender, after
      recovery in full of the aggregate amount to which it is entitled pursuant to
      the
      judgment or order, will be entitled to receive immediately from Guarantor the
      amount of any shortfall of the Specified Currency received by Lender as a
      consequence of sums paid in such other currency and will refund promptly to
      Guarantor any excess of the Specified Currency received by Lender as a
      consequence of sums paid in such other currency if such shortfall or such excess
      arises or results from any variation between the rate of exchange at which
      the
      Specified Currency are converted into the currency of the judgment or order
      for
      the purposes of such judgment or order and the rate of exchange at which Lender
      is able, acting in a reasonable manner and in good faith, in converting the
      currency received into the Specified Currency, to purchase the Specified
      Currency with the amount of the currency of the judgment or order actually
      received by Lender. The term "rate of exchange" includes, without limitation,
      any premiums and costs of exchange payable in connection with the purchase
      of or
      conversion into the Specified Currency.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    All
      payments to be made hereunder by Guarantor shall be made free and clear of
      deduction for any present or future tax, levy, impost, duty, charge,
      withholding, assessment or fee of any nature (including interest, penalties
      and
      additions thereto) that is imposed by any government or other taxing authority,
      but excluding, (i) taxes imposed on or measured by Lender's capital, net income
      and franchise taxes or any other tax imposed on Lender for the privilege of
      doing business, (ii) any taxes (other than withholding taxes) that would not
      be
      imposed but for a connection between Lender and the jurisdiction imposing such
      taxes (other than a connection arising solely by virtue of the activities of
      Lender pursuant to or in respect of this Guaranty or any Loan Document), (iii)
      any taxes imposed on Lender as a result of its voluntary transfer of the Loans
      or any interest therein, (iv) any taxes imposed on or measured by Lender's
      assets, gross or net income, gross or net receipts, branch profits, capital
      gains, excess profits, minimum taxes from tax preferences, alternative minimum
      taxes or accumulated earnings taxes and (v) any taxes for which Lender is
      actually reimbursed pursuant to any other provisions of this Guaranty (all
      such
      non-excluded taxes, levies, imposts, deductions, charges, withholdings and
      liabilities being collectively referred to herein as "Taxes"). If any Taxes
      are
      imposed and required to be withheld from any payment hereunder, Guarantor shall
      (a) increase the amount of such payment so that Lender will receive a net amount
      (after deduction of all Taxes, including any Taxes on the amount of any such
      increase) equal to the amount due hereunder, (b) pay such Taxes to the
      appropriate taxing authority for the account of Lender and (c) as promptly
      as
      possible thereafter, send Lender an original receipt showing payment thereof,
      together with such additional documentary evidence as Lender may from time
      to
      time reasonably require. If Guarantor fails to perform its obligations under
      parts (b) or (c) of the preceding sentence, Guarantor shall indemnify Lender
      for
      any incremental Taxes, interest or penalties that may become payable by Lender
      as a consequence of such failure.

     

    This
      Guaranty shall be binding upon Guarantor and upon the successors and permitted
      assigns of Guarantor and shall inure to the benefit of Lender and its successors
      and assigns. All references herein to any Borrower shall be deemed to include
      its successors and permitted assigns and all references herein to Lender shall
      be deemed to include its successors and assigns. Each Borrower's and Guarantor's
      successors and permitted assigns shall include a receiver, trustee, custodian
      of
      or for any such Borrower or Guarantor or any of their respective assets and
      any
      such Borrower or Guarantor as debtor-in-possession. All references to the
      singular shall be deemed to include the plural where the context so
      requires.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    GUARANTOR
      HEREBY CONSENTS AND AGREES THAT THE STATE AND FEDERAL COURTS IN NEW YORK COUNTY,
      NEW YORK SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
      OR DISPUTES WITH RESPECT TO THIS GUARANTY AND WAIVES ANY OBJECTION WHICH IT
      MAY
      HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS
      TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND CONSENTS THAT ALL SERVICE
      OF PROCESS UPON GUARANTOR BE MADE BY REGISTERED MAIL OR MESSENGER DIRECTED
      TO
      GUARANTOR AT THE ADDRESS SET FORTH BELOW GUARANTOR'S SIGNATURE AND THAT SERVICE
      SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. GUARANTOR
      HEREBY AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY GUARANTOR AGAINST LENDER
      OR
      ANY MATTER ARISING OUT OF THIS GUARANTY SHALL BE BROUGHT EXCLUSIVELY IN THE
      STATE AND FEDERAL COURTS IN NEW YORK COUNTY, NEW YORK. GUARANTOR HEREBY WAIVES,
      TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. NOTHING CONTAINED HEREIN SHALL
      AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
      BY LAW OR AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST
      GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
      JURISDICTION.

     

    THIS
      GUARANTY SHALL BE GOVERNED IN ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE
      OF
      NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
      LAWS.

     

    Wherever
      possible each provision of this Guaranty shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Guaranty shall be prohibited by or invalid under such 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
      Guaranty.

     

    [Signature
      page follows]

     

     

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Guaranty has been duly executed by Guarantor this
      7th
      day of
      September, 2006.

     

    
      	 	 	 
	 	
              PNEUTECH
                INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ David
              Marks
	 	Its
              Chairman
	 	 
	 	 
	 	
              [Address]Greystone
        Business Credit II LLC

      
        
          

        

      

       

    

    GUARANTY

     

    
      	
              Borrower:

            	
              Pneutech
                Inc., a
                corporation organized under the laws of Canada 

            
	 	 
	
              Borrower:

            	
              Hydramen
                Fluid Power Limited, a
                corporation organized under the laws of Ontario

            
	 	 
	
              Guarantor:

            	
              Rousseau
                Controls Inc., a
                corporation organized under the laws of
                Canada

            

    

    

    Each
      Borrower, as a debtor under an insolvency proceeding commenced in the Commercial
      Division of the Superior Court of the Province of Quebec, District of Montreal,
      under the Companies' Creditors Arrangement Act R.S.C. 1985, c. C-36 (the
      "CCAA"),
      and
      each of which is continuing to operate its business and manage its properties
      pursuant to the provisions of the CCAA, has requested that GREYSTONE
      BUSINESS CREDIT II LLC ("Lender")
      provide certain financial accommodations to such Borrower pursuant to the terms
      of a Loan and Security Agreement between such Borrower and Lender, each dated
      of
      even date herewith (as amended from time to time, the "Loan
      Agreements"
      and
      each individually a "Loan
      Agreement").
      As
      one of the conditions to providing financing to each Borrower, Lender has
      required that Guarantor, also a debtor under an insolvency proceeding commenced
      in the Commercial Division of the Superior Court of the Province of Quebec,
      District of Montreal, under the CCAA and continuing to operate its business
      and manage its properties pursuant to the provisions of the CCAA, guaranty
      all
      obligations of each Borrower to Lender.

    

    For
      value
      received and in consideration of any loan, advance or financial accommodation
      of
      any kind whatsoever heretofore, now or hereafter made, given or granted to
      each
      Borrower by Lender pursuant to the Loan Agreements, Guarantor unconditionally
      jointly
      and severally (solidarily) guaranties
      the full and prompt payment when due, whether at maturity or earlier, by reason
      of acceleration or otherwise, and at all times thereafter, of the indebtedness,
      liabilities and obligations of every kind and nature of each Borrower to Lender
      (including, without limitation, all interest accruing after the filing of a
      proceeding under the Bankruptcy Code (as defined in the Loan Agreements) whether
      or not allowed by the court in such proceeding, and all other indebtedness,
      liabilities and obligations arising after the filing of any proceeding under
      the
      Bankruptcy Code), howsoever created, arising or evidenced, whether direct or
      indirect, absolute or contingent, joint or several, now or hereafter existing,
      or due or to become due, in each case arising under the Loan Agreements or
      the
      other Loan Documents (as defined in the Loan Agreements), plus all costs and
      expenses (including, without limitation, all court costs and reasonable
      attorneys' and paralegals' fees and expenses) paid or incurred by Lender in
      endeavoring to collect all or any part of such indebtedness, liabilities and
      obligations from, or in prosecuting any action against, Guarantor or any other
      guarantor of all or any part of such indebtedness, liabilities and obligations
      (all such indebtedness, liabilities, obligations, costs and expenses being
      hereinafter referred to as "Borrower's
      Obligations"
      for
      each individual Borrower and "Borrowers'
      Obligations"
      for all
      Borrowers). All sums becoming due under this Guaranty shall bear interest from
      the due date thereof until paid at the highest rate charged with respect to
      any
      of any Borrowers' Obligations under the Loan Agreements. Guarantor
      expressly renounces to the benefits of division and discussion.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Guarantor
      agrees that its obligations under this Guaranty are unconditional, irrespective
      of (i) the validity or enforceability of Borrowers' Obligations or any note
      or
      other instrument evidencing Borrowers' Obligations, (ii) the absence of any
      attempt by Lender to collect any of Borrowers' Obligations from any Borrower
      or
      any other guarantor, (iii) Lender's waiver or consent with respect to any
      provision of the Loan Documents, (iv) Lender's failure to perfect or maintain
      its security interests in, or to preserve its rights with respect to, any of
      the
      Collateral (as defined in the Loan Agreements), (v) Lender's election, in any
      proceeding under Chapter 11 of the Bankruptcy Code or other applicable
      insolvency law, of the application of Section 1111(b)(2) of the Bankruptcy
      Code
      or similar provision of any other applicable insolvency law, (vi) any borrowing
      or grant of a security interest by any Borrower as debtor-in-possession under
      Section 364 of the Bankruptcy Code or similar provision of any other applicable
      insolvency law, (vii) the disallowance, under Section 502 of the Bankruptcy
      Code
      or similar provision of any other applicable insolvency law, of all or any
      of
      Lender's claims for repayment of Borrowers' Obligations, (viii)
      any lack or limitation of power, incapacity or disability on the part of either
      Borrower or of the directors, partners or agents thereof, (ix) any change or
      changes in the name, corporate existence or structure of either Borrower or
      the
      link or relationship between Guarantor and either Borrower, or (ix)
      any
      other circumstance that might constitute a legal or equitable discharge or
      defense of any Borrower or any guarantor.

     

    No
      payment made by or for the account or benefit of Guarantor (including, without
      limitation, (i) a payment made by any Borrower in respect of any such Borrower's
      Obligations, (ii) a payment made by any person under any other guaranty of
      any
      of Borrowers' Obligations or (iii) a payment made by means of set off,
      compensation or other application of funds by Lender) shall entitle Guarantor,
      by subrogation or otherwise, to any payment by any Borrower or from or out
      of
      any property of any such Borrower, and Guarantor shall not exercise any rights
      or remedies against any Borrower or any property of any such Borrower including,
      without limitation, any right of contribution, indemnity or reimbursement by
      reason of any performance by Guarantor under this Guaranty, all of such rights
      of subrogation, contribution, indemnity and reimbursement being hereby waived
      by
      Guarantor. The provisions of this paragraph shall survive the termination of
      this Guaranty or the release or discharge of Guarantor from liability hereunder.
      Each Borrower is a third party beneficiary of the provisions of this
      paragraph.

     

    Guarantor
      hereby waives diligence, presentment, demand for payment, filing of claims
      with
      a court in the event of receivership or bankruptcy of any Borrower, protest
      or
      notice with respect to Borrowers' Obligations and all demands whatsoever, and
      covenants that this Guaranty will not be discharged, except by complete and
      irrevocable payment and performance of the obligations and liabilities contained
      herein. No notice to any party, including Guarantor, shall be required for
      Lender to make demand hereunder. Such demand shall constitute a mature and
      liquidated claim against Guarantor. At any time after maturity of any Borrower's
      Obligations, whether by acceleration or otherwise, Lender may, at its sole
      election, proceed directly and at once, without notice, against Guarantor to
      collect and recover the full amount or any portion of any such Borrower's
      Obligations, without first proceeding against any such Borrower or any other
      person or against any of the Collateral. Lender shall have the exclusive right
      to determine the application of payments and credits, if any, from Guarantor,
      any Borrower or any other person, on account of any such Borrower's
      Obligations.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    Lender
      is
      hereby authorized, without notice or demand to Guarantor and without affecting
      or impairing the liability of Guarantor hereunder, to from time to time (i)
      renew, extend, accelerate or otherwise change the time for payment of, or other
      terms relating to, any Borrower's Obligations or otherwise modify, amend or
      change the terms of any promissory note or other agreement, document or
      instrument now or hereafter executed by any Borrower and delivered to Lender;
      (ii) accept partial payments on any Borrower's Obligations; (iii) take and
      hold
      Collateral for the payment of any Borrower's Obligations, or for the payment
      of
      this Guaranty, or for the payment of any other guaranties of any Borrower's
      Obligations or other liabilities of any Borrower, and exchange, enforce, waive
      and release any Collateral; (iv) apply Collateral and direct the order or manner
      of sale thereof as it may determine in its sole discretion; and (v) settle,
      release, compromise, collect or otherwise liquidate any Borrower's Obligations
      and any Collateral in any manner.

     

    At
      any
      time after maturity of any Borrower's Obligations, Lender may, in its sole
      discretion, without notice to Guarantor and regardless of the acceptance of
      any
      Collateral for the payment hereof, appropriate and apply toward payments of
      any
      such Borrower's Obligations, (i) any indebtedness due or to become due from
      Lender to Guarantor and (ii) any moneys, credits or other property belonging
      to
      Guarantor at any time held by or coming into the possession of Lender or any
      affiliates of Lender, whether for deposit or otherwise.

     

    Guarantor
      assumes responsibility for keeping itself informed of the financial condition
      of
      each Borrower and all other guarantors of all or any of Borrowers' Obligations,
      and of all other circumstances bearing upon the risk of nonpayment of any
      Borrowers' Obligations or any part thereof that diligent inquiry might reveal,
      and Guarantor agrees that Lender shall have no duty to advise Guarantor of
      information known to Lender regarding any of the foregoing. Guarantor
      acknowledges familiarity with each Borrower's financial condition and represents
      that it has not relied on any statements made, or information furnished, by
      Lender or its agents in obtaining such familiarity. If Lender provides any
      such
      information to Guarantor, Lender shall be under no obligation to (i) undertake
      any investigation not a part of its regular business routine, (ii) disclose
      any
      information which, pursuant to accepted or reasonable commercial finance
      practices, Lender wishes to maintain confidential or (iii) make any other or
      future disclosures of any information to Guarantor.

     

    Notwithstanding
      any contrary provision of this Guaranty, it is intended that neither this
      Guaranty nor any liens, hypothecs or security interests securing this Guaranty
      constitute a "Fraudulent
      Conveyance"
      (as
      defined below). Consequently, Guarantor agrees that if this Guaranty or any
      liens, hypothecs or security interests securing this Guaranty would, but for
      the
      application of this sentence, constitute a Fraudulent Conveyance, this Guaranty
      and each such lien and security interest shall be valid and enforceable only
      to
      the maximum extent that would not cause this Guaranty or such lien or security
      interest to constitute a Fraudulent Conveyance, and this Guaranty shall
      automatically be deemed to have been amended accordingly at all relevant times.
      For purposes hereof, a "Fraudulent
      Conveyance"
      means a
      fraudulent conveyance under Section 548 of the Bankruptcy Code or a fraudulent
      conveyance or fraudulent transfer under any applicable fraudulent conveyance
      or
      fraudulent transfer law or similar law of any state or other governmental unit
      as in effect from time to time or similar provision of any other applicable
      insolvency law,
      including the Bankruptcy and Insolvency Act (Canada).

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    Guarantor
      waives the right to assert the doctrine of marshaling with respect to any of
      the
      Collateral securing any Borrower's Obligations. Guarantor further agrees that,
      to the extent any Borrower makes one or more payments to Lender, or Lender
      receives any proceeds of Collateral, which are subsequently invalidated,
      declared to be fraudulent or preferential, set aside or required to be repaid
      to
      any such Borrower, its estate, trustee, receiver or any other party under the
      Bankruptcy Code or other law, that portion of any such Borrower's Obligations
      which has been paid, reduced or satisfied by such payment or proceeds shall
      be
      reinstated and continued in full force and effect as of the date such initial
      payment, reduction or satisfaction occurred and this Guaranty shall continue
      to
      be in existence and in full force and effect, irrespective of whether any
      evidence of indebtedness or this Guaranty has been surrendered or
      canceled.

     

    Guarantor
      agrees that all payments hereunder shall be made without setoff, compensation
      or
      counterclaims and Guarantor waives all presentments, demands for performance,
      notices of nonperformance, protests, notices of protest, notices of dishonor
      and
      notices of acceptance of this Guaranty. Guarantor further waives all notices
      of
      the existence, creation or incurring of new or additional indebtedness, arising
      either from additional loans extended to any Borrower or otherwise, and also
      waives all notices that the principal amount, or any portion thereof, or any
      interest on any instrument or document evidencing all or any part of any
      Borrowers' Obligations is due, notices of any and all proceedings to collect
      from the maker, any endorser or any other guarantor of all or any part of any
      Borrowers' Obligations, or from anyone else, and, to the extent permitted by
      law, notices of exchange, sale, foreclosure, realization, surrender or other
      handling of any Collateral securing any Borrower's Obligations.

     

    No
      delay
      on the part of Lender in the exercise of any right or remedy shall operate
      as a
      waiver thereof, and no single or partial exercise by Lender of any right or
      remedy shall preclude any further exercise thereof except as expressly set
      forth
      in a writing duly signed and delivered on Lender's behalf by an authorized
      officer or agent of Lender; nor shall any modification or waiver of any of
      the
      provisions of this Guaranty be binding upon Lender, except as expressly set
      forth in a writing duly signed and delivered on Lender's behalf by an authorized
      officer or agent of Lender. Lender's failure at any time or times hereafter
      to
      require strict performance by any Borrower or Guarantor of any of the
      provisions, warranties, terms and conditions contained in any promissory note,
      security agreement, deed of hypothec, agreement, guaranty, instrument or
      document now or at any time or times hereafter executed by any Borrower or
      Guarantor and delivered to Lender, shall not waive, affect or diminish any
      right
      of Lender at any time or times hereafter to demand strict performance thereof
      and such right shall not be deemed to have been waived by any act or knowledge
      of Lender, or its respective agents, officers or employees, unless such waiver
      is contained in an instrument in writing signed by an officer or agent of
      Lender, and directed to any such Borrower or Guarantor, as applicable,
      specifying such waiver. No waiver by Lender of any default shall operate as
      a
      waiver of any other default or the same default on a future occasion, and no
      action by Lender permitted hereunder shall in any way affect or impair Lender's
      rights or the obligations of Guarantor under this Guaranty. Any determination
      by
      a court of competent jurisdiction of the amount of any principal or interest
      owing by any Borrower to Lender shall be conclusive and binding on Guarantor
      irrespective of whether Guarantor was a party to the suit or action in which
      such determination was made.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    Guarantor
      hereby represents and warrants that (i) it is in Guarantor's direct
      interest to assist each Borrower in procuring credit, because any such Borrower
      is an affiliate of Guarantor, furnishes goods or services to Guarantor,
      purchases or acquires goods or services from Guarantor, and/or otherwise has
      a
      direct or indirect corporate or business relationship with Guarantor,
      (ii) this Guaranty has been duly and validly authorized, executed and
      delivered and constitutes the valid and binding obligation of Guarantor,
      enforceable in accordance with its terms, and (iii) the execution and
      delivery of this Guaranty does not violate or constitute a default under (with
      or without the giving of notice, the passage of time, or both) any order,
      judgment, decree, instrument or agreement to which Guarantor is a party or
      by
      which it or its assets are affected or bound.

     

    Each
      payment to be made under this Guaranty will be made in US dollars (the
      "Specified
      Currency").
      To
      the fullest extent permitted by applicable law, any obligation of Guarantor
      to
      make payments under this Guaranty in the Specified Currency will not be
      discharged or satisfied by any tender in any currency other than the Specified
      Currency. To the fullest extent permitted by applicable law, if any judgment
      or
      order expressed in a currency other than the Specified Currency is rendered
      for
      any payment of any amount owing in respect of this Guaranty, Lender, after
      recovery in full of the aggregate amount to which it is entitled pursuant to
      the
      judgment or order, will be entitled to receive immediately from Guarantor the
      amount of any shortfall of the Specified Currency received by Lender as a
      consequence of sums paid in such other currency and will refund promptly to
      Guarantor any excess of the Specified Currency received by Lender as a
      consequence of sums paid in such other currency if such shortfall or such excess
      arises or results from any variation between the rate of exchange at which
      the
      Specified Currency are converted into the currency of the judgment or order
      for
      the purposes of such judgment or order and the rate of exchange at which Lender
      is able, acting in a reasonable manner and in good faith, in converting the
      currency received into the Specified Currency, to purchase the Specified
      Currency with the amount of the currency of the judgment or order actually
      received by Lender. The term "rate of exchange" includes, without limitation,
      any premiums and costs of exchange payable in connection with the purchase
      of or
      conversion into the Specified Currency.

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    All
      payments to be made hereunder by Guarantor shall be made free and clear of
      deduction for any present or future tax, levy, impost, duty, charge,
      withholding, assessment or fee of any nature (including interest, penalties
      and
      additions thereto) that is imposed by any government or other taxing authority,
      but excluding, (i) taxes imposed on or measured by Lender's capital, net income
      and franchise taxes or any other tax imposed on Lender for the privilege of
      doing business, (ii) any taxes (other than withholding taxes) that would not
      be
      imposed but for a connection between Lender and the jurisdiction imposing such
      taxes (other than a connection arising solely by virtue of the activities of
      Lender pursuant to or in respect of this Guaranty or any Loan Document), (iii)
      any taxes imposed on Lender as a result of its voluntary transfer of the Loans
      or any interest therein, (iv) any taxes imposed on or measured by Lender's
      assets, gross or net income, gross or net receipts, branch profits, capital
      gains, excess profits, minimum taxes from tax preferences, alternative minimum
      taxes or accumulated earnings taxes and (v) any taxes for which Lender is
      actually reimbursed pursuant to any other provisions of this Guaranty (all
      such
      non-excluded taxes, levies, imposts, deductions, charges, withholdings and
      liabilities being collectively referred to herein as "Taxes"). If any Taxes
      are
      imposed and required to be withheld from any payment hereunder, Guarantor shall
      (a) increase the amount of such payment so that Lender will receive a net amount
      (after deduction of all Taxes, including any Taxes on the amount of any such
      increase) equal to the amount due hereunder, (b) pay such Taxes to the
      appropriate taxing authority for the account of Lender and (c) as promptly
      as
      possible thereafter, send Lender an original receipt showing payment thereof,
      together with such additional documentary evidence as Lender may from time
      to
      time reasonably require. If Guarantor fails to perform its obligations under
      parts (b) or (c) of the preceding sentence, Guarantor shall indemnify Lender
      for
      any incremental Taxes, interest or penalties that may become payable by Lender
      as a consequence of such failure.

     

    This
      Guaranty shall be binding upon Guarantor and upon the successors and permitted
      assigns of Guarantor and shall inure to the benefit of Lender and its successors
      and assigns. All references herein to any Borrower shall be deemed to include
      its successors and permitted assigns and all references herein to Lender shall
      be deemed to include its successors and assigns. Each Borrower's and Guarantor's
      successors and permitted assigns shall include a receiver, trustee, custodian
      of
      or for any such Borrower or Guarantor or any of their respective assets and
      any
      such Borrower or Guarantor as debtor-in-possession. All references to the
      singular shall be deemed to include the plural where the context so
      requires.

     

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    GUARANTOR
      HEREBY CONSENTS AND AGREES THAT THE STATE AND FEDERAL COURTS IN NEW YORK COUNTY,
      NEW YORK SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
      OR DISPUTES WITH RESPECT TO THIS GUARANTY AND WAIVES ANY OBJECTION WHICH IT
      MAY
      HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS
      TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND CONSENTS THAT ALL SERVICE
      OF PROCESS UPON GUARANTOR BE MADE BY REGISTERED MAIL OR MESSENGER DIRECTED
      TO
      GUARANTOR AT THE ADDRESS SET FORTH BELOW GUARANTOR'S SIGNATURE AND THAT SERVICE
      SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. GUARANTOR
      HEREBY AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY GUARANTOR AGAINST LENDER
      OR
      ANY MATTER ARISING OUT OF THIS GUARANTY SHALL BE BROUGHT EXCLUSIVELY IN THE
      STATE AND FEDERAL COURTS IN NEW YORK COUNTY, NEW YORK. GUARANTOR HEREBY WAIVES,
      TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. NOTHING CONTAINED HEREIN SHALL
      AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
      BY LAW OR AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST
      GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
      JURISDICTION.

     

    THIS
      GUARANTY SHALL BE GOVERNED IN ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE
      OF
      NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
      LAWS.

     

    Wherever
      possible each provision of this Guaranty shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Guaranty shall be prohibited by or invalid under such 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
      Guaranty.

     

    [Signature
      page follows]

     

    

     

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

     

    IN
      WITNESS WHEREOF, this Guaranty has been duly executed by Guarantor this
      7th
      day of
      September, 2006.

     

    
      	 	 	 
	 	ROUSSEAU
              CONTROLS INC.
	 
 	 
 	 
 
	 	By:  	/s/ David
              Marks
	 	Its Chairman
	 	 
	 	[Address]

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