Document:

Atmosphere
      Annealing, Inc.

    BCGW,
      Inc.

    Amended
      and Restated Credit Agreement

    Dated
      as of August 28, 2006

     

    

    
      

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    AMENDED
      AND RESTATED CREDIT AGREEMENT

     

    THIS
      AMENDED AND RESTATED CREDIT AGREEMENT, made as of the 28th
      day of
      August, 2006, by and between ATMOSPHERE ANNEALING, INC., a Michigan corporation
      (“Annealing”), BCGW, Inc., a Michigan corporation (“BCGW”, and together with
      Annealing, “Companies”, and individually a “Company”), and THE HUNTINGTON
      NATIONAL BANK, a national banking association (“Lender”).

     

    RECITALS

     

    A. Annealing
      has requested that Lender extend to it credit as previously extended by Lender
      under the Credit Agreement dated as of November 18, 2003, as amended, between
      Annealing and Lender (the “Prior Credit Agreement”), on the terms and conditions
      set forth herein.

     

    B. BCGW
      has
      requested that Lender extend credit to it.

     

    C. Lender
      is
      willing to extend such credit to Companies on the terms and conditions herein
      set forth.

     

    D. This
      agreement shall constitute an amendment and restatement of the Prior Credit
      Agreement as provided in Section 12.13 hereof.

     

    NOW,
      THEREFORE, Lender and Companies agree as follows:

     

    W
      I T N E S S E T H

     

    
      	 	
              1.

            	
              DEFINITIONS

            

    

     

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

     

    “Account”
      shall mean any right to payment of Annealing for goods sold or leased or for
      services rendered.

     

    “Account
      Debtor” shall mean the party who is obligated on or under any
      Account.

     

    “Advance”
      shall mean a borrowing requested by Annealing and made by Lender under Articles
      2 or 3D of this Agreement.

     

    “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
      LIBO/LIBOR Margin” and “Applicable Prime Margin” as applicable, 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. Adjustments to the Applicable
      LIBO/LIBOR Margin and the Applicable Prime Margin, based on Schedule 1.1, shall
      be implemented on a quarterly basis as follows:

     

    (a) Such
      adjustments shall be given prospective effect only, effective as to all amounts
      outstanding hereunder upon the date of delivery of the financial statements
      to
      the Lender under Sections 8.1(a) and (d) and the compliance certificate under
      Section 8.10 hereunder, in each case establishing applicability of the
      appropriate adjustment, with no retroactivity or claw-back. If Companies fail
      timely to deliver financial statements required under Section 8.1(a) or (d)
      or
      the compliance certificate under Section 8.10, then from the date delivery
      to
      the Bank of such financial statements and certificate was required until such
      financial statements and certificate are delivered, the margins shall be at
      the
      highest level on pricing matrix attached to this Agreement as Schedule
      1.1.

     

    (b) From
      the
      date hereof until the receipt of Companies’ financial statements for the fiscal
      quarter ending on September 30, 2006, the margins shall be those set forth
      under
      the Level III column of the pricing matrix attached to this Agreement as
      Schedule 1.1. 

     

    “Base
      LIBOR Rate” shall mean, with respect to a LIBOR Borrowing for an Interest
      Period, LIBOR as of 11:00 a.m. two (2) London Business Days prior to the first
      day of such Interest Period for deposits with maturities approximately equal
      to
      such Interest Period and in an amount approximately equal to the amount of
      such
      LIBOR Borrowing.

     

    “BCGW
      Guaranty” shall mean the unconditional guaranty of the obligations of Annealing
      to the Lender, executed by BCGW and dated as of the date hereof, as amended
      from
      time to time.

     

    “Borrowing
      Base” shall mean as of any date of determination, eighty percent (80%) of
      Eligible Accounts.

     

    “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 a 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 either, thereunder would be required by GAAP to
      be
      capitalized and shown as liabilities on the balance sheet of
      Companies.

    

    
      
        
          
          

        

        
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    “Capital
      Lease” shall mean any lease of any property (whether real, personal or mixed) by
      Company as lessee which, in conformity with GAAP, is, or is required to be
      accounted for as a capital lease on the balance sheet of Companies, together
      with any renewals of such leases (or entry into new leases) on substantially
      similar terms.

     

    “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 Annealing includes
      consolidation with its Subsidiaries (including BCGW) in accordance with
      GAAP.

     

    “Consolidated
      Debt” shall mean, as of any applicable time of determination thereof, the total
      liabilities of Annealing which are required to be shown on its Consolidated
      balance sheet, as determined in accordance with GAAP.

     

    “Consolidated
      EBITDA” shall mean for any period of determination, the Consolidated net income
      of Annealing and its Subsidiaries for such period, plus, to the extent deducted
      in determining net income, federal income tax expense, depreciation,
      amortization and interest expense for such period, all as determined in
      accordance with GAAP.

     

    “Consolidated
      Funded Debt” shall mean as of any date all Funded Debt of Annealing and its
      Subsidiaries as of such date, determined on a Consolidated basis in accordance
      with GAAP.

     

    “Consolidated
      Tangible Net Worth” shall mean, as of any date of determination, the excess of
      (i) the Consolidated net book value of all assets of Annealing and its
      Subsidiaries (other than amounts due from Affiliates, patents, patent rights,
      trademarks, trade names, franchises, copyrights, licenses, goodwill, and similar
      intangible assets) after all appropriate deductions in accordance with GAAP
      (including, without limitation, reserves for doubtful receivables, obsolescence,
      depreciation and amortization) over (ii) all Consolidated Debt, in each case
      determined in accordance with GAAP.

     

    “Daily
      Fluctuating LIBO Rate” shall mean the rate obtained by dividing: (1) the actual
      or estimated per annum rate, or the arithmetic mean of the per annum rates,
      of
      interest for deposits in U.S. dollars for one (1) month periods, as offered
      and
      determined by Lender in its sole discretion based upon information which appears
      on page LIBOR01, captioned British Bankers Assoc. Interest Rate Settlement
      Rates, of the Reuters America Network, a service of Reuters America Inc. (or
      such other page that may replace that page on that service for the purpose
      of
      displaying LIBO rates; or, if such service ceases to be available or ceases
      to
      be used by Lender, such other reasonably comparable money rate service as Lender
      may select) or upon information obtained from any other reasonable procedure,
      on
      each date the Daily Fluctuating LIBO Rate is determined; by (2) an amount equal
      to one minus the stated maximum rate (expressed as a decimal), if any, of all
      reserve requirements (including, without limitation, any marginal, emergency,
      supplemental, special or other reserves) that is specified on each date the
      Daily Fluctuating LIBO Rate is determined by the Board of Governors of the
      Federal Reserve System (or any successor agency thereto) for determining the
      maximum reserve requirement with respect to eurocurrency funding (currently
      referred to as “Eurocurrency Liabilities” in Regulation D of such Board)
      maintained by a member bank of such System or any other regulations of any
      governmental authority having jurisdiction with respect thereto, all as
      conclusively determined by Lender, absent manifest error, such result to be
      rounded up, if necessary, to the nearest whole multiple of one-sixteenth of
      one
      percent (1/16 of 1.0%) per annum. Subject to any maximum or minimum interest
      rate limitation specified herein or by applicable law, the interest rate shall
      change automatically without notice to Companies immediately on each day with
      each change in the Daily Fluctuating LIBO Rate or the reserve requirement,
      as
      applicable, with any change thereto effective as of the opening of business
      of
      the day of the change (the “Index”). The Index is not necessarily the lowest
      rate charged by Lender on its loans. If the Index becomes unavailable during
      the
      time of this loan, Lender may designate a substitute index after written notice
      to Companies. Lender will tell Companies the current index rate upon Companies’
written request. The interest rate change will not occur more often than once
      each day.

     

    
      
        
          
          

        

        
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    “Debt
      Ratio” shall mean as of any date of determination, a ratio, the numerator of
      which is Consolidated Debt as of such date, and the denominator of which is
      Consolidated Tangible Net Worth as of such date.

     

    “Default”
      shall
      mean any event or omission which, with the passage of time, the giving of
      notice, or both, would constitute an Event of Default as defined
      herein.

     

    “Eligible
      Account” shall mean an Account (but shall not include interest and service
      charges) arising in the ordinary course of Annealing’s business which meets each
      of the following requirements:

     

    (a) it
      is not
      owing more than ninety (90) days after the date of the original invoice or
      other
      writing evidencing such Account;

     

    (b) it
      arises
      from the sale or lease of goods and such goods have been shipped or delivered
      to
      the Account Debtor under such Account; or it arises from services rendered
      and
      such services have been performed;

     

    (c) it
      is
      evidenced by an invoice, dated not later than the date of shipment or
      performance, rendered to such Account Debtor or some other evidence of billing
      reasonably acceptable to Lender;

     

    (d) it
      is not
      evidenced by any note or other negotiable instrument or by any chattel
      paper;

     

    (e) it
      is a
      valid, legally enforceable obligation of the Account Debtor thereunder, and
      is
      not subject to any offset, counterclaim or other defense on the part of such
      Account Debtor or to any known claim on the part of such Account Debtor denying
      liability thereunder in whole or in part;

     

    (f) it
      is not
      subject to any sale of accounts, any rights of offset, assignment, lien or
      security interest whatsoever other than to Lender;

     

    (g) it
      is not
      owing by a subsidiary or affiliate of Companies, nor by an Account Debtor (other
      than General Motors de Mexico and Harrington Tool and Die) which (i) does not
      maintain its chief executive office in the United States of America, (ii) is
      not
      organized under the laws of the United States of America, or any state thereof,
      or (iii) is the government of any foreign country or sovereign state, or of
      any
      state, province, municipality or other instrumentality thereof;

    

    
      
        
          
          

        

        
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    (h) it
      is not
      an account owing by the United States of America or any state or political
      subdivision thereof, or by any department, agency, public body corporate or
      other instrumentality of any of the foregoing, unless all necessary steps are
      taken to comply with the Federal Assignment of Claims Act of 1940, as amended,
      or with any comparable state law, if applicable, and all other necessary steps
      are taken to perfect Lender’s security interest in such account;

     

    (i) it
      is not
      owing by an Account Debtor for which either Company has received a notice of
      (i)
      the death of the Account Debtor or any partner of the Account Debtor, (ii)
      the
      dissolution, liquidation, termination of existence, insolvency or business
      failure of the Account Debtor, (iii) the appointment of a receiver for any
      part
      of the property of the Account Debtor, or (iv) an assignment for the benefit
      of
      creditors, the filing of a petition in bankruptcy, or the commencement of any
      proceeding under any bankruptcy or insolvency laws by or against the Account
      Debtor;

     

    (j) it
      is not
      an account billed in advance, payable on delivery, for unbilled sales, payable
      at a future date in accordance with its terms, subject to a retainage or
      holdback by the Account Debtor or otherwise insured by a surety company;

     

    (k) it
      is not
      owing by an Account Debtor who has failed to pay twenty five percent (25%)
      or
      more of the aggregate amount of its Accounts owing to Annealing within ninety
      (90) days after the date of the respective invoices or other writings evidencing
      such Accounts; and

     

    (l) it
      is not
      an Account which when aggregated with all other Accounts owing by the same
      Account Debtor would cause Annealing’s Accounts owing from such Account Debtor
      to exceed an amount equal to thirty percent (30%) of Annealing’s aggregate
      Accounts owing from all Account Debtors, provided, however, Lender in its sole
      discretion may, upon prior written notice to Annealing, establish higher or
      lower concentration limits for any specific Account Debtor;

     

    (m) it
      is not
      owing by any Account Debtor whose obligations Lender, in its reasonable
      commercial discretion, shall have notified Companies are not deemed to
      constitute Eligible Accounts. Any such notification shall apply only to Accounts
      created after the date thereof. 

     

    An
      Account which is at any time an Eligible Account, but which subsequently fails
      to meet any of the foregoing requirements, shall forthwith cease to be an
      Eligible Account.

     

    “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.

     

    
      
        
          
          

        

        
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    “Equipment
      Line Maturity Date” shall mean March 15, 2007.

     

    “Equipment
      Line Note” shall mean the Note issued by Annealing under Article 3D of this
      Agreement in the form attached as Exhibit “G”.

     

    “Equipment
      Term Note” shall mean the Note issued by Annealing under Article 3E of this
      agreement in the form attached as Exhibit “D”.

     

    “Equipment
      Term Note Maturity Date” shall mean March 15, 2014.

     

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

     

    “Event
      of
      Default” shall mean any of the Events of Default specified in Section 11
      hereof.

     

    “Excess
      Cash Flow” shall mean, for any period of four fiscal quarters of Companies as to
      which the Fixed Charge Coverage Ratio (calculated based on financial results
      for
      those quarters) exceeded 1.2 to 1.0, the amount which, if subtracted from the
      numerator used to calculate such Fixed Charge Coverage Ratio, would result
      in
      the Fixed Charge Coverage Ratio being 1.2 to 1.0.

     

    “Fixed
      Charge Coverage Ratio” shall mean as of any date of determination, a ratio, the
      numerator of which is Consolidated EBITDA for the four fiscal quarters ending
      on
      such date, plus
      rent and
      lease expense and property taxes of Companies for such period, less
      dividends and other distributions paid by Annealing during such period, and
      the
      denominator of which is the sum of all regularly scheduled payments of principal
      on indebtedness (excluding principal payments with respect to the Revolving
      Credit Note but including the principal component of Capital Lease obligations)
      of Companies paid or due and payable during such period, plus
      the sum
      of all payments of interest (including the interest component of Capital Lease
      obligations) paid or due and payable by Companies during such period and
      Non-Funded Capital Expenditures, rent and lease expense and property and income
      taxes paid by Companies during such period.

     

    “Funded
      Debt” of any Person shall mean (a) all indebtedness of such Person for borrowed
      money or for the deferred purchase price of property or services as of such
      date
      (other than 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 such Person under Capital Leases, and (c) all obligations of
      such
      Person in respect of letters of credit, acceptances or similar obligations
      issued or created for the account of such Person.

     

    “GAAP”
      shall mean, as of any applicable date of determination, generally accepted
      accounting principles consistently applied. In calculating the financial
      covenants in this Agreement, GAAP shall be determined based on GAAP as in effect
      on the date of this Agreement. In all other cases GAAP shall be determined
      based
      on GAAP as in effect from time to time.

     

    
      
        
          
          

        

        
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    “Indebtedness”
      shall mean all loans, advances, indebtedness, obligations and liabilities of
      Companies to Lender under this Agreement, together with all other indebtedness,
      obligations and liabilities whatsoever of Companies to Lender 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, with respect to a LIBOR Borrowing, a period of one (1)
      month, commencing on the date of the first advance of each Term Note, as
      applicable, with respect to such LIBOR Borrowing. If any Interest Period would
      otherwise end on a day which is not a London Business Day, such Interest Period
      shall be extended to end on the next succeeding London Business
      Day.

     

    “Lansing
      Mortgage” shall mean the mortgage dated as of the date hereof, executed and
      delivered by BCGW to Lender, encumbering property commonly described as 209
      Mt.
      Hope Avenue, Lansing, Michigan, as amended from time to time.

     

    “Leverage
      Ratio” shall mean as of the last day of each fiscal quarter of Companies, a
      ratio, the numerator of which is Consolidated Funded Debt as of such date and
      the denominator of which is Consolidated EBITDA for the four fiscal quarters
      ending on such date.

     

    “LIBO
      Rate” shall mean for any date, the fluctuating per annum interest rate equal to
      the Applicable LIBO/LIBOR Margin above the Daily Fluctuating LIBO
      Rate.

     

    “LIBOR”
      shall mean, with respect to an Interest Period, the British Bankers’ Association
      (“BBA”) interest settlement rate based on an average of rates quoted by BBA
      designated banks as being, in BBA’s view, the offered rate at which deposits in
      U.S. Dollars are being quoted to prime banks in the London interbank market
      at
      11:00 a.m. (London time) two (2) London Business Days prior to the first day
      of
      such Interest Period, such deposits being for a period of time equal or
      comparable to such Interest Period and in an amount equal or comparable to
      the
      principal amount of the Advance to which the Interest Period relates, as such
      rates are determined by the BBA and displayed on the Reuter’s
      Screen.

     

    “LIBOR
      Borrowing” shall mean the principal amount of any portion of a Term Note bearing
      interest at the LIBOR Rate.

     

    “LIBOR
      Lending Office” shall mean such branch of Lender, domestic or foreign, as it may
      hereafter designate as its LIBOR Lending Office by notice to
      Company.

     

    “LIBOR
      Rate” shall mean, with respect to an Interest Period, the sum of the Applicable
      LIBO/LIBOR Margin plus the quotient of: (i) the Base LIBOR Rate applicable
      to
      that Interest Period, divided by (ii) one (1) minus the Reserve Requirement
      (expressed as a decimal) applicable to the Interest Period. The LIBOR Rate
      shall
      be rounded to 5 decimal places.

     

    
      
        
          
          

        

        
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    “Loan
      Documents” shall mean collectively, this Agreement, any Notes, the Security
      Agreement, the Mortgages, and any other instruments or agreements executed
      at
      any time pursuant to or in connection with any such documents.

     

    “London
      Business Day” shall mean a Business Day on which dealings in dollar deposits are
      carried out in the London Interbank market and on which banks, generally, in
      New
      York, New York are open for business.

     

    “Maxco”
      shall mean Maxco, Inc., a Michigan corporation.

     

    “Maxco
      Loan” shall mean a loan to be made by Annealing to Maxco on or before August 31,
      2006, in the maximum principal amount of $8,500,000.

     

    “Maxco
      Note” shall mean the Demand Note from Maxco as maker to Annealing as payee
      evidencing the Maxco Loan.

     

    “Mortgages”
      shall mean Lansing Mortgage and the mortgages of real property located in North
      Vernon, Indiana and Canton, Ohio, dated November 18, 2003, executed and
      delivered to the Lender by Annealing.

     

    “Non-Funded
      Capital Expenditure” shall mean any Capital Expenditure purchased by Companies
      with internally generated (i.e., non-borrowed) funds.

     

    “Note”
      shall mean the Revolving Credit Note, Term Note A, Term Note B and Term Note
      C,
      as the case may be, as any may be amended or modified from time to time, and
      “Notes” shall refer to all of them.

     

    “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 GAAP;

     

    (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 30 days or are
      being contested in good faith by appropriate proceedings diligently pursued,
      provided that in the case of any such contest such provision for the payment
      of
      such liens and encumbrances has been made on the books of such Person as may
      be
      required by GAAP;

     

    (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
      provision for the payment of such liens has been made on the books of such
      Person as may be required by GAAP;

     

    (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

     

    
      
        
          
          

        

        
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    (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.

     

    “Prepayment
      Premium” shall mean, in the case of a Principal Prepayment, an amount equal to
      the positive difference, if any, between (i) the aggregate amount of interest
      which would otherwise be payable on the prepaid principal amount for the
      remainder of the applicable Interest Period, and (ii) the aggregate amount
      of
      interest Lender would earn if the prepaid principal amount were reinvested
      at
      the Treasury Rate for the remainder of the applicable Interest Period. The
      term
“Treasury Rate” means the yield on U.S. Treasury securities at constant maturity
      as interpolated by the U.S. Treasury from the daily yield curve, based on the
      closing market big yields on actively-traded U.S. Treasury securities in the
      over-the-counter market, as such yields are stated under the heading referred
      to
      as “U.S. Government Securities, Treasury Constant Maturities” in Document
      H.15(519), presently published by the Board of Governors of the Federal Reserve
      System and titled “Federal Reserve Statistical Release.” The Treasury Rate used
      to calculate a Prepayment Premium shall be the constant maturity yield value
      read from the yield curve at the fixed maturity which is the same as, or is
      the
      next closest period which is longer than, the applicable Interest
      Period.

     

    “Principal
      Prepayment” shall mean a payment of principal of a Term Note which is bearing
      interest at the LIBOR Rate on a day which is not the last day of the applicable
      Interest Period.

     

    “Prime
      Rate” shall mean the per annum interest rate established by Lender as its prime
      commercial 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 Lender at any such
      time, plus the Applicable Prime Margin.

     

    “Request
      for Revolving Credit Advance” shall mean a Request for Advance issued by
      Annealing under this Agreement in the form annexed to this Agreement as Exhibit
      “B”.

     

    
      
        
          
          

        

        
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    “Request
      for Equipment Line Advance” shall mean a request for equipment line advance to
      be issued by Annealing under Article 3D in the form attached as Exhibit
“H”.

     

    “Reserve
      Requirement” shall mean, with respect to an Interest Period, the daily average
      during such Interest Period of the aggregate reserve requirement (including
      all
      basic, supplemental, marginal and other reserves and taking into account any
      transitional adjustments or other scheduled changes in reserve requirements
      during such Interest Period) which may be imposed on Lender under Regulation
      D
      on Eurocurrency liabilities, in the case of LIBOR Borrowings.

     

    “Revolving
      Credit Maturity Date” shall mean August 15, 2008.

     

    “Revolving
      Credit Note” shall mean the Note described in Section 2.1 hereof made by
      Annealing to Lender in the form annexed to this Agreement as Exhibit
“C”.

     

    “Security
      Agreement” shall mean the Security Agreement dated as of November 18, 2003, as
      amended by the First Amendment dated as of the date hereof, from Annealing
      as
      debtor to Lender as secured party, as amended from time to time.

     

    “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
      Annealing, either directly or indirectly through one or more
      intermediaries.

     

    “Term
      Loan A Maturity Date” shall mean August 31, 2009.

     

    “Term
      Loan B Maturity Date” shall mean August 31, 2011.

     

    “Term
      Loan C Maturity Date” shall mean August 31, 2011.

     

    “Term
      Note A” shall mean the Note issued by Annealing under Article 3A of this
      Agreement in the form attached as Exhibit “A”.

     

    “Term
      Note B” shall mean the Note issued by Annealing under Article 3B of this
      Agreement in the form attached as Exhibit “E”.

     

    “Term
      Note C” shall mean the Note issued by Annealing under Article 3C of this
      Agreement in the form attached as Exhibit “F”.

     

    “Term
      Note” shall mean Term Note A, Term Note B, or Term Note C, and “Term Notes”
shall mean all of them.

     

    2. THE
      INDEBTEDNESS: REVOLVING CREDIT

     

    2.1 Subject
      to the terms and conditions of this Agreement, Lender shall make Advances to
      Annealing at any time and from time to time until the Revolving Credit Maturity
      Date, not to exceed Six Million Dollars ($6,000,000) in aggregate principal
      amount at any one time outstanding. All of the Advances under this Article
      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.

    

    
      
        
          
          

        

        
          10

          
            

          

        

         

      

    

     

    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
      the
      LIBO Rate or as otherwise provided under this Agreement. The amount and date
      of
      each Advance and the amount and date of any repayment shall be noted on Lender’s
      records, which records will be conclusive evidence thereof absent demonstrable
      error.

     

    2.3 Annealing
      may request an Advance under this Article 2 upon the delivery to Lender of
      a
      Request for Advance executed by an authorized officer of Annealing, 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 “B”;

     

    (b) each
      such
      Request for Advance shall be delivered to Lender by 11:00 a.m. Detroit time
      on
      the proposed date thereof;

     

    (c) the
      principal amount of such Advance, plus the sum of the amount of all other
      outstanding Advances under this Article 2, shall not exceed the formula set
      forth in Section 2.5 below; and

     

    (d) a
      Request
      for Advance, once delivered to Lender, shall be irrevocable.

     

    2.4 Annealing
      may prepay all or part of the outstanding balance of the Advance(s) under the
      Revolving Credit Note at any time without premium or penalty.

     

    2.5 The
      aggregate principal amount at any one time outstanding under the Revolving
      Credit Note shall never exceed the Borrowing Base. Annealing shall immediately
      make all payments necessary to comply with this provision.

     

    2.6 Proceeds
      of the initial Advance under the Revolving Credit Note shall be used solely
      for
      working capital purposes except that up to $700,000 may be used to fund the
      Maxco Loan.

     

    2.7 Annealing
      agrees to pay to Lender a commitment fee on the average daily balance of the
      unused portion of the Revolving Credit Note at the rate of one-eighth of one
      percent (1/8%) 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 January, April, July and October, commencing October
      1,
      2006, and on the Revolving Credit Maturity Date, and shall be non-refundable.
      For purposes of calculating the Commitment Fee, the face amount of all
      outstanding letters of credit issued by Bank for the account of Annealing shall
      be deemed to be usage of the Revolving Credit Note.

     

    
      
        
          
          

        

        
          11

          
            

          

        

         

      

    

     

    3A THE
      INDEBTEDNESS: TERM LOAN A

     

    3A.1 Lender
      agrees to loan to Annealing, and Annealing agrees to borrow, on the date of
      execution of this Agreement, the sum of Three Million Two Hundred Eighty-Five
      Thousand Dollars ($3,285,000). At the time of borrowing, Annealing agrees to
      execute Term Note A with appropriate insertions as evidence of the indebtedness
      hereunder. The loan made under this Article 3A shall be subject to the terms
      and
      conditions of this Agreement.

     

    3A.2 The
      indebtedness represented by Term Note A shall be repaid in consecutive monthly
      principal installments in the amount of Ninety-One Thousand Two Hundred Fifty
      Thousand Dollars ($91,250) each, commencing on September 28, 2006, and on the
      28th
      day of
      each month thereafter until the Term Loan A Maturity Date, when the entire
      unpaid balance of principal and interest thereon shall be due and
      payable.

     

    3A.3 The
      proceeds of Term Loan A shall be used to fund the Maxco Loan.

     

    3A.4 Term
      Note
      A shall bear interest at a rate per annum equal to the LIBOR Rate. Monthly
      payments of interest shall be payable on the last day of each Interest Period,
      commencing on the last day of the first Interest Period, and thereafter on
      the
      last day of each subsequent Interest Period. The LIBOR Rate, the Interest
      Period, and the amount and date of any repayment shall be noted on Lender’s
      records, which records will be presumed correct absent manifest error.
      Notwithstanding the foregoing, from and after the occurrence of any Event of
      Default, Term Note A shall bear interest, payable on demand, at a rate per
      annum
      equal three percent (3%) above the LIBOR Rate until the end of the then current
      Interest Period, at which time Term Note A shall bear interest at the rate
      of
      three percent (3%) above the Prime-based Rate. Interest shall be calculated
      on
      the basis of a 360 day year for the actual number of days elapsed. The LIBOR
      Rate shall be reset at the end of each Interest Period.

     

    3B THE
      INDEBTEDNESS: TERM LOAN B

     

    3B.1 Lender
      agrees to loan to Annealing, and Annealing agrees to borrow, on the date of
      execution of this Agreement, the sum of Two Million Six Hundred Eighty Thousand
      Dollars ($2,680,000). At the time of borrowing, Annealing agrees to execute
      Term
      Note B with appropriate insertions as evidence of the indebtedness hereunder.
      The loan made under this Article 3B shall be subject to the terms and conditions
      of this Agreement.

     

    3B.2 The
      indebtedness represented by Term Note B shall be repaid in equal consecutive
      monthly principal installments in the amount of Eleven Thousand One Hundred
      Sixty Six and 67/100 Dollars ($11,166.67) each, commencing on September 28,
      2006, and on the 28th
      day of
      each month thereafter until the Term Loan B Maturity Date, when the entire
      unpaid balance of principal and interest thereon shall be due and
      payable.

     

    3B.3 The
      proceeds of Term Loan B shall be first used to renew and extend indebtedness
      owed by Annealing under this Prior Credit Agreement, with the balance to fund
      the Maxco Loan.

     

    3B.4 Term
      Note
      B shall bear interest at a rate per annum equal to the LIBOR Rate. Monthly
      payments of interest shall be payable on the last day of each Interest Period,
      commencing on the last day of the first Interest Period, and thereafter on
      the
      last day of each subsequent Interest Period. The LIBOR Rate, the Interest
      Period, and the amount and date of any repayment shall be noted on Lender’s
      records, which records will be presumed correct absent manifest error.
      Notwithstanding the foregoing, from and after the occurrence of any Event of
      Default, Term Note B shall bear interest, payable on demand, at a rate per
      annum
      equal three percent (3%) above the LIBOR Rate until the end of the then current
      Interest Period, at which time Term Note B shall bear interest at the rate
      of
      three percent (3%) above the Prime-based Rate. Interest shall be calculated
      on
      the basis of a 360 day year for the actual number of days elapsed. The LIBOR
      Rate shall be reset at the end of each Interest Period.

     

    
      
        
          
          

        

        
          12

          
            

          

        

         

      

    

     

    3C THE
      INDEBTEDNESS: TERM LOAN C

     

    3C.1 Lender
      agrees to loan to Companies, and Companies agree to borrow, on the date of
      execution of this Agreement, the sum of One Million Three Hundred Sixty Thousand
      Dollars ($1,360,000). At the time of borrowing, Companies agree to execute
      Term
      Note C with appropriate insertions as evidence of the indebtedness hereunder.
      The loan made under this Article 3C shall be subject to the terms and conditions
      of this Agreement.

     

    3C.2 The
      indebtedness represented by Term Note C shall be repaid in equal consecutive
      principal installments in the amount of Five Thousand Six Hundred Sixty Six
      and
      67/100 Dollars ($5,666.67) each, commencing on September 28, 2006, and on the
      28th
      day of
      each month thereafter until the Term Loan C Maturity Date, when the entire
      unpaid balance of principal and interest thereon shall be due and
      payable.

     

    3C.3 The
      proceeds of Term Loan C shall be used to refinance indebtedness owed by BCGW
      to
      Capitol National Bank and to fund the Maxco Loan.

     

    3C.4 Term
      Note
      C shall bear interest at a rate per annum equal to the LIBOR Rate. Monthly
      payments of interest shall be payable on the last day of each Interest Period,
      commencing on the last day of the first Interest Period, and thereafter on
      the
      last day of each subsequent Interest Period. The LIBOR Rate, the Interest
      Period, and the amount and date of any repayment shall be noted on Lender’s
      records, which records will be presumed correct absent manifest error.
      Notwithstanding the foregoing, from and after the occurrence of any Event of
      Default, Term Note C shall bear interest, payable on demand, at a rate per
      annum
      equal three percent (3%) above the LIBOR Rate until the end of the then current
      Interest Period, at which time Term Note C shall bear interest at the rate
      of
      three percent (3%) above the Prime-based Rate. Interest shall be calculated
      on
      the basis of a 360 day year for the actual number of days elapsed. The LIBOR
      Rate shall be reset at the end of each Interest Period.

     

    3C.5 All
      obligations of Companies under Term Note C shall be joint and
      several.

     

    3D. THE
      INDEBTEDNESS: EQUIPMENT LINE OF CREDIT

     

    3D.1 Lender
      agrees to make Advances to Annealing at any time and from time to time from
      the
      date hereof until the Equipment Line Maturity Date, not to exceed Seven Million
      One Hundred Sixty-Five Thousand Dollars ($7,165,000) in the aggregate. All
      of
      the Advances under this Section 3D shall be evidenced by the Equipment Line
      Note
      under which Advances (but not re-Advances) may be made, subject to the terms
      and
      conditions of this Agreement.

    

    
      
        
          
          

        

        
          13

          
            

          

        

         

      

    

     

    3D.2 The
      Equipment Line Note shall mature on the Equipment Line Maturity Date and each
      Advance from time to time outstanding thereunder shall bear interest at the
      LIBO
      Rate. The amount and date of each Advance and the amount and date of repayment
      shall be noted on Lender’s records, which records will be conclusive evidence
      thereof absent demonstrable error.

     

    3D.3 Annealing
      may request an Advance under this Section 3D upon the delivery to Lender of
      a
      Request for Equipment Line Advance executed by an authorized officer of
      Annealing, subject to the following:

     

    (a) each
      such
      Request for Equipment Line Advance shall set forth the information required
      on
      the Request for Equipment Advance form annexed hereto as Exhibit “H” and shall
      attach a copy of the invoice(s) of the equipment to be purchased with the
      proceeds of the Advance;

     

    (b) each
      such
      Request for Equipment Line Advance shall be delivered to Lender by 11:00 a.m.
      three (3) Business Days prior to the proposed date of Advance;

     

    (c) the
      principal amount of such Advance shall be at least $250,000;

     

    (d) a
      Request
      for Equipment Line Advance, once delivered to Lender, shall be irrevocable;
      and

     

    (e) after
      the
      initial Advance, the amount of such Advance shall not exceed 80% of the “hard”
cost (i.e., total cost excluding soft costs such as delivery, installation
      and
      warranty costs) of the equipment to be purchased with the proceeds of such
      Advance.

     

    3D.4 The
      initial Advance under the Equipment Line Note in the amount of approximately
      $4,565,000 shall be used to renew and extend indebtedness outstanding under
      the
      Prior Credit Agreement, and to fund the Maxco Loan. Thereafter, the proceeds
      of
      Advances under the Equipment Line Note shall be used solely to finance the
      purchase of equipment for use in Annealing’s business.

     

    3E. THE
      INDEBTEDNESS: EQUIPMENT TERM LOAN

     

    3E.1 Bank
      agrees to loan to Annealing, on the Equipment Line Maturity Date, a sum equal
      to
      the principal amount of the Advances outstanding on such date under the
      Equipment Line Note. At the time of such borrowing, Annealing agrees to execute
      the Equipment Term Note with appropriate insertions as evidence of the
      indebtedness hereunder. The Equipment Term Loan made under this Section 3E
      shall
      be subject to the terms and conditions of this Agreement.

     

    3E.2 The
      indebtedness represented by the Equipment Term Note shall be repaid in equal
      consecutive monthly principal installments, each in the amount of one
      eighty-fourth (1/84th)
      of the
      original principal amount of the Equipment Term Note, commencing on April 15,
      2007, and on the 15th
      day of
      each month thereafter until the Equipment Term Loan Maturity Date, when the
      entire unpaid balance of principal and interest thereon shall be due and
      payable.

     

    
      
        
          
          

        

        
          14

          
            

          

        

         

      

    

     

    3E.3 The
      proceeds of the Equipment Term Note shall be used solely to renew and extend
      the
      indebtedness outstanding on the Equipment Line Note on the Equipment Line
      Maturity Date.

     

    3E.4 The
      Equipment Line Note shall bear interest at a rate per annum equal to the LIBOR
      Rate. Monthly payments of interest shall be payable on the last day of each
      Interest Period, commencing on the last day of the first Interest Period, and
      thereafter on the last day of each subsequent Interest Period. The LIBOR Rate,
      the Interest Period, and the amount and date of any repayment shall be noted
      on
      Lender’s records, which records will be presumed correct absent manifest error.
      Notwithstanding the foregoing, from and after the occurrence of any Event of
      Default, the Equipment Term Note shall bear interest, payable on demand, at
      a
      rate per annum equal three percent (3%) above the LIBOR Rate until the end
      of
      the then current Interest Period, at which time the Equipment Term Note shall
      bear interest at the rate of three percent (3%) above the Prime-based Rate.
      Interest shall be calculated on the basis of a 360 day year for the actual
      number of days elapsed. The LIBOR Rate shall be reset at the end of each
      Interest Period.

     

    
      	 	
              4.

            	
              INTEREST
                ON REVOLVING CREDIT NOTE AND EQUIPMENT LINE NOTE;
                PREPAYMENTS

            

    

     

    4.1 The
      Revolving Credit Note, the Equipment Line 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 LIBO Rate. Interest
      shall be payable monthly on the first Business Day of each month, commencing
      on
      October 1, 2006, and at maturity. Notwithstanding the foregoing, from and after
      the occurrence of any Event of Default and during the continuation thereof,
      the
      Indebtedness outstanding under the Revolving Credit Note and the Equipment
      Line
      Note shall bear interest, payable on demand, at a rate per annum equal to three
      percent (3%) above the Prime Rate. Interest shall be calculated on the basis
      of
      a 360 day year for the actual number of days elapsed. The interest rate shall
      change on the effective date of any change in the LIBO Rate or Prime Rate,
      but
      not more frequently than daily.

     

    4.2 (a) At
      their
      option and upon one (1) Business Day’s prior written, telephonic or telegraphic
      notice to the Lender, the Companies may prepay any portion of any Term Note
      in
      whole at any time or in part from time to time, with accrued interest on the
      principal being prepaid to the date of such prepayment. All prepayments of
      a
      Term Note made on the last day of the applicable Interest Period will be without
      premium or penalty. Any other prepayment will be subject to the provisions
      of
      Section 13.1.

     

    (b) Term
      Loan
      A shall be subject to required principal reductions in the amount of 15% of
      Excess Cash Flow, payable in respect of each fiscal quarter (but based on Excess
      Cash Flow for the four fiscal quarters then ending) from and including the
      fiscal quarter ending September 30, 2006, and each fiscal quarter thereafter
      until Term Loan A has been paid in full, on the next installment due date under
      Term Loan A after the earlier of (i) the date of delivery of the Companies’
quarterly financial statements pursuant to Section 8.1(d) hereof for such fiscal
      quarter and (ii) 45 days after the end of each fiscal quarter. Unless paid
      on
      the due date thereof, all such payments shall be subject to Section
      13.1.

     

    
      
        
          
          

        

        
          15

          
            

          

        

         

      

    

     

    (c) 
      (i) 
       Upon
      at
      least ninety (90) days’ prior written notice to Lender, Companies may at their
      option terminate this Agreement; provided, however, that no such termination
      shall be effective until Companies have paid all of the Indebtedness in
      immediately available funds. Any such notice of termination given by Companies
      shall be irrevocable and Companies shall be required to pay, on the termination
      date contained in such notice, all of the Indebtedness, in immediately available
      funds.

     

    (ii) On
      the
      effective date of any such termination (but only if such termination is
      effective prior to August 28, 2009), Companies shall pay to Lender a termination
      charge (in addition to the then outstanding principal, accrued interest and
      other charges owing under this Agreement and the other Loan Documents), as
      liquidated damages for the loss of bargain and not as a penalty, in the amount
      of the Termination Charge Percentage of the Maxco Loan Amount.

     

    As
      used
      in this Section 4.2(c)(ii), the following terms shall have the defined meanings
      below:

    

    “Maxco
      Loan Amount” shall mean the principal amount of the Maxco Loan as of August 31,
      2006

     

    Termination
      Charge Percentage” shall mean 1.3% if termination is effective on or before
      August 28, 2007; 0.8% if termination is effective after August 28, 2007 and
      on
      or before August 28, 2008; and 0.4% if such termination is effective after
      August 28, 2008 and on or before August 28, 2009.

     

    (iii) All
      of
      the Indebtedness shall be due and payable upon any termination of this
      Agreement. Except as otherwise expressly provided in this Agreement and the
      other Loan Documents, no termination shall in any way affect or impair the
      rights, powers or privileges of Lender or the obligations, duties or liabilities
      of Companies in any way relating to (a) any transaction or event occurring
      prior
      to such termination or (b) any of the undertakings, agreements, covenants or
      warranties of Companies contained in this Agreement or any other Loan Document.
      All of such undertakings, agreements, covenants and warranties of Companies
      shall survive such termination and Lender shall retain its liens and security
      interest in all collateral and its rights and remedies under this Agreement
      and
      the other Loan Documents notwithstanding such termination until Companies have
      paid the Indebtedness to Bank in full, in immediately available
      funds.

     

    (d)
      Each
      partial prepayment of any Term Note shall be applied to the principal payments
      due thereunder in the inverse order of their maturities.

     

    
      	 	
              5.

            	
              SPECIAL
                PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION - REVOLVING
                CREDIT NOTE

            

    

     

    5.1 For
      any
      period for which the applicable interest rate is the LIBO Rate, if Lender shall
      designate a LIBOR Lending Office which maintains books separate from those
      of
      the rest of Lender, Lender shall have the option of maintaining and carrying
      the
      relevant Advance on the books of such LIBOR Lending Office.

    

    
      
        
          
          

        

        
          16

          
            

          

        

         

      

    

     

    5.2 In
      the
      event that Lender determines that by reason of (a) any change arising after
      the
      date of this Agreement affecting the interbank eurocurrency market or affecting
      the position of Lender with respect to such market, adequate and fair means
      do
      not exist for ascertaining the applicable interest rates by reference to which
      the Daily Fluctuating LIBO Rate then being determined is to be fixed, (b) any
      change arising after the date of this Agreement in any applicable law or
      governmental rule, regulation or order (or any interpretation thereof, including
      the introduction of any new law or governmental rule, regulation or order),
      or
      (c) any other circumstances affecting Lender or the interbank eurocurrency
      market (such as, but not limited to, official reserve requirements required
      by
      Regulation D of the Board of Governors of the Federal Reserve System), the
      Daily
      Fluctuating LIBO Rate plus the applicable spread shall not represent the
      effective pricing to Lender of accruing interest based upon the Daily
      Fluctuating LIBO Rate, then, and in any such event, the accrual of interest
      hereunder based upon the Daily Fluctuating LIBO Rate shall be suspended until
      Lender shall notify Annealing
      that
      the
      circumstances causing such suspension no longer exist and beginning on the
      date
      of such suspension interest shall accrue hereunder at a variable rate of
      interest per annum, equal to the Prime Rate.

     

    5.3 In
      the
      event that on any date Lender shall have determined that accruing interest
      hereunder based upon the Daily Fluctuating LIBO Rate has become unlawful by
      compliance by Lender in good faith with any law, governmental rule, regulation
      or order, then, and in any such event, Lender shall promptly give notice thereof
      to Annealing. In such case, when required by law, interest shall accrue
      hereunder at a variable rate of interest per annum equal to the Prime
      Rate.

     

    5.4 If,
      due
      to (a) the introduction of or any change in or in the interpretation of any
      law
      or regulation, (b) the compliance with any guideline or request from any central
      bank or other public authority (whether or not having the force of law), or
      (c)
      the failure of Annealing to pay any amount when required by the terms of this
      Agreement or the Revolving Credit Note, there shall be any loss or increase
      in
      the cost to Lender of accruing interest hereunder based upon the Daily
      Fluctuating LIBO Rate, then Annealing agrees that it shall, from time to time,
      upon demand by Lender, pay to Lender additional amounts sufficient to compensate
      Lender for such loss or increased cost. A certificate as to the amount of such
      loss or increase cost, submitted to Annealing by Lender, shall be conclusive
      evidence, absent demonstrable error, of the correctness of such
      amount.

     

    5.5 A
      late
      installment charge equal to five percent (5%) of each late installment (but
      not
      balloon payments)under any Note may be charged on any installment (but not
      balloon) payment not received by Lender 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.

     

    
      	 	
              6.

            	
              CONDITIONS

            

    

     

    6.1 Companies
      agrees to furnish Lender, prior to the initial borrowing under this Agreement,
      in form and substance to be satisfactory to Lender, with (i) certified copies
      of
      resolutions of the board of directors of each Company evidencing approval of
      the
      borrowings and transactions contemplated hereunder; (ii) a certificate of good
      standing from the state of each Company’s incorporation and from the state(s) in
      which Companies are required to be qualified to do business; (iii) an opinion
      of
      Companies’ legal counsel; (iv) evidence that after giving effect to the initial
      Advance under the Revolving Credit Note, Annealing has at least $2,000,000
      in
      borrowing availability thereunder, and (v) such other documents and instruments
      as Lender may require.

    

    
      
        
          
          

        

        
          17

          
            

          

        

         

      

    

     

    6.2 As
      security for all indebtedness of Companies to Lender, Companies agree to
      furnish, execute and deliver to Lender, or cause to be furnished, executed
      and
      delivered to Lender, prior to or simultaneously with the initial borrowing
      hereunder, in form to be satisfactory to Lender and supported by appropriate
      resolution in certified form authorizing same, the following:

     

    (a) The
      BCGW
      Guaranty;

     

    (b) Amendments
      to the Security Agreement and the Mortgages of Annealing’s property in North
      Vernon, Indian and Canton, Ohio, dated November 18, 2003;

     

    (c) The
      Lansing Mortgage, together with a survey and a commitment for an ALTA loan
      policy in an amount not less than the principal amount of Term Loan C, each
      in
      form and substance satisfactory to Lender;

     

    (d) Financing
      Statements required or requested by Lender to perfect all security interests
      to
      be conferred upon Lender under this Agreement and to accord Lender a perfected
      first priority security position under the Uniform Commercial Code (subject
      only
      to the encumbrances permitted hereunder); and

     

    (e) Such
      other documents or agreements of security and appropriate assurances of validity
      and perfected first priority of lien or security interest as Lender may request
      at any time.

     

    6.3 Concurrently
      with the execution of this Agreement, Companies pay to Lender their
      non-refundable loan origination fee in the amount of $27,120.

     

    
      	 	
              7.

            	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

    Each
      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:

     

    7.1 Each
      Company is a corporation duly organized and existing in good standing under
      the
      laws of the State of Michigan; each Company is in good standing in each
      jurisdiction in which it is required to be qualified to do business; execution,
      delivery and performance of this Agreement and other documents and instruments
      required under this Agreement, and the issuance of the Notes by Companies,
      are
      within their corporate powers, have been duly authorized, are not in
      contravention of law or the terms of either 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 Notes, when issued and delivered, will be
      valid and binding on Companies in accordance with their terms.

     

    7.2 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
      Companies, are not in contravention of the unwaived terms of any indenture,
      agreement or undertaking to which either Company is a party or by which it
      is
      bound.

     

    
      
        
          
          

        

        
          18

          
            

          

        

         

      

    

     

    7.3 No
      litigation or other proceeding before any court or administrative agency is
      pending, or to the knowledge of the officers of Companies is threatened against
      either Company, the outcome of which would reasonably be expected to materially
      impair either Company’s financial condition or the ability of either Company to
      carry on its business.

     

    7.4 There
      are
      no security interests in, liens, mortgages, or other encumbrances on any of
      either Company’s assets, except to Lender or as otherwise permitted by this
      Agreement.

     

    7.5 Neither
      Company 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
      7.5.
      Neither
      Company has received notice of any withdrawal liability in connection with
      such
      pension plans, or notice of any existing material liability of either Company
      with respect to any pension plan owed to the Pension Benefit Guaranty
      Corporation (“PBGC”) or any successor thereto.

     

    7.6 The
      audited Consolidated and Consolidating financial statements of Companies dated
      March 31, 2006, and the interim internally prepared financial statements of
      Companies dated June 30, 2006, previously furnished to Lender, were prepared
      in
      accordance with GAAP (provided, however, that any Company prepared financial
      statements may exclude footnotes and cash flow as required by GAAP) and fairly
      present in all material respects the financial condition of Annealing as of
      such
      date; since said dates there has been no material adverse change in the
      financial condition of Annealing; and to the best knowledge of Companies’
officers, neither Company has 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 either Company.

     

    7.7 The
      financial projections previously furnished by Companies to Lender were as of
      the
      date thereof and are as of the date of execution of this Agreement reasonable
      in
      all material respects.

     

    7.8 All
      tax
      returns and tax reports of Companies 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 Companies (or any of their properties)
      which are due and payable and for which the failure to pay would materially
      adversely affect their business or the value of their property or assets have
      been paid. The charges, accruals and reserves on the books of Companies in
      respect of the Federal income tax for all periods are adequate in the opinion
      of
      Companies.

     

    7.9 As
      of the
      date hereof, there are no subsidiaries of Annealing other than
      BCGW.

     

    7.10 Except
      as
      set forth in Schedule
      7.10:

     

    (a) Each
      Company, 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 it. Each Company has 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 its business as presently conducted.

     

    
      
        
          
          

        

        
          19

          
            

          

        

         

      

    

     

    (b) Neither
      Company is a party to any litigation or administrative proceeding, nor so far
      as
      is known by Companies is any litigation or administrative proceeding threatened
      against either Company, which in either case (i) asserts or alleges that either
      Company violated Environmental Laws, (ii) asserts or alleges that either Company
      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 either Company
      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 either Company.

     

    (c) Neither
      Company is subject to any judgment, decree, order or citation related to or
      arising out of applicable Environmental Laws; and to the best knowledge of
      Companies, neither Company 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.

     

    (d) Each
      Company has all permits, licenses and approvals required under applicable
      Environmental Laws.

     

    7.11 Neither
      Company is an “investment company” within the meaning of the Investment
      Companies Act of 1940, as amended. Neither Company is 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.

     

    7.12 Companies
      have good and valid title to the property pledged, mortgaged or otherwise
      encumbered or to be encumbered by them under the Security Agreement and the
      Mortgages.

     

    8. AFFIRMATIVE
      COVENANTS

     

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

     

    8.1 Furnish
      Lender:

     

    (a) within
      ninety (90) days after and as of the end of each fiscal year of Companies,
      a
      detailed Consolidated and Consolidating balance sheet, statement of income
      and
      statement of cash flows of Companies as of the end of such fiscal year, prepared
      in accordance with GAAP and audited by independent certified public accountants
      satisfactory to Lender;

    

    
      
        
          
          

        

        
          20

          
            

          

        

         

      

    

     

    (b) within
      ninety (90) days after and as of the end of each fiscal year of Maxco, a
      consolidated balance sheet, statement of income and statement of cash flows
      of
      Maxco prepared on an audited basis by independent certified public accountants
      satisfactory to Lender, with attached schedule of consolidating financial
      information used in preparing the consolidated financial
      statements;

     

    (c) within
      ninety (90) days after the end of each fiscal year of Annealing, an annual
      budget of Annealing for the then current year, to include a balance sheet,
      statement of income and expense, statement of cash flows and planned capital
      expenditures, and also including but not limited to, information pertaining
      to
      additions, replacements, rebuilds and ongoing maintenance.

     

    (d) within
      forty-five (45) days after and as of the end of each fiscal quarter (including
      the fourth fiscal quarter) of Companies, a Consolidated and Consolidating
      balance sheet and statement of income of Companies for the quarter then ended
      and fiscal year-to-date, certified by an authorized officer of Annealing as
      being correct and accurate to the best of his knowledge; 

     

    (e) within
      fifteen (15) days after and as of the end of each month, including the last
      month of each fiscal year, (i) the monthly aging of Annealing’s accounts (and a
      schedule identifying each Eligible Account), and any such schedule shall be
      accompanied, if so requested by Lender, by a true and correct copy of the
      invoices evidencing Eligible Accounts, and by evidence of performance, (ii)
      the
      monthly aging of Annealing’s accounts payable, and (iii) an inventory
      report;

     

    (f) Friday
      (or on a day otherwise agreed to by Lender in writing) of each week (or such
      other date as shall be agreed to in writing by Lender), a borrowing base report,
      each in form acceptable to Lender;

     

    (g) such
      information as required by the terms and conditions of any security agreement
      referred to in this Agreement; 

     

    (h) within
      three (3) days of receipt, copies of all audit compliance letters and all
      certificates of registration and related appendices, with respect to the
      certifications referred to in Section 8.14; and

     

    (i) promptly,
      and in form to be satisfactory to Lender, such other information as Lender
      may
      request from time to time.

     

    8.2 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 under standard business practices, unless and to the extent only that
      such payment is being contested in good faith with adequate
      reserves.

     

    8.3 Maintain
      insurance coverage on its 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 Lender or property in which Lender
      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
      Companies and Lender (as mortgagee) as their respective interests may appear,
      copies of all said policies, including all endorsements thereon and those
      required hereunder, to be deposited with Lender.

     

    
      
        
          
          

        

        
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    8.4 Permit
      Lender, through its authorized attorneys, accountants and representatives,
      to
      examine each Company’s books, accounts, records, ledgers and assets of every
      kind and description at all reasonable times upon oral or written request of
      Lender, which shall include but shall not be limited to collateral audits of
      Companies conducted by Lender at Companies’ expense, not to exceed $1,200 in any
      fiscal year (provided that such limitation shall not apply during the
      continuance of an Event of Default).

     

    8.5 Promptly
      notify Lender after becoming aware of any Default or Event of Default under
      this
      Agreement, and promptly inform Lender of the existence or occurrence of any
      condition or event which could have a material adverse effect upon either
      Company’s financial condition.

     

    8.6 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
      either Company to carry on its general business objects and
      purposes.

     

    8.7 Comply
      with all requirements imposed by ERISA as presently in effect or hereafter
      promulgated, including but not limited to, the minimum funding requirements
      of
      any Pension Plan.

     

    8.8 Promptly
      notify Lender 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 a Company from a Pension Plan; or

     

    (f) a
      reportable event, within the meaning of Title IV of ERISA.

    

    
      
        
          
          

        

        
          22

          
            

          

        

         

      

    

     

    8.9 Furnish
      Lender, upon Lender’s request, in form satisfactory to Lender, with pledges,
      assignments, mortgages, lien instruments or other security instruments covering
      any or all of Companies’ real and personal property, of every nature and
      description, whether now owed or hereafter acquired, to the extent that Lender
      may in its sole discretion require. 

     

    8.10 Furnish
      to the Lender concurrently with the delivery of each of the financial statements
      required by Sections 8.1(a) and (d) a statement prepared and certified by the
      chief financial officer of Annealing (or in such officer’s absence, a
      responsible senior officer of Annealing) (a) setting forth all computations
      necessary to show compliance by Companies with the financial covenants contained
      in Sections 8.11, 8.12 and 8.13 hereof, (b) stating that as of the date thereof,
      no Default or 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 Companies 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.

     

    8.11 Maintain,
      as of the end of each fiscal quarter, a Fixed Charge Coverage Ratio of not
      less
      than 1.2 to 1.

     

    8.12 Maintain,
      as of the end of such fiscal quarter, a Leverage Ratio of not more than 2.6
      to
      1.

     

    8.13 Maintain
      a Debt Ratio of not more than (a) 3 to 1 at September 30, 2006, and (b) 2.75
      to
      1 at the end of each fiscal quarter thereafter.

     

    8.14 Maintain
      at all times Annealing’s TS-16949, ISO-9002 and ISO 14001 certifications, or (if
      such certificates are replaced) obtain and maintain at all times any and all
      successor certifications.

     

    8.15 Maintain
      equipment maintenance expenditures at a level consistent with prior practice;
      and not permit any reduction in Annealing’s equipment maintenance program that
      causes or is reasonably likely to cause a reduction in value or functionality
      of
      Annealing’s equipment.

     

    8.16 On
      or
      before January 31, 2007, cause the property tax description of the real property
      subject to the Lansing Mortgage (the “Lansing Property”) to be split so that no
      property other than the Lansing Property is included in such tax
      description.

     

    8.17 Within
      two Business Days of funding the Maxco Loan, deliver to Lender the original
      Maxco Note endorsed in blank to Lender.

    

    
      
        
          
          

        

        
          23

          
            

          

        

         

      

    

     

    9. NEGATIVE
      COVENANTS

     

    Each
      Company covenants and agrees that so long as Lender may make any Advances under
      this Agreement and thereafter so long as any Indebtedness remains outstanding
      under this Agreement, it will not, without Bank’s prior written
      consent:

     

    9.1 Purchase,
      acquire, or redeem any of its stock or other equity interests or make any
      material change in its capital structure.

     

    9.2 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.

     

    9.3 Guarantee,
      endorse, or otherwise become secondarily liable for or upon the obligations
      of
      others, except by endorsement for deposit in the ordinary course of business
      and
      guaranties in favor of Lender and guarantees described in attached Schedule
      9.3.

     

    9.4 Purchase
      or otherwise acquire or become obligated for the purchase of all or
      substantially all of the assets or business interests of any Person or any
      equity interests of any Person or in any other manner effectuate or attempt
      to
      effectuate an expansion of present business by acquisition.

     

    9.5 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
      Lender;

     

    (b) the
      Permitted Liens;

     

    (c) liens
      described in attached Schedule
      9.5;
      and

     

    (d) liens
      and
      security interests upon fixed assets acquired by Companies after the date of
      this Agreement, 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(s) 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, (iii) the lien or security
      interest does not extend to any property other than such item(s) of property
      and
      proceeds thereof, and (iv) the amount of indebtedness securing such liens does
      not exceed the maximum amount permitted by Section 9.13(d).

     

    9.6 Sell,
      assign, transfer or confer a security interest in any account, contract, note,
      trade acceptance or other receivable, except to Lender.

     

    9.7 Alter
      the
      character of its business from that conducted as of the date of this
      Agreement.

    

    
      
        
          
          

        

        
          24

          
            

          

        

         

      

    

     

    9.8 Declare
      or pay any dividends or make any other distribution upon its capital
      stock.

     

    9.9 Make
      or
      agree to make any non-funded Capital Expenditure if the amount thereof, plus
      all
      other non-funded Capital Expenditures made during the then current fiscal year,
      would exceed $1,000,000 in the aggregate for Companies.

     

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

     

    9.11 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, except:

     

    (a) investments
      of surplus cash in cash equivalents; 

     

    (b) investments
      described on Schedule
      9.11
      attached hereto;

     

    (c) investments
      not to exceed $25,000 in the aggregate outstanding at any one time;
      and

     

    (d) the
      Maxco
      Loan

     

    9.12 Enter
      into or become subject to any agreement (i) prohibiting the creation or
      assumption of any lien or encumbrance upon the properties or assets of either
      Company or (ii) requiring an obligation to become secured (or further secured)
      if another obligation is secured or further secured.

     

    9.13 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 Lender;

     

    (b) current
      unsecured trade payables and accrued liabilities arising in the ordinary course
      of either Company’s business;

     

    (c) indebtedness
      described in attached Schedule
      9.13;
      and 

     

    (d) purchase
      money indebtedness and finance leasing transactions incurred after the date
      hereof while no Default or Event of Default has occurred and is continuing
      in
      connection with the acquisition of new or used fixed assets in an aggregate
      amount not exceeding $200,000 in the aggregate at any time
      outstanding.

     

    9.14 Permit
      its fiscal year to end on any day other than March 31.

    

    
      
        
          
          

        

        
          25

          
            

          

        

         

      

    

     

    9.15 Without
      limiting the provisions of Section 9.10, pay or agree to pay any management
      or
      similar fees to Maxco, Inc. or any other Affiliate.

     

    10. ENVIRONMENTAL
      PROVISIONS

     

    10.1 Each
      Company shall comply with all applicable Environmental Laws.

     

    10.2 Each
      Company shall provide to Lender, 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 either
      Company to a cleanup, removal, remedial action, or other response by or on
      the
      part of either Company under applicable Environmental Laws or which seeks
      damages or civil, criminal or punitive penalties from either Company for an
      alleged violation of Environmental Laws.

     

    10.3 Each
      Company shall promptly notify Lender in writing as soon as either 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.

     

    10.4 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, Companies shall, at the request of Lender, at their sole
      expense, retain an environmental consultant, acceptable to Lender, 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 Lender upon completion.

     

    10.5 At
      any
      time either Company, directly or indirectly through any environmental consultant
      or other representative, determines to undertake an environmental audit,
      assessment or investigation, Companies shall promptly provide Lender with
      written notice of the initiation of the environmental audit, fully describing
      the purpose and intended scope of the environmental audit. Upon receipt,
      Companies will promptly provide to Lender copies of all final findings and
      conclusions of any such environmental investigation.

     

    10.6 Each
      Company hereby indemnifies, saves and holds Lender 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 either Company, or due to any acts of either Company or its
      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
      Lender is in sole possession (subject to the rights of any creditors of
      Companies) of such property.

     

    
      
        
          
          

        

        
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    It
      is
      expressly understood and agreed that the indemnifications granted herein are
      intended to protect Lender, 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
      Lender, or under any other document or agreement given to secure repayment
      of
      any indebtedness from Companies, whether or not such claims arise before or
      after Lender has foreclosed upon and/or otherwise become the owner of any such
      property. All obligations of indemnity as provided hereunder shall be secured
      by
      the collateral documents.

     

    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 Companies to Lender.

     

    10.7 Each
      Company shall maintain all permits, licenses and approvals required under
      applicable Environmental Laws.

     

    11. EVENTS
      OF DEFAULT

     

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

     

    (a) non-payment
      of any installment of the principal or interest of the Notes when
      due;

     

    (b) non-payment
      of any other outstanding Indebtedness within ten (10) days of demand by
      Lender;

     

    (c) default
      in the observance or performance of any of the conditions, covenants or
      agreements of Companies set forth in Sections 2.5, 8.1, 8.3, 8.4, 8.5, 8.8,
      8.10, 8.11, 8.12, 8.13, 9 (in its entirety), 10.2, 10.3 or 10.5;

     

    (d) default
      in observance or performance of any of the other conditions, covenants or
      agreements of Companies herein set forth, and continuance thereof for thirty
      (30) days;

     

    (e) any
      representation or warranty made by Companies or any other Person herein or
      in
      any instrument submitted pursuant hereto proves untrue in any material respect
      when made or deemed made;

     

    (f) default
      in the observance or performance of any of the conditions, covenants or
      agreements of Companies or any other Person set forth in any collateral document
      which may be given to secure the Indebtedness hereunder or in any other
      collateral document related to or connected with this Agreement or the
      indebtedness hereunder;

     

    (g) default
      in the payment of any other obligation of either Company for borrowed money
      in
      an aggregate amount in excess of Ten Thousand Dollars ($10,000), 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 Ten Thousand Dollars ($10,000) sufficient to permit the holder
      thereof to accelerate the maturity of such obligation;

     

    
      
        
          
          

        

        
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    (h) judgment(s)
      for the payment of money in excess of the sum of Fifty Thousand Dollars
      ($50,000) in the aggregate shall be rendered against either Company and any
      such
      judgment(s) 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 any 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 either
      Company 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 either 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 either 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 whatsoever in the management, ownership
      or
      control of either Company which shall in the reasonable judgment of Bank
      materially adversely affect future prospects for the successful operation of
      either Company; or

     

    (k) if
      BCGW
      shall revoke the BCGW Guaranty, or attempt to do so.

     

    then,
      or
      at any time thereafter, unless such default is remedied, Lender may give notice
      to Companies declaring all outstanding indebtedness hereunder and under the
      Notes to be due and payable, whereupon all indebtedness then outstanding
      hereunder and under the Notes shall immediately become due and payable without
      further notice and demand, and Lender shall not be obligated to make further
      Advances under this Agreement.

     

    11.2 If
      a
      creditors’ committee shall have been appointed for the business of either
      Company; or if either Company 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 and such receiver, trustee
      or custodian so appointed shall not have been discharged within thirty (30)
      days
      after the date of his appointment or if an order shall be entered and shall
      not
      be dismissed or stayed within thirty (30) days from its entry, approving any
      petition for reorganization of either Company, then the Notes and all
      indebtedness then outstanding hereunder shall automatically become immediately
      due and payable and Lender shall not be obligated to make further Advances
      under
      this Agreement.

     

    
      
        
          
          

        

        
          28

          
            

          

        

         

      

    

     

    11.3 Upon
      the
      occurrence and during the continuance of an Event of Default, Lender shall
      have
      and may exercise any one or more of the rights and remedies for which provision
      is made for a secured party under the UCC, under the Security Agreement or
      under
      any other document contemplated hereby or for which provision is provided by
      law
      or in equity, including, without limitation, the right to take possession and
      sell, lease or otherwise dispose of any or all of the collateral and to set
      off
      against the Indebtedness any amount owing by Lender to Companies and/or any
      property of Companies in possession of Lender. Each Company agrees, upon request
      of Lender, to assemble the collateral and make it available to Lender at any
      place designated by Lender.

     

    11.4 All
      of
      the Indebtedness shall constitute one loan secured by Lender’s security interest
      in the collateral and by all other security interests, mortgages, liens, claims,
      and encumbrances now and from time to time hereafter granted from Companies
      to
      Lender. Lender may in its sole discretion apply the collateral to any portion
      of
      the Indebtedness. The proceeds of any sale or other disposition of the
      Collateral authorized by this Agreement shall be applied by Lender, first upon
      all expenses authorized by the Michigan Uniform Commercial Code (or other
      applicable law) or otherwise in connection with the sale and all reasonable
      attorneys’ fees and legal expenses incurred by Lender; the balance of the
      proceeds of such sale or other disposition shall be applied in the payment
      of
      the Indebtedness, first to interest, then to principal, then to other
      Indebtedness and the surplus, if any, shall be paid over to Companies or to
      such
      other Person or Persons as may be entitled thereto under applicable law.
      Companies shall remain liable for any deficiency, which Companies shall pay
      to
      Lender immediately upon demand.

     

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

     

    12. MISCELLANEOUS

     

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

     

    12.2 Companies
      shall pay all closing costs and expenses, including, by way of description
      and
      not limitation, attorney fees, lien search fees, and appraisal fees incurred
      by
      Lender in connection with the commitment, consummation and closing of this
      Agreement. All of said amounts required to be paid by Companies may, at Lender’s
      option, be charged by Lender as an advance against the proceeds of the Notes.
      All costs, including actual attorney fees incurred by Lender in protecting
      or
      enforcing any of its or any of the Lender’s rights against Companies or any
      collateral or in defending Lender from any claims or liabilities by any party
      or
      otherwise incurred by Lender 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 Lender
      which would not have been asserted were it not for Lender’s relationship with
      Companies hereunder, shall also be paid by Companies.

     

    
      
        
          
          

        

        
          29

          
            

          

        

         

      

    

     

    12.3 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.

     

    12.4 No
      delay
      or failure of Lender 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 Lender under this Agreement are
      cumulative and not exclusive of any right or remedies which Lender would
      otherwise have.

     

    12.5 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, 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 12.5. 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 facsimile, shall
      be
      deemed given when received (answerback confirmed in the case of telexes and
      receipt confirmed in the case of telecopies).

     

    To
      Companies:

    

    209
      Mt.
      Hope Avenue

    Lansing,
      Michigan 48910

    Attention:
      Steven Wyatt

    Fax
      No.
      (517) 482-7240

    

    To
      Lender:

    

    801
      W.
      Big Beaver Road, 3rd
      Floor

    Troy,
      Michigan 48084

    Attention:
      Kevin Szachta

    Fax
      No.
      (248) 244-3587

    

    12.6 This
      Agreement and the Notes have been delivered at Troy, 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.

     

    
      
        
          
          

        

        
          30

          
            

          

        

         

      

    

     

    12.7 No
      amendments or waiver of any provisions of this Agreement nor consent to any
      departure by Companies therefrom shall in any event be effective unless the
      same
      shall be in writing and signed by Lender, 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.

     

    12.8 All
      sums
      payable by Companies to Lender under this Agreement or the other documents
      contemplated hereby shall be paid directly to Lender at its principal office
      set
      forth in Section 12.5 hereof in immediately available United States funds,
      without set off, deduction or counterclaim. In its sole discretion, Lender
      may
      charge any and all deposit or other accounts of Companies with Lender for all
      or
      a part of any Indebtedness then due; provided, however, that this authorization
      shall not affect Companies’ obligation to pay, when due, any Indebtedness
      whether or not account balances are sufficient to pay amounts due.

     

    12.9 Any
      payment of the Indebtedness made by mail will be deemed tendered and received
      only upon actual receipt by Lender at the address designated for such payment,
      whether or not Lender 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. Companies expressly assume
      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
      Lender 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, Lender shall be entitled to
      exercise any and all rights conferred upon it herein upon the occurrence of
      an
      Event of Default. Companies waive the right to direct the application of any
      and
      all payments at any time or times hereafter received by Lender from or on behalf
      of Company. Companies agree that Lender 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 Lender may deem advisable,
      notwithstanding any entry by Lender upon any of its books and records. Companies
      expressly agree that to the extent Lender 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 Lender, to the extent that
      Lender did not directly receive a corresponding cash payment, shall be added
      to
      and be additional Indebtedness payable upon demand by Lender.

     

    12.10 In
      the
      event Companies’ obligation to pay interest on the principal balance of the
      Notes is or becomes in excess of the maximum interest rate which Companies
      are
      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.

     

    
      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

    

     

    12.11 COMPANIES
      AND LENDER 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.

     

    12.12 This
      Agreement shall become effective upon the execution hereof by Lender and
      Companies.

     

    12.13 This
      Agreement constitutes an amendment and restatement of the Prior Credit
      Agreement, which Prior Credit Agreement is fully superseded and amended and
      restated in its entirety hereby; provided, however, that the Indebtedness
      governed by the Prior Credit Agreement shall remain outstanding and in full
      force and effect and provided further that this Agreement does not constitute
      a
      novation of such Indebtedness.

     

    
      	 	
              13.

            	
              SPECIAL
                PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION - TERM
                NOTES;
                PATRIOT ACT NOFICATION

            

    

     

    13.1 If
      either
      Company makes any payment of principal with respect to a LIBOR Borrowing on
      a
      day which is not the last day of an Interest Period applicable to such LIBOR
      Borrowing, Companies will pay the Prepayment Premium to Lender on
      demand.

     

    13.2 If,
      with
      respect to an Interest Period for any LIBOR Borrowing, Lender determines in
      its
      sole discretion, that, by reason of circumstances affecting the interbank
      Eurodollar market generally, deposits in United States dollars (in the
      applicable amounts) are not being offered to banks in the interbank Eurodollar
      market for such Interest Period, or the LIBOR Rate will not adequately and
      fairly reflect the cost to Lender of maintaining or funding the LIBOR Borrowing
      for such Interest Period, Lender shall promptly give notice thereof to
      Companies. Thereafter, until Lender gives notice to the Companies that such
      circumstances no longer exist, (a) the obligation of Lender to fund LIBOR
      Borrowings shall be suspended until such illegality is remedied, and (b) the
      Companies shall repay in full the then-outstanding principal amount of LIBOR
      Borrowings, together with accrued interest thereon, or such LIBOR Borrowings
      shall automatically be converted to the Prime Rate, on the last day of the
      then-current Interest Period applicable to each LIBOR Borrowing, and, in the
      event such conversion or repayment results in a financial charge to Lender,
      Companies will pay the Prepayment Premium to Lender on demand.

     

    13.3 If,
      after
      the date of this Agreement, the adoption of any applicable law, rule or
      regulation, or any change therein, or any change in the interpretation or
      administration thereof by any governmental authority, central bank or comparable
      agency charged with the interpretation or administration thereof, or compliance
      by Lender with any request or directive (whether or not having the force of
      law)
      of any such authority, central bank or comparable agency shall make it unlawful
      or impossible for Lender to make, maintain or fund LIBOR Borrowings, Lender
      shall promptly give notice thereof to the Companies. Thereafter, (a) the
      obligation of Lender to fund LIBOR Borrowings shall be suspended until such
      illegality is remedied, and (b) the Companies shall repay in full the
      then-outstanding principal amount of LIBOR Borrowings, together with accrued
      interest thereon, or such LIBOR Borrowings shall automatically be converted
      to
      the Prime Rate, either: (1) on the last day of the then-current Interest Period
      applicable to such LIBOR Borrowings, or (2) immediately if Lender may not
      lawfully continue to fund and maintain such LIBOR Borrowings until such date,
      and, in the event such conversion or repayment results in a financial charge
      to
      Lender, Companies will pay the Prepayment Premium to Lender on
      demand.

     

    
      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

    

     

    13.4 If
      any
      governmental authority or regulatory agency, central bank or other comparable
      authority, shall at any time impose, modify or deem applicable any reserve
      (including, without limitation, the Reserve Requirement or any other reserve
      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, Lender to Companies, or shall impose on
      Lender or the interbank Eurodollar market any other condition, guideline or
      request affecting LIBOR Borrowings, any Term Note or Lender’s obligation to make
      advances of LIBOR Borrowings, and the result of any of the foregoing, shall
      be
      to increase the cost to Lender of making or maintaining LIBOR Borrowings, or
      to
      reduce the amount of any sum received or receivable by Lender under this
      Agreement or under any Term Note by an amount deemed by Lender to be material,
      then, within five (5) days after demand by Lender, Companies shall pay to Lender
      as additional interest such additional amount or amounts as will compensate
      Lender for such increased cost or reduction. A certificate of Lender claiming
      compensation under this Section and setting forth the additional amount or
      amounts to be paid to it hereunder shall be conclusive in the absence of
      manifest error. Lender’s determination of amounts payable under this Section
      shall be calculated as though Lender funded the applicable LIBOR Borrowings
      through the purchase of a Eurodollar deposit of the type, maturity and amount
      corresponding to the deposit used as a reference in determining the Base LIBOR
      Rate with respect to such LIBOR Borrowing, whether or not Lender in fact
      purchased such deposit. In such event, Lender shall have the option to
      immediately terminate Companies’ right to request LIBOR Borrowings, and the
      unpaid balance of any outstanding LIBOR Borrowings, with accrued interest at
      the
      highest rate permitted to be charged by stipulation in writing between Lender
      and Companies, at the option of Lender, shall immediately become due and
      payable. The obligations of the Companies under this Section shall survive
      payment of the Loans and termination of this Agreement.

     

    13.5 If
      Lender
      shall determine that the adoption, amendment or revision of any applicable
      law,
      rule or regulation affecting Lender’s capital requirements or adequacy with
      respect to any Term Note, or the interpretation or administration thereof by
      any
      governmental authority or regulatory agency, central bank or other comparable
      authority, or compliance by Lender with any applicable law, rule or regulation
      affecting Lender’s capital requirements or adequacy with respect to any Term
      Note, or any request, interpretation or directive (whether or not having the
      force of law) of any governmental authority or regulatory agency, central bank
      or other comparable authority which affects Lender’s capital requirements with
      respect to any Term Note, has or would have the effect of reducing the rate
      of
      return on Lender’s capital to a level below the rate of return Lender would have
      realized in the absence of such adoption, amendment, revision, interpretation,
      administration or compliance (taking into account Lender’s policies with respect
      to capital adequacy) by an amount considered by Lender to be material, then,
      upon demand by Lender, Companies shall pay to Lender as additional interest
      or
      as fees, as determined by Lender in its sole discretion, such additional amount
      or amounts as will compensate Lender for such reduction in its rate of return.
      Such adjustments in interest or fees shall be imposed upon Lender’s demand and
      shall apply to the then outstanding principal balance of the Loans and to
      subsequent advances under this Agreement. In determining such amount or amounts,
      Lender shall use any reasonable averaging and attribution methods. A certificate
      of Lender claiming compensation under this Section and setting forth the
      additional amount or amounts to be paid to it hereunder shall be conclusive
      in
      the absence of manifest error.

    

    
      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

    

     

    13.6 In
      accordance with the requirements of this Section 13, if any Term Note shall
      bear
      interest at the Prime Rate, then interest shall be payable monthly on the unpaid
      principal balance of such Notes from time to time outstanding, commencing on
      the
      first day of the calendar month following the date on which the Prime Rate
      becomes effective. Interest shall be computed on a daily basis using a year
      of
      360 days, and assessed for the actual number of days elapsed, and in such
      computation effect shall be given to any change in the interest rate resulting
      from a change in the Prime Rate on the date of such change in the Prime
      Rate.

     

    13.7 The
      following notification is provided to Borrower pursuant to Section 326 of the
      USA Patriot Act of 2001, 31 U.S.C. Section 5318:

     

    IMPORTANT
      INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government
      fight the funding of terrorism and money laundering activities, Federal law
      requires all financial institutions to obtain, verify, and record information
      that identifies each person or entity that opens an account, including any
      deposit account, treasury management account, loan, other extension of credit,
      or other financial services product. What this means for Companies: When either
      Company opens an account, the Lender will ask for such Company’s name, taxpayer
      identification number, business address, and other information that will allow
      the Lender to identify such Company. The Lender may also ask any Company’s legal
      organizational documents or other identifying documents.

     

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

     

    
      	THE
              HUNTINGTON NATIONAL BANK	 	 	ATMOSPHERE
              ANNEALING, INC.
	 	 	 	 
	 	 	 	 
	By:	 	 	By:
	
              
                

              

            	 	 	
              
                

              

            
	
              Its:

              
                

              

            	 	 	
              Its:

              
                

              

            

    

     

    
      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

    

     

    
      
        	
              	 	 	
                BCGW,
                  INC.

              
	 	 	 	 
	 	 	 	 
	
              	 	 	By:
	
                 

              	 	 	
                
                  

                

              
	
                 

              	 	 	
                Its:

                
                  

                

              

      

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      “A”

    

      TERM
        NOTE A

    

     

    
      	
              $3,285,000

            	
              Troy,
                Michigan

              August
                28, 2006

            

    

     

    FOR
      VALUE
      RECEIVED, ATMOSPHERE ANNEALING, INC., a Michigan corporation (“Annealing”),
      promises to pay to the order of THE HUNTINGTON NATIONAL BANK, a national banking
      association (“Lender”), at 801 West Big Beaver, Troy, Michigan, in lawful money
      of the United States of America, Three Million Two Hundred Eighty Five Thousand
      Dollars ($3,285,000), together with interest thereon as hereinafter set
      forth.

     

    This
      Note
      shall be payable in equal consecutive monthly principal installments in the
      amounts provided in Section 3A.2 of the Agreement (hereinafter defined),
      beginning September 28, 2006, and on the 28th
      day of
      each month thereafter until the Term Loan A Maturity Date, when the entire
      unpaid balance of principal and interest accrued thereon shall be due and
      payable.

     

    The
      principal balance from time to time outstanding hereunder shall bear interest
      at
      the LIBOR Rate applicable under the Agreement or as otherwise determined
      thereunder, and interest shall be computed, assessed and payable as set forth
      in
      the Agreement.

     

    This
      Note
      evidences borrowing under, is subject to, is secured in accordance with, may
      be
      prepaid in accordance with, and may be matured under the terms of the Amended
      and Restated Credit Agreement dated as of August 28, 2006, by and between
      Annealing, BCGW, Inc. and Lender (as the same may be amended or modified from
      time to time, “Agreement”) to which reference is hereby made. As additional
      security for this Note, Annealing grants Lender a lien on all property and
      assets, including deposits and other credits, of Annealing, at any time in
      possession or control of or owing by Lender for any purpose.

     

    Annealing
      hereby waives presentment for payment, demand, protest and notice of 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 Lender, and Lender shall be under
      no
      further responsibility for the exercise thereof or the loan evidenced hereby.
      Nothing herein shall limit any right granted by other instrument or by
      law.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

    

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

    
       

      
        
          	
                	 	 	
                  
                    ATMOSPHERE
                      ANNEALING, INC.

                  

                
	 	 	 	 
	 	 	 	 
	
                	 	 	By:
	
                   

                	 	 	
                  
                    

                  

                
	
                   

                	 	 	
                  Its:

                  
                    

                  

                

        

         

      

    

    
      
        
          
          

        

        
          2

          
            

          

        

         

      

    

     

    EXHIBIT
      “B”

     

    REQUEST
      FOR ADVANCE

     

    Pursuant
      to the Amended and Restated Credit Agreement dated as of August 28, 2006
      (“Agreement”), the undersigned hereby requests THE HUNTINGTON NATIONAL BANK to
      make an Advance to the undersigned on ___________________, 200__, in the amount
      of _______________________________ Dollars ($_____________) under the Revolving
      Credit Note dated August ____, 2006, issued by Annealing (as defined in the
      Agreement) to said Lender (“Note”). The undersigned certifies that no Default or
      Event of Default (as such terms are defined in the Agreement) exists on the
      date
      hereof, 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 Annealing 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 immediately pay such excess
      amount.

     

    The
      undersigned hereby authorizes said Lender to disburse the proceeds of this
      Request for Advance by crediting the account of the undersigned with Lender
      separately designated by the undersigned or as the undersigned may otherwise
      direct.

     

    Dated
      this ______ day of _______________, 200__.

    
      
         

        
          
            	
                  	 	 	
                    
                      ATMOSPHERE
                        ANNEALING, INC.

                    

                  
	 	 	 	 
	 	 	 	 
	
                  	 	 	By:
	
                     

                  	 	 	
                    
                      

                    

                  
	
                     

                  	 	 	
                    Its:

                    
                      

                    

                  

          

           

        

      

    

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

     

    EXHIBIT
      “C”

     

    REVOLVING
      CREDIT NOTE

     

    
      	
              $6,000,000

            	
              Troy,
                Michigan

              August
                28, 2006

            

    

     

    On
      or
      before the Revolving Credit Maturity Date, ATMOSPHERE ANNEALING, INC., a
      Michigan corporation (“Annealing”), promises to pay to the order of THE
      HUNTINGTON NATIONAL BANK, a national banking association (“Lender”), at 801 West
      Big Beaver, Troy, Michigan, in lawful money of the United States of America
      the
      indebtedness or so much of the sum of Six Million Dollars ($6,000,000) as may
      from time to time have been advanced and then be outstanding hereunder pursuant
      to the Amended and Restated Credit Agreement dated as of the date hereof, by
      and
      between Annealing, BCGW, Inc. and Lender (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 LIBO 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, Annealing grants Lender a lien on all
      property and assets including deposits and other credits of Annealing, at any
      time in possession or control of or owing by Lender for any
      purpose.

     

    Annealing
      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 Lender, and Lender shall be under no further responsibility for
      the exercise thereof or the loan evidenced hereby. Nothing herein shall limit
      any right granted Lender by other instrument or by law.

     

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

    
      
         

        
          
            	
                  	 	 	
                    
                      ATMOSPHERE
                        ANNEALING, INC.

                    

                  
	 	 	 	 
	 	 	 	 
	
                  	 	 	By:
	
                     

                  	 	 	
                    
                      

                    

                  
	
                     

                  	 	 	
                    Its:

                    
                      

                    

                  

          

           

        

      

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      “D”

     

    EQUIPMENT
      TERM NOTE

     

    
      	
              $________________

            	
              Troy,
                Michigan

              March
                15, 2007

            

    

     

    FOR
      VALUE
      RECEIVED, ATMOSPHERE ANNEALING, INC., a Michigan corporation (“Annealing”),
      promises to pay to the order of THE HUNTINGTON NATIONAL BANK, a national banking
      association (“Lender”), at 801 West Big Beaver, Troy, Michigan, in lawful money
      of the United States of America,
      __________________________________________________________________ 
      Dollars
      ($_____________), together with interest thereon as hereinafter set
      forth.

     

    Principal
      shall be payable in consecutive monthly installments in the amount of
      [one
      eighty-fourth (1/84th)
      of
      the original principal amount],
      beginning April 15, 2007, and on the 15th
      day of
      each month thereafter until the Equipment Term Loan Maturity Date, when the
      entire unpaid balance of principal and interest accrued thereon shall be due
      and
      payable.

     

    The
      principal balance from time to time outstanding hereunder shall bear interest
      at
      the LIBOR Rate from time to time applicable thereto under the Agreement (as
      defined below) or as otherwise determined thereunder, and interest shall be
      computed, assessed and payable as set forth in the Agreement. 

     

    This
      Note
      evidences borrowing under, is subject to, is secured in accordance with, may
      be
      prepaid in accordance with, and may be matured under the terms of the Amended
      and Restated Credit Agreement dated as of August ____, 2006, by and between
      Annealing BCGW, Inc. and Lender (as the same may be amended or modified from
      time to time, “Agreement”) to which reference is hereby made. As additional
      security for this Note, Annealing grants Lender a lien on all property and
      assets, including deposits and other credits, of Annealing, at any time in
      possession or control of or owing by Lender for any purpose.

     

    Annealing
      hereby waives presentment for payment, demand, protest and notice of 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 Lender, and Lender shall be under
      no
      further responsibility for the exercise thereof or the loan evidenced hereby.
      Nothing herein shall limit any right granted by other instrument or by
      law.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

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

    
      
         

        
          
            	
                  	 	 	
                    
                      ATMOSPHERE
                        ANNEALING, INC.

                    

                  
	 	 	 	 
	 	 	 	 
	
                  	 	 	By:
	
                     

                  	 	 	
                    
                      

                    

                  
	
                     

                  	 	 	
                    Its:

                    
                      

                    

                  

          

        

      

    

     

    
      
        
          
          

        

        
          2

          
            

          

        

         

      

    

     

    EXHIBIT
      “E”

     

    
      TERM
        NOTE
        B

    

     

    
      	
              $2,680,000

            	
              Troy,
                Michigan

              August
                28, 2006

            

    

     

    FOR
      VALUE
      RECEIVED, ATMOSPHERE ANNEALING, INC., a Michigan corporation (“Annealing”),
      promises to pay to the order of THE HUNTINGTON NATIONAL BANK, a national banking
      association (“Lender”), at 801 West Big Beaver, Troy, Michigan, in lawful money
      of the United States of America, Two Million Six Hundred Eighty Thousand Dollars
      ($2,680,000), together with interest thereon as hereinafter set
      forth.

     

    The
      Indebtedness evidenced hereby shall be payable in equal consecutive monthly
      principal installments in the amounts provided in Section 3B.2 of the Agreement
      (hereinafter defined), beginning September 28, 2006, and on the 28th
      day of
      each month thereafter until the Term Loan B Maturity Date, when the entire
      unpaid balance of principal and interest accrued thereon shall be due and
      payable.

     

    The
      principal balance from time to time outstanding hereunder shall bear interest
      at
      the LIBO Rate from time to time applicable thereto under the Agreement (as
      defined below) or as otherwise determined thereunder, and interest shall be
      computed, assessed and payable as set forth in the Agreement. 

     

    This
      Note
      evidences borrowing under, is subject to, is secured in accordance with, may
      be
      prepaid in accordance with, and may be matured under the terms of the Amended
      and Restated Credit Agreement dated as of August 28, 2006, by and between
      Annealing, BCGW, Inc. and Lender (as the same may be amended or modified from
      time to time, “Agreement”) to which reference is hereby made. As additional
      security for this Note, Annealing grants Lender a lien on all property and
      assets, including deposits and other credits, of Annealing, at any time in
      possession or control of or owing by Lender for any purpose.

     

    Annealing
      hereby waives presentment for payment, demand, protest and notice of 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 Lender, and Lender shall be under
      no
      further responsibility for the exercise thereof or the loan evidenced hereby.
      Nothing herein shall limit any right granted by other instrument or by
      law.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

    

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

    
      
         

        
          
            	
                  	 	 	
                    
                      ATMOSPHERE
                        ANNEALING, INC.

                    

                  
	 	 	 	 
	 	 	 	 
	
                  	 	 	By:
	
                     

                  	 	 	
                    
                      

                    

                  
	
                     

                  	 	 	
                    Its:

                    
                      

                    

                  

          

        

      

    

    

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      “F”

     

    
      TERM
        NOTE
        C

    

     

    
      	
              $1,360,000

            	
              Troy,
                Michigan

              August
                28, 2006

            

    

     

    FOR
      VALUE
      RECEIVED, ATMOSPHERE ANNEALING, INC., a Michigan corporation, and BCGW, Inc.,
      a
      Michigan corporation (“Companies”), jointly and severally promise to pay to the
      order of THE HUNTINGTON NATIONAL BANK, a national banking association
      (“Lender”), at 801 West Big Beaver, Troy, Michigan, in lawful money of the
      United States of America, One Million Three Hundred Sixty Thousand Dollars
      ($1,360,000), together with interest thereon as hereinafter set
      forth.

     

    The
      Indebtedness evidenced hereby shall be payable in equal consecutive monthly
      principal installments in the amounts described in Section 3C.2 of the Agreement
      (hereinafter defined), beginning September 28, 2006, and on the 28th
      day of
      each month thereafter until the Term Loan C Maturity Date, when the entire
      unpaid balance of principal and interest accrued thereon shall be due and
      payable.

     

    The
      principal balance from time to time outstanding hereunder shall bear interest
      at
      the rate from time to time applicable thereto under the Agreement (as defined
      below) or as otherwise determined thereunder, and interest shall be computed,
      assessed and payable as set forth in the Agreement. 

     

    This
      Note
      evidences borrowing under, is subject to, is secured in accordance with, may
      be
      prepaid in accordance with, and may be matured under the terms of the Amended
      and Restated Credit Agreement dated as of August 28, 2006, by and between
      Companies and Lender (as the same has been and may hereafter be amended or
      modified from time to time, “Agreement”) to which reference is hereby made. As
      additional security for this Note, each Company grants Lender a lien on all
      property and assets, including deposits and other credits, of such Company,
      at
      any time in possession or control of or owing by Lender for any
      purpose.

     

    Each
      Company hereby waives presentment for payment, demand, protest and notice of
      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 Lender, and Lender shall be under
      no
      further responsibility for the exercise thereof or the loan evidenced hereby.
      Nothing herein shall limit any right granted by other instrument or by
      law.

     

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

    

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

    
      
         

        
          
            	
                  	 	 	
                    
                      ATMOSPHERE
                        ANNEALING, INC.

                    

                  
	 	 	 	 
	 	 	 	 
	
                  	 	 	By:
	
                     

                  	 	 	
                    
                      

                    

                  
	
                     

                  	 	 	
                    Its:

                    
                      

                    

                  

          

           

          
            
               

              
                
                  	
                        	 	 	
                          
                            
                              BCGW,
                                INC.

                            

                          

                        
	 	 	 	 
	 	 	 	 
	
                        	 	 	By:
	
                           

                        	 	 	
                          
                            

                          

                        
	
                           

                        	 	 	
                          Its:

                          
                            

                          

                        

                

                 

              

            

          

        

      

    

    
      
        
          
          

        

        
          2

          
            

          

        

         

      

    

    
 

    EXHIBIT
      “G”

    

      EQUIPMENT
        LINE NOTE

    

    
       

      
        	
                $7,165,000

              	
                Troy,
                  Michigan

                August
                  28, 2006

              

      

    

    

    On
      or
      before the Equipment Line Maturity Date, FOR VALUE RECEIVED, ATMOSPHERE
      ANNEALING, INC., a Michigan corporation (“Annealing”), promises to pay to the
      order of THE HUNTINGTON NATIONAL, a National banking association (“Bank”), at
      801 West Big Beaver Road, Troy, Michigan, in lawful money of the United States
      of America the indebtedness or so much of the sum of Seven Million One Hundred
      Sixty-five Thousand Dollars ($7,165,000) as may from time to time have been
      advanced and then be outstanding hereunder pursuant to Section 3D of the Amended
      and Restated Loan Agreement dated as of August ____, 2006, by and between
      Annealing, BCGW, Inc. and Lender (“Agreement”), together with interest thereon
      as hereinafter set forth.

     

    Each
      of
      the Advances hereunder shall bear interest at the LIBO 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 and repayments (but not 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, Annealing grants Bank a
      lien
      on all property and assets including deposits and other credits of the
      Annealing, at any time in possession or control of or owing by Bank for any
      purpose.

     

    Annealing
      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.

    
       

      
        
          	
                	 	 	
                  
                    ATMOSPHERE
                      ANNEALING, INC.

                  

                
	 	 	 	 
	 	 	 	 
	
                	 	 	By:
	
                   

                	 	 	
                  
                    

                  

                
	
                   

                	 	 	
                  Its:

                  
                    

                  

                

        

         

      

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      “H”

     

    
      REQUEST
        FOR EQUIPMENT LINE ADVANCE

    

     

    Pursuant
      to the Amended and Restated Loan Agreement dated as of August 28, 2006
      (“Agreement”), the undersigned hereby requests THE HUNTINGTON NATIONAL BANK
      (“Lender”) to make an Advance to the undersigned on _____________, 200___, in
      the amount
      of _________________________________________________________________
DOLLARS
      $_______________, under the $6,450,000 Equipment Line Note dated August ____,
      2006 issued by the undersigned to Lender (“Note”).

     

    The
      undersigned certifies that (i) 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 and (ii) the amount of the
      requested Advance does not exceed 80% of the hard cost of the equipment being
      purchased.

     

    Attached
      hereto are a description of the equipment to be purchased with the proceeds
      of
      this Advance and an invoice or other evidence of the purchase price
      thereof.

     

    The
      undersigned hereby authorizes said Lender to disburse the proceeds of this
      Request for Advance by crediting the account of the undersigned with Lender
      separately designated by the undersigned or as the undersigned may otherwise
      direct.

     

    Dated
      this ____ day of ______________, 200___.

    
       

      
        
          	
                	 	 	
                  
                    ATMOSPHERE
                      ANNEALING, INC.

                  

                
	 	 	 	 
	 	 	 	 
	
                	 	 	By:
	
                   

                	 	 	
                  
                    

                  

                
	
                   

                	 	 	
                  Its:

                  
                    

                  

                

        

      

    

    

    
      
        
          
          

        

        
          1

          
            

          

        

         

      

    

     

    SCHEDULE
      1.1

     

    ATMOSPHERE
      ANNEALING, INC.

    

      AMENDED
        AND RESTATED CREDIT AGREEMENT 

      (BASIS
        POINTS PER ANNUM)

    

    
      
        	
                BASIS
                  FOR PRICING

              	 	
                LEVEL
                  I

              	 	
                LEVEL
                  II

              	 	
                LEVEL
                  III

              	 	
                LEVEL
                  IV

              	 	
                LEVEL
                  V

              
	
                LEVERAGE
                  RATIO1

              	 	
                <0.45:1.00

              	 	
                
                  >
                    0.46:1.00 

                

                BUT <
                  0.79

              	 	
                >
                  0.80: 1.00

                BUT <
                  1.25

              	 	
                >
                  1.26:1.00

                BUT
                  < 1.75

              	 	
                >
                  1.75: 1.00 

              
	 	 	 	 	 	 	 	 	 	 	 
	
                REVOLVING
                  CREDIT/LIBO

              	 	
                100

              	 	
                115

              	 	
                125

              	 	
                160

              	 	
                175

              
	 	 	 	 	 	 	 	 	 	 	 
	
                REVOLVING
                  CREDIT/PRIME

              	 	
                -50

              	 	
                -50

              	 	
                -50

              	 	
                -50

              	 	
                -50

              
	 	 	 	 	 	 	 	 	 	 	 
	
                EQUIPMENT
                  LINE NOTE AND

                EQUIPMENT
                  TERM NOTE/LIBOR

              	 	
                150

              	 	
                160

              	 	
                170

              	 	
                190

              	 	
                220

              
	 	 	 	 	 	 	 	 	 	 	 
	
                EQUIPMENT
                  LINE NOTE AND

                EQUIPMENT
                  TERM NOTE/PRIME

              	 	
                0

              	 	
                0

              	 	
                0

              	 	
                0

              	 	
                0

              
	 	 	 	 	 	 	 	 	 	 	 
	
                TERM
                  NOTE A/LIBOR

              	 	
                175

              	 	
                200

              	 	
                225

              	 	
                250

              	 	
                275

              
	 	 	 	 	 	 	 	 	 	 	 
	
                TERM
                  NOTE B AND

                TERM
                  NOTE C/LIBOR

              	 	
                120

              	 	
                140

              	 	
                160

              	 	
                180

              	 	
                200

              
	 	 	 	 	 	 	 	 	 	 	 
	
                TERM
                  NOTE A/PRIME

              	 	
                50

              	 	
                50

              	 	
                50

              	 	
                50

              	 	
                50

              
	 	 	 	 	 	 	 	 	 	 	 
	
                TERM
                  NOTE B AND TERM NOTE C/PRIME

              	 	
                -25

              	 	
                -25

              	 	
                -25

              	 	
                -25

              	 	
                -25

              

      

      
        
           

          
            
              

            

          

          1  
            As
            defined in the Credit Agreement

        

      

    

     

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

    

    SCHEDULE
      7.5

     

    PENSION
      PLANS

     

    401(k)
      Plan

    

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

     

    SCHEDULE
      7.10

     

    ENVIRONMENTAL
      DISCLOSURES

     

    Atmosphere
      Annealing

    October
      30, 2003

    

    North
      Vernon, Indiana

    

    Letter
      of
      Warning from IDEM Air Section Chief on March 30,1998 and Draft Permit
      identifying enforcement issues dated February 11, 2001. These air issues, which
      relate to permit of shot blast equipment, were resolved without penalty by
      making an acknowledgment of new air requirements in accordance with IDEM’s
      August 24, 2001 letter.

    

    Property
      was identified as contaminated upon acquisition in about 1995, and immediate
      predecessor of current Atmosphere Annealing performed response actions that
      cleaned up contamination after acquisition.

    

    The
      Company site is a property under Indiana law because it routinely supplies
      Section 312 reports under 42 USC 11022.

    

    IDEM
      Air
      Compliance Branch sent violation letter for failure to send a compliance
      certification. The Company will comply and send it.

    

    In
      January 2004, IDEM requested additional documentation for the annual compliance
      certification filed for calendar year 2003. Atmosphere Annealing provided the
      requested documentation to resolve the issue.

    

    In
      February 2005, IDEM issued a letter accepting the Atmosphere Annealing “notice
      of intent” letter that requested coverage under an updated general storm water
      discharge permit.

    

    In
      March
      2006, IDEM issued a notice of violation because the annual compliance
      certification for calendar year 2004 had not been filed. Atmosphere Annealing
      subsequently filed the required certification.

    

    Canton,
      Ohio

    

    Letter
      of
      Violation issued April 21, 2003 by Ohio EPA related to alleged hazardous waste
      regulations. The Company replied to the allegations, and the Ohio EPA on October
      14, 2003 found that the Company had “returned to compliance”.

    

    In
      2006,
      power-washing the concrete containment in the area near the hazardous waste
      accumulation tank completed closure of the hazardous waste management unit
      comprised of the tank and containment. OEPA does not need to approve this action
      or the completion of closure.

    

    Company
      received notices of violations of its sewer use permit from Canton’s Water
      Pollution Control Center on December 29, 1998; January 21, 1999; December 22,
      1999; July 21, 2000; July 13, 2001; January 16, 2002; December 6, 2002, and
      July
      8, 2003. The Company has responded and where necessary corrected the alleged
      violations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Some
      contamination was cleaned up at time of acquisition in 1985 by current
      Atmosphere Annealing’s immediate predecessor.

    

    Lansing,
      Michigan

    

    Mt.
      Hope
      Street facility

    

    Letter
      of
      Violation in 2000 from MDEQ Air Quality Division alleging nuisance emissions.
      Company investigated allegations and concluded that the allegations were
      unsubstantiated and were unlikely to recur even if they were substantiated.
      No
      further written notice has been sent.

    

    

    MDEQ
      communication in 2003 regarding odor complaint by alleged neighbor. The company
      has not found any proof to support claim, although it is considering some minor
      changes to exhaust stacks.

    

    MDEQ
      Waste Management Division sent letter of warning alleging certain waste
      reporting and recordkeeping violations. The Company has resolved the allegations
      per the MDEQ WMD=s letter of December 11, 1998.

    

    In
      November 2005, a piece of metal punctured a diesel fuel tank on a truck picking
      up parts at the plant. The fuel ran onto a paved area and some of it flowed
      off
      the pavement into the soil. In March 2006 the imported soil was excavated and
      transported for offsite disposal at the Venice Park Landfill in Lennon,
      Michigan. Verification sampling was done and PM Environmental recommended that
      no further site investigation was needed.

    

    Certain
      Recognized Environmental Conditions (RECs) have been identified in a Phase
      I ESA
      Report dated December 10, 2004. The RECs have been investigated the results
      of
      which are included in a Phase II ESA Report dated October 20, 2005, and a Phase
      II ESA/Asbestos Inspection Report dated February 14, 2006. A Due Care Plan
      has
      been completed. All of these reports were prepared by PM Environmental, Inc.
      and
      copies have been provided to The Huntington National Bank.

    

    Certain
      asbestos containing materials were identified in an Asbestos Inspection Report
      dated January 20, 2006. Those materials were found to be non-friable and no
      immediate response was required. An Operations and Maintenance Plan has been
      completed.

    

    Bassett
      Street facility

    

    Atmosphere
      Annealing was identified as potentially responsible party (PRP) by US EPA for
      generating material allegedly released at AABCO facility in Detroit, Michigan,
      which resulted in the United States incurring response costs. The company later
      paid $3,000 to PRP group to resolve claims for these response
      costs.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    The
      Company, as a result of a RCRA inspection, received notice in December 2001
      about RCRA violations related to containers, reporting and recordkeeping
      requirements. The Company’s consultant indicates that those items have been
      resolved.

    

    In
      June
      2005, MDEQ issued a letter of violation because the operating differential
      pressure of the acid gas scrubber was less than that specified in the permit.
      Atmosphere Annealing modified the permit to reflect the actual operating
      pressure, which was an administrative change that had no effect on the
      performance of the scrubber system.

    

    DOT
      inspection in November 2003 revealed that the regulations require the plant
      to
      have a transportation security plan (TSP) because of periodic shipments of
      hazardous materials that are byproducts of the phosphate line. Atmosphere
      Annealing subsequently prepared a TSP.

    

    Certain
      Recognized Environmental Conditions (RECs) have been identified in a Phase
      I ESA
      Report dated December 10, 2004. No further investigation has been done to date.
      This report was prepared by PM Environmental, Inc. and a copy has been provided
      to The Huntington National Bank.

     

    
      
        
          
          

        

        
          3

          
            

          

        

         

      

    

     

    SCHEDULE
      9.3

     

    GUARANTEE
      MATTERS

     

     

    None.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

    

    SCHEDULE
      9.5

     

    PERMITTED
      LIENS

     

    

     

    Michigan
      

    

    
      	
              Secured
                Party

            	 	
              Date

            	 	
              File
                Number

            
	
              LeaseNet
                Group, Inc.

            	 	
              08-19-04

            	 	
              2004166047-7

            
	 	 	 	 	 
	
              LeaseNet
                Group, Inc.

            	 	
              01-11-05

            	 	
              2005008431-3

            
	 	 	 	 	 
	
              LeaseNet
                Group, Inc.

            	 	
              08-02-06

            	 	
              2006133916-5

            
	 	 	 	 	 
	
              American
                Axle & Manufacturing, Inc.

            	 	
              07-24-02

            	 	
              D938102

            
	 	 	 	 	 
	
              IBM
                Credit LLC

            	 	
              07-19-06

            	 	
              2006126379-6

            
	 	 	 	 	 
	
              NBD
                Bank

            	 	
              09-04-97

            	 	
              D276516

            
	 	 	 	 	 
	
              Capitol
                National Bank

            	 	
              12-01-97

            	 	
              D310562

            
	 	 	 	 	 
	
              Formtech
                Industries LLC

            	 	
              04-10-06

            	 	
              2006063582-1

            

    

     

    Indiana

    

    
      	
              Secured
                Party

            	 	
              Date

            	 	
              File
                Number

            
	
              Caterpillar
                Financial Services

            	 	
              06-18-04

            	 	
              2004123654-3

            
	 	 	 	 	 
	
              Toyota
                Motor Credit Corporation

            	 	
              01-19-06

            	 	
              2006012012-3

            
	 	 	 	 	 
	
              Toyota
                Motor Credit Corporation

            	 	
              01-19-06

            	 	
              2006012013-5

            

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

     

    SCHEDULE
      9.11

    

      EXISTING
        INVESTMENTS

    

     

    None.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

     

    SCHEDULE
      9.13

     

    PERMITTED
      DEBT

     

    Chase
      indebtedness secured by a mortgage on BCGW, Inc.’s real property located at 1801
      Basset Street, Lansing, Michigan 48915

    

    Certain
      indebtedness with LeaseNet Group, Inc.LOAN
      AND SECURITY AGREEMENT

    

    

    THIS
      LOAN AND SECURITY AGREEMENT
      (the
      "Agreement") made as of the 15th day of July, 2006 by and among PETALS
      DECOARTIVE ACCENTS, INC., a Delaware corporation, with its principal office
      and
      place of business at 90 Grove Street, Ridgefield, CT 06877 (the "Borrower"),
      Southridge Partners LP, a Delaware limited partnership and Southshore Capital
      Fund Ltd., a Cayman Island corporation (the "Lenders"). The Borrower and the
      Lenders are sometimes referred to in this Agreement as (the
      "parties”).

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      pursuant
      to this Agreement, Lenders, in their sole discretion, may advance cash to the
      Borrower under this Agreement pursuant to the Revolving Credit
      Facility;

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and other good and valuable consideration
      exchanged between the parties, the receipt and sufficiency of which is hereby
      acknowledged, it is hereby agreed as follows:

    ARTICLE
      I

    DEFINITIONS
      AND ACCOUNTING TERMS

    

    SECTION
      1.1. Defined Terms.
      As used
      in this Agreement, the following terms shall have the following meanings (terms
      defined in the singular to have the same meaning when used in the plural and
      vice versa):

    

    "Advance"
      or "Advances" means any advance of cash from a Lender to the Borrower made
      pursuant to the Revolving Credit Facility. An Advance made also by referred
      to
      as a Loan.

    

    "Affiliate"
      of any Person shall mean (a) any Person which, directly or indirectly, is in
      control of, is controlled by, or is under common control with such Person,
      or
      (b) any Person who is a director or officer (i) of such Person, or (ii) of
      any
      Person described in clause (a) above. For purposes of this definition, control
      of a Person shall mean the power, direct or indirect, (x) to vote 10% or more
      of
      the securities having ordinary voting power for the election of directors of
      such Person, or (y) to direct or cause the direction of the management and
      policies of such Person whether by contract or otherwise.

    

    "Business
      Day" means any day other than a Saturday, Sunday, or other legal or bank
      holiday.

    

    "Collateral
      Security" or "Collateral" means all of the Collateral described in Article
      III
      hereof securing the re-payment of the Advances and all other obligations and
      indebtedness.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    "Equipment"
      has the meaning defined in the Uniform Commercial Code as in effect in the
      State
      of Connecticut.

    

    "Event
      of
      Default" means any of the events specified in Section 7.1 of this
      Agreement.

    

    "Fiscal
      Year" means the fiscal year the Borrower uses for filing tax returns, which
      Fiscal Year, as of the date hereof, ends annually on June 30.

    

    "GAAP"
      means generally accepted accounting principles consistently applied and
      maintained throughout the period involved. All computations required hereunder
      shall be made and interpreted pursuant to GAAP.

    

    “Lenders”
      mean Southshore Capital Fund Ltd. and Southridge Partners LP (each a
“Lender”).

    

    "Lien"
      means any mortgage, deed of trust, pledge, security interest, hypothecation,
      assignment, deposit arrangement, encumbrance, lien (statutory or other), or
      preference, priority, or other security agreement or preferential arrangement,
      charge, or encumbrance of any kind or nature whatsoever (including, without
      limitation, any conditional sale or other title retention agreement, any
      financing lease having substantially the same economic effect as any of the
      foregoing, and the filing of any financing statement under the UCC or comparable
      law of any jurisdiction to evidence any of the foregoing),

    

    "Loan"
      or
      "Loans" means any extension of credit under the Revolving Credit
      Facility.

    

    "Loan
      Documents" means this Agreement, and all other written agreements, documents,
      financing statements and/or certificates at any time given to or held by the
      Lenders in connection with the Revolving Credit Facility and the Revolving
      Credit Notes.

    

    "Obligations"
      means all of the obligations of the Borrower under this Agreement, the Revolving
      Credit Notes, including the obligation to reimburse Lenders for its reasonable
      costs and expenses (including, without limitation, reasonable attorney's fees)
      incurred in connection with the enforcement of its rights hereunder and
      thereunder.

    

    "Person"
      means any individual, partnership, corporation, limited liability company,
      business trust, joint stock company, trust, unincorporated association joint
      venture, governmental authority or other entity of whatever nature.

    

    "Revolving
      Credit Facility" means the revolving line of credit established for the Borrower
      by the Lenders pursuant to the provisions of Article II of this
      Agreement.

    

    "Revolving
      Credit Note(s)" means the promissory notes referred to in Section 2.4 hereof
      evidencing the Advances,
      substantially in the form set forth in Exhibit A.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    "Subsidiary"
      means a corporation or other entity of whose shares of stock or other ownership
      interests having ordinary voting power (other than stock or other ownership
      interests having such power only by reason of the happening of a contingency)
      to
      elect a majority of the directors of such corporation, or other Persons
      performing similar functions for such entity, are owned, directly or indirectly,
      by such Person.

    

    "UCC"
      means the Uniform Commercial Code as adopted in the State of
      Connecticut.

    

    SECTION
      1.2. Accounting Terms.
      All
      accounting terms used in this Agreement not specifically defined herein shall
      be
      construed in accordance with GAAP, consistent with those applied in the
      preparation of the financial statements referred to in Section 6.3 of this
      Agreement and all financial data pursuant to this Agreement shall be prepared
      in
      accordance with such principles.

    

    ARTICLE
      II

    AMOUNT
      AND TERMS OF CREDIT FACILITIES

    

    SECTION
      2.1. Revolving Credit Facility.
      The
      Lenders may, in their sole discretion, and subject to the terms and conditions
      hereinafter set forth, make Advances to the Borrower from time to time, in
      an
      aggregate principal amount outstanding at any time, up to but not to exceed
      $5,000,000. Any advance made by a Lender pursuant to this Agreement is payable
      by the Borrower upon demand to such Lender.

    

    Anything
      contained herein to the contrary notwithstanding, the obligation of each Lender
      to make Advances shall be at such Lender’s sole discretion.

    

    Within
      the limits of the Revolving Credit Facility, the Borrower may borrow, repay
      and
      re-borrow under the Revolving Credit Facility. All outstanding Advances shall
      be
      payable upon demand by the Lenders.

    

    The
      Advances shall be evidenced by the Revolving Credit Notes referred to in Section
      2.4 hereof.

    

    Each
      Lender enters into this Agreement of its own accord, and any liability for
      an
      obligation created on the part of each Lender shall be several and not joint.
      Each Lender may exercise its rights created hereunder independently one from
      the
      other, without creating any liability whatsoever between each Lender as the
      result of such exercise. 

    

    This
      Agreement shall terminate on December 31, 2008. At such time, and to the extent
      not earlier repaid pursuant the terms of this Agreement, all outstanding
      principal and interest under the Revolving Credit Notes shall become due and
      payable by the Borrower to the Lenders.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SECTION
      2.2. Interest.
      Notwithstanding anything in this Agreement or the Loan Documents to the
      contrary, the principal amount of Advances made under this Agreement shall
      bear
      interest at the rate equal to five (5%) percent per year, on the basis of a
      360-day year and actual number of days elapsed (but in no event in excess of
      the
      maximum rate permitted by applicable law). 

    

    SECTION
      2.3. The Revolving Credit Notes.
      The
      Loans shall be evidenced by promissory notes made and delivered by the Borrower
      in substantially the form of the Revolving Credit Notes, and made a part hereof,
      duly completed, dated the date of this Agreement and payable to a Lender at
      the
      office of the Lender set forth at the beginning of this Agreement or such other
      office as the Lender shall notify the Borrower of from time to time in writing.
      The Revolving Credit Notes shall evidence the obligation of the Borrower to
      repay the Advances to the Lenders as provided herein. The Lenders are hereby
      authorized, but not obligated, by the Borrower to endorse on the schedule
      attached to the Revolving Credit Note the amount of each Advance made, and
      each
      renewal, and payment of principal or interest thereon. Such endorsement shall,
      in the absence of error, be conclusive as to the outstanding balance due under
      the Revolving Credit Facility; provided, however, that the Lenders' failure
      to
      make such notation with respect to any Advance, or any renewal thereof, or
      payment thereon shall not limit or otherwise affect the obligations of the
      Borrower under this Agreement or the Revolving Credit Note. In lieu of using
      the
      schedule attached to the Revolving Credit Note, a Lender may record all
      advances, payments and renewals with respect to the Revolving Credit Facility
      in
      such other reasonable manner as it may elect. Such record, absent manifest
      error, shall be conclusive as to the principal balance due on the Revolving
      Credit Facility. 

    

    SECTION
      2.4. [Reserved]

    

    SECTION
      2.5. Prepayments.
      The
      Borrower may, at any time without penalty or premium, prepay the Loans in whole
      or in part, plus accrued interest in increments of not less than $50,000.

    

    SECTION
      2.6. [Reserved]

    

    SECTION
      2.7. Method of Payment.
      The
      Borrower shall make each payment due under this Agreement and under the
      Revolving Credit Notes (whether it be principal, interest or any other charge)
      in lawful money of the United States and in immediately available funds upon
      demand, to the accounts of the Lenders designated for that purpose. Whenever
      any
      payment to be made under this Agreement shall be stated to be due on a Saturday,
      Sunday or a public or bank holiday, such payment shall be made on the next
      succeeding Business Day, and such extension of time shall in such case be
      included in the computation of the payment of interest.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ARTICLE
      III

    SECURITY
      INTEREST

    

    SECTION
      3.1. Grant of Security.
      In order
      to secure the due and punctual repayment of the Obligations, Borrower hereby
      assigns, pledges and grants to the Lenders a continuing security interest in
      all
      of Borrower's right, title, and interest in and to all of the Borrower's
      accounts receivable, instruments, investment securities, chattel paper, notes,
      drafts, acceptances, contract rights, credits, claims; and all proceeds thereof
      (including, without limitation, claims of Borrower against third parties for
      breach of contract, and loss or damage to or destruction of the personal
      property), all of the inventory, equipment, trade marks, trade names, customer
      lists, designs, intellectual property, books and records, goodwill, and all
      substitutions and replacements thereof, wherever located, whether now owned
      or
      hereafter acquired and all proceeds therefrom. All the foregoing collectively
      referred to as (the "Collateral").

    

    SECTION
      3.2. Collateral Owned Free and Clear.
      Except
      for any existing lien on Borrower’s assets held by Ridgefield Bank, the Borrower
      shall not encumber or grant a security interest in any of the Collateral
      described in Section 3.1 above to anyone other than the Lenders, or permit
      any
      of the foregoing, without the prior written consent of the Lenders. In the
      event
      that any Collateral, including proceeds, is evidenced by or consists of
      negotiable instruments, Borrower shall, upon the Lenders' request, immediately
      endorse, assign and deliver physical possession of such to the
      Lenders.

    

    SECTION
      3.3. Remedies.
      If any
      Event of Default shall have occurred under this Agreement and/or the Revolving
      Credit Notes between the Borrower and the Lenders and, except for a default
      in
      the payment or repayment of principal required thereunder, the same shall have
      not been cured within fifteen (15) days of written notice thereof by Lenders
      to
      Borrower, the Lenders may:

    

    (a) sell
      the
      Collateral or any interest therein, and negotiate, endorse, assign, transfer
      and
      deliver unto the purchaser or purchasers thereof the Collateral at public or
      private sale, for cash, upon credit or for other property, for immediate or
      future delivery and for such price or prices and on such terms as the Lenders
      in
      their discretion and in good faith shall deem appropriate.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) Upon
      consummation of any such sale, the Lenders shall have the right to assign,
      transfer and deliver to the purchaser or purchasers thereof the Collateral
      or
      any interest therein so sold. Each such purchaser at any such sale shall hold
      the property sold absolutely free from any claim or right on the part of the
      Borrower, and the Borrower hereby waives (to the extent permitted by law) all
      rights of redemption, stay and appraisal which the Borrower now has or may
      at
      any time in the future have under any rule of law or statute now existing or
      hereafter enacted. The Lenders shall give the Borrower ten (10) business days
      prior written notice (which the Borrower agrees is reasonable notification
      within the meaning of the UCC), of the Lenders' intention to make any such
      public or private sale. Such notice shall state the time, place, manner and
      terms of the proposed sale. Any such public sale shall be held at such time
      or
      times, within ordinary business hours and at such place or places as the Lenders
      may fix and so state in the notice or publication (if any) of such sale, At
      any
      such sale, the Collateral or any interest therein to be sold may be sold as
      a
      whole or by means of such lots as the Lenders may (in their sole
      and
      absolute discretion) determine. The Lenders shall not be obligated to make
      any
      sale of the Collateral if it shall determine not to do so, regardless of the
      fact that notice of sale of the Collateral may have been given. The Lenders
      may,
      without notice or publication, adjourn any public or private sale or cause
      the
      same to be adjourned from time to time by announcement at the time and place
      fixed for sale, and such sale may, without further notice, be made at the time
      and place to which the same was so adjourned. In the event that the sale of
      the
      Collateral or any interest therein is made on credit or for future delivery,
      the
      Collateral may be retained by the Lenders until the sale price is paid by the
      purchaser or purchasers thereof, but the Lenders shall not incur any liability
      in case any such purchaser or purchasers shall fail to take up and pay for
      the
      Collateral or such interest so sold and, in case of any such failure, the
      Collateral or any interest therein may be sold again upon like notice. At any
      public sale made pursuant to this Section, the Lenders may bid for or purchase,
      free (to the extent permitted by law) from any right of redemption, stay or
      appraisal on the part of the Borrower (all said rights being also hereby waived
      and released to the extent permitted by law), the Collateral or any interest
      therein offered for sale and may make payment on account thereof by using any
      claim then due and payable to the Lenders from the Borrower as a credit against
      the purchase price, and the Lenders may, upon compliance with the terms of
      the
      sale, hold, retain and dispose of such property without further accountability
      to the Borrower therefore except for a final accounting. For purposes hereof,
      a
      written agreement to purchase the Collateral or any interest therein shall
      be
      treated as a sale thereof. The Lenders shall be free to carry out such sale
      pursuant to such agreement and the Borrower shall not be entitled to the return
      of the Collateral or any interest therein subject thereto, notwithstanding
      the
      fact that after the Lenders shall have entered into such agreement, all defaults
      under this Agreement may have been remedied and the Obligations may have been
      paid in full. As an alternative to exercising the power of sale herein conferred
      upon it, the Lenders may proceed by suit or suits at law or in equity to
      foreclose its security interest and sell the Collateral or any portion thereof
      pursuant to judgment or decree of a court or courts having competent
      jurisdiction. The Lenders agree to pay to the order of the Borrower any proceeds
      from the sale of the Collateral in excess of the Obligations, subject to the
      rights of any junior lien holder known to the Lenders.

    

    (c) All
      proceeds from the sale of the Collateral by the Lenders hereunder and all other
      moneys received by the Lenders pursuant to the terms of this Article III shall
      be applied as follows:

    

    
      	 	 	
              First:
                To the payment of all reasonable expenses incurred by the Lenders
                in
                connection with enforcing its rights hereunder including, without
                limitation, such sale, including, but not limited to, the expenses
                of
                taking, advertising, processing, preparing and storing the Collateral
                to
                be sold, all court costs and the Lenders' reasonable legal fees in
                connection therewith, and to the payment of all reasonable advances,
                costs
                and expenses paid or incurred by, or fees owed to, the Lenders in
                connection with this Agreement or any other agreement or the exercise
                of
                any right or remedy hereunder or thereunder to the extent that such
                advances, costs, expenses and fees shall not have been paid to the
                Lenders
                upon their demand to the Borrower therefor;
                and

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	 	
              Second:
                To the payment of the unpaid principal amount due and owing on the
                Revolving Credit Notes or any other instrument delivered by the Borrower
                to the Lenders in accordance with the terms thereof, by acceleration
                or
                otherwise, together (in order of priority as determined by the Lenders
                in
                its sole discretion) with interest thereon to the date of payment,
                and to
                the payment of all other unpaid monetary obligations of the Borrower
                to
                the Lenders under this Agreement,

            

    

    

    
      	 	 	
              Third.
                Any surplus remaining to be paid over to the Borrower, its successor
                or
                permitted assigns, or as a court of competent jurisdiction may direct,
                and
                subject to the rights of any junior lien holder known to the
                Lenders.

            

    

    

    SECTION
      3.4. Further Assurances.

    

    (a) The
      Borrower shall from time to time, at its expense, promptly execute and deliver
      all further instruments and documents, and take all further action, that may
      be
      necessary or desirable, or that the Lenders may reasonably request, in order
      to
      perfect any security interest granted hereby, or to enable the Lenders to
      exercise and enforce its rights or remedies hereunder or under any of the Loan
      Documents. Without limiting the generality of the foregoing, the Borrower will
      execute and file such financing and continuation statements, or amendments
      thereto, as may be necessary or desirable, or as the Lenders may request, in
      order to perfect and preserve the security interests granted
      hereby.

    

    (b) The
      Borrower shall furnish to the Lenders, from time to time, statements and
      schedules further identifying and describing the Collateral and such other
      reports in connection with the Collateral, as the Lenders may reasonably request
      in order to maintain its security interest in the Collateral, all in reasonable
      detail,

    

    SECTION
      3.5. Place
      of Business.
      The
      Borrower shall provide the Lenders with ten (10) days' prior written notice
      of
      the relocation of its chief executive offices and the offices where it keeps
      any
      Collateral. The Borrower will hold and preserve the Collateral and will permit
      representatives of the Lenders at any time during normal business hours to
      inspect the same after reasonable notice to the Borrower.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    SECTION
      3.6. Transfers and Other Liens.
      The
      Borrower shall not: (a) sell, assign (by operation or law or otherwise) or
      otherwise dispose of any of the Collateral, except (i) Borrow may dispose of
      a
      item of Collateral that, in Borrower’s good faith opinion, has become
      inadequate, obsolete, worn out, undesirable, unsuitable or unnecessary may
      be
      sold, traded in, exchanged or otherwise disposed of, provided that such removal
      will not materially impair the efficient operation of the Borrower's business
      or
      materially impair the aggregate value of the Collateral pledged to the Lenders
      hereunder, or (ii) upon the substitution of additional collateral of
      substantially equivalent value as reasonably determined by the Lenders; or
      (iii)
      Borrower may sell or dispose of Collateral in the ordinary course of business,
      or (b) create or suffer to exist any lien, security interest or other charge
      or
      encumbrance upon or with respect to any of the Collateral to secure the
      indebtedness or obligations of any Person, other than (i) the security interest
      created by this Article III, and (ii) security interests permitted by Section
      6.2 of this Agreement.

    

    SECTION
      3.7. Continuing Security Interest; Transfer of the
      Revolving Credit Notes.
      This
      Article III shall create continuing security interests in the Collateral and
      shall (i) remain in full force and effect until payment in full of all of the
      Obligations; (ii) be binding upon the Borrower and its successors and permitted
      assigns (if any); and (iii) inure to the benefit of the Lenders and their
      subsidiaries, successors transferees and assigns. Without limiting the
      generality of the foregoing clause (iii), the Lenders may assign or otherwise
      transfer the Revolving Credit Notes or any other instrument delivered by the
      Borrower to the Lenders to any Person, and such Person shall thereupon become
      vested with all the benefits (and obligations) in respect thereof granted to
      the
      Lenders under this Article III. Upon the payment in full of the Obligations,
      the
      Lenders agrees to terminate the security interests granted under this Article
      III and, at the expense of the Borrower, execute and deliver to the Borrower
      such documents as the Borrower shall reasonably request to evidence such
      termination.

    

    SECTION
      3.8. Rights Cumulative.
      Subject
      to the notice and cure provisions of Section 3.3, the rights and remedies
      granted to Lenders hereunder are in addition to, and not in lieu of, any and
      all
      other rights and remedies which Lenders may have under applicable law,
      including, without limitation, the rights and remedies of a secured creditor
      under the UCC, all of which (except where such law provides for an election
      of
      remedies) shall be cumulative.

    

    ARTICLE
      IV

    CONDITIONS

    

    SECTION
      4.1. Conditions Precedent to an
      Advance.
      Any
      Advance by a Lender shall be subject to the fulfillment on or prior to the
      Closing Date as well as on the date of any Advance of each of the following
      conditions, in form and substance satisfactory to the Lenders and their
      counsel;

    

    (a) The
      Borrower shall have executed and delivered to the Lenders this Agreement and
      such other Loan Documents as the Lenders may reasonably require from time to
      time;

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) The
      Borrower shall have executed and delivered to the Lenders, the Revolving Credit
      Notes, each dated the Closing Date;

    

    (c) The
      Borrower shall have executed and delivered to the Lenders UCC financing
      statements covering (to the satisfaction of the Lenders) the Collateral, in
      form
      for filing;

    

    (d) No
      Event
      of Default shall have occurred and be continuing; and

    

    (e) There
      shall not have occurred any material adverse change in the Borrower's business
      operations, properties or financial condition.

    

    ARTICLE
      V

    REPRESENTATIONS
      AND WARRANTIES

    

    SECTION
      5.1. Representations and Warranties of the Borrower.

    

    In
      order
      to induce the Lenders to enter into this Agreement and to make an Advance
      provided for herein, the Borrower makes the following representations and
      warranties to, and agreements
      with, the Lenders, all of which shall survive the execution and delivery of
      this
      Agreement, the issuance of the Revolving Credit Notes and the making of an
      Advance.

    

    (a) The
      Borrower's latest financial statements provided to the Lenders are, to the
      best
      of Borrower’s knowledge, true, complete and accurate in all material respects
      and fairly present the financial condition, assets and liabilities, whether
      accrued, absolute, contingent or otherwise and the results of the Borrower's
      operations for the period specified therein. To the best of Borrower’s
      knowledge, the Borrower's financial statements have been prepared in accordance
      with GAAP consistently applied from period to period subject in the case of
      interim statements to normal year-end adjustments. Since the date of the latest
      financial statements provided to the Lenders, to the best of Borrower’s
      knowledge, the Borrower has not suffered any damage, destruction or loss which
      has materially adversely affected its business, assets, operations, financial
      condition or results of operations.

    

    (b) 
      There
      are no material actions, suits or proceedings pending or, to the knowledge
      of
      the Borrower, threatened against the Borrower which could result in a material
      adverse change in its business, assets, operations, financial condition or
      results of operations and there is no basis known to the Borrower or its
      officers or directors for any such action, suit or proceedings.

    

    (c) To
      the
      best of Borrower’s knowledge, the Borrower has filed all returns and reports
      that are required to be filed by it in connection with any federal, state or
      local tax, duty or charge levied, assessed or imposed upon the Borrower or
      its
      property, including unemployment, social security and similar taxes and all
      of
      such taxes have been either paid or adequate reserve or other provision has
      been
      made e.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d) To
      the
      best of Borrower’s knowledge, the Borrower is duly organized, validly existing
      and in good standing under the laws of the State of Delaware and has the power
      and authority to own and operate its assets and to conduct is business as now
      or
      proposed to be carried on, and is duly qualified, licensed and in good standing
      to do business in all jurisdictions where its ownership of property or the
      nature of its business requires such qualification or licensing.

    

    (e) The
      Borrower has full power and authority to enter into the transactions provided
      for in this Agreement and the Loan Documents and has been duly authorized to
      do
      so by all necessary and appropriate action and when executed and delivered
      by
      the Borrower, this Agreement and the other Loan Documents executed and delivered
      pursuant hereto will constitute the legal, valid and binding obligations of
      the
      Borrower enforceable in accordance with their terms.

    

    (f) To
      the
      best of Borrower’s knowledge, there does not exist any default or violation by
      the Borrower or under any of the terms, conditions or obligations of: (i) its
      organizational documents; (ii) any indenture, mortgage, deed of trust,
      franchise, permit, contract, agreement, or other instrument to which it is
      a
      party or by which it is bound; and (iii) any law, regulation, ruling, order,
      injunction, decree, condition or other requirement applicable to or imposed
      upon
      the Borrower by any law or by any governmental authority, court or
      agency.

     

    (g) The
      security interests granted by Borrower to Lenders pursuant to this Agreement
      and
      any other Loan Document constitute valid security interests in the Collateral
      herein described under applicable law, and are prior (how does the current
      Revolver with Ridgefield affect this?)to security interests in the Collateral,
      if any, granted to any other Person, except as specifically provided
      herein.

    

    ARTICLE
      VI

    COVENANTS

    

    SECTION
      6.1. Affirmative Covenants of the Borrower Other Than Reporting
      Requirements.
      So long
      as this Agreement shall remain in effect or the Revolving Credit Notes or any
      fees and expenses due the Lenders hereunder shall be unpaid, the Borrower shall,
      to the best of its ability, unless the Lenders shall otherwise consent in
      writing:

    

    (a) Promptly
      submit to the Lenders such information relating to the Borrower's affairs
      (including but not limited to annual financial statements and tax returns)
      or
      any security for any Advance as the Lenders may reasonably request, subject
      to
      SEC Rules and Regulations permitting such disclosure.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) Pay
      and
      discharge all taxes, assessments and governmental charges or levies imposed
      upon
      it or its income or profits, or upon any properties belonging to it prior to
      the
      date on which penalties attach thereto, and all lawful claims which, if unpaid,
      might become a lien or charge against any of its properties, provided that
      the
      Borrower shall not be required to pay any such tax, assessment, charge, levy
      or
      claim, which is being contested in good faith and by proper proceedings, as
      long
      as appropriate reserves are set aside on its books and records.

    

    (c) Preserve
      and maintain its existence as a corporation in Delaware and qualify and remain
      qualified as a foreign corporation in such jurisdiction where such qualification
      is necessary or desirable in view of its business and operations or the
      ownership of its properties.

    

    (d) Keep
      adequate records and books of account, in which complete entries will be made
      in
      accordance with GAAP consistently applied, reflecting all financial transactions
      of the Borrower.

    

    (e) Maintain
      and preserve all of its properties (and/or leasehold interests in said
      properties), necessary or useful in the proper conduct of its business, in
      good
      working order and condition, ordinary wear and tear excepted, except such
      properties as may be disposed of in the ordinary course of
      business.

    

    (f) Make
      full
      and timely payment of the principal and interest and premium, if any, on the
      Loans.

    

    SECTION
      6.2. Negative
      Covenants of the Borrower.
      So long
      as this Agreement shall remain in effect or the Revolving Credit Notes or any
      fees and expenses due the Lenders hereunder shall be unpaid, the Borrower shall
      not, directly or indirectly, without the prior written consent of the Lenders,
      which consent shall not be unreasonably withheld:

    

    (a) Enter
      into any merger, consolidation or other reorganization with or into any other
      entity or acquire all or a substantial portion of the assets or stock of any
      entity or permit any other entity to consolidate with or merge with
      it.

    

    (b) 
      Sell,
      lease, transfer or otherwise dispose of any of its properties or assets, except
      in the ordinary course of its business.

    

    (c) Create
      or
      suffer to exist any Lien or transfer upon or against any of its property or
      assets now owned or hereafter acquired.

    

    (d) Become
      liable upon the obligations of any third party by assumption, endorsement or
      guaranty thereof or otherwise (other than to Lenders).

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e) Declare,
      pay or make any cash dividend or cash distribution on any shares of the common
      stock of Borrower or apply any of its funds, property or assets to the purchase,
      redemption or other retirement of any common or preferred stock, or of any
      options to purchase or acquire any such shares of common or preferred stock
      of
      Borrower.

    

    (f) Substantially
      change the nature of the business in which it is presently engaged, nor except
      as specifically permitted hereby purchase or invest, directly or indirectly,
      in
      any assets or property other than in the ordinary course of business for assets
      or property which are useful in, necessary for and are to be used in its
      business as presently conducted.

    

    (g) Directly
      or indirectly, purchase, acquire or lease any property from, or sell, transfer
      or lease any property to, or otherwise deal with, any Affiliate, except
      transactions disclosed in the ordinary course of business, on an arm's length
      basis on terms no less favorable than terms which would have been obtainable
      from an entity other than an Affiliate.

    

    (h) Enter
      into any partnership, joint venture or similar arrangement that would have
      a
      material effect on Borrower's financial condition .

    

    (i) Make
      any
      significant change (i) in accounting treatment and reporting practices except
      as
      required by GAAP or (ii) in tax reporting treatment except as required by
      law.

    

    ARTICLE
      VII

    DEFAULT

    

    SECTION
      7.1. Events of Default.
      If any
      of the following events ("Events of Default") shall occur and be
      continuing:

    

    (a) The
      Borrower shall fail to pay any payment of principal or interest under any of
      the
      Revolving Credit Notes, or other Obligations upon demand by a Lender, subject
      to
      being cured within any applicable time frame allotted for herein.

    

    (b) The
      Borrower shall fail to perform or observe any applicable material term, covenant
      or agreement contained in Sections 6.1 or 6.2 of this Agreement or the Borrower
      shall fail to perform or observe any other material term, covenant or agreement
      contained in this Agreement.

    

    (c) This
      Agreement, the Revolving Credit Notes, or any of the other Loan Documents which
      are a part hereof (and any amendments or supplements thereto) shall, at any
      time
      after their respective execution and delivery and for any reason, cease to
      be in
      full force and effect or shall be declared to be null and void, or the validity
      or enforceability thereof shall be contested by the Borrower or the Borrower
      shall deny that it has any or further liability or obligation under this
      Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (d) The
      Borrower shall terminate or suspend the operation of its business, or the
      Borrower shall be adjudicated a bankrupt or insolvent, or admit in writing
      its
      inability to pay its debts as they mature, or make an assignment for the benefit
      of creditors; or the Borrower shall apply for or consent to the appointment
      of a
      receiver, trustee or similar officer for it or for all or any substantial part
      of its property; or such receiver, trustee or similar officer shall be appointed
      without the application or consent of the Borrower and such appointment shall
      continue undischarged for a period of sixty (60) days; or the Borrower shall
      institute (by petition, application, answer, consent or otherwise), any
      bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
      dissolution, liquidation or similar proceeding relating to it under the laws
      of
      any jurisdiction; or any such proceeding shall be instituted (by petition,
      application or otherwise) against the Borrower.

    

    (e) There
      is
      entered one or more judgments against the Borrower in an aggregate amount
      exceeding $250,000.00 if such judgment(s) remains undischarged for thirty (30)
      days, unless the judgment is subject to appeal and a bond, in form satisfactory
      to the Lenders, has been posted or is otherwise covered by insurance and is
      reasonably satisfactory to the Lenders; or

    

    (f) This
      Agreement (and any amendments or supplements thereof) shall, at any time after
      its execution and delivery, for any reason (1) cease to create a valid and
      perfected first priority security interest in and to any of the Collateral
      Security or (2) cease to be in full force and effect or shall be declared null
      and void, or the validity or enforceability thereof shall be contested by the
      party thereto or the party thereto shall deny it has any further liability
      or
      obligation under Section 3.1 hereof, or

    

    (g) Any
      material change in Borrower's condition or affairs (financial or otherwise)
      which in Lenders' commercially reasonably opinion impairs the Collateral and
      the
      ability of Borrower to perform its Obligations under this
      Agreement;

    

    then,
      and
      in any such Event of Default, a Lender may, by written notice to the Borrower,
      declare the entire outstanding principal amount of the Revolving Credit
      Facility, all interest accrued and payable thereon, and all other amounts
      payable under this Agreement and the other Loan Documents to such Lender to
      be,
      due and payable in accordance with the provisions of Section 2.1, whereupon
      the
      repayment of all Advances, and all such accrued interest thereon, and all such
      Obligations shall become and be due and payable in accordance with the
      provisions of Section 2.1, without presentment, demand, protest or further
      notice of any kind, all of which are hereby expressly waived by the Borrower.
      Upon the occurrence of an Event of Default and the expiration of the time period
      provided to cure such Event of Default, the Lender shall have available to
      it
      all remedies provided to it pursuant to this Agreement, and all other remedies
      available to it of any nature whatsoever.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    ARTICLE
      VIII

    ADDITIONAL
      PROVISIONS

    

    SECTION
      8.1. No Waiver; Cumulative Remedies.
      No
      failure or delay on the part of a Lender, or any other holder of the Revolving
      Credit Notes, in exercising any right, power, or remedy hereunder, under the
      Revolving Credit Notes or under any other Loan Document shall operate as a
      waiver thereof, nor shall any single or partial exercise of any such right,
      power or remedy preclude any other or further exercise thereof or the exercise
      of any other right, power or remedy hereunder, under the Revolving Credit Notes
      or under any of the other Loan Documents. The remedies herein provided are
      cumulative and not exclusive of any other remedies provided by law and/or
      available in equity.

    

    SECTION
      8.2. Amendments.
      Notwithstanding any course of dealing between the parties, no amendment,
      modification, termination or waiver of any provision of this Agreement, the
      Revolving Credit Notes or any other Loan Document, nor consent to any departure
      by the Borrower, from the terms and provisions contained in the Loan Documents,
      shall be effective unless the same shall be in writing and signed by the
      Lenders, and the such waiver or consent shall be effective only in the specific
      instance and for the specific purpose for which given.

    

    SECTION
      8.3. Lenders'
      Right to Cure.
      The
      Lenders may, but shall not be obligated to, take such steps and incur such
      expenses as it deems necessary to protect its interests, rights and remedies,
      without waiving any rights or remedies upon the occurrence of any Events of
      Default. Any sums the Lenders may so disburse shall constitute additional loans
      to Borrower, payable on demand.

    

    SECTION
      8.4. Benefit of Agreement.
      This
      Agreement shall be binding upon Borrower, its successors and permitted assigns,
      if any, and inure to the benefit of and be enforceable by Lenders, its
      successors and assigns. No other person or entity shall be entitled to claim
      any
      right or benefit hereunder, as third-party beneficiary or otherwise. This
      Agreement is not assignable by Borrower without the Lenders' prior written
      consent in their sole discretion,

    

    SECTION
      8.5. Transaction Days.
      Whenever
      any payment is due, or obligation is to be performed hereunder on a Saturday,
      Sunday or holiday or bank holiday on which the Lenders are authorized to close,
      such payment may be made or obligation performed on the next succeeding
      transaction day. Such extension of time shall, in such case, be included in
      the
      computation of any interest or fees.

    

    SECTION
      8.6. Complete Agreement.
      This
      Agreement, together with the other Loan Documents, constitutes the entire
      agreement and understanding among the parties relating to the subject matter
      hereof, and supersedes all prior proposals, negotiations, agreements and
      understandings relating to such subject matter. In entering into this Agreement,
      Borrower acknowledges that it is not relying on any statement, representation,
      warranty, covenant or agreement of any kind made by the Lenders or any employee
      or agent of the Lenders.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    SECTION
      8.7. Notices.
      Unless
      otherwise provided herein, any notice or other communication herein required
      or
      permitted to be given shall be in writing and may be personally served,
      telecopied, or sent by United States mail and shall be deemed to have been
      given
      when delivered in person, upon receipt of telecopy or four business days after
      depositing it in the United States mail, registered or certified, with postage
      prepaid and properly addressed as follows:

    

    
      	
            	
              If
                to the Lenders:

            	
              c/o
                Southridge Capital Management LLC

            

    

    90
      Grove
      Street, Suite 204

    Ridgefield,
      CT 06877

    

    
      	
            	
              If
                to the Borrower:

            	
              Petals
                Decorative Accents LLC

            

    

    90
      Grove
      Street, Suite 206

    Ridgefield
      CT 06877

    

    SECTION
      8.8. Limitation on Interest.
      All
      agreements between Borrower and Lenders are hereby expressly limited so that
      in
      no contingency or event whatsoever, whether by reason of acceleration of
      maturity of any Indebtedness, shall the amount paid or agreed to be paid to
      Lenders for the use or forbearance of indebtedness contemplated hereby exceed
      the maximum permissible under applicable law. As used herein, the term
      "applicable law" shall mean the law in effect as of the date hereof provided,
      however that in the event there is a change in the law which results in a higher
      permissible rate of interest, then the Loan Documents shall be governed by
      such
      new law as of its effective date. In this regard, it is expressly agreed that
      it
      is the intent of Borrower and Lenders in the execution, delivery and acceptance
      of this Agreement to contract in strict compliance with the laws of the State
      of
      Connecticut from time to time in effect. If, under or from any circumstances
      whatsoever, fulfillment of any provision hereof or of any of the Loan Documents
      at the time of performance of such provision shall be due, shall involve
      transcending the limit of such validity prescribed by applicable law, then
      the
      obligation to be fulfilled shall automatically be reduced to the limits of
      such
      validity, and if under or from circumstances whatsoever Lenders should ever
      receive as interest an amount which would exceed the highest lawful rate, such
      amount which would be excessive interest shall be applied to the reduction
      of
      the principal balance evidenced by the Loans and not to the payment of interest.
      This provision shall control every other provision of the Loan Documents between
      Borrower and Lenders.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    SECTION
      8.9. Jurisdiction; Venue. THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
      THE
      STATE OF CONNECTICUT APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
      WITHIN THE STATE OF CONNECTICUT. BORROWER HEREBY WAIVES THE RIGHT TO A JURY
      TRIAL AND CONSENTS TO THE EXCLUSIVE JURISDICTION IN THE FEDERAL OR STATE COURTS
      OF THE STATE OF CONNECTICUT WITH RESPECT TO THE ENFORCEMENT OF THE TERMS HEREOF
      AND THE COLLECTION OF THE OBLIGATIONS HEREUNDER. 

    

    SECTION
      8.10. Termination.
      This
      Agreement may be terminated (a) upon written notice from a Lender to the
      Borrower, or (b) upon written notice from the Borrower to the Lenders at such
      time as the Borrower has repaid all Advances made pursuant to this Agreement,
      including all accrued interest thereon, and all other obligations of the
      Borrower under the Loan Documents have been satisfied in full and the Borrower
      has no remaining obligations to the Lenders of any kind under this
      Agreement.

    

    SECTION
      8.11. Severability.
      The
      Agreement shall be governed by the laws of the State of Connecticut without
      giving effect to any conflict of laws or choice of law rules. If any provisions
      of this Agreement or any of the other Loan Documents shall be held invalid
      or
      unenforceable in whole or in part in any jurisdiction, such provision shall,
      as
      to such jurisdiction, be ineffective to the extent of such invalidity or
      enforceability without in any manner affecting the validity or enforceability
      of
      such provision in any other jurisdiction or the remaining provisions of this
      Agreement in any jurisdiction.

    

    SECTION
      8.12. Survival of Provisions.
      All
      warranties, representations, covenants and obligations of the Borrower contained
      in this Agreement or any of the other Loan Documents shall survive the execution
      and delivery of this Agreement and the Lenders' making of any of the Loans.
      The
      Loan Documents shall continue in full force and effect so long as any of the
      Loans hereunder are outstanding and unpaid.

    

    SECTION
      8.13. Captions.
      Any
      captions or headings used in this Agreement are for convenience of reference
      purposes only and are without substantive effect.

    
       

      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      the
      parties have executed and delivered this Loan and Security Agreement as of
      the
      date first above written by their duly authorized, respective
      officers.

    

    
      	 	
              PETALS
                DECORATIVE ACCENTS, INC.

              

              

              By:__________________________

              

              

              SOUTHRIDGE
                PARTNERS LP

              

               

              
                By:__________________________

              

              

              SOUTHSHORE
                CAPITAL FUND LTD.

              

               

              
                By:__________________________

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