Document:

EXHIBIT 10.1
                                                                    ------------

               SIXTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
               --------------------------------------------------

         This Sixteenth Amendment to Loan and Security Agreement (the "Sixteenth
Amendment") is made as of January 3, 2007 by and between Proliance
International, Inc., ("Proliance"), Ready Aire, Inc. ("RA"; together with
Proliance, the "Borrowers"), Proliance International, S.A. de C.V. ("Proliance
Mexico"), Radiadores GDI, S.A. de C.V. ("Radiadores"), Aftermarket Delaware
Corporation ("Aftermarket") and Aftermarket LLC ("Aftermarket LLC"; together
with Proliance Mexico, Radiadores and Aftermarket, the "Obligors"), and Wachovia
Capital Finance Corporation (New England), formerly known as Congress Financial
Corporation (New England), as lender (the "Lender").

         WHEREAS, the Lender, Borrowers and Obligors are parties to that certain
Loan and Security Agreement dated as of January 4, 2001, as amended by the First
Amendment to Loan and Security Agreement dated as of July 2001 ("First
Amendment"), the Second Amendment to Loan and Security Agreement dated as of
July 30, 2001 ("Second Amendment"), the Third Amendment to Loan and Security
Agreement dated as of November 27, 2001 ("Third Amendment"), the Fourth
Amendment to Loan and Security Agreement dated as of December 31, 2001 ("Fourth
Amendment"), the Fifth Amendment to Loan and Security Agreement dated as of
February 20, 2002 ("Fifth Amendment"), the Sixth Amendment to Loan and Security
Agreement dated as of December 31, 2001 ("Sixth Amendment"), the Seventh
Amendment to Loan and Security Agreement dated as of July 1, 2002 ("Seventh
Amendment"), the Eighth Amendment to Loan and Security Agreement dated as of
November 22, 2002 ("Eighth Amendment"), the Ninth Amendment to Loan and Security
Agreement dated as of December 27, 2002 ("Ninth Amendment"), the Tenth Amendment
to Loan and Security Agreement dated as of November 19, 2004 (the "Tenth
Amendment"), the Eleventh Amendment to Loan and Security Agreement dated as of
March 2, 2005 (the "Eleventh Amendment"), the Twelfth Amendment to Loan and
Security Agreement dated as of July 21, 2005 (as amended by that certain
Amendment to Twelfth Amendment dated September 30, 2005 and that certain Second
Amendment to Twelfth Amendment dated November 30, 2005, the "Twelfth
Amendment"), and the Thirteenth Amendment to Loan and Security Agreement dated
as of October 20, 2005 (the "Thirteenth Amendment"), the Fourteenth Amendment to
Loan and Security Agreement dated as of March 31, 2006 (the "Fourteenth
Amendment"), and the Fifteenth Amendment to Loan and Security Agreement dated
September 30, 2006 (as amended hereby and as the same may be supplemented,
amended, restated or modified from time to time, the "Loan Agreement"); all
capitalized terms not otherwise defined herein shall have the meanings given
such terms in the Loan Agreement;

         WHEREAS, Borrowers have requested that Lender amend certain provisions
of the Loan Agreement as set forth herein; and

         WHEREAS, the Lender has agreed to amend such provisions of the Loan
Agreement subject to the terms and conditions hereof;

                                       1

         NOW THEREFORE, based on these premises, and in consideration of the
mutual promises contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties, the
Borrowers, the Obligors and the Lender hereby agree as follows:

         1.   Amendments to Loan Agreement.
              -----------------------------

                   1.1. Inventory Loan Limit. Section 2.1(a)(ii)(B) of the Loan
         Agreement is hereby deleted and the following is substituted in lieu
         thereof:

                        "(B)   From December 19, 2006 through January 4, 2007,
                               $43,000,000; from January 5, 2007 through January
                               11, 2007, $42,750,000; from January 12, 2007
                               through January 18, 2007, $42,500,000; from
                               January 19, 2007 through January 25, 2007,
                               $42,250,000; from January 26, 2007 through
                               February 1, 2007, $42,000,000; from February 2,
                               2007 through February 8, 2007, $41,750,000; from
                               February 9, 2007 through February 15, 2007,
                               $41,500,000; from February 16, 2007 through
                               February 22, 2007, $41,250,000 and from and after
                               February 23, 2007, $41,000,000 (which limit may
                               be revised by Lender, in its sole and absolute
                               discretion, based upon such factors as Lender may
                               consider including, without limitation, the
                               Lender's review of the Borrowers' 2007 annual
                               plan, provided that Borrowers acknowledge and
                               agree that Lender has made no commitment or
                               agreement to change such limit), less"

         2. Conditions Precedent. The following are all of the conditions
precedent to the effectiveness of this Sixteenth Amendment and the agreements of
the Lender hereunder:

                   2.1. payment to Lender in immediately available funds of all
         documented out-of-pocket expenses, including, without limitation,
         reasonable attorneys' fees and disbursements, incurred by the Lender
         through the date hereof, in accordance with Section 5 hereof;

                   2.2. receipt by Lender of this Sixteenth Amendment, duly
         executed by the Borrowers and Obligors;

                   2.3. each of the representations and warranties set forth in
         Section 4 hereof is true, accurate and correct in all material respects
         as of the date hereof (or such other date referenced in Section 4
         hereof).

                                       2

         3. Intentionally Omitted.
            ----------------------

         4. Representations and Warranties. Each Borrower and Obligor jointly
and severally represents and warrants to Lender the following, as applicable:

                   4.1. Organization and Qualification. Each of the Borrowers
         and Obligors is duly incorporated or formed, as applicable, validly
         existing, and in good standing under the laws of their respective
         jurisdictions of incorporation or formation, as applicable. Each
         Borrower and Obligor is duly qualified to do business and is in good
         standing as a foreign corporation or other applicable organization in
         all states and jurisdictions in which the failure to be so qualified
         would have a material adverse effect on the financial condition,
         business or properties of such Borrower or Obligor.

                   4.2. Power and Authority. Each Borrower and Obligor are duly
         authorized and empowered to enter, deliver, and perform this Sixteenth
         Amendment. The execution, delivery, and performance of this Sixteenth
         Amendment has been duly authorized by all necessary corporate action of
         each of the applicable Borrowers and Obligors. The execution, delivery
         and performance of this Sixteenth Amendment do not and will not (i)
         require any consent or approval of the shareholders of the Borrowers or
         the Obligors; (ii) contravene the charter or by-laws or equivalent
         organizational documents of any of the Borrowers or Obligor; (iii)
         violate or cause any Borrower or Obligor to be in default under, any
         provision of any law, rule, regulation, order, writ, judgment,
         injunction, decree, determination or award in effect having
         applicability to such Borrower or Obligor; (iv) result in a breach of
         or constitute a default under any indenture or loan or credit agreement
         or any other agreement, lease or instrument to which any Borrower or
         Obligor is a party or by which such Borrower's or Obligor's properties
         may be bound or affected, which breach or default is reasonably likely
         to have a material adverse effect on the financial condition, business
         or properties of such Borrower or Obligor; or (v) result in, or
         require, the creation or imposition of any lien (other than the liens
         set forth in Schedule 8.4 to the Loan Agreement) upon or with respect
         to any of the properties now owned or hereafter acquired by any
         Borrower or Obligor.

                   4.3. Legally Enforceable Agreement. This Sixteenth Amendment
         is a legal, valid and binding obligation of each of the Borrowers and
         Obligors and is enforceable against each of the Borrowers and Obligors
         in accordance with the terms hereof subject to bankruptcy,
         reorganization, moratorium or similar laws affecting the enforcement of
         creditors' rights generally.

                   4.4. Continuous Nature of Representations and Warranties.
         Each Borrower confirms and agrees that, except for the amendments to
         the Loan Agreement provided herein and in the other previously executed
         amendments to the Loan Agreement, (a) all representations and
         warranties contained in the Loan Agreement and in the other Financing
         Agreements (as amended prior to the date hereof and pursuant to this
         Sixteenth Amendment) are on the date hereof true and

                                       3

         correct in all material respects (except with respect to deviations
         therefrom permitted under Article 9 of the Loan Agreement) except to
         the extent that such representations and warranties expressly relate to
         a specific earlier date in which case the Borrowers confirm, reaffirm
         and restate such representations and warranties as of such earlier
         date, (b) all Information Certificates delivered in conjunction with
         the Loan Agreement and the Twelfth Amendment to Loan and Security
         Agreement dated as of July 21, 2005, as the same may be amended and/or
         restated, remain true and correct in all material respects and (c) it
         is unconditionally, absolutely, and jointly and severally liable for
         the punctual and full performance and payment of all Obligations,
         including, without limitation, all termination fees under Section
         12.1(c) of the Loan Agreement, charges, fees, expenses and costs
         (including attorneys' fees and expenses) under the Financing
         Agreements, and that no Borrower has any defenses, counterclaims or
         setoffs with respect to full, complete and timely payment of all
         Obligations.

         5. Acknowledgement of Obligations. Each Obligor, for value received,
hereby consents to the Borrowers' execution and delivery of this Sixteenth
Amendment, and the performance by the Borrowers of their respective agreements
and obligations hereunder. The Borrowers' performance and/or consummation of any
transaction or matter contemplated under this Sixteenth Amendment shall not
limit, restrict, extinguish or otherwise impair any of the Obligors' obligations
to Lender with respect to the Financing Agreements, as applicable. Each Obligor
acknowledges that it is unconditionally liable to Lender for the full and
complete payment of all Obligations, including, without limitation, all charges,
fees, expenses and costs (including attorney's fees and expenses) under the
Financing Agreements and that such Obligor has no defenses, counterclaims or
setoffs with respect to full, complete and timely payment of any and all
Obligations.

         6. Confirmation of Liens. Each Borrower and Obligor acknowledges,
confirms and agrees that the Financing Agreements, as amended hereby, are
effective to grant to Lender duly perfected, valid and enforceable first
priority security interests in and liens on the Collateral described therein,
except for liens referenced in Sections 8.4 and 9.8 and Schedule 8.4 of the Loan
Agreement, and that the locations for such Collateral specified in the Financing
Agreements have not changed except as provided herein or as previously disclosed
to the Lender. Each Borrower and Obligor further acknowledges and agrees that
all Obligations of the Borrowers are and shall be secured by the Collateral.

         7. Miscellaneous. Lender, Borrowers and Obligors acknowledge and agree
that the Security Documents (as defined in the Twelfth Amendment) shall
constitute Financing Agreements under the Loan Agreement. Without limiting
Borrowers' other obligations under the Financing Agreements, Borrowers hereby
agree to pay to Lender all reasonable attorney's fees and costs which have been
incurred or may in the future be incurred by Lender in connection with the
negotiation, preparation, performance and enforcement of this Sixteenth
Amendment and any other documents and agreements prepared and/or reviewed in
connection herewith. The undersigned confirm that the Financing Agreements
remain in full force and effect without amendment or modification

                                       4

of any kind, except for as set forth in this Sixteenth Amendment (and as set
forth in any previously executed amendments to the Loan Agreement). The
Borrowers and Obligors further confirm that no Event of Default or events which
with notice or the passage of time or both would constitute an Event of Default
have occurred and are continuing. The execution and delivery of this Sixteenth
Amendment by Lender shall not be construed as a waiver by Lender of any Event of
Default under the Financing Agreements. This Sixteenth Amendment shall be deemed
to be a Financing Agreement and, together with the other Financing Agreements,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior dealings, correspondence, conversations
or communications between the parties with respect to the subject matter hereof.

                      REST OF PAGE LEFT INTENTIONALLY BLANK

                                       5

                         Signature page to Sixteenth Amendment to Loan Agreement

         IN WITNESS WHEREOF, the Borrowers, the Obligors, and the Lender have
executed this Sixteenth Amendment as of the date first above written, by their
respective officers hereunto duly authorized, under seal.

                                   BORROWERS:
                                   ----------

WITNESS                            PROLIANCE INTERNATIONAL, INC.

RC Freeman                         By: RA Wisot
---------------------------------      ----------------------------------------
                                   Title: Vice President
                                          -------------------------------------

                                   READY AIRE, INC.

RC Freeman                         By: RA Wisot
---------------------------------      ----------------------------------------
                                   Title: Vice President
                                          -------------------------------------

                                       6

                        Signature page to Sixteenth Amendment to Loan Agreement

                                   OBLIGORS:

                                   PROLIANCE INTERNATIONAL, S.A. de C.V.

RC Freeman                         By: RA Wisot
---------------------------------      ----------------------------------------
                                   Title: Vice President
                                          -------------------------------------

                                   RADIADORES GDI, S.A. de C.V.

RC Freeman                         By: RA Wisot
---------------------------------      ----------------------------------------
                                   Title: Vice President
                                          -------------------------------------

                                   AFTERMARKET DELAWARE CORPORATION

RC Freeman                         By: RA Wisot
---------------------------------      ----------------------------------------
                                   Title: Vice President
                                          -------------------------------------

                                   AFTERMARKET LLC

RC Freeman                         By: RA Wisot
---------------------------------      ----------------------------------------
                                   Title: Vice President
                                          -------------------------------------

                                   LENDER:
                                   -------

                                   WACHOVIA CAPITAL FINANCE
                                   CORPORATION (NEW ENGLAND)

Michelle Simon Long                By: Willis A. Williams
---------------------------------      ----------------------------------------
                                   Title: Vice President
                                          -------------------------------------

                                       7<PAGE>

                                                                    EXHIBIT 10.1

                       FIFTH AMENDMENT AND MODIFICATION OF
                    REVOLVING LINE OF CREDIT PROMISSORY NOTE,
                 LOAN AGREEMENT AND REAFFIRMATION OF GUARANTIES

     This Fifth Amendment and Modification of Revolving Line of Credit
Promissory Note, Loan Agreement and Reaffirmation of Guaranties ("Amendment") is
made effective the 1st day of January, 2007 ("Effective Date") by and among WSI
Industries, Inc., a Minnesota corporation, having an address of 213 Chelsea
Road, Monticello, MN 55362 ("Borrower"), Taurus Numeric Tool, Inc., having an
address of 213 Chelsea Road, Monticello, MN 55362 and WSI Rochester, Inc.,
having an address of 213 Chelsea Road, Monticello, MN 55362 (jointly
"Guarantor") and Excel Bank Minnesota, a Minnesota banking corporation, having
an address of 50 South Sixth Street, Suite 1000, Minneapolis, Minnesota 55402
("Bank").

     WHEREAS, on or about December 4, 2002, (the "Loan Date") Borrower executed
a Revolving Line of Credit Promissory Note in favor of the Bank in the original
principal amount of One Million and no/100 Dollars ($1,000,000.00) ("Note"); and

     WHEREAS, on or about the Loan Date, Borrower and the Bank executed that
certain Loan Agreement ("Loan Agreement") which Loan Agreement, among other
things, described the terms and conditions under which the Borrower would borrow
money from and repay the money to the Bank; and

     WHEREAS, to secure the sums due and payable to the Bank pursuant to the
Note and the Loan Agreement, Borrower also executed that certain Security
Agreement, also dated as of the Loan Date, whereby the Bank took a security
interest in all assets of Borrower ("Security Agreement); and

     WHEREAS, to further secure the sums due and payable to the Bank pursuant to
the Note and the Loan Agreement, to perform the covenants and conditions thereof
and of certain documents executed in conjunction therewith, each Guarantor
executed an unconditional and unlimited guaranty ("Guaranty"), also dated as of
the Loan Date, whereby each Guarantor unconditionally guaranteed the Borrower's
performance of the Note and the Loan Agreement and the other loan documents
executed therewith; and

     WHEREAS, the Note, the Loan Agreement and the Security Agreement were
amended and extended pursuant to those certain Amendments and Modifications of
Revolving Line of Credit Promissory Note, Loan Agreement and Reaffirmation of
Guaranties dated effective December 31, 2003, May 3, 2004, January 1, 2005, and
January 1, 2006 (the "Amendments"); and

     WHEREAS, the Note, the Loan Agreement, the Security Agreement, the
Amendments and all of the documents executed in conjunction therewith are
sometimes jointly referred to herein as the "Loan Documents"; and

     WHEREAS, the Borrower has requested that the Bank again amend and extend
the maturity date of the Note and modify the terms of the Loan Agreement; and

                                        1

<PAGE>

     WHEREAS, the Bank and the Borrower and each Guarantor desire that the Note
and the Loan Agreement be amended and modified as hereinafter described and each
Guarantor wishes to acknowledge and reaffirm the terms and conditions of such
Guarantor's Guaranty.

     NOW, THEREFORE, in consideration of the above recitals, and in
consideration of credit given or to be given by the Bank to the Borrower and for
other good and valuable consideration, all of which consideration is hereby
acknowledged, the parties hereto agree as follows:

1.   Each of the above recitals is true and correct and is incorporated herein
     by this reference.

2.   The Note is hereby amended, modified and extended as follows:

     "On and after the Effective Date hereof the Note shall bear interest at the
     variable rate of equal to the Base Rate of interest as established by Excel
     Bank Minnesota from time to time ("Base Rate"). On the Effective Date
     hereof the Base Rate is eight and one-fourth percent (8.25%) per annum and
     the initial rate of interest under the Note as of the Effective Date is
     eight and one-fourth percent (8.25%) per annum. If the Base Rate is no
     longer established or is otherwise no longer available the holder of this
     Note may substitute a reasonably equivalent index to substitute for the
     Base Rate. The rate of interest hereunder shall change when, if, and as
     often as the Base Rate changes.

     The principal and interest due pursuant to the Note shall be repaid as
     follows: In monthly payments of all accrued interest on the sums actually
     advanced thereunder commencing on February 1, 2007 and continuing monthly
     thereafter on the 1st day of each and every month until January 31, 2008,
     at which time the entire remaining balance due under the Note, including
     all principal and accrued but unpaid interest, shall be due and payable in
     full."

3.   The following section of the Loan Agreement is hereby amended and modified
     as described below (all capitalized terms have the meanings given to them
     in the Loan Agreement):

          Section 5.08 of the Loan Agreement shall be amended as follows:

          "Section 5.08 MINIMUM NET WORTH. So long as the Note shall remain
          unpaid or the Bank shall have any Commitment hereunder, the Borrower
          will maintain, during and at the end of each fiscal quarter end, Net
          Worth at an amount not less than Six Million Seven Hundred Fifty
          Thousand and no/100 Dollars ($6,750,000.00) through August 31, 2007,
          and not less than Six Million Nine Hundred Fifty Thousand and no/100
          Dollars ($6,950,000.00) thereafter."

4.   Borrower hereby acknowledges and reaffirms each and every representation,
     warranty, term, covenant and condition of the Loan Documents. Borrower
     further acknowledges and agrees that the Loan Documents (as hereby amended
     and modified) are fully enforceable against Borrower and that Borrower has
     no defense, right of offset or otherwise to preclude enforcement of the
     Loan Documents, as hereby amended and modified, by the Bank against
     Borrower.

                                        2

<PAGE>

5.   The Security Agreement shall continue to secure all sums owing to the Bank
     by the Borrower pursuant to the terms and conditions of the Note and the
     Loan Agreement, together with all interest thereon, in accordance with the
     terms and conditions of the Note and all other sums due and owing or to
     become due and owing pursuant to the terms and conditions of this
     Amendment, the Loan Agreement, the Security Agreement and the Note, as
     amended, including but not necessarily limited to any further or additional
     extensions or renewals thereof.

6.   Borrower and each Guarantor acknowledge that the principal balance
     remaining unpaid on the Note as of the Effective Date hereof is $ zero (0).

7.   Each Guarantor hereby acknowledges, ratifies and reaffirms each and every
     term, covenant, agreement, provision, and condition of their respective
     Guaranty and any collateral security documents securing such guaranty,
     including but not limited to the security agreement dated of even date with
     the Guaranty ("Collateral Security Documents"), and the Loan Documents, as
     amended, and hereby acknowledges and agrees that the Guaranty guarantees to
     the Bank the repayment of all sums due and owing to the Bank pursuant to
     the terms, conditions and covenants of the Note, as amended, and the
     performance of the terms and covenants of the balance of the Loan
     Documents, as amended. Each Guarantor hereby affirms and agrees that each
     such Guaranty is unconditional and unlimited and that such Guaranty along
     with the Collateral Security Documents related thereto are fully
     enforceable against such Guarantor. Each Guarantor hereby further affirms
     and agrees and that such Guarantor has no defense, right of offset, claim,
     cause of action or otherwise to preclude the absolute and immediate
     enforcement of the Guaranty and/or the Collateral Security Documents
     supporting such Guaranty by the Bank.

8.   On or before the execution hereof, Borrower shall pay to the Bank, the
     Bank's costs including its reasonable attorneys' fees, incurred in drafting
     this Amendment and related documents, if any.

9.   Except as herein specifically modified, amended or extended, all terms and
     conditions of the Loan Documents shall otherwise remain unchanged and in
     full force and effect.

10.  Notwithstanding anything to the contrary herein, this Amendment or any
     failure by the Bank to exercise any of its rights upon an event of default
     under the Loan Documents or the Guaranty or the Collateral Security
     Documents, whether prior to or subsequent to the effective date of this
     Amendment, shall not be deemed a waiver of the Bank's available remedies
     under the Loan Documents, the Guaranty, or the Collateral Security
     Documents or any amendments thereof, or any other documents executed in
     conjunction therewith or incident thereto.

11.  All the terms of this Amendment shall be binding upon and inure to the
     benefit of and be enforceable by the successors and assigns of the parties
     hereto, to the extent assignment is permitted pursuant to the Loan
     Documents or the Guaranty.

12.  This Amendment is being executed in and is intended to be performed in the
     State of Minnesota and shall be construed and enforced in accordance with
     the laws of such state.

                                        3

<PAGE>

13.  This Amendment contains the entire agreement between the parties with
     respect to the covenants and promises contemplated herein and may be
     amended only in a writing signed by each of the parties hereto.

     IN WITNESS WHEREOF, the parties have executed this Amendment on the day and
year first above written.

                                        BORROWER:

                                        WSI INDUSTRIES, INC., a Minnesota
                                        corporation

                                        By /s/ Paul D. Sheely
                                           -------------------------------------
                                        Its: VP/CFO

                                        GUARANTOR:

                                        TAURUS NUMERIC TOOL, INC., a Minnesota
                                        corporation

                                        By /s/ Paul D. Sheely
                                           -------------------------------------
                                        Its: VP/Asst Sec.

                                        WSI ROCHESTER, INC., a Minnesota
                                        corporation

                                        By /s/ Paul D. Sheely
                                           -------------------------------------
                                        Its: VP/Asst Sec.

                                        EXCEL BANK MINNESOTA, a Minnesota
                                        banking corporation,

                                        By Gerald J. Holt
                                           -------------------------------------
                                        Its: VP

                                        4

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