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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

ý	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 0-31313

BROADWIND ENERGY, INC.
(Name of small business issuer in its charter)

Nevada (State or other jurisdiction of incorporation or organization)		88-0409160 (I.R.S. Employer Identification No.)
47 East Chicago Avenue, Suite 332, Naperville, IL 60540 (Address of principal executive offices)
(630) 637-0315 (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $0.001

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

The issuer's revenues for the fiscal year ended December 31, 2007 were $29,804,432.

The issuer's aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)

The aggregate market value of the issuer's voting and non-voting common equity held by non-affiliates, computed by reference to a closing price of such common equity of $10.55 as of March 31, 2008, was $287,579,557.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of March 31, 2008—79,936,996 shares of common stock, par value $0.001 per share.

DOCUMENTS INCORPORATED BY REFERENCE

Certain of the information required by Part III is incorporated by reference from the Registrant's Proxy Statement for its 2008 Annual Meeting of Stockholders.

Transitional Small Business Disclosure Format (check one): Yes o No ý

INDEX

		Page Number
PART I
Item 1.	Description of Business	1
Item 2.	Description of Property	4
Item 3.	Legal Proceedings	5
Item 4.	Submission of Matters to a Vote of Security Holders	5
PART II
Item 5.	Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities	6
Item 6.	Management's Discussion and Analysis or Plan of Operation	7
Item 7.	Financial Statements	22
Item 8.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	22
Item 8A.	Controls and Procedures	22
Item 8B.	Other Information	26
PART III
Item 9.	Directors, Executive Officers, Promoters , Control Persons and Corporate Governance; Compliance With Section 16(a) of the Exchange Act	27
Item 10.	Executive Compensation	28
Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	28
Item 12.	Certain Relationships and Related Transactions, and Director Independence	28
Item 13.	Exhibits	28
Item 14.	Principal Accountant Fees and Services	28

PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

Broadwind Energy, Inc., a Nevada corporation (also referred to as "we," "us," "our," the "Company," or "Broadwind"), became a public company in February 2006, after a reverse shell transaction with Blackfoot Enterprises, Inc. which was incorporated in Nevada in 1996. Our principal executive office is located at 47 East Chicago Avenue, Suite 332, Naperville, IL 60540. Our phone number is (630) 637-0315 and our website address is www.broadwindenergy.com .

Our business is dedicated to the production and servicing of components for energy and infrastructure-related industries. We are primarily focused on the manufacture of components for the wind industry, including tower support structures through our Tower Tech Systems, Inc. ("Tower Tech") and R.B.A., Inc. ("RBA") subsidiaries, and gearing systems through our Brad Foote Gear Works, Inc. ("Brad Foote") subsidiary. On January 16, 2008, we completed the acquisition of our Energy Maintenance Service, LLC ("EMS") subsidiary, through which we provide construction and operations support and maintenance and component repairs for wind turbines.

Manitowoc, Wisconsin serves as the location of the manufacturing facilities for our Tower Tech and RBA subsidiaries. This location offers us direct rail and highway access, as well as a deep-water shipping channel with direct access to Lake Michigan. Our Brad Foote subsidiary has manufacturing and administrative facilities in Cicero, Illinois and Neville Island, Pennsylvania. Our EMS subsidiary is headquartered in Gary, South Dakota.

History

Our Brad Foote subsidiary, which we acquired in October 2007, began designing and manufacturing large gearing systems in 1924, focusing on providing products for companies in the oil production, steel mill, power generation, transportation, and pulp and paper industries. In 2003, Brad Foote expanded into the wind industry. Our EMS subsidiary, which we acquired in January 2008, and whose operations consist of service and maintenance for the wind industry, was founded in 1998 under the leadership of Joseph Kolbach, who now serves as President of EMS. Raymond Brickner co-founded RBA in 1985 and Tower Tech Systems in 2004 as suppliers of heavy fabrication components to the wind energy, mining and industrial markets.

Since 2003, we have invested significantly in the growth of our subsidiaries. In particular, we have placed an emphasis on the growing wind markets we serve and the ability of our subsidiaries to supply our wind customers. In 2007, we recognized the need by our wind customers for a company with a complete suite of products and services. As a result, we expanded our component and service offerings organically and via acquisition.

Key events in the recent development of our subsidiaries include:

•: in 2003, Brad Foote produced its first gearing sets for GE's wind turbine;
•: in 2004, Tower Tech produced its first tower for Clipper Windpower;
•: in 2007, Tower Tech expanded its production by adding an additional line and new equipment; and
•: in 2007, Brad Foote expanded its facilities in Cicero, Illinois from 230,000 square feet to over 510,000 square feet.

Employees

As of December 31, 2007, we had expanded our workforce to approximately 585 full-time employees. Upon acquisition of our EMS subsidiary in January 2008, we added approximately 200 full-time employees.

Brad Foote has collective bargaining units at both its Pittsburgh and Cicero facilities with the United Steel Workers of America. Both units are under contract through 2009 and 2010 respectively.

Business Segments

Our desire to capitalize on various growth opportunities within the energy industry, specifically the wind industry, coupled with our recent acquisition activity, led us to organize our business into two operating segments as of December 31, 2007: Towers and Fabrication, and Gearing Systems. The decision to move to segment reporting was based on our belief that the operations of our recently acquired subsidiaries differ from our historic operations and that management will separately evaluate the future financial results of each segment.

Our Towers and Fabrication segment is comprised of our Tower Tech and RBA subsidiaries. Our Gearing Systems segment is comprised of our Brad Foote subsidiary. With the acquisition of EMS in January 2008, we added a third segment, referred to as Service and Maintenance. The following is a description of these three business segments. For financial information regarding our Gearing Systems and Towers and Fabrication segments, see Item 7. "Financial Statements" and Note 19 to our consolidated financial statements, "Segment Information." Because we acquired EMS subsequent to the 2007 fiscal year, the financial condition and results of operations of EMS are not included in this Annual Report on Form 10-KSB, and our financial results do not reflect the acquisition.

We have three reportable segments engaged in the following:

Towers and Fabrication —components used in wind energy, mining, construction and other industrial energy applications. Products include steel fabricated towers, internal tower components and large fabricated components, such as large crane parts and dipper buckets for mining.

Gearing Systems —complex components used in various industries, including oil and gas production, power generation, steel manufacturing, aggregates, and other industrial industries. The primary focus and majority of revenues are derived from the wind energy industry. Products include bevel gears, pinion gears, shafts, ring gears, planet gears, and planet pinions.

Service and Maintenance —services dedicated to the wind energy industry. Offerings include construction, engineering, operations, maintenance, component remanufacturing, and component repair.

Strategy

Our business strategy is to be the preferred partner of products and services to the North American energy industry, specifically the wind energy industry. Our strategic objectives include the following:

•: Recruit, train and retain high quality employees in our current and planned facilities;
•: Expand our suite of products and services to become a "one-stop" shop for our customers;
•: Increase manufacturing capacity to satisfy our customers' significant and growing demand for our products and services;
•: Develop our existing customer relationships through long term supply agreements; and
•: Improve operational efficiency and leverage our production technology.

Through these strategic objectives, we seek to expand our market share in the North American wind energy industry. In 2007, our subsidiaries sold products or services to wind turbine manufacturers who represent a majority share of the U.S. market.

Business

Customers

We manufacture products for a variety of customers from the wind energy, oil and gas, mining, and industrial industries. A majority of our revenue is derived from customers that participate directly in the wind energy industry as wind power plant owners or the manufacturers of wind turbines. Our Gearing Systems and Tower and Fabrication subsidiaries are dependent upon a limited number of customers, including GE, Gamesa and Clipper Windpower, for a majority of their revenues.

Sales and Marketing

Our sales and marketing strategy is to develop and maintain long-term relationships with our customers and to offer a complete suite of products and services to them. We pursue this strategy by working closely with our customers in developing and designing customized product solutions. We also intend for our offerings to fulfill needs that our customers may consider non-core and do not desire to operate within their organizations. We typically enter into long-term agreements, under which we supply our customers with products or services. The majority of our customer base consists of wind turbine manufacturers who supply end-users within the wind energy utilities industry and wind turbine developers with completed wind turbines. In the industrial sector, we sell our products through our technically trained sales force.

Competition

We do not believe that independent competitors exist that have developed a similar suite of products and services for the wind industry as offered by our subsidiaries. However, competition within each of our subsidiaries' niches exists and many of our customers maintain internal capabilities that compete with our offerings. Several tower manufacturers compete in the United States, including Trinity Industries, Inc., Ameron International Corporation, and DMI Industries. There are approximately five companies worldwide that have the proven ability and capacity to supply gear sets for the wind industry. Brad Foote is the only major North American supplier of gear sets. Two of the major European suppliers are owned by turbine manufacturers: Hansen (owned by Suzlon energy); and Flender (owned by Siemens). The competitors of Brad Foote within the oil and gas exploration industry are slightly more fragmented. These companies compete based upon price, quality, location, available capacity, and several other factors.

Backlog

Many of our products are sold under long-term supply agreements. These long-term agreements have various terms, but can be as long as three years with automatic renewal provisions.

Sources and Availability of Raw Materials

The primary raw material used in our Towers and Fabrication and Gearing Systems segments is steel. Our Gearing Systems Segment purchases raw materials from various suppliers who are located both in the United States and abroad. We do not anticipate any problems in being able to source our Gearing Systems steel. Currently, our customers provide the steel for the Towers and Fabrication Segment. We intend to source our own steel in this segment in the future and believe we will be able to obtain an adequate supply.

Government Regulation and Compliance with Environmental Laws

The operations of our subsidiaries are subject to numerous federal, state, and local environmental and worker health and safety laws and regulations. We believe that our subsidiaries are in substantial

compliance with such laws and regulations, and we have not budgeted any material capital expenditures for environmental control facilities.

Segment Financial Information

We assess and manage the performance of each business segment by reviewing internally-generated reports that detail revenue and gross profit results. We use this information to formulate plans regarding the future prospects of our business and to allocate resources in a manner that ensures achievement of revenue and profitability growth targets for the Company as a whole.

The following table provides a summary of business segment revenue and gross profit for the years ended December 31, 2007 and 2006. The amounts below include results of RBA in our Towers & Fabrication segment and Brad Foote in our Gearing Systems segment; however, RBA and Brad Foote were not part of our operations until we completed our acquisition of those companies in the fourth quarter of 2007. For additional financial information regarding these business segments, see Item 7. "Financial Statements," Note 19 to our consolidated financial statements, "Segment Information."

			For the Year Ended December 31,
			2007			2006
			(in thousands)
Revenue
	Towers & Fabrication		$	12,829		$	4,023
	Gearing Systems			16,975			—

		Total Revenue		29,804			4,023
Gross Profit
	Towers & Fabrication		$	4,731		$	(799	)
	Gearing Systems			(792	)		—

		Total Gross Profit (Loss)		3,939			(799	)

ITEM 2. DESCRIPTION OF PROPERTY

The following table summarizes all of our operating sites by segment, including leased and owned properties (dollars in thousands unless otherwise stated):

Segment	Location	Leased/Owned	Lessor	Monthly Rent		Square Footage
As of December 31, 2007
Towers and Fabrication	Manitowoc, WI	Leased	Related party	$	42	168,000
Towers and Fabrication	Manitowoc, WI	Leased	Related party		8	45,000
Gearing Systems	Cicero, IL	Leased	Consolidated variable interest entity		—	170,000
Gearing Systems	Cicero, IL	Leased	Third party		135	301,000
Gearing Systems	Cicero, IL	Owned	N/A		—	28,000
Gearing Systems	Neville Island, PA	Leased	Consolidated variable interest entity		—	70,000
As of January 1, 2008
Corporate	Naperville, IL	Leased	Third party		11	4,509
As of January 16, 2008
Service and Maintenance	Gary, SD	Leased	Related party		10	21,000
Service and Maintenance	Howard, SD	Leased	Consolidated variable interest entity		5	24,000
Service and Maintenance	Howard, SD	Leased	Third party		3	7,000

We consider our facilities to generally be in good condition and suitable for the needs of our operating segments for the immediate future. After completing significant expansions in 2007 and the first quarter of 2008 we currently have no major expansions planned at our existing facilities. However,

we are currently evaluating new facilities in all of our operating segments. For further detail about the related party leases and other related party transactions, please refer to Item 12 of this Annual Report.

As disclosed in Note 22 to the consolidated financial statements, on February 19, 2008 the Company completed the purchase of two real estate parcels previously leased by the Company's Brad Foote subsidiary.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we anticipate that Broadwind or our subsidiaries may be involved in litigation relating to claims arising out of its operations in the normal course of business. Such claims have, in the past, generally been covered by insurance. We are not aware of any actual or threatened litigation that would have a material adverse effect on our financial condition or results of operations, although no assurance can be given with respect to the ultimate outcome of actions. Furthermore, there can be no assurance that our insurance will be adequate to cover all liabilities that may arise out of claims brought against us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of our 2007 fiscal year.

During the first quarter of our 2008 fiscal year, we submitted to certain stockholders a proposal to amend our Articles of Incorporation to change our name from Tower Tech Holdings, Inc. to Broadwind Energy, Inc. (the "Amendment"). Our Board of Directors unanimously approved the Amendment on December 13, 2007. Pursuant to our Articles of Incorporation and Nevada Revised Statutes ("N.R.S.") 78.390, the Amendment required approval by stockholders owning a majority of our outstanding shares entitled to vote. On February 5, 2008, pursuant to N.R.S. 78.320, we received written consents for the Amendment from stockholders holding 52,178,365 shares, representing 65.27% of the 79,936,996 outstanding shares of common stock. No votes were cast against the Amendment or withheld, nor were there any abstentions or broker non-votes. For further information regarding this action of stockholders, please see the Definitive Information Statement on Schedule 14C filed by the Company on February 8, 2008.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock was listed for quotation on the OTC Bulletin Board during the 2007 fiscal year under the symbol "TWRT." As of March 4, 2008, in connection with the change of our name to Broadwind Energy, Inc., it has been listed under the symbol "BWEN." The following table sets forth the range of high and low bid quotations for each quarter within the last two fiscal years, as reported by the OTC Bulletin Board. These quotations reflect inter-dealer prices without retail mark-up, markdown, or commissions and may not necessarily represent actual transactions.

	BID PRICES
2007 FISCAL YEAR	HIGH		LOW
Quarter ending 3/31/07	$	4.20	$	1.76
Quarter ending 6/30/07	$	4.70	$	3.27
Quarter ending 9/30/07	$	5.51	$	4.15
Quarter ending 12/31/07	$	14.50	$	5.22
2006 FISCAL YEAR
Quarter ending 3/31/06	$	3.20	$	1.70
Quarter ending 6/30/06	$	2.50	$	1.10
Quarter ending 9/30/06	$	1.84	$	1.16
Quarter ending 12/31/06	$	2.47	$	1.25

On March 31, 2008, the published high and low bid quotations for our common stock were $10.70 and $10.30 per share, respectively. On February 28, 2008, there were issued and outstanding 79,936,996 shares of common stock of the Company held by 2,152 stockholders of record (not including shares held in street name). We have not declared cash dividends on our common stock during the last two fiscal years. We have no present intention of paying dividends on any of our shares, as we anticipate that all available funds will be invested to finance the growth of our business.

Repurchases

We did not engage in any repurchases of our common stock during the fourth quarter of 2007.

Unregistered Sales of Equity Securities

All unregistered sales of equity securities during the fourth quarter or year ended December 31, 2007 have been previously disclosed on Form 8-K.

Securities Authorized for Issuance Under Equity Compensation Plans

For information on our equity compensation plans, refer to Item 11. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes thereto in Item 7. "Financial Statements." The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including those identified in "Cautionary Note Regarding Forward-Looking Statements" in Part I of this Annual Report on Form 10-KSB. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties. See "Risk Factors" below for a discussion of other risks and uncertainties.

(Dollars are presented in thousands unless otherwise stated.)

Overview

We are dedicated to the production of components for energy and infrastructure-related industries. We are primarily focused on the manufacture of components for the wind industry, including tower support structures through our Towers and Fabrication segment, which is comprised of our Tower Tech and RBA subsidiaries, and gearing components through our Gearing Systems segment, which is comprised of our Brad Foote subsidiary. In addition, we completed the acquisition of our EMS subsidiary in January 2008, through which we provide construction and operations support and maintenance and component repairs for wind turbines. We are headquartered in Naperville, Illinois. Our Tower Tech and RBA subsidiaries are located in Manitowoc, Wisconsin. Our Brad Foote subsidiary has locations in Cicero, Illinois and Neville Island, Pennsylvania, and our EMS subsidiary is headquartered in Gary, South Dakota.

Our operations have historically consisted of manufacturing wind towers for large wind tower integration companies through our Tower Tech subsidiary. We grew significantly through acquisitions during our 2007 fiscal year, which are described below under the heading "Acquisitions." Through these acquisitions, we now offer gearing systems, heavy machine fabrication and construction, and service and maintenance of wind power plants.

Acquisitions

During October 2007, we made the following two acquisitions:

On October 1, 2007, we completed the acquisition of all of the outstanding stock of RBA for a total purchase price of $5,000 in cash plus acquisition costs of $197. RBA is a Manitowoc, Wisconsin-based fabricator of components for energy-related industries. We used internal funds to finance the acquisition.

On October 19, 2007, we completed the acquisition of all of the outstanding stock of Brad Foote for a total purchase price of $133,179. Brad Foote is an Illinois-based manufacturer of gearing systems for the wind turbine, oil and gas, and energy-related industries. The cash portion of the purchase price was financed through a $50,000 private placement of our common stock to five accredited investors: Tontine Capital Partners, L.P. ("TCP"), Tontine Capital Overseas Master Fund, L.P. ("TMF," and together with TCP, the "Original Tontine Investors"), Tontine Partners, L.P. ("TP"), Tontine 25 Overseas Master Fund, L.P. ("T25"), and Tontine Overseas Fund, Ltd. ("TOF"), (collectively with the Original Tontine Investors and affiliates, "Tontine"), and senior convertible subordinated notes in the amount of $25,000 from TP, TMF and TOF. Additionally, we assumed approximately $25,500 of senior debt from Brad Foote.

Subsequent to the end of our 2007 fiscal year, on January 16, 2008, we completed our acquisition of EMS, a Gary, South Dakota-based service provider of construction and operations and maintenance services to the wind industry. We financed the acquisition through a private placement of our common stock.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. for annual financial information and the instructions to Form 10-KSB and Item 310 of Regulation S-B of the Securities and Exchange Commission ("SEC"). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and related disclosure of contingent assets and liabilities. Management reviews its estimates on an ongoing basis. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates.

While our significant accounting policies are described in more detail in Note 1 to our consolidated financial statements, management believes the following accounting policies to be critical to our financial condition, results of operations, and cash flow, and to require management's most subjective and complex judgments in estimating the effect of inherent uncertainties.

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable, collectibility is reasonably assured, and delivery has occurred per the contract terms. Customer deposits and other receipts are deferred and recognized when earned. Revenue is recognized on a contract-by-contract basis. Depending on the terms of the contract, revenue may be earned by the building of tower sections, building a complete tower, modification to existing towers or sections, or shipment of completed gears. Warranty costs are estimated and accrued based on management's estimates or known costs of corrections.

Cost of sales

Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. This includes operation and maintenance of our equipment, direct and indirect labor and benefits, repairs and maintenance of our equipment, insurance, equipment rentals, freight in, and depreciation. Freight out to customers is classified as a selling expense and is excluded from cost of sales.

Inventories

Inventories are stated at the lower of cost or market by comparing the cost of each item in inventory to its most recent sales price or sales order price. Any excess of cost over the net realizable value of inventory components is included in the Company's inventory allowance. Market value of inventory, and management's judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period, contract terms, and usefulness. Inventories are valued based on an average cost method that approximates the first-in, first-out (FIFO) basis.

Property and Equipment

Property and equipment are stated at cost. Expenditures for additions and improvements are capitalized while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed currently as incurred. Properties sold or otherwise disposed of are removed from the property accounts, with gains or losses on disposal credited or charged to operations.

Depreciation, for financial reporting purposes, is provided over the estimated useful lives of the respective assets, which range from 3 to 39 years, using the straight-line method. Leasehold improvements are amortized over the shorter of the asset useful life or the lease term.

Goodwill and other intangible assets

We account for our goodwill and other intangible assets under Statement of Financial Accounting Statements ("SFAS") No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). Under SFAS 142, goodwill is not amortized, but is tested for impairment at least annually. Other intangible assets subject to amortization over their respective useful lives are tested for impairment at least annually.

Long-lived assets

We account for long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets . The carrying values of long-lived assets, including, but not limited to, capital assets and intangible assets, are amortized over their estimated useful lives, and are periodically evaluated for impairment when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the expected undiscounted future cash flows from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. We have reviewed long-lived assets and certain intangible assets with estimable useful lives and determined that the carrying values as of December 31, 2007 are recoverable in future periods.

Consolidation of Variable Interest Entities

In 2007, we identified two entities requiring consolidation under FASB Interpretation No. 46 (revised 2003), Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51 ("FIN 46(R)"), as follows:

BFG Cicero, LLC and BFG Pittsburgh, LLC

As disclosed in Item 2. "Description of Property" above, in 2007, our Brad Foote subsidiary leased two facilities, each owned indirectly by the wife of our Chief Executive Officer. For purposes of analysis under FIN 46(R), we are deemed to be the primary beneficiary of BFG Cicero, LLC and BFG Pittsburgh, LLC, and we have therefore consolidated their financial results. We recognized net pre-tax losses relating to the consolidation of these entities of approximately $95 during 2007. As disclosed in Note 22 to the consolidated financial statements, on February 19, 2008, we exercised an option to purchase each of the two properties from BFG.

Recent Accounting Pronouncements Affecting this Report

FIN 48

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 was effective for the first interim or annual reporting period for the first fiscal year beginning on or after December 15, 2006. FIN 48 applies to all tax positions for income taxes accounted for in accordance with SFAS No. 109. FIN 48 requires that uncertain tax positions be reviewed and assessed, with recognition and measurement of the tax benefit based on a "more likely than not" standard.

In May 2007, the FASB issued FASB Staff Position FIN 48-1, Definition of a Settlement in FASB Interpretation No. 48 ("FSP FIN 48-1"). FSP FIN 48-1 provides guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. In determining whether a tax position has been effectively settled, entities must evaluate (i) whether taxing authorities have completed their examination procedures; (ii) whether the entity intends to appeal or litigate any aspect of a tax position included in a completed evaluation; and (iii) whether it is remote that a taxing authority would examine or re-examine any aspect of a taxing position. FSP FIN 48-1 is to be applied upon the initial adoption of FIN 48.

We adopted the provisions of FIN 48 and FSP FIN 48-1 on January 1, 2007. At that time, the Company concluded there were no uncertain tax positions warranting adjustments to reflect the cumulative effect of adopting these standards. See Note 13—"Income Taxes" for further discussion of the impact of the application and adoption of these standards.

SAB 108

In September 2006, the SEC issued SAB No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statement ("SAB 108"), which provides interpretive guidance on how registrants should quantify financial statement misstatements. SAB 108 requires companies to evaluate the materiality of identified unadjusted errors on each financial statement and related disclosures using both the rollover and the iron curtain approach. SAB 108 applies to annual financial statements for fiscal years ending after November 15, 2006. The adoption of SAB 108 did not have a material impact on our financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted in this Report

SFAS 157

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS 157"). This standard clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.

In February 2008, the FASB issued FASB Staff Position No. 157-2 ("FSP 157-2"), which delayed the effective date by which companies must adopt the provisions of SFAS 157. FSP 157-2 defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The adoption of this standard is not anticipated to have a material impact on our financial position, results of operations, or cash flows.

SFAS 159

In February 2007, the FASB issued Statement of Financial Accounting Standards Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115 ("SFAS 159"). This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. This standard is effective for financial statements issued for fiscal years beginning after November 15, 2007. We do not believe the adoption of SFAS 159 will have a material impact on our consolidated financial position, results of operations, or cash flows.

SFAS 141(R)

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141R, Business Combinations ("SFAS 141R"), which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets

acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for fiscal years beginning after December 15, 2008. Early adoption is not permitted. We are currently evaluating the effect of the adoption of SFAS 141R, but do not presently anticipate it will have a material impact on our consolidated financial position or results of operations.

SFAS 160

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ("SFAS 160"), which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for fiscal years beginning after December 15, 2008. We have evaluated the effect of the adoption of SFAS 160, but do not presently anticipate it will have a material effect on our consolidated financial position or results of operations, as all subsidiaries are 100% owned.

SFAS 161

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities ("SFAS 161"). This statement is intended to enhance required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how: (a) an entity uses derivative instruments; (b) derivative instruments and related hedged items are accounted for under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities ; and (c) derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. We are currently evaluating the effect of adoption of SFAS 161, but do not presently believe that it will have a material effect on our consolidated financial position or results of operations.

Consolidated Results of Operations
(in thousands, except share data)

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

The consolidated results of operations for the year ended December 31, 2007 include those of Brad Foote and RBA since the date of each respective acquisition. The following table sets forth selected consolidated financial data for the periods indicated.

		Twelve Months Ended December 31,										Change
		2007(1)			%		2006			%		$			%(2)
		(in thousands, except for percentages)
Net sales		$	29,804		100.0	%	$	4,023		100.0	%	$	25,781		640.8	%
Cost of sales			25,865		86.8	%		4,822		119.9	%		21,043		436.4	%

Gross margin (deficit)			3,939		13.2	%		(799	)	(19.9	)%		4,738		593.0	%
Operating expenses
	Selling, general, and administrative expenses		5,724		19.2	%		1,251		31.1	%		4,473		357.6	%
	Depreciation and amortization		1,750		5.9	%		21		0.5	%		1,729		8233.3	%
	Merger transaction costs		—		0.0	%		250		6.2	%		(250	)	(100.0	)%

Total operating expenses			7,474		25.1	%		1,522		37.8	%		5,952		391.1	%

Operating loss			(3,535	)	(11.9	)%		(2,321	)	(57.7	)%		(1,214	)	(52.3	)%
Other income (expense)
	Interest expense		(1,239	)	(4.2	)%		(411	)	(10.2	)%		(828	)	201.5	%
	Interest income		400		1.3	%		—		0.0	%		400		N/A
	Realized loss on foreign currency transactions		(15	)	(0.1	)%		(3	)	(0.1	)%		(12	)	400.0	%
	Other, net		83		0.3	%		—		0.0	%		83		N/A
	Income (expense) relating to variable interest entity		(95	)	(0.3	)%		—		0.0	%		(95	)	N/A

Other income (expense), net			(866	)	(2.9	)%		(414	)	(10.3	)%		(452	)	(109.2	)%

	Net loss before provision for income taxes		(4,401	)	(14.8	)%		(2,735	)	(68.0	)%		(1,666	)	(60.9	)%
	Provision for income taxes		(1,039	)	(3.5	)%		—		0.0	%		(1,039	)	N/A

	Net loss	$	(3,362	)	(11.3	)%	$	(2,735	)	(68.0	)%	$	(627	)	(22.9	)%

(1): Our Brad Foote subsidiary comprises 100% of our Gearing Systems segment, and was acquired in the fourth quarter of 2007. The results presented include our Gearing Systems segment from the date of the Brad Foote acquisition, October 19, 2007 through the end of our fiscal year. Refer to our 8-K/A filed January 4, 2008 for further information on the 2007 financial results of Brad Foote. Our RBA subsidiary was acquired in the fourth quarter of 2007; hence its results are presented from the date of acquisition, October 1, 2007 through the end of our fiscal year. Refer to our 8-K/A filed November 13, 2007 for further information on the 2007 and 2006 financial results of RBA.
(2): N/A indicates percentage change is not applicable or not meaningful as one of the years presented is zero.

Our results for the year ended December 31, 2006 include our Tower Tech Systems subsidiary only. We believe the table below is helpful in analyzing the consolidated results of operations for the year ended December 31, 2007. The table below presents 2007 results of operations by segment. Please refer

to the Results of Operations by Business Segment for further discussion on the financial performance of our business segments.

	Twelve Months Ended December 31, 2007
	Towers & Fabrication		Gearing Systems			Other		Total
	(in thousands, except for percentages)
Net sales	$	12,829	$	16,975		$	—	$	29,804
Cost of sales		8,098		17,767			—		25,865

Gross profit (loss)	$	4,731	$	(792	)	$	—	$	3,939

Revenues and Cost of Sales. For the 2007 fiscal year, consolidated net sales were $29,804, with related cost of sales during that period of $25,865, for a gross profit of $3,939. In comparison, during 2006, we generated revenues of $4,023, with related cost of sales of $4,822, for a gross loss of $(799). The $25,781 increase in consolidated revenues from 2006 to 2007 was primarily due to the introduction of our Gearing Systems segment in October 2007 and an increase in production at Tower Tech.

Selling, General and Administrative Expenses. Selling, general and administrative expenses ("SG&A") increased to $5,724 for the 2007 fiscal year from $1,251 for the 2006 fiscal year. The overall increase to SG&A is largely due to the inclusion of our Gearing Systems segment, and is also attributable to increased legal and accounting expenses in 2007 related to the costs associated with being a public company, including SEC and Sarbanes-Oxley Section 404 compliance. Our Gearing Systems segment incurred administrative expenses related to new public company requirements. We also added a new Chief Executive Officer, President, Chief Financial Officer and several other accounting and administrative professionals in 2007. We also incurred $142 of stock-based compensation expense in connection with stock option grants made under our Equity Incentive Plan, which was approved by our Board in August 2007. There was no such plan or related expense in 2006. As a percentage of net sales, SG&A was 19.2% for 2007, as compared to 31.1% for 2006.

Depreciation and Amortization Expense. Amortization expense increased to $1,750 for the 2007 fiscal year from $21 for the 2006 fiscal year. As a percentage of net sales, amortization expense increased to 5.9% in 2007, compared to 0.5% for 2006. The overall increase in amortization expense is attributable to our acquisition of Brad Foote and RBA, and the related amortization of acquired intangible assets. Amortization expense related to intangible assets of Brad Foote and RBA was $1,655 for 2007.

Merger Transaction Costs. In 2006, we expensed approximately $250 of legal and consulting costs related to the acquisition of Blackfoot. In 2007, costs of $734 related to our acquisitions of Brad Foote and RBA were capitalized as part of the net assets acquired with each business.

Stock-based Compensation Expense. In connection with stock option grants made under our Equity Incentive Plan, which was approved by our Board in August 2007, we incurred $142 of stock-based compensation expense. There was no such plan or related expense in 2006.

Other Income (Expense), Net. Other income (expense) is comprised primarily of interest income and expense. Interest expense was $1,239 in for the 2007 fiscal year, compared to $411 for 2006. The increase is primarily attributable to the long-term debt obligations assumed in the acquisition of Brad Foote. We earned $400 of interest income during the year ended December 31, 2007 as a result of excess funds placed in money market accounts, as compared to $0 for the year ended December 31, 2006. We expect interest expense to increase in the future due to the issuance of senior subordinated convertible promissory notes, as described below under the heading "Liquidity and Capital Resources" and in Note 8 to the consolidated financial statements in Item 7 of this Annual Report.

What follows is a more detailed analysis of our operating results by business segment for the years ended December 31, 2007 and 2006.

Results of Operations by Business Segment
(in thousands, except share data)

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

At the close of our 2007 fiscal year, we were managing and reporting operating results through two business segments: Towers and Fabrication and Gearing Systems. In addition, we acquired EMS in January 2008 and expect to manage and report its operating results under a newly-formed third segment: Service and Maintenance. The financial condition and results of operations of EMS are not included in this Annual Report on Form 10-KSB, and our financial results do not reflect the acquisition. As discussed in Note 19 to our consolidated financial statements, "Segment Information," our management uses revenue and gross margin to evaluate segment performance and allocate resources among segments. Operations data for fiscal 2007 is summarized by segment below:

Towers & Fabrication Segment

The table below presents the results of operations of our Towers and Fabrication segment for the years indicated.

	Twelve Months Ended December 31,									Change
	2007(1)		%		2006			%		$		%
	(in thousands, except for percentages)
Net sales	$	12,829	100.0	%	$	4,023		100.0	%	$	8,806	218.9	%
Cost of sales		8,098	63.1	%		4,822		119.9	%		3,276	67.9	%

Gross profit (loss)	$	4,731	36.9	%	$	(799	)	(19.9	)%	$	5,530	692.1	%

(1): We acquired RBA in the fourth quarter of 2007; hence its results are included from the date of acquisition, October 1, 2007 through the end of our fiscal year. Refer to our 8-K/A filed November 13, 2007 for further information on the 2007 and 2006 financial results of RBA.

Revenues and Cost of Sales. For the 2007 fiscal year, net sales were $12,829, with related cost of sales during that period of $8,098, for a gross profit of $4,731, or 36.9%. In comparison, during 2006, we generated revenues of $4,023, with related cost of sales of $4,822, for a gross loss of $(799) or (19.9%). Our lower cost to revenue ratio during 2007 was largely attributable to a relatively lower indirect cost per unit due to higher product volumes. During 2007, we saw continued improvement in our production costs due to increased efficiency in our manufacturing processes and ongoing training programs. The increase to net revenue in 2007 was also attributable to the fact that we had increased volumes during the 2007 fiscal year, as compared to limited production for the 2006 fiscal year.

Gearing Systems Segment

The table below presents the results of operations of our Gearing Systems segment for the period from October 19, 2007 to December 31, 2007. All amounts, except percentages, are in thousands:

	Twelve Months Ended December 31,
	2007(1)			%
	(in thousands, except for percentages)
Net sales	$	16,975		100.0	%
Cost of sales		17,767		104.7	%

Gross loss	$	(792	)	(4.7	)%

(1): Our Brad Foote subsidiary comprises 100% of our Gearing Systems segment and was acquired in the fourth quarter of 2007. The period presented is from the date of acquisition, October 19, 2007, through the end of our fiscal year. Refer to our 8-K/A filed October 24, 2007 for further information on the 2007 and 2006 financial results of Brad Foote.

Revenues and Cost of Sales. Net sales for the period were $16,975. Related cost of sales were $17,767, which resulted in a gross loss of $792 or (4.7%). The gross loss was due, in part, to required purchase accounting treatment, in accordance with SFAS 141, for our acquisition of Brad Foote. The purchase accounting required a write up of our beginning inventories and fixed assets to fair market values. Our costs of sales increased as a result of the relief of increased inventory values and the depreciation on increased fixed asset values. The impact of the purchase accounting decreased margins $1,292 or (7.6%) for the period. The negative impact resulting from the relief of increased inventory values ($862) is a non-recurring item. We also experienced significant increased labor and training expenses, due to the addition of approximately 100 workers, higher repairs and moving costs resulting from Brad Foote's plant expansion up to approximately 500,000 square feet, equipment moving expenses and the reorganization of our manufacturing floor layout. Further, we wrote down inventories as a result of a year-end physical count and increased reserves for excess and obsolete items.

Liquidity and Capital Resources
(in thousands, except share data)

During the 2007 fiscal year, we made significant investments in growing our business through the acquisitions of Brad Foote and RBA. The acquisitions required significant amounts of capital, which were provided by our existing cash balance, private placements of our common stock, and borrowings from various parties.

Our primary operational liquidity and capital requirements have been for expenses associated with the purchase and maintenance of property and equipment that will improve our manufacturing efficiency, as well as expenses and investments related to our general business needs. Our main sources of liquidity and capital have been cash from operations and cash from financing activities.

At December 31, 2007, we had cash of $5,782 and a working capital deficit of $27,697 compared to cash of $125 and a working capital deficit of $7,814 at December 31, 2006. The increases in cash were due primarily to the proceeds from our March and October 2007 private placements of common stock. The major source of the working capital deficit was the cost of acquisitions and increases in accounts receivable.

Operating Cash Flows

Net cash used by operations was $132 for 2007 compared to $711 of cash used in operations for 2006. For the 2007 fiscal year, our net loss was $3,362 compared to a net loss of $2,735 for the 2006

fiscal year. The increase in revenue during 2007 created a significant increase in operating capital needs for accounts receivable, and with the cash received from the March 2007 private placement offering, significant payments were made against accounts payable and accrued liabilities. In addition, customer deposits for future orders contributed $1,135 to cash provided by operations.

Investing Cash Flows

Cash used in investing activities totaled $82,328 for 2007 as compared to $408 of cash used in investing activities for 2006. Our primary uses of investing cash flow in 2007 related to $76,474 paid for the acquisitions of Brad Foote and RBA. As a result of the acquisitions, we incurred transaction costs of $735 in 2007. Also in 2007, in connection with the acquisition of EMS, which was still pending as of December 31, 2007 and did not close until January 2008, we incurred $331 of related transaction costs for due diligence work and other professional fees. Upon closing of the acquisition in January 2008, we used approximately $1,200 of internal funds to finance a portion of the cash distribution. The remainder of the EMS acquisition was financed through a $17,225 private placement to Tontine. We expect to continue pursuing acquisitions, and will incur related transaction costs as we invest in our business.

Purchases of property and equipment totaled $5,854 for 2007, compared to $408 for 2006, reflecting our continued investment in equipment to improve efficiency and capacity.

Financing Cash Flows

Net cash provided by financing activities was $88,117 for 2007, primarily as a result of the March and October 2007 private placements of our common stock in the amount of $65,400, offset by payments and retirement of notes payable and long-term debt in the amount of $6,292. Proceeds of long term debt were $3,759. In comparison, cash of $1,078 was provided by financing activities during 2006, consisting primarily of borrowings from related parties and additional third-party debt. In addition, during the third quarter of 2007, we entered into three capital equipment leases totaling $756, with monthly payments of approximately $15 per month and expiration dates ranging from one to five years.

Prior to March 2007, we financed our operations primarily through capital contributed by, and borrowings from, certain stockholders (the "Founding Stockholders"), as well as through borrowings from financial institutions with personal guarantees being provided by the Founding Stockholders. On March 1, 2007, we obtained proceeds of $15,400 from a private placement to the Original Tontine Investors. Proceeds from this sale were used to reduce existing debt, and were used to purchase equipment and for working capital and general corporate purposes. In connection with the closing of the March 2007 securities purchase agreement, we also issued shares of common stock to our then-current officers, directors, and principal stockholders, four persons total, as repayment of $1,083 in loans.

During the fourth quarter of 2007, our acquisition of RBA required the use of $5,000 of our cash reserves, as consideration for all of the outstanding stock of RBA. However, the financing transactions that we executed with Tontine in connection with our acquisition of Brad Foote on October 19, 2007 yielded approximately $11,000 of proceeds in excess of the amount needed to fund the acquisition. To date, we have used most of these proceeds as working capital and for general corporate purposes. We intend to secure additional financing to continue or expansion of our operations to complete our strategic growth plans.

In connection with our acquisition of Brad Foote and $50,000 private placement to Tontine, TP, TMF and TOF provided us with senior subordinated convertible promissory notes in the aggregate principal amount of $25,000 (the "Notes"). The Notes, which accrue interest at 9.5% per annum until July 19, 2008 and 13.5% thereafter, mature on October 19, 2010 and are subject to acceleration upon customary events of default. For each Note, we must repay 10% of the original principal amount on

the first anniversary of issuance, 40% of the original principal amount on the second anniversary and the remaining outstanding balance on the third anniversary. Each Note holder has the right to convert both (i) the outstanding principal of its Note, and (ii) any interest thereon (including both paid-in-kind interest and accrued and unpaid interest) into newly issued shares of our common stock at a conversion rate of $7.50 per share (the "Conversion Rights"). The Conversion Rights became effective January 19, 2008, but the Notes contain certain constraints on the timing of exercise. As of December 31, 2007, $25,000 of principal was outstanding on the Notes, and approximately $488 of interest had accrued. We elected to pay this interest in kind, which increased the total principal amount of the Notes to approximately $25,475. Based on the conversion rate of $7.50 per share, the TP, TMF and TOF Notes would be convertible to 1,653,333, 600,000 and 1,080,000 shares, respectively. As of March 31, 2008, none of TP, TMF or TOF has provided official notice of their intent to exercise their Conversion Rights in whole or in part, however, management believes it is more likely than not that they will choose to exercise their rights.

In connection with our acquisition of Brad Foote, we also assumed approximately $25,500 of outstanding senior debt, which is comprised of the following loans that Brad Foote has obtained from LaSalle Bank National Association ("LaSalle") pursuant to a Loan and Security Agreement dated as of January 17, 1997, as amended (the "Loan Agreement"), which continued upon closing of the acquisition: (i) a $7,000 revolving line of credit loan (the "Revolving Loan"); (ii) a consolidated term loan in the original principal sum of approximately $7,800 (the "Term Loan"); (iii) an $11,000 non-revolving equipment line of credit (the "Equipment Loan"); and (iv) a $9,000 non-revolving equipment line of credit with a term conversion feature (the "Equipment Loan No. 2"). Because these loans were almost fully drawn on the date the Brad Foote acquisition was completed, we do not expect the proceeds from these loans to significantly increase our future cash flows from financing activities. We used proceeds from these loans to fund the operations and expansions of our Brad Foote subsidiary.

The Revolving Loan, which matures on June 30, 2008, had approximately $5,700 outstanding at closing of the Brad Foote acquisition, with $7,899 outstanding at December 31, 2007. Interest is payable monthly and accrues on Revolving Loan advances at a variable rate of Prime minus 1% (the "Base Rate"). The Term Loan, which matures on January 31, 2011, had approximately $5,300 outstanding at closing of the Brad Foote acquisition, with $4,900 outstanding at December 31, 2007, and requires monthly principal and interest payments. The monthly amount of principal due is $132 and interest accrues on the outstanding balance of the Term Loan at the Base Rate. The Equipment Loan had approximately $10,100 outstanding at closing of the Brad Foote acquisition with $9,500 outstanding at December 31, 2007. The equipment loan included an option to convert the obligation to a term note on April 29, 2007. This conversion was effected, making the outstanding principal balance payable in monthly principal installments of $183 commencing on May 31, 2007, maturing on April 30, 2012. Interest accrues on the outstanding balance of the converted term loan at the base rate. The Equipment Loan No. 2, which matures on June 30, 2013, had approximately $4,500 outstanding at closing of the Brad Foote acquisition with $5,900 outstanding at December 31, 2007. The Equipment Loan No. 2 includes an option to convert the obligation to a term note. Interest is payable monthly at the Base Rate until June 30, 2008, at which point Brad Foote must make monthly payments consisting of principal and interest.

The Loan Agreement states that the Revolving Loan, Term Loan, Equipment Loan and Equipment Loan No. 2 are secured by all of the assets of Brad Foote and that Brad Foote must maintain insurance on the collateral. The Loan Agreement requires Brad Foote to comply with standard covenants, including financial covenants relating to ratios of cash flow coverage and senior debt to EBITDA, and to submit our annual audited financial statements to LaSalle at the close of each fiscal year. In addition, Brad Foote must maintain a $1,000 key man life insurance policy upon the life of J. Cameron Drecoll, who served as Brad Foote's president prior to the acquisition and became our chief executive officer when the acquisition was completed. Each of the Revolving Loan, Term Loan, Equipment Loan and Equipment Loan No. 2 become immediately due and payable upon breach of any

covenants or representations made by Brad Foote in the Loan Agreement and upon other customary events of default. As of December 31, 2007, the Company was in violation of certain financial covenants with LaSalle Bank. We secured covenant waivers related to these loans through March 31, 2008 and do not anticipate an inability to comply with these covenants in the future. In addition, the covenants contained in the Loan Agreement include restrictions on Brad Foote's ability to make distributions or dividends and incur indebtedness, which could ultimately affect our ability to undertake additional debt or equity financing. If these covenants prevent us from securing additional financing when necessary, we plan to evaluate alternate sources of funding.

Subsequent to December 31, 2007, we assumed approximately $2,500 of outstanding senior debt in connection with our acquisition of EMS. The debt is comprised of various loans, which mature on dates from May 2008 to April 2013.

In the upcoming year, we plan to finance operations, including equipment purchases and other capital expenditures, with working capital and external financing. We believe that we will need to raise additional funding in the near term to finance operations and meet revenue, profitability and strategic goals for the foreseeable future. In addition, we continue to evaluate and assess potential strategic acquisition targets. Cash requirements from any future acquisitions may be substantial; however, we cannot estimate the cash or other consideration that may be required to finance such transactions. We expect to be able to procure financing upon reasonable terms in order to finance operations and acquisition activity. However, if we are unable to do so, or if we do not meet our anticipated future revenue levels, management is committed to taking actions necessary to ensure the conservation of adequate cash to continue to finance our operations.

Interest Rate Risk

The Company hedges certain of its variable interest debt with fixed rate interest rate swaps. These swaps resulted in a charge of $174, which is reported within interest expense.

Off-Balance Sheet Arrangements

The Company uses derivative financial instruments to manage well-defined commodity price risks and does not use them for speculation or trading purposes. Specifically, the Company uses forward contracts to reduce the volatility of electricity prices. These contracts meet the settlement requirements under SFAS No. 133 and qualify for the normal purchases and normal sales exclusions as defined by SFAS No. 133. The Company's Brad Foote subsidiary has also committed to a long-term agreement to purchase 100% of its electricity requirements from a single provider through January 2009, a portion of which are purchased at fixed prices. The committed electricity quantities are substantially lower than Brad Foote's actual energy usage; hence, the Company's exposure is considered minimal.

Available Information

All reports filed electronically by Broadwind with the Securities and Exchange Commission ("SEC"), including its Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K, Proxy and Information Statements, other information and amendments to those reports filed (if applicable), are accessible at no cost by contacting Broadwind's Investor Relations department, the contact information for which is available on our website, www.broadwindenergy.com . These filings are also accessible on the SEC's website at www.sec.gov . The public may read and copy any materials filed by Broadwind with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may also obtain information from the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Risk Factors and Cautionary Note Regarding Forward—Looking Statements

Our business and results of operations are subject to numerous risks, uncertainties, and other factors that you should be aware of, some of which are described below. In addition, certain statements in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained herein that are not historical fact, may be deemed forward-looking statements. In some cases, forward- looking statements can be identified by words such as "believe," "expect," "anticipate," "plan," "potential," "continue," "intend" or similar expressions. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Any forward-looking statements made herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements include or relate to the following: (i) our beliefs with respect to the sufficiency of our working capital and our plans to obtain external funding; (ii) our beliefs relating the likelihood that outstanding convertible debt will be converted to common stock; (iii) our beliefs regarding compliance with environmental laws and regulations; (iv) our intended use of segment information and our expectations relating to allocation of resources; (v) our intended use of proceeds from financing activities; (vi) our expectations relating to compliance with loan covenants and ability to obtain necessary waivers for covenants in the event of a default; (vii) our expectation that interest expense will increase in the future; (viii) our expectations with respect to our dividend policy; (ix) our expectations with respect to procurement of steel and other raw materials; (x) adequacy of our leased space; (xi) our strategic goals, including recruiting employees, expanding our product offerings and manufacturing capacity, developing existing customer relationships, improving efficiency and leveraging technology, and expanding our market share in North America; (xii) expectations relating to operations of EMS; (xiii) expectations relating to acquisition activity and expansion plans; and (xiv) our plans relating to improving of our internal controls. Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties and risks, known and unknown, associated with such statements. We caution investors that many important factors, some of which are listed below, have affected, and in the future could affect, our actual results of operations and cause such results to differ materially from those anticipated in forward- looking statements made in this Annual Report on Form 10-KSB and elsewhere by us or on our behalf. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historic results. As such, investors should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that investors should take into account when making investment decisions. For more information concerning risks and uncertainties related to our business, refer to our prior 10-KSBs, 10-QSBs, other Securities and Exchange Commission filings, and investor relations materials. You should not place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not intend to update publicly or revise any forward-looking statements except as required by law.

Our actual results may vary materially from those projected due to certain risks and uncertainties such as the following:

Our plans to grow and diversify through acquisitions and internal expansion may not be successful, which could result in poor financial performance.

As part of our business strategy, we intend to acquire new businesses. We may not be able to identify appropriate acquisition candidates or successfully negotiate, finance or integrate acquisitions. If we are unable to make acquisitions, we may be unable to realize the growth we anticipate. Future acquisitions could involve numerous risks including difficulties in integrating the operations, services, products, and personnel of the acquired business; and the potential loss of key employees, customers and suppliers of the acquired business. If we are unable to successfully manage these acquisition risks, future earnings may be adversely affected.

We also plan to grow our existing business through increased production levels at existing facilities, and potentially through expansion to new manufacturing facilities and locations. Such expansion will require coordinated efforts across the Company and enhancements to our current operating infrastructure, including management and operations personnel, systems and equipment, and property. Difficulties or delays in acquiring and effectively integrating such new facilities may adversely affect future performance.

Volatile financial markets or our own operating performance and liquidity could restrict our ability to access capital, and may increase our borrowing costs.

We rely on access to both short- and long-term capital markets as a source of liquidity for capital requirements not satisfied by cash flows from operations. If we are not able to access capital at competitive rates, the ability to implement our business plans may be adversely affected. Market disruptions or a downgrade of our credit ratings may increase the cost of borrowing or adversely affect our ability to access one or more financial markets.

Additionally, our current short- and long-term debt agreements contain various covenants requiring certain working capital ratios and cash flow benchmarks to be met. Thus, violations of such covenants may restrict our ability to obtain the additional financing we need to implement our growth strategy, and may affect our ability to continue as a going concern. In the event of a loan covenant violation and inability to obtain waivers, our loans would be due immediately and our ability to obtain financing could be severely impacted.

A disruption of economic growth in the wind industry could negatively impact our results of operations and growth.

Our business segments are focused on supplying products and services to wind turbine manufacturers and owners and operators of wind power plants. The development of wind power plants is highly dependent upon the federal production tax credit and the existence of renewable portfolio standards and other state incentives.

Renewable portfolio standards are state specific statutory provisions specifying that electric utilities generate a certain amount of electricity from renewable energy sources or devote a certain portion of its plant capacity to renewable energy sources. Additionally, certified renewable energy generators earn certificates for every unit of electricity they produce and can sell these along with their electricity to supply companies. These standards have spurred significant growth in the wind energy industry and a corresponding increase in the demand for our manufactured products. Currently, 25 states have renewable energy portfolio standards in place and two states have voluntary utility commitments to generate a specific percentage of their electricity from renewable sources. The enactment of renewable portfolio standards in additional states or any changes to existing renewable portfolio standards may impact the demand for our products.

Currently, only wind generation electricity facilities that are placed in service on or prior to December 31, 2008 are eligible to receive a federal production tax credit. The production tax credit provides a material incentive for developing wind energy projects and thereby impacts the demand for our manufactured products. The federal production tax credit is set to expire on December 31, 2008, and Congress has not yet renewed or extended the credit beyond 2008. The failure of Congress to extend or renew the federal production tax credit could significantly delay the development of wind power plants and the demand for production of turbines and towers. Any delay or failure to renew the federal production tax credit would have a material adverse impact on our business and results of operations.

We face intense competition from industry participants who may have greater resources than we.

Our businesses are subject to risks associated with competition from new or existing industry participants who may have more resources and better access to capital. Many of our competitors and potential competitors may have substantially greater financial, customer support, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we do. These industry participants compete with our subsidiaries based upon price, quality, location, available capacity, and several other factors. We cannot be sure that we will have the resources or expertise to compete successfully in the future. Some of our competitors may also be able to provide customers with additional benefits at lower overall costs to increase market share. We cannot be sure that we will be able to match cost reductions by our competitors.

We rely on the services of key personnel and unionized labor, the loss of which could adversely affect the future success of the Company.

We are highly dependent on the services of key personnel and executive officers, and have collective bargaining agreements with certain of our operations workforce. The loss of the services of these and other personnel, whether through terminations, attrition, labor strike, or otherwise, or a material change in our collective bargaining agreements, could have a material adverse impact on us and our future profitability. Collective bargaining units in place at our Brad Foote subsidiary's Pittsburgh and Cicero facilities are under contract through 2009 and 2010, respectively.

Disruptions in the supply of parts and raw materials, or changes in supplier relations, may negatively impact our operating results.

Raw material costs for items such as steel have increased significantly and may continue to increase. Limitations on availability or increases in the cost of raw materials, including steel, the cost of energy, transportation and other necessary services may impact our operating results, because our manufacturing businesses may not be able to pass on the cost of such increases to their respective customers. In addition, we may encounter supplier constraints, be unable to maintain favorable supplier arrangements and relations or be affected by disruptions in the supply chain caused by such events as natural disasters, power outages and labor strikes. In the event of a significant increase in the price of raw materials, particularly steel, our margins and profitability could be negatively impacted.

Restrictions on transport and rapidly rising fuel costs could affect distribution access to certain geographical areas.

Rising fuel cost and transport restrictions could negatively impact transport of large products such as towers. This could cause customers to source towers closer to wind farm developments, and could negatively impact our revenues.

Trade restrictions may present barriers to entry in certain international markets.

Restrictions on trade with certain international markets could affect our ability to expand into these markets. In addition, the existence of government subsidies available to our competitors in certain countries may affect our ability to compete on a price basis.

We are substantially dependent on a few significant customers.

Each of our segments have significant customers and concentrated sales to such customers. If our relationships with significant customers should change materially, it would be difficult to immediately and profitably replace lost sales.

Material weaknesses or other deficiencies in our internal control over financial reporting, including potential failure to prevent or detect errors or fraud, could affect the accuracy of our reported financial results.

Management and our auditors have identified certain material weaknesses as referenced in Item 8A Controls and Procedures. Internal control weaknesses or deficiencies could affect our ability to close our financial reporting on a timely basis or report accurate numbers. In addition, acquisitions of companies lacking sufficient financial and internal control expertise may affect our ability to comply with public company reporting requirements in the future, including meeting filing deadlines established by the Securities and Exchange Commission, and ensuring that our Company-wide controls and procedures are adequate to provide financial information in a timely and reliable matter. We may incur substantial additional costs to bring acquired companies' systems into compliance with Section 404. Our ability to attract and retain qualified financial experts will also impact our ability to comply with financial reporting and Sarbanes-Oxley regulations. If we are not able to maintain the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, including the SEC. This type of action could adversely affect our financial results or investors' confidence in our company and our ability to access capital markets and could cause our stock price to decline.

ITEM 7. FINANCIAL STATEMENTS

See pages beginning with page F-1 for the audited consolidated financial statements of the Company.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As reported in a Form 8-K filing on December 21, 2007, we dismissed our former auditor and engaged Grant Thornton LLP as our independent auditor, which became effective on December 17, 2007. We have not had any disagreements with our current or former auditors.

ITEM 8A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company's disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covering this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms. Due to the material weaknesses described below, our disclosure controls and procedures did not ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Following the acquisition of Brad Foote (described in Note 3 to the consolidated financial statements), the makeup of our Board of Directors changed, including the positions of our chief executive officer and other directors. We established an Audit Committee on October 25, 2007, and designated a financial expert as chairperson. While our full Board of Directors retains ultimate responsibility for our financial reporting and system of internal controls, our Audit Committee will provide oversight of our internal control over financial reporting and financial reporting and disclosure.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

A material weakness (as defined in SEC Rule 12b-2) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Management conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2007. In making this assessment, management used the criteria described in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management concluded that the Company's internal control over financial reporting was not effective as of December 31, 2007. As discussed in further detail below, management's assessment excludes assessment of internal control over financial reporting of Brad Foote Gear Works, Inc., which was acquired on October 19, 2007. Brad Foote had a significant impact on the Company's consolidated financial statements as of and for the year ended December 31, 2007, and is expected to have a significant impact in future periods.

The Company has experienced significant growth through acquisitions during 2007, and significant resources were committed to effecting the transactions and integrating the acquired businesses. Accordingly, such acquisitions limited the available time of management and others charged with establishing, implementing, and monitoring internal control over financial reporting, and material weaknesses were noted as of December 31, 2007. While management is in the process of remediating material weaknesses and other deficiencies, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

Management has identified the following material weaknesses in internal control over financial reporting as of December 31, 2007; some of these internal control deficiencies may also constitute deficiencies in our disclosure controls:

Accounting Policies and Procedures: In years prior to 2007, we did not have detailed policies and procedures in place to document our control structure and provide a basis for the evaluation of internal control design or operating effectiveness. This weakness was previously identified by management and still existed as of December 31, 2007. During 2007, we engaged outside consultants to aid in the development of detailed process-level policies and procedures. In future periods, we expect these changes to our documented policies and procedures to enhance the overall quality of our control environment, including our ability to monitor and assess internal control over financial reporting.

IT Environment, General Ledger System: We do not currently employ a sophisticated accounting and reporting system to report our results of operations and financial condition and consolidate each of our subsidiaries. Subsidiaries currently each have separate accounting systems and must be manually consolidated. We do not currently have in place adequate access or change controls to these systems. Management is currently in the process of implementing a new accounting system in our Towers and Fabrication segment, which we expect to address and remediate the deficiencies identified in our current accounting system.

Financial Close and Reporting: Due to the limitations discussed with our accounting systems and the need for manual consolidation, our financial closing and reporting process is susceptible to material error. Our closing process also relies on manual reconciliations of other material accounts that are not entirely segregated among different individuals. We lack significant expertise related to compliance with certain non-routine SEC reporting requirements and other legal matters requiring public disclosure. Though we employ experienced CPAs with backgrounds in public accounting and technical matters of GAAP, our recent acquisitions and the integration of the acquired companies into our financial closing process have presented significant challenges, which are expected to be addressed in part by the system implementation described above. In addition to the system implementation, we have relied on compensating measures including: enhanced communication and involvement of outside legal counsel in reporting and disclosure matters, and the addition of our Audit Committee, the chair of which is a financial expert with extensive public accounting and auditing experience.

Internal Financial Expertise: With respect to complex transactions such as our recent acquisitions of Brad Foote and RBA, accounting for income taxes, and application of other emerging accounting standards, we have historically relied on the work of outside consultants to aid in the application of GAAP and the preparation of financial statements in accordance with GAAP. Management is currently evaluating its personnel needs and plans to address this material weakness through the hiring of one or more individuals with the requisite accounting expertise, to supplement our current team of experienced CPAs in our accounting and financial reporting functions.

Application Access, Segregation of Duties: Due to our size and growth, we have not been able to maintain adequate segregation of duties in certain critical processes. Where possible, we have put compensating controls in place to mitigate the risk presented by inadequate segregation of duties. Through the course of our acquisition integration and system implementation, we are currently in the process of realigning personnel and reviewing access rights to remediate this weakness.

User Developed Applications: As discussed above in IT Environment, General Ledger System , we do not currently employ a sophisticated accounting and financial reporting system. As a result, in preparing our consolidated financial statements, we employed the use of various spreadsheets and database programs ("User Developed Applications"). The User Developed Applications are utilized in calculating and tracking several material accounts and amounts, including various estimates and cost allocations, reconciliations, amortization and rollforward schedules, and other areas. At December 31, 2007, most User Developed Applications were not secured as to access, logical security, changes, or

data integrity. In 2008, we have begun an effort to identify all of our User Developed Applications and intend to remediate the weakness through controls in the User Developed Applications themselves or compensating controls. These efforts, along with implementation of our new general ledger and reporting system, which seeks to eliminate the need for User Developed Applications in critical processes, are expected to continue into 2008. We believe that with the passage of sufficient close and reporting cycles to evidence operation of these compensating controls, the material weakness will be remediated.

Process-Level Controls: As a result of the preceding material weaknesses described, many of our process-level controls also contain material weaknesses. We have identified additional material weaknesses in several cycles, including revenues, expenditures, income taxes, and treasury. The remediation measures described above are expected to reduce future deficiencies in these and other cycles.

As discussed in Note 3 to the consolidated financial statements, on October 19, 2007, we completed the acquisition of Brad Foote. As of and for the year ended December 31, 2007, this acquisition comprised 88% of consolidated total assets and 57% of consolidated total revenues. This acquired business has been excluded from management's assessment of internal control as of December 31, 2007. Though management did not perform a complete assessment, from the date of acquisition through our fiscal year end, we identified several items that represent material weaknesses or significant deficiencies in the internal control over financial reporting at Brad Foote as of December 31, 2007. These potential material weaknesses are summarized below:

•: Inventory. Routine physical inventory counts and related reconciliations of book-to-physical were not performed in a timely manner during the year or subsequent to year-end. The process for maintenance of perpetual inventory records and related accounting for scrap and cost of goods sold lacked controls to ensure an accurate perpetual inventory balance. Additionally, raw materials pricing was subject to manual override, causing overstated unit costs and related errors in inventory and cost of goods sold balances. However, a complete physical inventory was taken at December 29, 2007 which became the basis of the inventory valuation at year end.
•: Cost accounting. Controls relating to the accumulation and recording of labor and overhead were lacking in design and operating effectiveness. Variances were not regularly analyzed, and amounts were not consistently applied to inventory balances.
•: Accounts receivable. Monitoring controls were not in place to ensure the appropriate application of payments, month-end account reconciliations, or related reserves.
•: Billing and sales. Revenue recognition controls were not in place to ensure revenue was not recognized prior to fulfillment of applicable recognition criteria, and that sales were appropriately cut off at year-end.
•: Capital Expenditures. No formal policy existed for accounting for capital expenditures. Major capital projects related to production equipment were not adequately tracked and capitalized.
•: Internal Financial Expertise. The financial management of the company lacked the financial expertise to comply with public company requirements. This lack of expertise had a significant impact on the ability to timely close the financial statements.
•: Accounting Policies & Procedures. The company did not have detailed policies and procedures in place to document their control structure and provide a basis for the evaluation of internal control design or operating effectiveness.

Since the acquisition of Brad Foote, management has worked closely with existing personnel, and has begun remediation efforts to reduce the risks presented by the existing material weaknesses and significant deficiencies. Since year end, we have added new financial personnel with the expertise to handle the requirements of public company reporting. We have implemented physical inventory

procedures to be taken at each calendar year end. We have hired a new materials manager responsible for the tracking of inventory, and have enhanced management review of the inventory process. Overhead rates are reviewed by a new cost accountant and by management on a quarterly basis. Accounts receivable and billing controls have also been implemented to provide monthly reconciliation and management review, as well as additional approvals related to month end cutoff. The impact of the remediation efforts initiated by management will not be fully known until our assessment of internal control over financial reporting as of December 31, 2008.

The acquisition of Brad Foote also included changes to the makeup of our Board of Directors and the position of chief executive officer, as noted above.

This Annual Report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report.

ITEM 8B. OTHER INFORMATION

On October 4, 2007, our Tower Tech subsidiary obtained a secured line of credit from Investors Community Bank in the amount of $2,500, which was increased to $5,500 on March 21, 2008. As of April 10, 2008 $4,281 was outstanding on the line of credit. The line of credit is governed by the terms of various agreements between Tower Tech and Investors Community Bank (the "Credit Agreements"). All advances to Tower Tech under the line of credit are guaranteed in full by Broadwind and RBA, pursuant to Guaranty Agreements (the "Guaranties"). The agreement governing the loan contains customary covenants, including financial covenants relating to minimum debt to tangible net worth, minimum debt service coverage ratio and minimum tangible net worth. Tower Tech is obligated to make monthly payments of accrued interest and pay the principal in full on September 21, 2008. Draws on the line of credit bear interest at a variable rate equal to the greater of 4.25% or 1.75% above the Previous Month Average 30 Day Libor Rate.

On December 1, 2007, our Tower Tech subsidiary executed an amendment to the Lease Agreement dated January 1, 2005, relating to office space at Tower Tech's Manitowoc facility (the "Amendment"). The lessor is City Centre, LLC, who is indirectly owned in part by Raymond L. Brickner III, our President, and Daniel P. Wergin, who served as a director of the Company until January 2008. The Amendment extends the initial lease term from December 31, 2009 to December 31, 2014 and provides for annual rent of $508. Previously, annual rent was $400 plus a production fee of $3.8 per tower for towers produced in excess of 100.

On December 26, 2007, our Tower Tech subsidiary executed a Lease Agreement for a storage facility in Manitowoc, Wisconsin (the "Lease"). The lessor is City Centre, LLC, who is indirectly owned in part by Raymond L. Brickner III, our President, and Daniel P. Wergin, who served as a director of the Company until January 2008. The Lease provides that Tower Tech will assume the tenant's interest in a preexisting lease between City Centre, LLC and a third party. The prior tenant will continue to pay rent through May 31, 2008, but Tower Tech is liable for 2008 real estate taxes and interest due on a $200 advance from City Centre to that tenant for leasehold improvements. The term of the Lease is 15 years, and annual rent is $222.

The foregoing summaries of the secured line of credit with Investors Community Bank, the amendment to the secured line of credit with Investors Community Bank, the Amendment to the Lease Agreement with City Centre, LLC and the Lease Agreement with City Centre, LLC do not purport to be complete, and are qualified in their entirety by reference to the Credit Agreements, the Guaranties, the Amendment and the Lease, copies of which are attached as Exhibits 10.35 through 10.41, 10.42 through 10.43, 10.2 and 10.3, respectively.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The names and ages of the executive officers of the Company and their positions and offices presently held are as follows:

Name	Age	Position
J. Cameron Drecoll	53	Chief Executive Officer and Director
Raymond L. Brickner III	51	President and Director
Steven A. Huntington	53	Chief Financial Officer
Lars Moller	40	Executive Vice President and Chief Operating Officer
Matthew J. Gadow	36	Executive Vice President of Strategic Planning

JOHN CAMERON DRECOLL has served as our Chief Executive Officer and also as a director since October 19, 2007. He was appointed to these positions pursuant to our acquisition of Brad Foote Gear Works, Inc. on October 19, 2007, where Mr. Drecoll held the positions of majority shareholder and Chief Executive Officer since 1996. Mr. Drecoll has more than 30 years of experience in the industrial manufacturing segment. Prior to acquiring Brad Foote Gear Works, Mr. Drecoll served in operational management, specializing in integration and turnaround of new acquisitions, at Regal Beloit Corporation. During his 15 years at Regal, the company enjoyed a five-fold increase in sales. Mr. Drecoll served on the Board of Directors of the American Gear Manufacturer Association and served as Chairman in 2003. Mr. Drecoll received a Mechanical Engineering degree and a Masters of Business Administration from Marquette University.

RAYMOND L. BRICKNER III has served as our President and as a director since the reverse public shell transaction between Tower Tech Systems, Inc. and Blackfoot Enterprises, Inc. in February 2006. In addition, Mr. Brickner has served as President of RBA Inc. since its inception in 1985. We acquired RBA Inc. on October 1, 2007.

STEVEN A. HUNTINGTON has served as our Chief Financial Officer since April 23, 2007. On May 1, 2008, Mr. Huntington will no longer serve as the Chief Financial Officer of Broadwind, but will continue to serve as Chief Financial Officer of Tower Tech Systems. Prior to joining Broadwind, Mr. Huntington was the Chief Financial Officer for Idaho Pacific Holdings Inc., a potato dehydrator based in Ririe, Idaho. He served in that position since August 2005, and had responsibility for accounting, planning, plant accounting and information systems, as well as internal control upgrades from a private company to a public company. From January 1999 to July 2005, he was the Vice President, Finance, Chief Financial Officer, Treasurer and Corporate Secretary for Northern Labs, Inc., a contract manufacturer and packager of consumer products based in Manitowoc, Wisconsin. Mr. Huntington served as a Plant Controller for Sealy Mattress Company in Batavia, Illinois from 1995 to 1999, and as Corporate Controller for Classics International Entertainment in Chicago, Illinois from 1993 to 1995. His previous work experience dates back to 1977. He received an MBA in Finance from DePaul University and a BS degree in Accounting from the University of Wisconsin—Green Bay. Mr. Huntington is a certified public accountant.

LARS MOLLER has served as our Executive Vice President and Chief Operating Officer since March 26, 2008. We hired Mr. Moller on October 23, 2007 to serve as Executive Vice President of Business Development. Mr. Moller oversees the development of our supplier, customer and strategic partner relationships. Mr. Moller has more than 20 years of experience in the wind industry, most recently serving as President of DMI Industries, a wind tower manufacturer in West Fargo, North Dakota since October 2003. Mr. Moller began his career in the wind industry with The Bonus Energy Group in 1986 and has also held senior management positions with Vestas Americas, Difko and

BONUS Energy. Mr. Moller also serves on the Board of Directors of the American Wind Energy Association and Canadian Wind Energy Association.

MATTHEW J. GADOW has served as our Executive Vice President of Strategic Planning since October 23, 2007. In this capacity, Mr. Gadow handles Broadwind's acquisitions, joint ventures and other strategic projects. Effective May 1, 2008, Mr. Gadow will begin serving as Executive Vice President and Chief Financial Officer. Prior to joining Broadwind, Mr. Gadow served for nearly five years as the executive vice president and chief financial officer for DMI Industries, a wind tower manufacturer based in West Fargo, North Dakota. Before joining DMI, he worked eight years as an operational finance director at several manufacturing locations under the Norwood Promotional Products umbrella of companies. Mr. Gadow, a certified public accountant, spent several years in public accounting after earning his bachelor's degree from Texas Lutheran University, Seguin, Texas. In addition to his executive roles within the wind industry, Mr. Gadow also serves on the American Wind Energy Association's Finance Committee.

Additional information required by Item 9 relating to directors, compliance with Section 16(a) of the Exchange Act, and code of ethics is incorporated herein by reference to the sections labeled "Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance" and "Code of Ethics and Business Conduct," that appear in the definitive Proxy Statement for our 2008 Annual Meeting of Stockholders. Such information is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

The information required by this Item 10 is contained in the section entitled "Executive Compensation" in the definitive Proxy Statement for our 2008 Annual Meeting of Stockholders. Such information is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 11 regarding security ownership of certain holders and related stockholder matters is contained in sections entitled "Principal Stockholders," "Management Shareholdings," "Changes in Control," and "Equity Compensation Plan Information" that appear in the definitive Proxy Statement for our 2008 Annual Meeting of Stockholders. Such information is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 12 contained in the section entitled "Certain Transactions and Business Relationships" that appears in the definitive Proxy Statement for our 2008 Annual Meeting of Stockholders. Such information is incorporated herein by reference.

ITEM 13. EXHIBITS

See "Exhibit Index" immediately following the certifications to this Form 10-KSB for a description of the documents that are filed as Exhibits to this report on Form 10-KSB or incorporated by reference herein.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 is contained in the section entitled "Independent Registered Public Accounting Firm, Audit Fees" that appears in the definitive Proxy Statement for our 2008 Annual Meeting of Stockholders. Such information is incorporated herein by reference.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		BROADWIND ENERGY, INC.
Date: April 15, 2008		By:	/s/ J. CAMERON DRECOLL J. Cameron Drecoll Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

(Power of Attorney)

Each person whose signature appears below constitutes and appoints J. Cameron Drecoll and Steven A. Huntington as true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-KSB and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

SIGNATURE	TITLE	DATE

/s/ J. CAMERON DRECOLL J. Cameron Drecoll	Chief Executive Officer and Director (Principal Executive Officer)	April 15, 2008
/s/ STEVEN A. HUNTINGTON Steven A. Huntington	Chief Financial Officer (Principal Financial and Accounting Officer)	April 15, 2008
/s/ RAYMOND L. BRICKNER III Raymond L. Brickner III	President and Director	April 15, 2008
/s/ JAMES M. LINDSTROM James M. Lindstrom	Director	April 15, 2008
/s/ TERENCE P. FOX Terence P. Fox	Secretary, General Counsel and Director	April 15, 2008
/s/ CHARLES H. BEYNON Charles H. Beynon	Director	April 15, 2008
/s/ WILLIAM M. BARRETT William M. Barrett	Director	April 15, 2008

ITEM 7. FINANCIAL STATEMENTS

BROADWIND ENERGY, INC. AND SUBSIDIARIES
(FORMERLY TOWER TECH HOLDINGS INC.)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

		Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS		F-2
FINANCIAL STATEMENTS:
	Consolidated Balance Sheets as of December 31, 2007 and 2006	F-4
	Consolidated Statements of Operations—Two Years ended December 31, 2007	F-5
	Consolidated Statements of Shareholders' Equity (Deficit)—Two Years ended December 31, 2007	F-6
	Consolidated Statements of Cash Flows—Two Years ended December 31, 2007	F-7
	Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of Broadwind Energy, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Broadwind Energy, Inc. (formerly Tower Tech Holdings Inc.) and Subsidiaries (the "Company") as of December 31, 2007, and the related consolidated statements of operations, shareholders' equity (deficit), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Broadwind Energy, Inc. and Subsidiaries as of December 31, 2007, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1, the Company adopted the provisions of Financial Interpretation 48, Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109 , as of January 1, 2007.

GRANT THORNTON LLP

Milwaukee, Wisconsin
April 15, 2008

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of Tower Tech Holdings Inc.

We have audited the accompanying consolidated balance sheet of Tower Tech Holdings Inc. and its subsidiary as of December 31, 2006, and the related consolidated statements of operations, shareholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tower Tech Holdings Inc. and its subsidiary as of December 31, 2006, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Carver Moquist & O'Connor, LLC

Plymouth, Minnesota
March 30, 2007

F-3

BROADWIND ENERGY, INC. AND SUBSIDIARIES
(FORMERLY TOWER TECH HOLDINGS INC.)

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

			December 31, 2007			December 31, 2006
ASSETS
Current assets:
	Cash		$	5,782		$	125
	Restricted cash			500			—
	Accounts receivable, net of allowance of $2,983 and $0, respectively			13,541			161
	Inventories, net of allowance of $1,096 and $0, respectively			12,983			288
	Prepaid expenses			345			14
	Other current assets			1,601			—

Total current assets				34,752			588
Property and equipment:
	Buildings and land			4,032			—
	Machinery and equipment			54,775			3,046
	Leasehold improvements			1,919			356
	Office furniture and equipment			640			32

				61,366			3,434
	Less accumulated depreciation and amortization			2,476			635

Net property and equipment				58,890			2,799
Other assets:
	Goodwill			27,611			—
	Intangibles, net of accumulated amortization of $1,655 and $0, respectively			84,022			—
	Acquisition costs			331			—
	Bond issuance fees, net of accumulated amortization of $17 and $2, respectively			—			15
	Deposits			212			—
	Accounts receivable—retainage			—			493

Total other assets				112,176			508

TOTAL ASSETS			$	205,818		$	3,895

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
	Notes payable		$	440		$	588
	Notes payable to related parties			25,000			4,377
	Current maturities of long-term debt			12,693			97
	Current portions of long-term capital lease obligations			300			—
	Accounts payable			10,136			892
	Accounts payable to related parties			—			725
	Accrued liabilities			12,457			1,532
	Unearned revenue			97			—
	Customer deposits			1,326			191

Total current liabilities				62,449			8,402
	Long-term debt, net of current maturities			17,620			807
	Capital lease obligations, net of current portions			686			—
	Interest rate swaps			388			—
	Deferred income taxes			139			—

Total liabilities				81,282			9,209

Commitments and contingencies
Shareholders' equity (deficit):
	Common stock, $.001 par value: 100,000,000 shares authorized;
		76,260,912 and 35,235,500 shares issued and outstanding, respectively		76			35
	Additional paid-in capital			133,033			1,261
	Accumulated deficit			(9,877	)		(6,610	)
	Interest in variable interest entity			1,304			—

Total shareholders' equity (deficit)				124,536			(5,314	)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)			$	205,818		$	3,895

The accompanying notes are an integral part of these financial statements.

F-4

BROADWIND ENERGY, INC. AND SUBSIDIARIES
(FORMERLY TOWER TECH HOLDINGS INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

		Years Ended December 31,
		2007			2006
Net sales		$	29,804		$	4,023
Cost of sales			25,865			4,822

Gross margin (deficit)			3,939			(799	)

Operating costs and expenses:
	Selling, general and administrative expenses		5,724			1,251
	Depreciation and amortization		1,750			21
	Merger transaction costs		—			250

Total operating costs and expenses			7,474			1,522

Operating loss			(3,535	)		(2,321	)
Other income (expense):
	Interest expense		(1,239	)		(411	)
	Interest income		400			—
	Realized loss on foreign currency transactions		(15	)		(3	)
	Other, net		83			—
	Income (expense) relating to variable interest entity		(95	)		—

Total other income (expense), net			(866	)		(414	)

Net loss before provision for income taxes			(4,401	)		(2,735	)
Income tax benefit			(1,039	)		—

Net loss		$	(3,362	)	$	(2,735	)

Net loss per common share—basic and diluted		$	(0.07	)	$	(0.08	)
Weighted average common shares outstanding—basic and diluted			51,535,137			33,771,768

The accompanying notes are an integral part of these financial statements.

F-5

BROADWIND ENERGY, INC. AND SUBSIDIARIES
(FORMERLY TOWER TECH HOLDINGS INC.)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

(in thousands, except share data)

		Common Stock
		Common Stock									Interest in Variable Interest Entity
		Shares Issued and Outstanding	Issued Amount		Additional Paid-in Capital			Accumulated Deficit			Interest in Variable Interest Entity			Total
Balance, December 31, 2005		22,750,000	$	23	$	428		$	(3,875	)	$	—		$	(3,424	)
	Recapitalization of shares issued by Blackfoot prior to merger	9,750,000		10		(10	)		—			—			—
	Stock issued for merger transaction costs	2,500,000		2		248			—			—			250
	Stock issued for compensation	235,500		—		353			—			—			353
	Contributed capital—management salaries	—		—		242			—			—			242
	Net loss	—		—		—			(2,735	)		—			(2,735	)

Balance, December 31, 2006		35,235,500		35		1,261			(6,610	)		—			(5,314	)
	Stock issuance for private placement to accredited investors, net of costs of $1,209	22,766,667		22		64,169			—			—			64,191
	Stock issued for satisfaction of third-party debt	1,500,000		2		2,248			—			—			2,250
	Stock issued for satisfaction of related party debt	722,295		1		1,083			—			—			1,084
	Stock issued for acquisition of Brad Foote Gear Works, Inc.	16,036,450		16		64,130			—			—			64,146
	Stock options granted	—		—		142			—			—			142
	Capital contributions	—		—		—			—			1,399			1,399
	Net loss	—		—		—			(3,267	)		(95	)		(3,362	)

Balance, December 31, 2007		76,260,912	$	76	$	133,033		$	(9,877	)	$	1,304		$	124,536

The accompanying notes are an integral part of these financial statements.

F-6

BROADWIND ENERGY, INC. AND SUBSIDIARIES
(FORMERLY TOWER TECH HOLDINGS INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

			Years Ended December 31,
			2007			2006
Cash flows from operating activities:
	Net loss		$	(3,362	)	$	(2,735	)
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization		3,523			326
		Amortization of bond issuance fees		15			2
		Deferred income taxes		139			—
		Contributed services by shareholders		—			243
		Compensation expense related to restricted stock issuances		—			353
		Stock-based compensation expense		142			—
		Stock issued for merger costs		—			250
		(Gain) loss on disposal of assets		2			—
	Changes in operating assets and liabilities, net of effects of acquired companies:
		Accounts receivable		(4,788	)		19
		Restricted cash		(500	)		—
		Inventories		715			(5	)
		Prepaid expenses		305			(6	)
		Other current assets		148			—
		Accounts receivable—retainage		493			(493	)
		Accounts payable		2,991			(32	)
		Accounts payable—related party		(725	)		438
		Accrued liabilities		(259	)		947
		Unearned revenue		(106	)		—
		Customer deposits		1,135			(18	)

Net cash used in operating activities				(132	)		(711	)
Cash flows from investing activity:
	Cash paid for acquired companies, net of effects of acquisition			(76,474	)		—
	Capital expenditures—Towers & Fabrication			(4,921	)		(408	)
	Capital expenditures—Gearing Systems			(933	)

Net cash used in for investing activities				(82,328	)		(408	)
Cash flows from financing activities:
	Increase in notes payable			25,283			1,169
	Payments of notes payable			(3,796	)		—
	Proceeds from long-term debt			3,759			—
	Retirement of long-term debt			(2,496	)		(91	)
	Principal payments on capital leases			(186	)		—
	Change in valuation of interest rate swap			153			—
	Proceeds from private placements of common stock			65,400			—

Net cash provided by financing activities				88,117			1,078

Net increase (decrease) in cash				5,657			(41	)
Cash at beginning of period				125			166

Cash at end of period			$	5,782		$	125

Supplemental cash flow information:
	Cash paid for interest		$	801		$	308
	Cash paid for taxes		$	—		$	—
Non-cash investing and financing activities:
	Accounts payable incurred for the purchase of equipment		$	1,077		$	41
	Assets acquired under capital lease obligations		$	756		$	—
	Common Stock issued for acquisition of Brad Foote		$	64,146		$	—
	Portion of Brad Foote acquisition accrued		$	5,171		$	—
	Stock issued for satisfaction of third-party debt and related obligations		$	1,042		$	—
	Stock issued for satisfaction of related party debt		$	1,084		$	—
	Assets consolidated from variable interest entity		$	3,474		$	—
	Long-term debt consolidated from variable interest entity		$	2,075		$	—

The accompanying notes are an integral part of these financial statements.

F-7

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies

Organization

Blackfoot Enterprises, Inc. ("Blackfoot") was incorporated under the laws of the State of Nevada on July 10, 1996.

Blackfoot as a public company had no operations. On November 18, 2005, Blackfoot entered into a Share Exchange Agreement whereby it agreed to issue 25,250,000 shares of its common stock to acquire all of the outstanding shares of Tower Tech Systems, Inc. ("Tower Tech"), a private corporation incorporated under the laws of the State of Wisconsin. Tower Tech engineers and manufactures wind turbine extension towers in Manitowoc, Wisconsin.

As part of the Share Exchange Agreement, immediately prior to the closing of the transaction on February 6, 2006, 2,500,000 restricted common shares were issued to a consultant for services provided in connection with this business combination transaction, which were valued at $250. These 2,500,000 shares were part of the 25,250,000 shares described above.

Upon completion of the transaction on February 6, 2006, Tower Tech became a wholly-owned subsidiary of Blackfoot and Blackfoot changed its name to Tower Tech Holdings Inc. Since this transaction resulted in the existing shareholders of Tower Tech acquiring control of Blackfoot, for financial reporting purposes, the business combination has been accounted for as an additional capitalization of Blackfoot (a reverse acquisition with Tower Tech as the accounting acquirer). Accordingly, Tower Tech's net assets were included in the consolidated balance sheet at their historical value. The operations of Tower Tech were the only continuing operations of the Company.

On October 1, 2007, the Company acquired all of the outstanding stock of R.B.A., Inc. ("RBA") for $5,197. RBA is a fabricator of components for energy-related industries and is located in Manitowoc, Wisconsin.

On October 19, 2007, the Company acquired all of the outstanding stock of Brad Foote Gear Works, Inc. ("Brad Foote") for total consideration of $133,179. Brad Foote is an Illinois-based manufacturer of gearing systems for the wind, oil and gas, and energy-related industries.

The Company is engaged to the production and servicing of components for energy and infrastructure-related industries. The Company focuses on the manufacture of components for the wind industry, including tower support structures through its Tower Tech and RBA subsidiaries, and gearing systems through its Brad Foote subsidiary. The Company operates principally in the United States of America.

On December 13, 2007, the Board of Directors unanimously approved the proposed amendment to the Articles of Incorporation to change the corporate name from Tower Tech Holdings Inc. to Broadwind Energy, Inc. ("Broadwind" or "the Company"). During the first quarter of the 2008 fiscal year, the amendment was approved by a majority of the stockholders.

The accompanying consolidated financial statements as of and for the year ended December 31, 2006 present the historical financial information of Broadwind consolidated with Blackfoot from the date of reorganization (February 6, 2006) to December 31, 2006. The accompanying consolidated financial statements as of December 31, 2007 present the historical financial information of Broadwind

F-8

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

consolidated with RBA and Brad Foote from the date of acquisition (October 1, 2007 and October 19, 2007, respectively) to December 31, 2007.

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly—owned subsidiaries, Tower Tech, RBA, and Brad Foote. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company applies Financial Accounting Standards Board ("FASB") Interpretation No. 46 (revised 2003), Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51 ("FIN 46(R)") when determining whether to consolidate a Variable Interest Entity ("VIE"). FIN 46(R) requires that an equity investor in a VIE have significant equity at risk (generally a minimum of 10%) and hold a controlling interest, evidenced by voting rights, and absorb a majority of the entity's expected losses, receive a majority of the entity's expected returns, or both. If the equity investor is unable to evidence these characteristics, the entity that retains these ownership characteristics will be required to consolidate the VIE. Refer to Note 4, "Consolidation of variable interest entities" for further information on consolidated VIEs.

Reclassifications

Where appropriate, certain reclassifications have been made to the prior year financial statements to conform to the current year presentation.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America ("GAAP") requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Cash

The reported cash balances as of December 31, 2007 and 2006 are comprised of actual cash balances only, and do not include cash equivalents. Cash is maintained in high-quality financial institutions. The balances, at times, may exceed federally insured limits.

Restricted cash and accounts receivable—retainage

As a part of a contract with one of the Company's customers, 15% of the total selling price was withheld in 2006 for a specified warranty period up to seven years. At December 31, 2006, $493 was held in Accounts receivable—retainage in non-current assets on the consolidated balance sheet. At December 31, 2007, the amount was no longer required to be classified as non-current as it was

F-9

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

converted to a short-term certificate of deposit in the amount of $500, which is reported in restricted cash on the consolidated balance sheet.

Customer concentrations and receivables

The Company sells to domestic and international companies and grants uncollateralized credit to customers on an individual basis based on the customer's financial condition and credit history. Credit is typically on net 30-day terms. Customer deposits are frequently required at various stages of the production process to minimize credit risk.

Sales to three customers accounted for 70% of net sales for the year ended December 31, 2007. Sales to two customers accounted for 97% of net sales for the year ended December 31, 2006.

At December 31, 2007, three customers comprised 63% of total outstanding accounts receivable. At December 31, 2006, two customers comprised 78% of all outstanding accounts receivable.

Management established an allowance for doubtful accounts receivable based on its review of all outstanding amounts on a regular basis. Allowances are generally made for accounts outstanding for 90 days or more, but may vary based on customer circumstances, history with the Company, or other circumstances. Bad debt expense for the years ended December 31, 2007 and 2006 was $149 and $0, respectively.

Inventories

Inventories consist of raw materials, work-in-process, and finished goods. Raw materials consist of components and parts for general production use. Work-in-process consists of labor and overhead, processing costs, purchased subcomponents, and materials purchased for specific customer orders. Finished goods consist of components purchased from third parties as well as sub-assembly components manufactured by the Company that will be used to produce final customer products.

F-10

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

The components of inventories as of December 31, 2007 and 2006 are summarized as follows:

	2007			2006
Raw materials	$	4,230		$	—
Work-in-process		8,976			288
Finished goods		873			—

		14,079			288
Less: Reserve for excess and obsolete inventory		(1,096	)		—

Net inventories	$	12,983		$	288

Goodwill and other intangible assets

The Company accounts for its goodwill and other intangible assets under Statement of Financial Accounting Statements ("SFAS") No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). Under SFAS 142, goodwill is not amortized, but is tested for impairment at least annually. As of December 31, 2007, there was no impairment charge deemed necessary by management. The Company's other intangible assets subject to amortization are tested for impairment at least annually and are amortized over the following estimated useful lives:

Customer relationships		9 - 20 years
Trademarks		20 years

Property and equipment

Property and equipment are stated at cost. Expenditures for additions and improvements are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Properties sold or otherwise disposed of are removed from the property accounts, with gains or losses on disposal credited or charged to operations.

Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets as follows:

Buildings and improvements		39 years
Machinery and equipment		5 to 15 years
Office equipment		3 to 7 years
Leasehold improvements		Lesser of useful life or lease term

As of December 31, 2007 and 2006, property and equipment not yet placed into service totaled $3,442 and $0, respectively. Accordingly, no depreciation expense is recorded for such assets not yet placed into service.

F-11

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

Bond issuance fees

Bond issuance fees are recorded at cost and are amortized on a straight-line basis over the life of the bond. In November 2007, the bond outstanding as of December 31, 2006 was paid in full; therefore, the remaining bond fee was expensed at that time and no balance remains as of December 31, 2007.

Long-lived assets

The Company accounts for long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets . The carrying values of long-lived assets, including, but not limited to, capital assets and intangible assets, are amortized over their estimated useful lives, and are periodically evaluated for impairment when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the expected undiscounted future cash flows from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. The Company has reviewed long-lived assets and certain intangible assets with estimable useful lives and determined that the carrying values as of December 31, 2007 are recoverable in future periods.

Product warranty liability

The Company warrants its products against certain defects based on contract terms. For the Towers and Fabrication segment, warranty periods are generally five years for workmanship and manufacturing defects and seven years for painting defects. For our Gearing Systems segment, warranty periods are generally either eighteen months from shipment or one year in service at the customer site, and cover defects in material and workmanship. In certain cases, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions. As of December 31, 2007 and 2006, the Company's estimated product warranty liability based on historical activity was $242 and $51, respectively, and is recorded within accrued liabilities in the consolidated balance sheets.

Income taxes

As part of the process of preparing its consolidated financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. On January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 ("FIN 48"). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS 109, Accounting for Income Taxes . This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The pronouncement also provides guidance on de-recognition,

F-12

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

classification, interest and penalties, accounting in interim periods, disclosure and transition. In May 2007, the FASB issued staff position FIN No. 48-1, Definition of Settlement in FASB Interpretation No. 48 ("FSP FIN 48-1") which amended FIN 48 to provide guidance about how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under FSP FIN No. 48-1, a tax position could be effectively settled through an examination by a taxing authority. Since adoption, the Company has applied FIN No. 48 in a manner consistent with the provisions of FSP FIN No. 48-1. The Company recognizes accrued income tax related interest and penalties and as a component of income tax expense.

The provision for income taxes is determined using the asset and liability approach for accounting for income taxes in accordance with SFAS 109. A current liability is recognized for the estimated taxes payable for the current year. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which the timing differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates or tax laws are recognized in the provision for income taxes in the period that includes the enactment date.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount more-likely-than-not to be realized. To the extent the Company establishes or changes the valuation allowance in a period, the tax effect will flow through the statement of operations. However, in the case of deferred tax assets of an acquired or merged entity with a valuation allowance recorded for purchase accounting, any change in that valuation allowance will be recorded as an adjustment to goodwill to the extent goodwill exists. Otherwise, such valuation allowance will be reflected in the statement of operations.

The determination of the Company's provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. In the ordinary course of our business, there are transactions and calculations for which the ultimate tax determination is uncertain. In spite of the Company's belief that it has appropriate support for all the positions taken on its tax returns, the Company acknowledges that certain positions may be successfully challenged by taxing authorities. Therefore, an accrual for tax contingencies is provided for, when necessary, in accordance with the requirements of SFAS No. 5, Accounting for Contingencies . These tax contingency accruals are reviewed quarterly and reversed upon being sustained under audit, the expiration of statutes of limitations, new information, or other determination by the taxing authorities. The provision for income taxes includes the impact of changes in the tax contingency accrual. Although the Company believes its recorded tax assets and liabilities are reasonable, tax laws and regulations are subject to interpretation and inherent uncertainty; therefore, tax assessments can involve both a series of complex judgments about future events and rely on estimates and assumptions. Although the Company believes these estimates and assumptions are reasonable, the final determination could be materially different than that which is reflected in our provision for income taxes and recorded tax assets and liabilities.

Prior to 2006, the Company had elected to be taxed as an S corporation under the provisions of the Internal Revenue Service and Wisconsin statutes. However, on February 7, 2006, the Company

F-13

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

underwent a disqualifying event in the execution of the Share Exchange Agreement with Blackfoot, and terminated its S corporation status.

Segment reporting

FASB Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS 131") establishes annual and interim reporting standards for operating segments of a company. It also requires entity-wide disclosures about the products and services an entity provides, the material locations in which it holds assets and reports revenues, and its major customers.

In order to apply SFAS 131, the enterprise must first identify the chief operating decision maker ("CODM"). The CODM is usually the highest level of management responsible for the enterprise's overall resource allocation. Broadwind's Executive Committee, consisting of the Chief Executing Officer, President, Chief Financial Officer, and Executive Vice Presidents of Business Development and Strategic Planning, has been identified as the CODM in assessing the performance and the allocation of resources within the Company. The next step in the application of SFAS 131 is to identify the operating segments reported to the CODM. The operating segments are identified based on the way financial information is organized and reported to the CODM.

The disaggregation of Broadwind's business into segments and its requirement for reporting under SFAS 131 occurred upon the acquisition of Brad Foote in October 2007. At that time, the makeup of the Company's management changed, and the CODM was identified. For 2007, Broadwind operated as two distinct segments, though there was no formally designed segment reporting package for the review of the CODM. Management is currently working with its CODM to develop a standard monthly reporting package to enable the CODM to review segment performance and allocate resources appropriately. The primary financial measures used by the CODM in assessing performance and allocating resources are revenue and gross margin.

As described further in Note 19, Broadwind operates and is managed as two reporting segments: Towers and Fabrication and Gearing Systems.

Advertising costs

Advertising costs are expensed as incurred. Advertising costs amounted to $274 and $1 for the years ended December 31, 2007 and 2006, respectively.

Stock-based compensation

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment ("SFAS 123(R)"), which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation . Prior to 2007, the Company had no stock-based compensation plans. In 2007, the Company initiated a new plan, and adopted the provisions of SFAS No. 123(R) effective at the beginning of the 2007 fiscal year. The Company uses the Black-Scholes option-pricing model to determine the fair value of options granted as of the grant date. More information on the Company's stock-based compensation plan may be found in Note 12.

F-14

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

Revenue recognition

The Company recognizes revenue when four recognition criteria are met: (i) persuasive evidence of an arrangement exists; (ii) transfer of title has occurred (generally evidenced by shipment or delivery) or services have been rendered; (iii) the selling price is fixed or determinable; and (iv) collectibility is reasonable assured. Customer deposits and other receipts are generally deferred and recognized when the related revenue is earned.

Certain customer arrangements require revenue to be recognized on an individual basis, depending on when the Company is deemed to have earned revenue based on the contract terms. Such terms may be based on the building of tower sections, completion of towers, or modifications to existing towers or sections; however, the same four general recognition criteria still apply.

Cost of sales

The Company's cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. This includes operation and maintenance of our equipment, direct and indirect labor and benefits, repairs and maintenance of our equipment, insurance, equipment rentals, freight in, and depreciation. Freight out to customers is classified as a selling expense and is excluded from cost of sales. For the years ended December 31, 2007 and 2006, freight out was $65 and $7, respectively.

Fair value of financial instruments

The respective carrying value of certain on-balance sheet financial instruments approximates their fair values. These financial instruments include cash, accounts receivable, accounts payable and accrued liabilities, indebtedness to related parties and notes payable. SFAS No. 107, Disclosures about Fair Value of Financial Instruments defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. Fair values were assumed to approximate cost or carrying values as most of the debt was incurred recently and the assets were acquired within one year. Management is of the opinion that the Company is not exposed to significant interest, credit, or currency risks arising from these financial instruments.

Effect of recently issued accounting standards

In July 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies the accounting treatment (recognition and measurement) for an income tax position taken in a tax return and recognized in a company's financial statements. The new standard also contains guidance on "derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition." The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. FIN 48 applies to all tax positions for income taxes accounted for in accordance with SFAS No. 109. FIN 48 requires that uncertain tax positions be reviewed and assessed, with recognition and measurement of the tax benefit based on a "more likely than not" standard.

F-15

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

In May 2007, the FASB issued FASB Staff Position FIN 48-1, Definition of a Settlement in FASB Interpretation No. 48 ("FSP FIN 48-1"). FSP FIN 48-1 provides guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. In determining whether a tax position has been effectively settled, entities must evaluate (i) whether taxing authorities have completed their examination procedures; (ii) whether the entity intends to appeal or litigate any aspect of a tax position included in a completed evaluation; and (iii) whether it is remote that a taxing authority would examine or re-examine any aspect of a taxing position. FSP FIN 48-1 is to be applied upon the initial adoption of FIN 48.

The Company adopted the provisions of FIN 48 and FSP FIN 48-1 on January 1, 2007. At that time, the Company concluded there were no uncertain tax positions warranting adjustments to reflect the cumulative effect of adopting these standards. See Note 13—"Income Taxes" for further discussion of the impact of the application and adoption of these standards.

In September 2006, the U.S. Securities and Exchange Commission ("SEC") staff issued Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108 addresses diversity in practice of quantifying financial statement misstatements. It establishes an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the company's financial statements and the related financial statement disclosures. The SAB is effective for financial statements issued for fiscal years ending after November 15, 2006. The adoption of SAB 108 did not have an impact on the Company's consolidated financial position or results of operations.

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS 157"). This standard clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. This standard is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of this statement, and believes the adoption of SFAS 157 will not have a material impact on the consolidated financial position or results of operations.

In February 2007, FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 ("SFAS 159"), which provides a fair value measurement option for eligible financial assets and liabilities. Under SFAS 159, an entity is permitted to elect to apply fair value accounting to a single eligible item, subject to certain exceptions, without electing it for other identical items and include unrealized gains and losses in earnings. The fair value option established by this Statement is irrevocable, unless a new election date occurs. This standard reduces the complexity in accounting for financial instruments and mitigates volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007, which, for the Company, is January 1, 2008. The Company will adopt the provisions of this Statement beginning in fiscal 2008. Management is currently evaluating the impact

F-16

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 1—Nature of business and summary of significant accounting policies (Continued)

the adoption of SFAS 159 will have on the Company's consolidated financial statements, but does not presently anticipate it will have a material effect on its consolidated financial position or results of operations.

In December 2007, FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations ("SFAS 141(R)"), which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141(R) also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008. Early adoption is not permitted.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ("SFAS 160"), which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for fiscal years beginning after December 15, 2008. Management has evaluated the adoption of SFAS 160, and does not presently anticipate it will have a material effect on its consolidated financial position or results of operations, as all subsidiaries are 100% owned.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities ("SFAS 161"). This statement is intended to enhance required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how: (a) an entity uses derivative instruments; (b) derivative instruments and related hedged items are accounted for under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities ; and (c) derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the effect of adoption of SFAS 161, but does not presently believe that it will have a material effect on its consolidated financial position or results of operations.

Note 2—Development stage operations

Through September 30, 2006, the Company was considered a development stage enterprise in accordance with SFAS No. 7, Accounting and Reporting by Development Stage Enterprises. During the fourth quarter of 2006, the Company gained manufacturing efficiency, secured a backlog of orders, and generated significant revenues. Accordingly, as of December 31, 2006, the Company no longer considered itself to be in the developmental stage.

F-17

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 3—Acquisitions

RBA, Inc.

On October 1, 2007, the Company acquired all of the outstanding stock of RBA, a Manitowoc, Wisconsin-based fabricator of components for energy-related industries. The aggregate consideration paid for the RBA acquisition was $5,197, which includes transaction-related acquisition costs of $197.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on the date of the acquisition:

Current assets		$	1,400
Property and equipment			1,845
Goodwill			845
Customer relationships			2,020
Trademark			120
Other assets			49

	Total assets acquired		6,279
Current liabilities			(1,082	)
Long-term liabilities			—

	Total liabilities assumed		(1,082	)

	Net assets acquired	$	5,197

Of the $845 of goodwill associated with the purchase of RBA, none is expected to be deductible for income tax purposes.

The Company is not including the pro-forma effect of this acquisition because the impact is not material to its results of operations for the year ended December 31, 2007.

Brad Foote Gear Works, Inc.

On October 19, 2007, the Company acquired all of the outstanding stock of Brad Foote, an Illinois-based manufacturer of gearing systems for the wind turbine, oil and gas and energy-related industries. The aggregate consideration paid for the Brad Foote acquisition was $133,179, which includes $538 of transaction-related acquisition costs.

Total consideration included $64,146 of the Company's common stock, which was valued based upon a fairness opinion received from an independent valuation firm, as the majority of the Company's stock was held by a limited number of stockholders, and the shares are thinly traded on the OTC Bulletin Board.

F-18

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 3—Acquisitions (Continued)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on the date of the acquisition (in thousands):

Current assets		$	22,077
Property and equipment			44,955
Trademark			7,999
Goodwill			25,586
Customer relationships			75,538
Other long-term assets			163

	Total assets acquired		176,318
Current liabilities			(26,292	)
Long-term liabilities			(16,847	)

	Total liabilities assumed		(43,139	)

Net assets acquired		$	133,179

Of the $25,586 of goodwill associated with the purchase of Brad Foote, approximately $25,000 is expected to be deductible for income tax purposes.

The following table represents the consolidated financial information for the Company on a pro forma basis, assuming the acquisition of Brad Foote had occurred as of January 1, 2006. The historical financial information has been adjusted to give effect to pro forma items that are directly attributable to the acquisition and expected to have a continuing impact on the consolidated results. These items include adjustments to increase depreciation related to the stepped-up basis in machinery and equipment, adjust inventory to fair market value, record amortization on intangible assets, and increase interest expense for certain long-term notes payable, and reclassify certain items to conform to the Company's financial reporting presentation.

The table sets forth unaudited financial information, and has been compiled from historical financial statements and other information, but is not necessarily indicative of the results that actually would have been achieved had the transaction occurred on the dates indicated or that may be achieved in the future.

		Year Ended December 31,
		2007									2006
		As reported			Pro-forma adjustments			Pro-forma			As reported			Pro-forma adjustments			Pro-forma
Revenues		$	29,804		$	59,210	(a)	$	89,014		$	4,023		$	60,185	(c)	$	64,208
Net income (loss)			(3,362	)		1,652	(b)		(1,710	)		(2,735	)		4,137	(d)		1,402
Earnings per share
	Basic and diluted	$	(0.07	)	$	0.03		$	(0.03	)	$	(0.08	)	$	0.12		$	0.04

(a): Represents revenue of Brad Foote for the period from January 1, 2007 through the acquisition date.

F-19

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 3—Acquisitions (Continued)

(b): Represents net income of Brad Foote for the period from January 1, 2007 through the acquisition date.
(c): Represents revenue of Brad Foote for the year ended December 31, 2006.
(d): Represents net income of Brad Foote for the year ended December 31, 2006.

Note 4—Consolidation of variable interest entities

FASB Interpretation No. 46 provides a framework for identifying variable interest entities ("VIEs") and determining when a company should include the assets, liabilities, noncontrolling interests and results of activities of a VIE in its consolidated financial statements.

In general, a VIE is a corporation, partnership, limited liability company, trust, or any other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations.

FIN 46(R) requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in the VIE ("a variable interest holder") is obligated to absorb a majority of the risk of loss from the VIE's activities, is entitled to receive a majority of the VIE's residual returns (if no party absorbs a majority of the VIE's losses), or both. A variable interest holder that consolidates the VIE is called the primary beneficiary of the VIE. Upon consolidation, the primary beneficiary generally must initially record all of the VIE's assets, liabilities and noncontrolling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. FIN 46 also requires disclosures about VIEs that the variable interest holder is not required to consolidate but in which it has a significant variable interest.

In 2007, from the date of acquisition of Brad Foote, the Company leased two properties from BFG Cicero, LLC and BFG Pittsburg, LLC. The sole member of each of BFG Cicero, LLC and BFG Pittsburgh, LLC is BFG Acquisition LLC, an Illinois limited liability company whose sole member is the wife of the Company's chief executive officer, (collectively, "the LLCs"). As defined by FIN 46, the LLCs are deemed VIEs, and the Company is considered the primary beneficiary. The Company has therefore consolidated the assets and liabilities of the LLCs as of December 31, 2007, which are comprised primarily of buildings and land, and related debt. The LLCs are jointly and severally liable on the debt, there are no financial covenants, and there is no recourse provision or guarantee of the debt by Brad Foote or the Company. At December 31, 2007, the debt bore interest at a rate of 6.25%, and there was $65 of interest accrued.

During 2007, the Company recognized pre-tax losses of $95 ($0.00 per diluted share) related to the consolidation of the LLCs. The impact on future operating income or loss from the consolidation of the LLCs will be minimal due to the purchase transaction executed in the first quarter of 2008, which is discussed in Note 22.

F-20

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 4—Consolidation of variable interest entities (Continued)

The following table summarizes the balance sheets for our consolidated VIEs as of December 31, 2007. There was no consolidation effect as of December 31, 2006.

		December 31, 2007
		BFG Cicero, LLC			BFG Pittsburgh, LLC			Total
Assets:
	Buildings and land	$	2,420		$	1,054		$	3,474
	Less: Accumulated depreciation		(23	)		(7	)		(30	)

	Net buildings and land		2,397			1,047			3,444

Total assets		$	2,397		$	1,047		$	3,444

Liabilities and members' equity:
Liabilities
	Accrued expenses	$	45		$	20		$	65
	Current portions of long-term debt		296			126			422
	Long-term debt		1,149			504			1,653

Total liabilities			1,490			650			2,140

Members' equity
	Contributions		975			424			1,399
	Accumulated deficit		(68	)		(27	)		(95	)

Total liabilities and members' equity		$	2,397		$	1,047		$	3,444

Note 5—Goodwill and intangible assets

As of December 31, 2006, the Company had no goodwill or intangible assets on its balance sheet. During 2007, as a result of the acquisitions of Brad Foote and RBA, as discussed in Note 3, the Company recorded both goodwill and other intangible assets, consisting of customer relationships and trademarks. Intangible assets subject to amortization are as follows as of December 31, 2007:

	Weighted Average Remaining Amortization Period (Years)	December 31, 2007
	Weighted Average Remaining Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization
Trademarks	19.79	$	8,119	$	82
Customer relationships	9.93		77,558		1,573

Total		$	85,677	$	1,655

F-21

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 5—Goodwill and intangible assets (Continued)

Amortization expense on trademarks and customer relationships, which is being recorded ratably over the estimated life of the related intangible assets, was $1,655 for 2007. Estimated aggregate amortization expense for future years is as follows:

For the year ended:
2008		$	8,184
2009			8,184
2010			8,184
2011			8,184
2012			8,184
Thereafter			43,102

	Total	$	84,022

Changes in the carrying amount of goodwill for the year ended December 31, 2007 were due entirely to acquisitions. In 2007, total aggregate goodwill recorded was $27,611. The Company will review goodwill and other intangible assets for impairment annually, or more frequently, if circumstances indicate that the assets' carrying amount may not be recovered. As of December 31, 2007, no such circumstances existed, and, accordingly, no impairment expense was recorded.

Note 6—Accrued liabilities

Accrued liabilities as of December 31, 2007 and 2006 consisted of the following:

	2007		2006
Accrued operating expenditures	$	4,217	$	122
Reimbursements due under Brad Foote purchase agreement		5,171		—
Accrued payroll, employee benefits, and related taxes		1,894		638
Accrued rent		492		558
Accrued interest		560		214
Other		123		—

Total accrued liabilities	$	12,457	$	1,532

F-22

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 7—Lines of Credit and Notes payable

Notes payable at December 31, 2007 and 2006 consisted of the following:

		2007			2006
Third party
	Prime plus 1% note, repaid in March 2007	$	—		$	100
	Prime plus 2.5% note, repaid in March 2007		—			428
	Prime rate note, repaid in March 2007		—			60
	Investors Community Bank line		—			—
	Investors Community Bank 6.85% note		440			—

Total third party notes payable			440			588
Related party
	5% notes, due on demand, unsecured, repaid in March 2007	$	—		$	666
	Shareholder notes at a fixed rate of 8%, due on demand, unsecured; repaid or converted to common shares in March 2007		—			3,711
	9.5% related party note, subject to conversion		25,000			—

Total related party notes payable			25,000			4,377

Total notes payable		$	25,440		$	4,965

Weighted average interest rate at December 31			9.45	%		7.86	%

In March 2007, the Company repaid substantially all of its outstanding notes payable and lines of credit with the proceeds from private placements of its Common Stock.

Investors Community Bank 6.85% note

In November 2007, the Company's RBA subsidiary executed a term note with Investors Community Bank, which bears interest at 6.85%. The note is secured by substantially all of the assets of RBA. The Company was in compliance with all related terms as of December 31, 2007.

Investors Community Bank line

As of October 4, 2007, the Company has $2,500 line of credit with Investors Community bank, upon which no amounts are outstanding as of December 31, 2007 ("the ICB Line"). The ICB Line is secured by substantially all of the assets of Tower Tech and RBA. The ICB Line includes certain financial covenants that require Tower Tech and RBA to collectively maintain the following: (i) minimum debt to tangible net worth of 1.0 to 1.0 based on year end financial statements; (ii) minimum debt service coverage ratio of 1.25 to 1.0 at year end; (iii) minimum tangible net worth of $10,000 or greater at year end. The ICB Line also requires approval prior to new loans or leases, and requires the Company to maintain its primary depository account at Investors Community Bank. As the Company had not drawn on the ICB Line as of December 31, 2007, it was in compliance with all covenants and terms of the ICB Line. Draws on the line of credit bear interest at a variable rate equal

F-23

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 7—Lines of Credit and Notes payable (Continued)

to the greater of 4.25% or 1.75 above the Previous Month Average 30 Day Libor Rate. The line of credit is due on October 4, 2008.

9.5% related party note, subordinated and unsecured

In connection with the Company's acquisition of Brad Foote, Tontine Partners, L.P. ("TP"), Tontine Capital Overseas Master Fund, L.P. ("TMF," and together with TCP, the "Original Tontine Investors"), and Tontine Overseas Fund, Ltd. ("TOF") provided the Company with senior subordinated convertible promissory notes in the aggregate principal amount of $25,000 (the "Notes"). The Notes, which accrue interest at 9.5% per annum until July 19, 2008 and 13.5% thereafter, mature on October 19, 2010 and are subject to acceleration upon customary events of default. For each of the Notes, the Company must repay 10% of the original principal amount on the first anniversary of issuance, 40% of the original principal amount on the second anniversary and the remaining outstanding balance on the third anniversary. Each Note holder has the right to convert the outstanding principal of its Note into newly issued shares of Common Stock of the Company at a conversion rate of $7.50 per share (the "Conversion Rights"). The Conversion Rights became effective January 19, 2008, but the Notes contain certain constraints on the timing of exercise. It is the Company's belief that the Conversion Rights will be exercised in 2008; hence, the entire balance on this obligation has been classified in current liabilities.

Note 8—Long-term debt

Long-term debt at December 31, 2007 and 2006 consisted of the following:

	2007			2006
Prime plus 0.5%, repaid in March 2007	$	—		$	510
6.796% note, repaid in November 2007		—			394
2007 Revolving Note, due June 2008		7,887			—
2006 Term Note, due January 2011		4,871			—
2006 Equipment Line Note, due 2012		9,533			—
2007 Equipment Line Note, due 2013		5,947			—
Long-term debt associated with VIEs (Note 4)		2,075			—

Total long-term debt		30,313			904
Less current maturities		(12,693	)		(97	)

Total long-term debt, less current maturities	$	17,620		$	807

F-24

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 8—Long-term debt (Continued)

Prime plus 0.5%, repaid in March 2007

This loan was originally due September 15, 2012. It was secured by substantially all assets of the Company and personal guarantees of the shareholders. In connection with the private placement described in Note 11, this loan was paid in full in March 2007.

6.796% note, repaid in November 2007

This loan was payable to Wisconsin Business Development Finance Corporation and was originally due September 1, 2015. It was secured by substantially all assets of the Company and personal guarantees of our principal shareholders. It was paid in full on November 9, 2007 with the proceeds from the Investors Community Bank line of credit described in Note 7.

Brad Foote Master Loan and Security Agreement

In connection with the Company's acquisition of Brad Foote, it assumed existing senior debt of Brad Foote, all of which was obtained through LaSalle Bank National Association ("LaSalle"), pursuant to a master Loan and Security Agreement, dated as of January 17, 1997, and amendments thereto (the "Loan Agreement"). All agreements in place as of December 31, 2007 are subject to the terms of the Loan Agreement, which includes certain covenants and collateral provisions.

The Loan Agreement includes several negative covenants, which limit Brad Foote's ability to, among other things, (i) issue distributions or dividends; (ii) obtain external financing from other financial institutions or related parties over a defined amount; or (iii) issue principal payments on other subordinated debt. The Loan Agreement also includes financial covenants, which require Brad Foote to maintain: (i) a quarterly ratio of senior debt to EBITDA of not greater than 3.0 to 1.0; and (ii) an annual cash flow coverage ratio of not less than 1.2 to 1.0. These ratios include non-GAAP measures specifically defined in the Loan Agreement; these measures are not disclosed in the Company's consolidated financial statements or notes thereto. Violations of these covenants may render the underlying obligations immediately due and payable. Brad Foote is also required to submit audited financial statements within 120 days following the close of each fiscal year.

All agreements executed under the terms of the Loan Agreement are secured by substantially all of the assets of Brad Foote, and are senior in priority to obligations to other parties.

As of December 31, 2007, Brad Foote was in violation of each of the senior debt to EBITDA and cash flow coverage covenants described above. On April 11, 2008, Brad Foote executed an amendment to the Loan Agreement with LaSalle ("the Amendment"), which waived the violation of the senior debt to EBITDA covenant for the fiscal quarters ended December 31, 2007 and March 31, 2008, and the violation of the cash flow coverage covenant for the fiscal year ended December 31, 2007. The cash flow coverage ratio was amended to not less than 1.5 to 1.0 at March 31, 2008, and to 2.0 to 1.0 at June 30, 2008 and quarterly thereafter. The Amendment also requires minimum EBITDA of not less than $7,500 at June 30, 2008, $15,000 at September 30, 2008, and $22,500 at December 31, 2008 and thereafter. The Amendment also requires Brad Foote to maintain, at all times on and after May 15,

F-25

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 8—Long-term debt (Continued)

2008, borrowing capacity of $3,000 in excess of borrowing availability under Revolving Note described below.

Outstanding obligations under the Loan Agreement as of December 31, 2007, are as follows:

2007 Revolving Note, due June 2008

On November 1, 2007, Brad Foote entered into an amendment of a previously existing revolving note agreement, which provided for maximum borrowings of $8,000 (the "2007 Revolver"). The 2007 Revolver bears interest on the outstanding principal balance, at the Company's option, of prime rate minus 1.0%. The rate at December 31, 2007 was 6.25%. The entire balance of this note is classified in current liabilities as of December 31, 2007.

2006 Term Note, due January 2011

On February 1, 2006, Brad Foote entered into a term note for an aggregate principal sum of $7,899, with monthly principal payments of $132 commencing on February 28, 2006, with final payment due on January 31, 2011 (the "2006 Term Note"). Interest on the 2006 Term Note is variable, calculated at the rate of the prime rate minus 1.0%. The Company has a one-time option to convert the 2006 Term Note to a fixed rate. As of December 31, 2007, the Company has not exercised this conversion option, and the rate was 6.25%.

2006 Equipment Line Note, due 2012

On November 10, 2006, Brad Foote entered into an amendment of a previously existing equipment line note agreement, for total maximum borrowings of $11,000 (the "2006 Equipment Line"). The 2006 Equipment Line included an option to convert the obligation to a term note on April 29, 2007. This conversion was effected, making the outstanding principal balance payable in monthly principal installments of $183 commencing on May 31, 2007, maturing on April 30, 2012. The 2006 Equipment Line bears interest at prime minus 1.0%. The rate at December 31, 2007 was 6.25%.

2007 Equipment Line Note, due 2013

On June 30, 2007 Brad Foote entered into an equipment line note agreement, for total maximum borrowings of $9,000 (the "2007 Equipment Line"). The 2007 Equipment Line includes an option to convert the obligation to a term note on June 30, 2008. As of December 31, 2007, the Company believes it is likely to exercise this conversion option, and is therefore accounting for the 2007 Equipment Line as a long-term debt obligation. Upon conversion, the 2007 Equipment Line calls for monthly payments commencing on July 31, 2008, and maturing on June 30, 2013. The 2007 Equipment Line will bear interest, at the Company's option, at prime minus 1.0% or a fixed rate of 2.0% above a rate to be determined based on yields of U.S. Treasury Notes for terms and maturities comparable to those of the 2007 Equipment Line. The rate at December 31, 2007 was 6.25%.

F-26

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 8—Long-term debt (Continued)

Long-term debt associated with VIEs (Note 4)

As disclosed in Note 4, the Company has consolidated $2,075 of debt related to variable interest entities for which the Company is the primary beneficiary as defined by FIN 46(R). The consolidated debt of the LLCs described in Note 4 is payable in monthly installments of $35, bears interest at a rate of prime minus 1.0%, and matures on November 30, 2012. The debt names the LLCs as joint and several obligors, and contains no recourse provisions to Brad Foote or the Company.

Maturities of long-term debt for each of the five years following December 31, 2007 are as follows:

Year ending December 31,	Principal amount of long-term debt
2008	$	12,693
2009		5,411
2010		5,411
2011		3,963
2012		2,330
Thereafter		505

Total	$	30,313

Note 9—Interest rate swaps

In 2007, the Company entered into two interest rate swap agreements to minimize the impact of interest rate fluctuations on its debt. Interest rate swap agreements involve exchanges of fixed or floating rate interest payments periodically over the life of the agreement without the exchange of the underlying principal amounts. No swap or other derivative instruments were in place in 2006. Under the provisions of SFAS No. 133, all derivatives are measured at fair value and recognized as either assets or liabilities in the Company's balance sheet. The accounting for changes in the fair value of a derivative is dependent upon the use of the derivative and its resulting designation. Unless specific hedge accounting criteria are met, changes in fair value must be recognized currently in earnings. The Company's interest rate swaps do not qualify for hedge accounting under SFAS No. 133. Therefore, the Company is required to recognize the swap at its fair market value and record the fluctuations in the fair value of the swap in current earnings. The unrealized loss related to these fluctuations was approximately $153 for the year ended December 31, 2007, and is recognized within interest expense. The fair market value of the interest rate swaps of $388 is recorded as a long-term liability at December 31, 2007.

Note 10—Capital leases

The Company leases equipment from various financing companies under capital leases with terms that extend to 2012. The economic substance of the lease is that the Company is financing the acquisition of the assets through the leases, and accordingly, it is recorded in the Company's assets and liabilities. Amortization of the capital leases has been included in depreciation expense. The following

F-27

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 10—Capital leases (Continued)

is an analysis of the leased assets included in property and equipment as of December 31, 2007 and 2006:

	2007			2006
Machinery and equipment	$	1,589		$	—
Less accumulated depreciation		(25	)		—

Net machinery and equipment	$	1,564		$	—

The following is a schedule of future minimum payments required under the leases:

Year ending December 31,	Minimum payments on capital lease obligations
2008	$	370
2009		294
2010		248
2011		187
2012		42
Thereafter		—

Total		1,141
Less: amount representing interest		(155	)
Less: current maturities		(300	)

Total capital lease obligations, net of interest due and current maturities	$	686

Note 11—Shareholders' equity (deficit)

On March 1, 2007, the Company completed a private placement of 10,266,667 shares of its unregistered common stock at a $1.50 per share totaling $15,400 to two accredited investors, Tontine Capital Partners, L.P. and Tontine Capital Overseas Master Fund, L.P. (together, the "Original Tontine Investors"). Approximately $1,209 of issuance costs were incurred in connection with this private placement. These costs are netted against the amounts of additional paid-in capital associated with the placement.

A portion of these proceeds, in the amount of $3,815, was used to extinguish all third party notes and a portion of related party notes payable. The remaining related party notes payable were extinguished with the issuance of 722,295 shares of unregistered common stock at $1.50 per share as repayment of $1,084 of debt owed to its directors and officers. Additionally, all long-term debt totaling $510 was paid off with the exception of the long-term note owed to Wisconsin Business Development Finance Corporation. The remaining proceeds of approximately $11,000 was used to purchase equipment, provide working capital and for general corporate purposes.

F-28

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 11—Shareholders' equity (deficit) (Continued)

In conjunction with the private placement, an additional 1,500,000 shares of unregistered common stock at $1.50 per share were issued to Integritas, Inc. for reimbursement of short term loans and advances totaling $447, for a finder's fee for their work in finding the two accredited investors for the private placement totaling $1,209, and for entering into a consulting service agreement that was to provide on-going marketing services through December 31, 2008 totaling $312. The Company terminated this consulting service agreement with Integritas, Inc. during June 2007 and expensed the remainder of the agreement cost.

On October 19, 2007, in connection with the acquisition of Brad Foote, the Company completed a private placement of 12,500,000 shares of its unregistered common stock at a $4.00 per share totaling $50,000 to accredited investors, the Original Tontine Investors and Tontine Partners, L.P., Tontine 25 Overseas Fund, Ltd., and Tontine Overseas Master Fund, L.P.

Note 12—Stock-based compensation

On August 20, 2007, the Board of Directors approved the Company's 2007 Equity Incentive Plan ("the 2007 Plan") which reserves 4,200,000 shares of common stock, which officers, other key employees, and directors may be granted options to purchase shares of the Company's common stock at not less than the fair market value of such shares on the date of the grant. Options generally become exercisable ratably on the anniversary of the date of the grant over a period of up to five years. There are no vesting provisions tied to performance conditions for any outstanding options. Vesting for all outstanding options is based solely on continued service as an employee of the Company and generally vest upon retirement. Options to purchase shares expire not later than ten years after the grant of the option. The 2007 plan is pending shareholder approval.

The Company recognizes compensation expense for the stock options over the requisite service period for vesting of the award, or to an employee's eligible retirement date, if earlier and applicable. Total stock-based compensation expense included in the Company's consolidated statements of operations for the year ended December 31, 2007 is $142. There was no stock option plan in 2006, and thus no option expense for the year ended December 31, 2006.

As of December 31, 2007, the Company had $3,983 of unrecognized compensation expense related to the outstanding stock options, which will be recognized over a weighted-average period of 4.8 years.

The fair value of each option grant was estimated as of the date of the grant using the Black-Scholes pricing model. The resulting compensation expense is amortized on a straight line basis over the vesting period of the grant. The expected term of options granted is determined utilizing a public company proxy with similar grants as the Company does not have sufficient option exercise history from its employees. Likewise, as the Company has only limited public trading history, the expected volatility rate used is also determined from a public company proxy in the same industry and business operations as the Company. The risk-free interest rate is based on US Treasury yield curve in effect at the time of the grant. Expected pre-vesting option forfeitures are estimated to be zero based on the

F-29

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 12—Stock-based compensation (Continued)

small population of the individuals who have options, and the nature of the positions held by those individuals.

		Year ended December 31, 2007
Dividend yield		—
Expected volatility		60.00%
Risk-free interest rate		4.08% - 4.24%
Expected term (in years)		5
Weighted-average fair value of options granted		$4.34

A summary of option activity as of December 31, 2007, and changes during the year then ended is presented below:

		Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)
Options Outstanding at January 1, 2007		—		N/A	N/A
	Options Granted	950,000	$	7.92	9.56
	Options Exercised	—	$	—	—
	Options Forfeited	—	$	—	—

Options Outstanding at December 31, 2007		950,000	$	7.92	9.56

Options Exercisable at December 31, 2007		—	$	—	—

The following table summarizes share-based compensation expense related to share-based awards subject to SFAS No. 123(R) recognized during the years indicated:

		Year ended December 31,
		2007			2006
Share-based compensation expense included in statement of operations:
	Selling, general, and administrative	$	142		$	—
	Income tax benefit		—			—

	Net effect of share-based compensation expense on net income (loss)	$	(142	)	$	—

Decrease in basic income (loss) per share		$	—		$	—

Decrease in diluted income (loss) per share		$	—		$	—

Aggregate intrinsic value of options outstanding as of December 31, 2007 was $6,065.

F-30

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 13—Income taxes

The Company accounts for income taxes pursuant to SFAS No. 109, Accounting for Income Taxes , which provides for an asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of the tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted.

The provision for income taxes consists of the following:

		2007			2006
Current:
	Federal	$	—		$	—
	State		—			—

			—			—
Deferred:
	Federal		(1,541	)		(380	)
	State		(229	)		(56	)

			(1,770	)		(436	)
Increase in deferred tax valuation allowance			731			436

Total income tax expense (benefit)		$	(1,039	)	$	—

The increase in the valuation allowance is $731 and $436 for the years ended December 31, 2007 and 2006. The deferred tax benefit of $1,039 is related to the change in valuation allowance due to changed expectations about the realization of deferred tax assets as a result of the acquisition of RBA, Inc.

F-31

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 13—Income taxes (Continued)

The tax effects of the temporary differences, net operating losses that give rise to significant portions of deferred tax assets and liabilities are as follows:

		2007			2006
Deferred tax assets:
	Net operating loss carry forwards	$	2,458		$	653
	Accruals and reserves		241			244

Total deferred tax assets			2,699			897
Valuation allowance			(1,167	)		(436	)

Deferred tax assets, net of valuation allowance			1,532			461
Deferred tax liabilities:
	Fixed assets		877			461
	Intangible assets		794			—

Total deferred tax liabilities			1,671			461

Net deferred tax liability		$	139		$	—

Valuation allowances of $1,167 and $436 have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2007 and 2006.

As of December 31, 2007, the Company had federal net operating carryforwards of approximately $6,100 expiring at various points beginning in 2011. The majority of the net operating loss carry forwards will expire in 2026 and 2027.

As of December 31, 2006, the Company had federal net operating loss carryforwards of approximately $1,600 that may be subject to restrictions imposed on the utilization of net operating losses in the event of an ownership change, as defined in Section 382 of the Internal Revenue Code. Generally, a change of more than 50% in the ownership of a company's stock, by value, over a three-year period constitutes an ownership change for federal income tax purposes. An ownership change may limit a company's ability to use its net operating loss carryforwards attributable to the period prior to such change. The Company believes that past issuances and transfers of its stock may have caused an ownership change in calendar 2007. However, the Company does not believe that an ownership change and any resulting limitation under Section 382 would affect the Company's ability to utilize the net operating loss carryforwards to offset future taxable income before they expire.

F-32

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 13—Income taxes (Continued)

The reconciliation of the tax provision (benefit) computed at the statutory rate to the effective tax rate is as follows:

	Percent of pre-tax income
	2007		2006
Income tax expense (benefit)	35.0	%	35.0	%
State taxes (net of federal tax benefit)	5.2	%	4.6	%
Permanent differences	(0.4	)%	(4.1	)%
Loss from pass through	0.0	%	(8.4	)%
Change in valuation allowance	(16.6	)%	(15.9	)%
Prior period adjustments	0.4	%	(11.1	)%

Effective tax rate	23.6	%	0.0	%

The Company adopted the provision of Financial Standards Accounting Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes—An interpretation of FASB Statement No. 109 ("FIN 48") on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no material adjustments in the liability for unrecognized income tax benefits.

The Company recognizes interest and penalties related to uncertain tax position in income tax expense. As of January 2007, the Company had no accrued interest related to uncertain tax positions.

The company files income tax returns in the U.S. federal and state jurisdictions. As of December 31, 2007, open tax years in the federal and some state jurisdictions date back to 1996 due to the taxing authorities' ability to adjust operating loss carry forwards. No changes in settled tax years have occurred through December 31, 2007. The Company does not anticipate there will be a material change in the total amount of unrecognized tax benefits within the next 12 months.

Change in tax status

Effective with the execution of the Share Exchange Agreement with Blackfoot discussed in Note 1, the Company terminated its subchapter S status and became a taxable C-corporation entity. Prior to the merger on February 6, 2006, no provision was made for income taxes in 2005 because the losses were included in the personal tax returns of the Company's shareholders.

F-33

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 14—Employee benefit plans

Effective as of the date of acquisition of Brad Foote, the Company sponsors a defined contribution savings plan that allows substantially all employees in the Gearing Systems segment to contribute a portion of their pre-tax and/or after-tax income up to statutory limits. The plan requires the Company to match 50% of the participants' contributions up to 4% of the participants' compensation.

Effective as of the date of the acquisition of RBA, the Company sponsors a defined contribution savings plan that allows RBA employees within the Towers and Fabrication segment to contribute a portion of their pre-tax and/or after-tax income up to statutory limits. The plan requires the Company to match 100% of the participants' contributions up to 3% of the participants' compensation.

Total costs incurred under these plans for the year ended December 31, 2007 were $74. There were no such plans in 2006, and there is currently no benefit plan for the Company's Tower Tech subsidiary.

Note 15—Operating leases—related party

During 2007, the Company amended the operating leases under which the Company leases its two Towers and Fabrication facilities from City Centre, LLC, a limited liability company owned by the Company's President and a director who was serving on the Board at the time the amendment was executed, but who subsequently resigned. The leases call for monthly rents of $42 and $8, and expire on December 31, 2014 and July 31, 2017, respectively. The leases also grant the Company five options to renew the lease for an additional five years beginning at the end of the lease period just ended.

In 2007, the Company entered into a 15-year lease with City Centre, LLC for a third building utilized for its Towers and Fabrication operating facilities. The lease commences in June 2008 with a monthly payment due of $19.

Following is a schedule by years of future minimum rental payments required under the lease as of December 31, 2007:

Year ending December 31,	Minimum payments on operating lease obligations
2008	$	738
2009		831
2010		831
2011		831
2012		831
Thereafter		3,795

Total minimum required lease payments	$	7,857

Related party rent expense for the years ended December 31, 2007 and 2006 was $410 and $400, respectively.

Accrued rent payable to City Centre, LLC totaled $118 and $558 at December 31, 2007 and 2006, respectively, and is included in accrued liabilities.

F-34

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 16—Operating leases—third party

The Company leases various property and equipment and buildings under lease agreements of varying terms extending to 2012. Rental expense attributed to third party operating leases was $201 and $0 for the years ended December 31, 2007 and 2006, respectively.

Following is a schedule by years of future minimum rental payments required under the leases as of December 31, 2007:

Year ending December 31,	Minimum payments on lease obligations
2008	$	1,305
2009		1,295
2010		1,318
2011		1,343
2012		1,370
Thereafter		5,716

Total minimum required lease payments	$	12,347

Note 17—Related party transactions

Interest expense of $547 and $287 was incurred on shareholder and related party notes during the years ended December 31, 2007 and 2006, respectively, and $488 and $197 was included in accrued liabilities at December 31, 2007 and 2006, respectively.

At December 31, 2007, $282 relating to amounts due from shareholders is included within other current assets on the consolidated balance sheet. This amount represents amounts paid by the Company on behalf of four shareholders in connection with the March 2007 sale of stock by each of the shareholders. The Company expects to collect this amount in 2008.

During the year ended December 31, 2006, the Company's shareholders provided managerial services to the Company without charge. The Company determined the fair value of these services to be $242. These amounts were recorded as selling, general, and administrative expense and contributed capital. No managerial services were provided without charge during the year ended December 31, 2007.

During the year ended December 31, 2007, the Company's Brad Foote subsidiary leased two properties from limited liability companies controlled by the wife of the Company's chief executive officer. On February 19, 2008, the Company purchased each of the properties. Refer to Note 4 for further discussion of the leases and Note 22 for discussion of the acquisition of these properties subsequent to December 31, 2007.

F-35

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 18—Commitments and contingencies

Customer disputes

As of December 31, 2006, the Company had disputes over service billings related to contracted tower work from one vendor totaling $142. The Company is in disagreement over these billings with the vendor and does not believe it owes the stated amounts. As of April 2008, the Company has not resolved these matters and it is more likely than not that the Company will pay some amount to settle these liabilities. The Company's best estimate of this potential contingent liability is 50% of the total, which is approximately $71 and has recorded this in accrued liabilities at December 31, 2007.

Purchase commitments

(A) In 2007, the Company's Brad Foote subsidiary entered into a contract with a foreign vendor to purchase equipment totaling 16,843 Euros, with expected shipment dates beginning in the first quarter of 2008 and ending in the second quarter of 2010. This commitment price is fixed in Euros and the Company has no foreign currency hedge on this commitment. At December 31, 2007, the Company had made payments of $2,870 on this contract, and accordingly recorded total net foreign currency losses in the statement of operations of $15 due to the decline in the value of the U.S. Dollar relative to the Euro. Until full payment of amounts due on this contract, if a forward hedge is not executed, the Company remains exposed to future foreign currency fluctuation.

The following table presents the projected amounts of future cash commitments in Euros, based on the estimated shipment dates of the individual equipment items remaining to be purchased:

Year ending December 31,	Euros
2008	€	10,373
2009		2,150
2010		1,450

Total commitment	€	13,973

(B) The Company uses derivative financial instruments to manage well-defined commodity price risks and does not use them for speculation or trading purposes. Specifically, the Company uses forward contracts to reduce the volatility of electricity prices. These contracts meet the settlement requirements under SFAS No. 133 and qualify for the normal purchases and normal sales exclusions as defined by SFAS No. 133. The Company's Brad Foote subsidiary has also committed to a long-term agreement to purchase 100% of its electricity requirements from a single provider through January 2009, a portion of which are purchased at fixed prices. The committed electricity quantities are substantially lower than Brad Foote's actual energy usage; hence, the Company's exposure is considered minimal.

(C) The Company's Tower Tech subsidiary has committed to purchase $573 of machinery and equipment to be delivered in the second quarter of 2008. As of December 31, 2007, the Company had paid a 20% deposit on this commitment, which is reported within machinery and equipment on the Company's consolidated balance sheet; however, as the asset had not yet been received or placed into service, no depreciation expense has been recorded.

F-36

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 18—Commitments and contingencies (Continued)

Environmental remediation liabilities

In connection with the Company's acquisition of Brad Foote in October 2007, it reviewed Phase I Environmental Site Assessments ("ESAs") performed at each of Brad Foote's operating facilities. The Phase I ESAs included one owned property acquired by the Company, and two leased properties, which have both been consolidated into the balance sheet and statement of operations of the Company as of and for the year ended December 31, 2007. The Phase I ESA's indicated the potential existence of several reportable environmental conditions at the sites; however the Company has not performed full environmental assessments at any of the sites. The Company is not aware of any ongoing legal or regulatory environmental matters relating to the sites, and has not identified any circumstances or events that would require the Company to take action on any of the conditions identified or other conditions not specifically noted in the Phase I ESAs.

The Company has no known short- or long-term obligations relating to any of its operating sites, and has no reason to believe its intended use of its owned or leased properties will result in probable future environmental remediation liabilities. Until such time as the Company obtains thorough environmental assessments, either through voluntarily or compulsory action, it cannot determine a reasonable estimate of any future liabilities, or a reasonable range thereof. Accordingly, the Company has not recognized any liability or expense relating to such liabilities in its consolidated balance sheet or statement of operations as of and for the year December 31, 2007.

As required by AICPA Statement of Position 96-1, Environmental Remediation Liabilities ("SOP 96-1"), the Company will record liabilities when environmental assessment indicates that site remediation efforts are probable and the costs can be reasonably estimated. The Company will measure such liabilities based on all information available, including currently enacted laws and regulations, professional assessments, existing technology, site-specific costs, and cost-sharing arrangements. Such estimates involve the judgment and assumptions of management, and any changes in assumptions or new information could lead to increases or decreases in the Company's ultimate liability, with any such changes recognized immediately in earnings.

Other

The Company is also subject to legal proceedings in the normal course of business. Management believes these proceedings will not have a material adverse effect on the consolidated financial statements.

Note 19—Segment information

For 2007, the Company's reportable operating segments are Towers and Fabrication and Gearing Systems. The Company's segments are comprised of distinct subsidiaries that operate as strategic business units. To the extent the Company's subsidiaries are closely related, they may be combined into the same segment. When determining whether segments are related for purposes of aggregation, the Company considers the following criteria:

•: Geographic proximity;

F-37

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 19—Segment information (Continued)

•: The extent to which the operations are similar, including products and services, customers, suppliers; and
•: Whether the subsidiaries are (or can be) managed by the same team.

The Company evaluates the performance of operating segments based on revenue and gross margin. The accounting policies for the segments are the same as those described in Note 1. The Company accounts for intersegment sales and transfers as if the sales were to external third parties (i.e. at current market prices).

Towers and Fabrication

For the Towers and Fabrication segment, the two subsidiaries aggregated therein, Tower Tech and RBA, have very similar and complementary operations, and are currently operated by the same management team. They also share the same property in Manitowoc, Wisconsin. Prior to acquisition, Tower Tech subcontracted certain labor and other services from RBA.

The Towers and Fabrication segment is engaged in the manufacturing of wind towers for large wind tower integration companies and the fabricating, welding, and machining of parts for the energy, mining, construction, and metals industries.

For 2007, the Towers and Fabrication segment comprised 43% of total consolidated revenues, with net income before taxes of $1,155. It comprised 15% of total consolidated assets.

Gearing Systems

The Company's Gearing Systems segment consists of its Brad Foote subsidiary. It is operated by a separate management team that was retained upon the Company's acquisition of Brad Foote in October 2007. While this segment may share certain customers and suppliers with the Towers and Fabrication segment, it has a separate production process and is tracked independently of the Towers and Fabrication Segment for management reporting purposes.

The Gearing Systems segment manufactures and supplies gearing systems for the wind turbine, oil and gas and energy-related industries.

For 2007, the Gearing Systems segment comprised 57% of total consolidated revenues, with net losses before taxes of $5,151. It comprised 87% of total consolidated assets.

Other

The Company applies the provisions of EITF 04-10 for segment reporting. Under the provisions of EITF 04-10, any operating segments that do not individually meet the aggregation criteria or quantitative thresholds described in SFAS 131 may be combined with other operating segments that do not individually meet the aggregation criteria or quantitative thresholds to form a separate reportable segment. The Company has combined all operating segments that do not individually meet the aggregation criteria established in SFAS 131 to form the "Other" segment for segment reporting. For 2007, the Other segment is comprised of activities of corporate and company administration activities.

F-38

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 19—Segment information (Continued)

Expenses in this segment are generally associated with managing the reportable operating segments, office rent, and salaries of employees not attributable to the Company's reportable segments. Other segment assets consist principally of cash and cash equivalents, accounts and notes receivable from subsidiaries, various office furniture and equipment, and deferred income tax assets.

Segment financial data are as follows:

		Towers and Fabrication			Gearing Systems			Other		Intersegment Eliminations		Total
As of and for the year ended December 31, 2007
	Revenues from external customers	$	12,829		$	16,975		—		—		$	29,804
	Cost of sales		8,098			17,767		—		—			25,865
	Gross profit (loss)		4,731			(792	)	—		—			3,939
	Depreciation and amortization		121			1,629		—		—			1,750
	Interest income		400			—		—		—			400
	Interest expense		(204	)		(547	)	(488	)	—			(1,239	)
	Income tax benefit		1,039			—		—		—			1,039
	Net income (loss)		2,594			(5,151	)	(805	)	—			(3,362	)
	Property and equipment, net		10,153			48,737		—		—			58,890
	Total assets		30,773			179,940		138		(5,033	)		205,818
	Capital expenditures		4,921			933		—		—			5,854

		Towers and Fabrication			Gearing Systems		Other		Intersegment Eliminations		Total
As of and for the year ended December 31, 2006
	Revenues from external customers	$	4,023		$	—	$	—	$	—	$	4,023
	Cost of sales		4,822			—		—		—		4,822
	Gross profit (loss)		(799	)		—		—		—		(799	)
	Depreciation and amortization		328			—		—		—		328
	Interest income		—			—		—		—		—
	Interest expense		411			—		—		—		411
	Net loss		(2,735	)		—		—		—		(2,735	)
	Property and equipment, net		2,799			—		—		—		2,799
	Total assets		3,895			—		—		—		3,895
	Capital expenditures		408			—		—		—		408

Note 20—Earnings per share

Broadwind Energy computes earnings per share in accordance with FASB Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"). SFAS 128 requires companies to compute earnings per share under two different methods, basic and diluted, and present per share data for all periods in which statements of operations are presented. Basic earnings per share are computed

F-39

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 20—Earnings per share (Continued)

by dividing net income by the weighted average number of shares of common stock outstanding. Diluted earnings per share are computed by dividing net income by the weighted average number of common stock and common stock equivalents outstanding.

The following table provides a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share for 2007 and 2006:

	2007			2006
Basic earnings per share calculation:
Net loss to common stockholders	$	(3,362	)	$	(2,735	)
Weighted average of common shares outstanding		51,535,137			33,771,768
Basic net loss per share	$	(0.07	)	$	(0.08	)
Diluted earnings per share calculation:
Net loss to common stockholders	$	(3,362	)	$	(2,735	)
Weighted average of common shares outstanding
Convertible promissory notes(1)		—			—
Stock Options(2)		—			—
Diluted weighted average of common shares outstanding		51,535,137			33,771,768
Diluted net loss per share	$	(0.07	)	$	(0.08	)

(1): The senior subordinated convertible promissory notes are anti-dilutive for the year-ended December 31, 2007, and therefore have been excluded from diluted earnings per share. Had the convertible debt been included in the diluted earnings per share calculation, weighted-average outstanding shares would have increased by approximately 685,000 shares for the year-ended December 31, 2007.
(2): The 950,000 shares of options granted and outstanding have not vested as of December 31, 2007, and therefore, have been excluded from diluted earnings per share.

F-40

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 21—Disclosures about fair values of financial instruments

The estimated fair values of the Company's financial instruments at December 31 are as follows:

	2007				2006
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
ASSETS:
Cash and cash equivalents	$	5,782	$	5,782	$	126	$	126
Inventories		12,983		12,983		288		288
Other current assets		1,946		1,946		14		14
LIABILITIES:
Long-term debt, including current maturities		55,754		56,731		5,869		5,789
Interest rate swaps		388		388		—		—

Trade receivables and payables have an estimated market value equal to their carrying value. The fair value of long-term debt is estimated based on approximate borrowing rates currently available to Broadwind Energy for debt equal to the existing debt maturities.

Note 22—Subsequent events

Acquisition of Energy Maintenance Service, LLC

On January 16, 2008, the Company completed its acquisition of all of the outstanding membership interests of Energy Maintenance Service, LLC ("EMS"), a Gary, South Dakota-based full service provider to the wind industry with offerings including construction, operations and maintenance, and component repairs of wind turbines. The acquisition was completed pursuant to a Membership Interest Purchase Agreement among the Company, EMS, and the members of EMS dated December 9, 2007.

The purchase price for the EMS acquisition consisted of cash and common stock. The cash paid at closing was approximately $18,429, which included a $2,250 final tax adjustment and $2,360 to enable Energy Maintenance Service to pay employee bonuses and for the cancellation of options to purchase membership interests of Energy Maintenance Service, as described in further detail below. The stock portion of the purchase price consisted of 1,629,834 shares of Company common stock, calculated at a per share price of $8.48.

In connection with the acquisition of EMS, the Company entered into an employment agreement with the EMS President and CEO, Joe Kolbach, who will continue chief executive responsibilities for Energy Maintenance Service as a subsidiary of the Company. EMS employees and certain other persons who held options to purchase membership interests of Energy Maintenance Service agreed to terminate those options upon closing. In exchange for that arrangement, the Company agreed to issue incentive stock options to acquire an aggregate of 158,000 shares of Company unregistered common stock. EMS intends to continue to employ the option holders following closing, and the options to purchase shares of Company common stock were issued pursuant to the Company's 2007 Equity Incentive Plan (Note 12).

F-41

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 22—Subsequent events (Continued)

The Company financed its acquisition of EMS through a private placement of 2,031,250 shares of the Company's unregistered common stock at a price of $8.48 per share for a total purchase price of $17,225 to Tontine Capital Partners, L.P., Tontine Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine Overseas Fund, Ltd., and Tontine 25 Overseas Master Fund, L.P. This private placement was negotiated at the time the EMS purchase agreement was signed. In addition, the Company assumed approximately $2,500 of senior debt from Energy Maintenance Service in connection with the acquisition.

With the acquisition of EMS in January 2008, we added a third segment, referred to as Service and Maintenance. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on the date of the acquisition of EMS (in thousands):

Current assets		$	6,409
Property and equipment, net			1,532
Trademark			1,790
Goodwill			3,602
Customer relationships			24,700

	Total assets acquired		38,033
Current liabilities			(4,581	)
Long-term liabilities			(800	)

	Total liabilities assumed		(5,381	)

Net assets acquired		$	32,652

Purchase of Property

On February 19, 2008, the Company's Brad Foote subsidiary completed the purchase of two real estate parcels located in Cicero, Illinois (the "Cicero Property") and Pittsburgh, Pennsylvania (the "Pittsburgh Property"), which Brad Foote previously leased pursuant to lease agreements dated August 22, 2007 (the "Lease Agreements"). Brad Foote acquired the Cicero Property from BFG Cicero LLC, an Illinois limited liability company ("BFG Cicero"), and acquired the Pittsburgh Property from BFG Pittsburgh LLC, a Pennsylvania limited liability company ("BFG Pittsburgh") pursuant to two Real Property Purchase Agreements that were executed on February 14, 2008 and effective February 11, 2008 (together, the "Purchase Agreements"). The sole member of each of BFG Cicero and BFG Pittsburgh is BFG Acquisition LLC, an Illinois limited liability company whose sole member is the wife of the Company's chief executive officer.

On December 13, 2007, Brad Foote provided notice to BFG Cicero and BFG Pittsburgh of its intent to exercise its options to purchase the Cicero Property and the Pittsburgh Property for a total cost of $3,634. The total cost included aggregate closing costs of $80 and a negotiated reimbursement of $154 to BFG Cicero and BFG Pittsburgh to cover purchase and sale costs and to ensure BFG Cicero and BFG Pittsburgh incurred no gain or loss in connection with the transaction.

F-42

BROADWIND ENERGY, INC. AND SUBSIDIARIES

(FORMERLY TOWER TECH HOLDINGS INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

Note 22—Subsequent events (Continued)

In order to complete the purchases, Brad Foote created two wholly-owned special purpose entities, 1309 South Cicero Avenue, LLC (the "Cicero Avenue, LLC") and 5100 Neville Road, LLC (the "Neville Road, LLC"), and assigned its interest in the Purchase Agreements to such entities. The Cicero Avenue, LLC and the Neville Road, LLC completed the acquisitions on February 19, 2008 and assumed the interests of BFG Cicero and BFG Pittsburgh as landlord pursuant to the Lease Agreements. Brad Foote will continue to lease the properties from the Cicero Avenue, LLC and the Neville Road, LLC pursuant to the Lease Agreements.

To finance a portion of the purchase price, the Cicero Avenue, LLC and the Neville Road, LLC obtained a term loan in the amount of $2,075 from LaSalle Bank National Association (the "Real Estate Term Loan"). The Real Estate Term Loan is secured by various agreements executed by Brad Foote, the Cicero Avenue, LLC, and the Neville Road, LLC. In addition, Brad Foote has guaranteed payment of the principal, interest and any premium under the Real Estate Term Loan and has amended its preexisting Loan Agreement with LaSalle Bank National Association to reflect the Real Estate Term Loan and its unconditional guarantee.

Financing Transactions

On March 21, 2008, the Company executed an amendment to the existing line of credit with Investors Community Bank, which increased the total available credit from $2,500 to $5,500. At December 31, 2007, the Company had no outstanding borrowings on the line of credit. The purpose for the increase is to fund future equipment purchases and for general working capital needs.

Letters of Intent

Through the normal course of business, the Company enters into nonbinding letters of intent for asset acquisitions, business combinations, or other transactions. Subsequent to December 31, 2007 through the date of this report, the Company has five letters of intent outstanding to third parties for which final agreements have not been executed. These letters do not represent a legal commitment or obligation of the Company, and may be withdrawn at the Company's discretion.

F-43

BROADWIND ENERGY, INC.
EXHIBIT INDEX FOR
FORM 10-KSB FOR 2007 FISCAL YEAR

EXHIBIT NUMBER		DESCRIPTION
2.1		Share Exchange Agreement by and among Blackfoot Enterprises, Inc. and the shareholders of Tower Tech Systems, Inc. and Tower Tech Systems, Inc. dated as of November 7, 2005—incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed November 21, 2005
2.2		Stock Purchase Agreement dated September 13, 2007 among the Company, RBA, Inc. and the stockholders of RBA, Inc.—incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed September 17, 2007
2.3		Stock Purchase Agreement dated August 22, 2007 among the Company, Brad Foote Gear Works, Inc. and the shareholders of Brad Foote Gear Works, Inc.—incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed August 24, 2007
2.4		Membership Interest Purchase Agreement dated December 9, 2007 among the Company, Energy Maintenance Service, LLC, Joseph A. Kolbach and the members of Energy Maintenance Service, LLC—incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed December 13, 2007
2.5		Amendment No. 1 to the Membership Interest Purchase Agreement dated December 9, 2007 among the Company, Energy Maintenance Service, LLC, Joseph A. Kolbach and the members of Energy Maintenance Service, LLC—incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed January 14, 2008
3.1		Articles of Incorporation—incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form 10-SB filed August 11, 2000
3.2		Certificate of Amendment to Articles of Incorporation—incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed February 10, 2006
3.3		Certificate of Amendment to Articles of Incorporation—filed herewith
3.4		Bylaws, as amended and restated through December 13, 2007—incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed December 19, 2008
10.1		Lease agreement dated January 1, 2005 between Tower Tech Systems, Inc. and City Centre, LLC—incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005
10.2		Amendment, dated December 1, 2007, to Lease agreement dated January 1, 2005 between Tower Tech Systems, Inc. and City Centre, LLC—filed herewith
10.3		Lease Agreement dated December 26, 2007 between Tower Tech and City Centre, LLC—filed herewith
10.4		Purchase Agreement effective February 11, 2008 between Brad Foote and BFG Cicero—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed February 21, 2008
10.5		Assignment and Assumption of Purchase Agreement effective February 11, 2008 between Brad Foote and the Cicero Avenue LLC—incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed February 21, 2008

10.6		Purchase Agreement effective February 11, 2008 between Brad Foote and BFG Pittsburgh—incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed February 21, 2008
10.7		Assignment and Assumption of Purchase Agreement effective February 11, 2008 between Brad Foote and the Neville Road LLC—incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed February 21, 2008
10.8		Investment Agreement, dated June 27, 2006, by and between the Company and Dutchess Private Equities Fund, L.P.—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed June 30, 2006
10.9		Securities Purchase Agreement dated March 1, 2007 between the Company and the Buyers named therein—incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed March 5, 2007
10.10		Securities Purchase Agreement dated August 22, 2007 among the Company, Tontine Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine Partners, L.P., Tontine Overseas Fund, Ltd. and Tontine 25 Overseas Master Fund, L.P.—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 24, 2007
10.11		Senior Subordinated Convertible Promissory Note dated October 19, 2007 to Tontine Capital Overseas Master Fund, L.P.—incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed October 24, 2007
10.12		Senior Subordinated Convertible Promissory Note dated October 19, 2007 to Tontine Partners, L.P.—incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed October 24, 2007
10.13		Senior Subordinated Convertible Promissory Note dated October 19, 2007 to Tontine Overseas Fund, Ltd.—incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed October 24, 2007
10.14		Amended and Restated Securities Purchase Agreement dated January 3, 2008 among the Company, Tontine Capital Partners, L.P., Tontine Partners, L.P. and Tontine 25 Overseas Master Fund, L.P.—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed January 4, 2008
10.15		April 1, 2006 amended line of credit agreements with related parties—incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2006
10.16		Promissory note dated April 7, 2006 to City Centre LLC—incorporated by reference to Exhibit 10.13 to the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2006
10.17		Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.18		Third Amendment, dated March 30, 1998, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.19		Fourth Amendment, dated December 1, 1998, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.20		Fifth Amendment, dated June 1, 1999, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith

10.21		Ninth Amendment, dated April 30, 2002, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.22		Thirteenth Amendment, dated April 29, 2004, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.23		Seventeenth Amendment, dated February 1, 2006, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.24		Nineteenth Amendment, dated November 10, 2006, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.25		Twenty-Second Amendment, dated June 30, 2007, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.26		Twenty-Third Amendment, dated October 4, 2007, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.27		Twenty-Fourth Amendment, dated October 18, 2007, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.28		Twenty-Sixth Amendment, dated January 15, 2008, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.29		Twenty-Seventh Amendment, dated January 31, 2008, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed February 21, 2008
10.30		Twenty-Eighth Amendment, dated April 11, 2008, to Loan and Security Agreement dated January 17, 1997 between Brad Foote and LaSalle Bank National Association—filed herewith
10.31		Amended and Restated Renewal Revolving Note dated January 15, 2008, from Brad Foote to LaSalle Bank National Association—filed herewith
10.32		Equipment Line Note dated June 30, 2007, from Brad Foote to LaSalle Bank National Association—filed herewith
10.33		Amended and Restated Equipment Line Note dated November 10, 2006, from Brad Foote to LaSalle Bank National Association—filed herewith
10.34		Consolidated Term Note dated February 1, 2006, from Brad Foote to LaSalle Bank National Association—filed herewith
10.35		Agreement Governing Extensions of Credit dated October 4, 2007 between Tower Tech and Investors Community Bank—filed herewith
10.36		Commercial Promissory Note dated October 4, 2007, from Tower Tech to Investors Community Bank—filed herewith
10.37		Commercial Loan Agreement dated October 4, 2007 between Tower Tech and Investors Community Bank—filed herewith

10.38		Commercial Security Agreement dated October 4, 2007 between Tower Tech and Investors Community Bank—filed herewith
10.39		Agreement Governing Extensions of Credit dated March 21, 2008 between Tower Tech and Investors Community Bank—filed herewith
10.40		Commercial Promissory Note dated March 21, 2008, from Tower Tech to Investors Community Bank—filed herewith
10.41		Commercial Loan Agreement dated March 21, 2008 between Tower Tech and Investors Community Bank—filed herewith
10.42		Guaranty dated March 21, 2008, by RBA to Investors Community Bank—filed herewith
10.43		Guaranty dated March 21, 2008, by the Company to Investors Community Bank—filed herewith
10.44		Registration Rights Agreement, dated June 27, 2006, by and between the Company and Dutchess Private Equities Fund, L.P.—incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed June 30, 2006
10.45		Registration Rights Agreement dated March 1, 2007—incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed March 5, 2007
10.46		Amendment to Registration Rights Agreement dated October 19, 2007, among the Company, Tontine Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine Partners, L.P., Tontine Overseas Fund, Ltd. and Tontine 25 Overseas Master Fund, L.P.—incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed October 24, 2007
10.47		Registration Rights Agreement dated October 19, 2007 among the Company, J. Cameron Drecoll, Pat Rosmonowski, Dennis Palmer and Noel Davis—incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed October 24, 2007
10.48		Registration Rights Agreement dated January 16, 2008 among the Company, EMS, Inc., Fagen, Inc., Joseph A. Kolbach and Daniel A. Yarano—incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed January 23, 2008
10.49*		Employment Agreement dated February 26, 2007 with Raymond L. Brickner III—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 5, 2007
10.50*		Summary of Amendment, effective January 1, 2008, to Employment Agreement dated February 26, 2007 with Raymond L. Brickner III—filed herewith
10.51*		Employment Agreement dated October 19, 2007 between the Company and J. Cameron Drecoll—incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K filed October 24, 2007
10.52*		Employment Agreement dated April 12, 2007 with Steven A. Huntington—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed April 27, 2007
10.53*		Summary of Amendment, effective October 24, 2007, to Employment Agreement dated April 12, 2007 with Steven A. Huntington—filed herewith
10.54*		Employment Agreement dated October 22, 2007 with Lars Moller—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 26, 2008

10.55*		Employment Agreement dated October 22, 2007 with Matthew J. Gadow—incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 26, 2008
10.56*		Board Compensation Plan—incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 26, 2007
10.57*		Deferred Compensation Plan—incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated October 26, 2007
10.58*		2007 Equity Incentive Plan—incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007
10.59*		Form of Incentive Stock Option Agreement—incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007
10.60*		Form of Nonqualified Option Agreement—incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007
10.61*		Form of Restricted Stock Award Agreement—incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007
10.62*		Form of Performance Award Agreement—incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007
10.63*		Form of Stock Appreciation Rights Agreement—incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007
14.1		Code of Ethics and Business Conduct, as amended and restated through December 13, 2007—incorporated by reference to Exhibit 14.1 to the Company's Current Report on Form 8-K filed December 19, 2007
21.1		Subsidiaries of Broadwind Energy, Inc.—filed herewith
31.1		Rule 13a-14(a) Certification of Chief Executive Officer—filed herewith
31.2		Rule 13a-14(a) Certification of Chief Financial Officer—filed herewith
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer—filed herewith
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer—filed herewith

*: Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-KSB.

QuickLinks

PART I

ITEM 1. DESCRIPTION OF BUSINESS

ITEM 2. DESCRIPTION OF PROPERTY

ITEM 3. LEGAL PROCEEDINGS

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

ITEM 7. FINANCIAL STATEMENTS

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 8A. CONTROLS AND PROCEDURES

ITEM 8B. OTHER INFORMATION

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

ITEM 10. EXECUTIVE COMPENSATION

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 13. EXHIBITS

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 7. FINANCIAL STATEMENTS

BROADWIND ENERGY, INC. AND SUBSIDIARIES (FORMERLY TOWER TECH HOLDINGS INC.) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BROADWIND ENERGY, INC. AND SUBSIDIARIES (FORMERLY TOWER TECH HOLDINGS INC.) CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
BROADWIND ENERGY, INC. AND SUBSIDIARIES (FORMERLY TOWER TECH HOLDINGS INC.) CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data)
BROADWIND ENERGY, INC. AND SUBSIDIARIES (FORMERLY TOWER TECH HOLDINGS INC.) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (in thousands, except share data)
BROADWIND ENERGY, INC. AND SUBSIDIARIES (FORMERLY TOWER TECH HOLDINGS INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
BROADWIND ENERGY, INC. AND SUBSIDIARIES (FORMERLY TOWER TECH HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data)

Exhibit 3.3

	ROSS MILLER
	Secretary of State
	204 North Carson Street, Ste 1
	Carson City, Nevada 89701-4299
	(775) 684 5708
	Website: secretaryofstate.biz

Certificate of Amendment
(PURSUANT TO NRS 78.385 AND 78.390)

USE BLACK INK ONLY - DO NOT HIGHLIGHT

ABOVE SPACE IS FOR OFFICE USE ONLY

Certificate of Amendment to Articles of Incorporation

For Nevada Profit Corporations

(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)

1. Name of corporation:

Tower Tech Holdings Inc.

2. The articles have been amended as follows (provide article numbers, if available):

ARTICLE 1 - NAME

The name of the Corporation is Broadwind Energy, Inc.

3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the* articles of incorporation have voted in favor of the amendment is: 52,178,365

*If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof.

4. Effective date of filing (optional):	2/28/08
	(must not be later than 90 days after the certificate is filed)

5. Officer Signature (Required) :

/s/ Steven A Huntington

IMPORTANT: Failure to include any of the above information and submit the proper fees may cause this filing to be rejected.

This form must be accompanied by appropriate fees.	Nevada Secretary of State AM 78.385 Amend 2007
	Revised on 01/01/07

Exhibit 10.2

FIRST AMENDMENT TO LEASE AGREEMENT

THIS FIRST AMENDMENT TO LEASE AGREEMENT (“First Amendment”) is made and entered into between City Centre, L.L.C. a Wisconsin Limited Liability Company (hereinafter “Landlord” , and Tower Tech Systems, A Wisconsin Corporation (hereinafter “Tenant”).

WITNESSETH:

WHEREAS , Tenant and Landlord entered into that certain Lease Agreement made as of January 1, 2005 whereby Tenant leases from Landlord the approximately 138,186 square foot of premises located in the City of Manitowoc, County of Manitowoc, State of Wisconsin, know municipally as 101 South 16th Street, Manitowoc, Wisconsin, and more particularly described in the Lease as the “Demised Premises”;

WHEREAS , the initial Term of the Lease currently expires on December 31, 2009, and there are five (5) separate consecutive additional Renewal Periods of five (5) years each; and

WHEREAS , Landlord and Tenant agree to extend the initial Lease Term for a period of five (5) years expiring December 31, 2014 (initial lease term); and to retain the existing five (5) separate options to extend the Term of the Lease for five (5) separate consecutive additional Renewal Periods of five (5) years each, and otherwise amend other provisions of the Lease as provided herein.

NOW, THEREFORE, In consideration of the mutual promises, covenants and agreements, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledge, the parties agree to amend the Lease as follows:

1. The recitals set forth above are incorporated herein as true and correct.

2. Landlord and Tenant hereby agree that the current Term of the Lease is hereby extended for a period of five (5) years, and shall hereafter expire on December 31, 2014. Landlord and Tenant hereby agree that the Rent is currently Thirty-Three thousand, three-hundred nineteen dollars and eighty-three cents ($33,319.83) per month, and shall be increased throughout the remainder of the Term as herein set forth:

a. Per listed item #3 ( RENTAL ) of the Lease the Tenant shall pay to the Landlord at 100 Maritime Drive, Suite 3C (Address Change), Manitowoc, Wisconsin, 54220, or at such other place as the Landlord shall from time to time designate in writing, rental increases as computed as follows:

Effective Date	Bldg/Area	Sq. Ft.	$ Per Sq. Ft.
See Orig. Lease	Various	138,186	N/A
12/01/07	#230 (Leeco)	25,159	$	3.00
12/01/07	2 ^nd Flr. Office (new)	4,617	$	7.00
12/01/07	Total	167,962

Note: Effective August 1, 2005 , the monthly rent through November 30, 2007 was $33,319.83 (excluding the Leeco Steel Bay #230) or annually $399,832.99. Effective on December 1, 2007 , the monthly rent is hereby increased to $42,302.83 or annually to $507,633.96. The annual revised rent is hereby considered the new “base year rent” which includes 100% of the 2007 Real Estate taxes and insurance. Deleted from the Lease is any and all calculations based on “additional” Tower production (see item #3).

3. Item #12 of the Lease is hereby deleted in its entirety.

4. All of the other terms and conditions of the Lease are hereby reaffirmed and remain in full force and effect. If there is a conflict between the terms and conditions of the First Amendment and the terms and conditions of the Lease, the terms and conditions of this First Amendment shall control.

IN WITNESS WHEREOF, the parties hereto have fully executed this First Amendment as of this day of December, 2007.

Landlord:			Tenant:

City Centre, L.L.C.
A Wisconsin Limited Liability Company			Tower Tech Systems, Inc.

By:	/s/ Christopher C. Allie		By:	/s/ Steven A. Huntington
	Christopher C. Allie

Title:		Member	Title:		CFO

Exhibit 10.3

LEASE AGREEMENT

THIS AGREEMENT is entered into this 26 ^th day of December , 2007 , by and between City Centre LLC of 100 Maritime Dr., Suite 3C Manitowoc, WI 54220 (herein after Lessor) and Tower Tech Systems, Inc. of 200 S. 16th Street, Manitowoc, WI 54220 (herein after Lessee).

Recitals

WHEREAS, Lessor and Lessee have agreed to enter into a lease for the Building known as the “Boat Worx” building (see attached Exhibit “A”) located at 500 South 16th Street, Manitowoc, Wisconsin, 54220 (herein after “Building”).

NOW THEREFORE, in consideration of the mutual conditions hereinafter set forth and for good and valuable consideration, the receipt of which is hereby acknowledged, Lessor and Lessee hereby agree as follows:

1. Lessee will assume the existing lease between Boat Worx Inc. and City Centre LLC, originally dated the 10 ^th day of August, 2004. It is understood that Boatworx, Inc. will pay Their existing monthly rent per the lease directly to City Centre LLC through May 31, 2008. From January 1, 2008 through May 31, 2008 Lessee agrees to be liable for all of the 2008 Real Estate taxes on said premise along with interest due on the $200,000 advance to Boat Worx Inc. in lieu of City Centre LLC repaying Boat Worx for the balance of their Lease Hold improvements.

2. Lessee agrees to enter into a new 15 year lease on said Premise at the Current Rental of $ 93,034.00 per year (payable monthly) plus additional rent of $129,432.00 for a total annual rent of $222,466.00 payable monthly at $ 18,538.83.

3. Lessee agrees to alter item number 1. (page #1) (Subject and purpose) which hereby states the use of said premise. Lessor grants Lessee the same use as required under the City Centre Lease with RBA, Inc. and Tower Tech Systems under their existing lease with City Centre, LLC.

4. Lessee agrees to assume all of the remaining items in the Existing lease of Boat Worx, Inc. except for the changes Agreed upon in items # 1 thru #3 above.

IN WITNESS WHEREOF, the parties hereto have caused this Lease Agreement to be signed on the date written above.

City Centre LLC		Tower Tech Systems, Inc.

By:	/s/ Christopher C. Allie	By:	/s/ Steven A. Huntington

Its:	Agent	Its:	CFO

Exhibit 10.17

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (herein “Agreement”) dated as of January 17, 1997 between BFG ACQUISITION CORP., an Illinois corporation (hereafter, the “Borrower”) 1309 S. Cicero Avenue, Cicero, Illinois 60650 and LASALLE BANK NI, an Illinois state banking corporation (hereafter, the “Lender”), 3201 N. Ashland Avenue, Chicago, Illinois 60657.

W I T N E S S E T H:

WHEREAS, the Borrower has asked the Lender to make to the Borrower a secured $2,700,000.00 term loan and a secured $2,200,000.00 revolving loan to finance the acquisition of certain assets (the “Acquisition”) which are currently owned by Brad Foote Gear Works, Inc., a Delaware corporation (the “Seller”) and to provide working capital for the Borrower; and

WHEREAS, the Lender has agreed to make such loans on the terms and subject to the conditions set forth in this Agreement;

NOW THEREFORE, in consideration of the foregoing premises, the terms and conditions contained herein, and of any loans or extension of credit heretofore, now or hereafter made to or for the benefit of Borrower by Lender, the Borrower and the Lender hereby agree as follows:

SECTION 1. DEFINITION.

1.1 Defined Terms . As used in this Agreement, the following terms shall have the following respective meanings:

“ Accounts ”, “ Inventory ”, “ Equipment ”, and “ General Intangibles ” shall have the meanings assigned to them in Section 7 hereof.

“ Acquisition ” - see Preamble .

“ Agreement ” shall mean this Loan and Security Agreement, as amended, modified, restated or supplemented from time to time.

“ Bank Commitment ” shall mean the commitment letter dated December 16, 1996 issued by the Lender with respect to the Loans.

“ Bankruptcy Code ” shall mean Title 11 of the United States Code (11 U.S.C. §101 et seq.), as amended from time to time, and any successor statute.

“ Borrower ” - see Preamble .

“ Borrowing Base ” shall mean, as of any applicable date of determination, an amount equal to (i) eighty-five percent (85%) of Borrower’s Eligible Accounts, less (ii) until the Reserve Elimination Date, the Reserve.

“ Borrowing Base Certificate ” shall mean a certificate in such form and content as the Lender may request, completed in all appropriate respects and executed by the President of Borrower or such other officer of Borrower authorized in writing by the Borrower, and setting forth Borrower’s computation of the Borrowing Base as of the date of such certificate.

“ Business Day ” shall mean a day on which the Lender is open to carry on its normal commercial lending business.

“ Capital Expenditures ” shall mean such expenditures (including, in any event, all capitalized rentals and leasehold improvements) as shall be determined in accordance with GAAP to constitute capital expenditures.

“ Cash Flow Coverage ” shall mean, as of any applicable date of determination, (i) EBITDA, divided by (ii) current maturities of bank long term debt, plus interest expense (including interest owed to Lender and former owners), plus lease payments for Leased Equipment.

“ Cash Interest Expense ” shall mean, as of any applicable date of determination, Borrower’s total interest expense, whether paid or accrued (including the interest component of capital leases), including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit, but excluding, however, interest expense not payable in cash (including amortization of discount), all as determined in conformity with GAAP.

“ Charges ” shall mean all national, federal, state, county, city, municipal, and/or other governmental (including, without limitation, the Pension Benefit Guaranty Corporation) taxes, levies, assessments, charges, liens, claims or encumbrances upon and/or relating to (i) the Collateral or any portion thereof, (ii) the Indebtedness or any portion thereof, (iii) Borrower’s employees, payroll, income and/or gross receipts, (iv) Borrower’s ownership and/or use of any of its assets, or (v) any other aspect of Borrower’s business.

“ Collateral ” shall mean all property and interests in property now owned or hereafter acquired by the Borrower in or upon which a security interest, lien or mortgage is granted or in which a collateral assignment is made under this Agreement or under the other Collateral Documents.

“ Collateral Assignment of Life Insurance ” shall mean the collateral assignment of the life insurance policy on the life of J. Cameron Drecoll described in Section 6 hereof.

“ Collateral Documents ” shall mean this Agreement, the Collateral Assignment of Life Insurance, the Stock Pledge Agreements, the Security Agreement-Leased Equipment, and any other agreement, instrument, mortgage, deed of trust or document pursuant to which a security

interest or lien is granted by the Borrower or any other obligor, to secure the payment and performance of the Indebtedness.

“ Commitment Amount ” shall mean, as of any applicable date of determination, Two Million Two Hundred Thousand and 00/100 ($2,200,000.00) Dollars.

“ Debt ” shall mean, as of any applicable date of determination, all items of indebtedness, obligation or liability of a Person, whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several, that should be classified as liabilities in accordance with GAAP.

“ Default ” shall mean a condition or event which, with the giving of notice or the passage of time, or both, would become an Event of Default.

“ Disbursement Date ” shall mean each date upon which the Lender makes a loan to the Borrower under Section 2 of this Agreement.

“ EBIT ” shall mean, as of any applicable date of determination, with respect to Borrower, the sum of the amounts for such periods, of (i) Net Income, plus (ii) Cash Interest Expense, plus (iii) federal and state income taxes, plus (iv) extraordinary losses (and any unusual losses arising in or outside of the ordinary course of business not included in extraordinary losses determined in accordance with GAAP, which have been included in the determination of Net Income), minus, (v) extraordinary gains (and any unusual gains arising in or outside of the ordinary course of business not included in extraordinary gains determined in accordance with GAAP which have been included in the determination of Net Income).

“ EBITDA ” shall mean, as of any applicable date of determination, with respect to Borrower, the sum of the amounts for such periods, of (i) Net Income, plus (ii) depreciation and amortization expense, plus (iii) Cash Interest Expense, plus (iv) federal and state income taxes, plus (v) extraordinary losses (and any unusual losses arising in or outside of the ordinary course of business not included in extraordinary losses determined in accordance with GAAP, which have been included in the determination of Net Income), minus, (vi) extraordinary gains (and any unusual gains arising in or outside of the ordinary course of business not included in extraordinary gains determined in accordance with GAAP which have been included in the determination of Net Income).

“ Eligible Accounts ” shall mean those Accounts included in a Borrowing Base Certificate which, as of the date of such Borrowing Base Certificate and at all times thereafter: (i) satisfy the requirements for eligibility as described in Section 2.6 of this Agreement, (ii) do not violate the negative covenants and other provisions of this Agreement and do satisfy the affirmative covenants and other provisions of this Agreement, and (iii) are deemed by Lender, in its reasonable credit judgment, to be Eligible Accounts.

“ Equipment Lease ” shall mean that certain Equipment Lease Agreement dated January 17, 1997 between Seller as lessor and Borrower as lessee, covering the Leased Equipment.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.

“ Event of Default ” shall mean any of those conditions or events listed in Section 15 of this Agreement.

“ Financing Statements ” shall mean UCC financing statements describing the Lender as secured party and Borrower as debtor covering the Collateral and otherwise in such form, for filing in such jurisdictions and with such filing offices, as the Lender shall deem necessary or advisable.

“ GAAP ” shall mean, as of any applicable date of determination, generally accepted accounting principles, consistently applied, set forth in the rules, regulations, statements, opinions and pronouncements of the American Institute of Certified Public Accountants and of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession).

“ Guarantors ” shall mean collectively, J. Cameron Drecoll, Patrick Rosmonowski and Dennis Palmer, and “Guarantor” shall refer to any one of them.

“ Guaranties ” shall mean the continuing guaranties to be executed by the Guarantors in accordance with Section 5 hereof, pursuant to which the Guarantors jointly and severally unconditionally guarantee repayment to the Lender of all the Indebtedness, and “ Guaranty ” shall refer to any one of the Guaranties.

“ Hazardous Material ” shall have the meaning set forth in Section 13.1(u) hereof.

“ Indebtedness ” shall mean and include all loans, advances, debts, liabilities, obligations, covenants and duties owing to the Lender by the Borrower, whether now existing, or hereafter created or arising, including, without limitation: (1) the Revolving Loan, together with all loans, advances and overadvances now or hereafter made thereunder, and all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof or increases thereto; and (2) the Term Loan, together with all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof; and (3) all interest, fees, charges, expenses, attorneys’ fees and other costs and sums now or hereafter payable by the Borrower under the terms of this Agreement, the Notes, or any of the other Loan Documents; and (4) any and all other loans, advances, overdrafts, indebtedness, liabilities and obligations now or hereafter owed by Borrower to Lender, of every kind and nature, howsoever created, arising or evidenced, and howsoever owned, held or acquired, whether now due or to become due, whether direct or indirect, or absolute or contingent, whether several, joint or joint and several, whether liquidated or unliquidated, whether legal or equitable, whether disputed or undisputed, whether secured or unsecured, or whether arising under this Agreement or any of the other Loan Documents or any other document or instrument, and, advances made by Lender to pay or discharge any other lien, security interest or encumbrance upon the Collateral; and (5) all advances made by Lender to protect the Collateral, and/or Lender’s security interest therein; and (6) all costs, expenses and fees (including reasonable attorneys’ fees) incurred by Lender pursuant to the terms of this Agreement or any of the other Loan Documents, or in connection

with (i) the drafting and preparation of this Agreement and the other Loan Documents, (ii) the administration, enforcement and defense of this Agreement and any other Loan Documents, or the relationships and security interests created hereunder or thereunder, (iii) the collection of the Indebtedness and any other obligation or indebtedness secured hereby, and (iv) the sale or other disposition of the Collateral, or any portion thereof.

“ Leased Equipment ” shall mean all of the equipment described in the Equipment Lease, as described in Exhibit A attached hereto.

“ Lender ” - see Preamble .

“ Loan Documents ” shall mean this Agreement, the Notes, the Negative Pledge Agreement, the Collateral Assignment of Life Insurance, and all other agreements, instruments and documents, including, without limitation, the Collateral Documents, and any other security agreements, notes, guaranties, mortgages, assignments, financing statements, and all other writings heretofore, now, or hereafter executed by the Borrower or any other obligor, and delivered to Lender in connection with or relating to this Agreement, together with all agreements, instruments and documents referred to therein or contemplated thereby.

“ Loans ” shall mean collectively, the Revolving Loan, the Term Loan and all extensions, renewals, amendments, refinancings, modifications, consolidations, conversions, and increases thereof or thereto.

“ Lock Box ” shall mean the United States post office lock box established pursuant to the terms of Section 2 of this Agreement.

“ Negative Pledge Agreement ” shall mean the negative pledge agreement to be executed by Borrower in accordance with Section 6 hereof.

“ Net Income ” shall mean the net income or loss of the Borrower for any period determined in accordance with GAAP, but excluding in any event:

(a) any gains or losses on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, and any taxes on excluded gains and any tax deductions or credits on account of any excluded losses; and

(b) net earnings of any Person in which the Borrower has an ownership interest, unless such net earnings have actually been received by the Borrower in the form of cash distributions.

“ Notes ” shall mean collectively, the Revolving Note, the Term Note and all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof or thereto.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation and any Person succeeding to the functions thereof.

“ Permitted Liens ” shall mean:

(a) Liens and encumbrances in favor of the Lender;

(b) Liens for taxes, assessments or other governmental charges incurred in the ordinary course of business and for which no interest, late charge or penalty is attaching or which is being contested in good faith by appropriate proceedings and, if requested by the Lender, bonded in an amount and manner satisfactory to the Lender;

(c) Liens, not delinquent, created by statute in connection with worker’s compensation, unemployment insurance, social security and similar statutory obligations; and

(d) Liens of mechanics, materialmen, carriers, warehousemen or other like statutory or common law liens securing obligations incurred in good faith in the ordinary course of business that are not yet due and payable.

(e) The subordinate security interest in the Collateral granted by Borrower to Seller, which has been subordinated to Lender’s security interest in the Collateral pursuant to the terms of the Seller/Bank Intercreditor Agreement.

“ Person ” shall mean and include any individual, corporation (including, without limitation, any affiliate or subsidiary of Borrower), partnership, joint venture, limited liability company, limited liability partnership, sole proprietorship, association, trust, unincorporated association, joint stock company, government, institution, municipality, political subdivision or agency, or other entity of whatever nature.

“ Pledged Stock ” shall have the meaning ascribed to it in Section 6 hereof.

“ Prime Rate ” shall mean the rate of interest publicly announced by LaSalle National Bank from time to time as its “prime rate”, without regard to whether such announced “prime rate” is the lowest rate of interest then offered by the Lender to its borrowers.

“ Real Property ” shall mean, for purposes of all provisions of this Agreement relating to Hazardous Materials, all real property now or hereafter occupied, owned or controlled by the Borrower.

“ Reserve ” shall have the meaning ascribed to it in Section 2.7 hereof.

“ Reserve Elimination Date ” shall have the meaning ascribed to it in Section 2.7 hereof.

“ Revolving Loan ” shall mean the $2,200,000.00 revolving line of credit loan extended by the Lender to the Borrower under Section 2 of this Agreement, and any and all extensions, renewals, amendments, modifications, refinancings, conversions, consolidations and increases thereof or thereto.

“ Revolving Note ” shall mean the promissory note evidencing the Revolving Loan executed by Borrower in accordance with Section 2 hereof, and any and all extensions, renewals, amendments, refinancings, or modifications, conversions or consolidations thereof or thereto.

“ Seller/Bank Intercreditor Agreement ” shall mean the intercreditor agreement of even date herewith between Seller and the Lender described in Section 6 hereof.

“ Seller Note ” shall mean the subordinated promissory note dated January 17, 1997 in the principal sum of $1,200,000.00 issued by Borrower to Seller in connection with the Acquisition.

“ Stock Pledge Agreements ” shall have the meaning ascribed to it in Section 6 hereof.

“ Security Agreement-Leased Equipment ” shall have the meaning ascribed to it in Section 6 hereof.

“ Subordinated Debt ” shall mean indebtedness of the Borrower to third parties (including, without limit, the indebtedness evidenced by the Seller Note and all payments due and to become due under the Equipment Lease) which has been subordinated to the Indebtedness pursuant to a subordination agreement in form and content satisfactory to the Lender.

“ Subsidiary ” shall mean any corporation (whether now existing or hereafter organized or acquired) in which more than fifty percent (50%) of the outstanding securities having ordinary voting power for the election of directors, as of any applicable date of determination, shall be owned directly, or indirectly through one or more Subsidiaries, by Borrower.

“ Tangible Net Worth ” shall mean, as of any applicable date of determination, an amount equal to (i) the net book value of all assets of Borrower (other than 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, less (ii) all loans due from officers, directors, shareholders, employees and/or affiliates of Borrower, less (iii) prepaid expenses, less (iv) all Debt, other than Subordinated Debt.

“ Term Loan ” shall mean the term loan described in Section 3 hereof and all extensions, renewals, amendments, refinancings, modifications, and consolidations thereof or thereto.

“ Term Note ” shall mean the promissory note evidencing the Term Loan executed by Borrower in accordance with Section 3 hereof, and any and all extensions, renewals, amendments, refinancings, modifications or consolidations thereof or thereto.

“ Termination Date ” shall mean April 1, 1999, or such earlier date upon which the Revolving Note becomes due and payable.

“ UCC ” shall mean the Illinois Uniform Commercial Code, 810 ILCS 5\1-101 et. seq., as amended.

1.2 Accounting Terms . All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP.

1.3 Other Terms . All other terms contained in this Agreement which are not otherwise defined in this Section 1 or in any other section of this Agreement, shall, unless the

context indicates otherwise, have the meanings provided for by the UCC to the extent the same are used or defined therein.

1.4 Singular and Plural . Where the context herein requires, the singular number shall be deemed to include the plural, the masculine gender shall include the feminine and neuter genders, and vice versa.

SECTION 2. REVOLVING LOAN.

2.1 Revolving Credit Commitment . Subject to and upon the terms and conditions of this Agreement, the Lender agrees to makes loans to Borrower on a revolving basis in such amount as the Borrower shall request pursuant to Section 2.2 of this Agreement at any time from the date of this Agreement until the Termination Date, up to an aggregate principal amount outstanding at any time not to exceed the lesser of the Commitment Amount or the Borrowing Base, provided that each Disbursement Date under this Agreement must be a Business Day and provided that the principal amount of each advance under the Revolving Loan must be in the minimum amount of One Thousand and no/100 ($1,000) Dollars.

2.2 Borrowing Procedures .

2.2.1 Notice . The Borrower shall give written notice to the Lender not later than 2:00 p.m. on or before the Business Day on which the Borrower requests the Lender to make an advance under the Revolving Loan.

2.2.2 Lender Obligations . The Lender, in its reasonable discretion and upon its reasonable determination, that the conditions set forth in this Agreement have been duly satisfied, will make the amount set forth in the Borrower’s notice available to or upon the order of the Borrower in immediately available funds at the Lender’s principal office, on the date of the proposed borrowing (which shall be a Business Day), provided, however, that the Lender shall not be obligated if:

(a) With respect to the initial disbursement under the Revolving Loan, any of the conditions precedent set forth in Section 6 hereof shall not have been satisfied, or

(b) With respect to all other advances under the Revolving Loan:

(i) Any Default or Event of Default has occurred and is continuing, or

(ii) Any of the warranties or representations set forth in this Agreement shall not be true or correct on and as of such Disbursement Date, or

(iii) Such proposed advance under the Revolving Loan would cause the aggregate unpaid principal amount of the Revolving Loan outstanding under this Agreement to exceed the lesser of the Commitment Amount or the Borrowing Base on the Disbursement Date, or

(iv) The Disbursement Date is on or after the Termination Date.

2.3 Revolving Note . The Revolving Loan shall be evidenced by a revolving note, executed by the Borrower, dated the date of this Agreement, payable to the Lender on April 1, 1999, and in the principal sum of Two Million Two Hundred Thousand and 00/100 ($2,200,000.00) Dollars (the “Revolving Note”). The date and amount of each advance under the Revolving Loan made by the Lender and of each repayment of principal thereon received by the Lender shall be recorded by the Lender in its records. The aggregate unpaid principal amount so recorded by the Lender shall be rebuttable presumptive evidence as to the principal amount outstanding thereunder, provided , however , that the failure by the Lender so to record any such amount or any error in so recording any such amount shall not limit or otherwise affect the obligations of the Borrower under this Agreement or the Revolving Note to repay the principal amount of the-entire Revolving Loan together with all interest accrued or accruing thereon.

Interest on the Revolving Note shall be payable monthly, commencing on February 1, 1997 and continuing on the same day of each month thereafter. Interest shall accrue on the unpaid principal balances of the Revolving Note calculated at a variable rate per annum equal to the Prime Rate plus one-half percent (.50%) per annum, such rate to change on the day or days the Prime Rate changes. Interest after maturity of the Revolving Note or an Event of Default shall be calculated on the unpaid principal balances of the Revolving Note at the variable rate per annum equal to the Prime Rate plus three and one-half percent (3.5%) per annum, such rate to change on the day or days the Prime Rate changes. Interest on the Revolving Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.

Lender will reduce the interest rate charged on the Revolving Note by one-half percent (.5%) to Prime floating if (i) at Borrower’s fiscal year ended December 31, 1997, Borrower’s EBIT is equal to or greater than $2,000,000, and (ii) no Event of Default shall then have occurred and be continuing hereunder and Borrower shall be in full compliance with all of its financial covenants made in Section 14.1 hereof.

In addition, a late charge equal to five percent (5%) of each late payment may be charged on any payment not received by the Lender within five (5) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default or Event of Default.

Immediately upon demand by Lender, the Borrower shall pay to Lender an amount of money equal to the amount theretofore advanced by the Lender to the Borrower upon any Account that is no longer an Eligible Account, and the Lender shall apply such payment to and on account of the Revolving Loan. The Borrower shall notify the Lender within a reasonable time after learning that an Account is no longer an Eligible Account, but in any event, not later than the date of the next request by the Borrower for an advance under the Revolving Loan.

Borrower covenants to Lender and agrees that if at any time the then unpaid principal balance of the Revolving Loan shall be in excess of the lesser of the (i) Commitment Amount and (ii) the Borrowing Base as then determined and computed, the Borrower shall immediately without notice or demand pay over the amount of the excess to the Lender as and for a mandatory prepayment on the Revolving Loan.

If Borrower shall voluntarily terminate the Revolving Loan for any reason prior to January 17, 1998, Borrower promises to pay to Lender on the date of such termination, in addition to the entire outstanding principal balance of the Revolving Note and all accrued interest thereon, a prepayment premium in the amount of Twenty-Two Thousand ($22,000.00) Dollars.

2.4 Lock Box . Borrower shall at its sole expense establish and maintain, so long as the Revolving Loan shall remain unpaid, a United States post office lock box (the “Lock Box”), to which the Lender shall have exclusive access, and to which the Borrower shall have no access. Borrower expressly authorizes Lender, from time to time to remove all contents from the Lock Box, for disposition in accordance with this Agreement. Borrower agrees to notify all Account Debtors and other parties obligated to it that all payments made on any Account, invoice, or other Collateral shall be remitted, for the credit of Borrower, to the Lock Box, and Borrower shall include a like statement on all invoices. Borrower shall execute all documents, authorizations and other agreements necessary to establish the Lock Box, and Lender’s exclusive access thereto.

Any and all cash, checks, drafts and other instruments for the payment of money received by Borrower at any time, in full or partial payment of any of the Collateral shall forthwith, upon receipt, be transmitted to and delivered to Lender (properly endorsed, where required, so that such items may be collected by Lender). Any such items received by Borrower shall not be commingled with any other of Borrower’s funds or property, but will be held separate and apart from Borrower’s own funds or property, and upon express trust for the benefit of Lender until delivery is made to Lender.

All items or amounts which are remitted to the Lock Box or otherwise delivered by or for the benefit of the Borrower to Lender on account of partial or full payment of, or any other amount payable with respect to, any of the Collateral shall, at Lender’s option: (i) be applied to the payment of the Indebtedness, in such order of application as Lender may determine in its sole discretion, or (ii) shall be deposited to the credit of a non-interest bearing cash collateral account in the name of Lender for the benefit of Borrower, to be established by Borrower with Lender pursuant to this section, as security for payment of the Indebtedness. Borrower shall have no right whatsoever to withdraw any funds so deposited. Borrower further grants to Lender a first priority security interest in and lien on all funds on deposit in such account. Borrower hereby irrevocably authorizes and directs Lender to endorse all items received for deposit to said cash collateral account, notwithstanding the inclusion on any such item of a restrictive notation, e.g., “paid in full”, “balance of account”, or other restriction.

2.5 Collection of Proceeds . Borrower agrees to collect and enforce payment of all Accounts until Lender shall direct Borrower to the contrary and, from and after this direction, Borrower agrees to fully and promptly cooperate and assist Lender (or any other person designated by Lender) in the collection and enforcement of all Accounts. Borrower shall not grant any extension of time for the payment of Accounts, shall not compromise, compound or settle the Accounts or any part thereof for less than the full amount thereof, shall not release, in whole or in part, any person liable for the payment of the Accounts or any part thereof, or allow any credit, discount or allowance whatsoever upon the Accounts or any part thereof, unless such

activity shall be deemed to be in the ordinary course of business and shall not occasion or threaten a material adverse change in the financial condition, results of operation or business of the Borrower, without first obtaining the written consent of the Lender.

Borrower irrevocably authorizes Lender or any employee or agent of Lender to endorse the name of Borrower upon any checks or other items which are received in payment of any Accounts or for any Inventory, and to do any and all things necessary in order to reduce these items to money.

The Lender shall have no duty as to the collection or protection of Collateral or the proceeds thereof, nor as to the preservation of any related rights, beyond the use of reasonable care in the custody and preservation of Collateral in the possession of Lender. Borrower agrees to take all steps necessary to preserve rights against prior parties with respect to Borrower’s property in the possession of Lender.

For the purpose of calculating interest on the Revolving Loan, Borrower understands that the Lender imposes a minimum two Business Days delay in crediting payments received by the Lender on Eligible Accounts or other Collateral against the Revolving Loan to allow time for collection and Borrower agrees that the Lender may, at Lender’s option, make such credits only when payments are actually collected by Lender in immediately available funds. Any credit of payment by Lender prior to receipt by Lender of immediately available funds is conditional upon Lender’s receipt of those funds.

All remittances will be received by Lender subject to collection, and the Lender assumes no responsibility in connection therewith beyond the exercise of ordinary care and will not be liable for default, negligence or willful misconduct of any correspondent or for losses in transit.

Borrower agrees that the Lender shall not be liable for any loss or damage which Borrower suffers or may suffer as a result of the Lender’s processing of items or its exercise of any other rights or remedies under this Agreement, including, without limitation, indirect, special or consequential damages, loss of revenues or profits, or any claim, demand or action by any third party arising out of or in connection with the processing of items or the exercise of any other rights or remedies hereunder. Borrower further agrees to indemnify and hold Lender harmless from and against all such third party claims, demands or actions, including, without limitation, litigation costs and reasonable attorneys’ fees.

2.6 Eligible Accounts . Upon Borrower’s delivery to Lender of a Borrowing Base Certificate, Lender shall determine, in its reasonable discretion, which Accounts listed thereon are “Eligible Accounts”. In making this determination, Lender will consider the following requirements:

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

(b) 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 Borrower within ninety (90) days after the date of the respective invoices or other writings evidencing such Accounts;

(c) it arises from the sale 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;

(d) 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 acceptable to Lender;

(e) it is not evidenced by any note, trade acceptance, draft or other negotiable instrument or by any chattel paper, unless such note or other document or instrument previously has been endorsed and delivered by Borrower to Lender and is acceptable to Lender;

(f) 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 claim on the part of such Account Debtor denying liability thereunder in whole or in part;

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

(h) it is not owing by a parent, subsidiary, affiliate, officer, employee or partner of Borrower, nor by an Account Debtor which (i) does not maintain its chief executive office in the United States of America or Canada, (ii) is not organized under the laws of the United States of America, or any state thereof, or under the laws of any province in Canada, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality or other instrumentality thereof;

(i) 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 and collection rights in such Account.

(j) it is not owing by an Account Debtor for which Borrower 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;

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

(1) If the Account Debtor is located in either the State of New Jersey, the State of Minnesota, or the State of Indiana, Borrower has filed a Notice of Business Activities Report or comparable report with the applicable state authority for the then current year;

(m) it is not owing by any Account Debtor whose obligations Lender, acting in its sole discretion, shall have notified Borrower are not deemed to constitute Eligible Accounts.

For purposes of determining eligibility, should twenty percent (20%) or more of the Eligible Accounts be due and owing from any one Account Debtor at any time, then the excess of said twenty percent (20%) of such Accounts shall not be eligible, regardless of whether such Accounts otherwise satisfy the criteria for eligibility set forth above.

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.

2.7 Reserve/Reserve Elimination Date . The borrowing availability under the Revolving Loan shall be reduced by a $50,000.00 reserve (the “Reserve”). The Reserve shall be eliminated on the date the first annual $50,000.00 payment is made by Borrower to Regal-Beloit Corporation pursuant to that certain Settlement Agreement dated December 2, 1996 by and among Borrower, Regal-Beloit Corporation, Seller and the Guarantors (the “Reserve Elimination Date”).

Proceeds of the Revolving Loan and the Term Loan will be used solely for the purpose of providing financing for the Acquisition and working capital for the Borrower in the Borrower’s ordinary course of business.

2.8 Unused Facility Fee . The Borrower will pay to Lender an unused facility fee of one-quarter percent (1/4%) on the unused portion of the Revolving Loan, which fee shall be paid monthly in arrears.

SECTION 3. TERM LOAN.

3.1 Term Loan . The Lender agrees to make the Borrower a secured term loan in the principal amount of Two Million Seven Hundred Thousand and no/100 ($2,700,000.00) Dollars (herein, the “Term Loan”). The Term Loan shall be evidenced by a term note of even date herewith, executed by Borrower, in the principal sum of Two Million Seven Hundred Thousand and no/100 ($2,700,000.00) Dollars (the “Term Note”), payable to the order of the Lender in twenty-three (23) successive monthly installments of principal in the sum of $32,143.00 each, plus interest, commencing March 1, 1997, and payable on the first (1st) day of each month thereafter, followed by a final balloon payment of the entire unpaid principal balance and accrued interest due on February 1, 1999. Interest shall be payable monthly on the unpaid principal balance of the Term Note (concurrently with each principal payment), calculated at a per annum rate equal to the Prime Rate plus one-half percent (1/2%) per annum, and after default or maturity, at a rate per annum equal to the Prime Rate plus three and one-half percent (3-1/2%) per annum. In addition, a late charge equal to five percent (5%) of each late payment may be charged on any payment not received by the Lender within five (5) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default or Event

of Default. Interest on the Term Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.

Lender will reduce the interest rate charged on the Term Note by one-half percent (.5%) to Prime floating if (i) at Borrower’s fiscal year ended December 31, 1997, Borrower’s EBIT is equal to or greater than $2,000,000, and (ii) no Event of Default shall then have occurred and be continuing hereunder and Borrower shall be in full compliance with all of its financial covenants made in Section 14.1 hereof.

If Borrower shall prepay the Term Loan for any reason prior to January 17, 1998, Borrower promises to pay to Lender on the date of such prepayment, in addition to the entire outstanding principal balance of the Term Note and all accrued interest thereon, a prepayment premium in the amount of Twenty-Seven Thousand ($27,000.00) Dollars.

SECTION 4. COLLATERAL; LOANS CROSS-DEFAULTED AND CROSS-COLLATERALIZED.

All Loans and other Indebtedness shall be secured by Borrower’s grant to the Lender of a first priority security interest in and to the Collateral (except that Lender shall maintain a second priority security interest in the Pledged Stock as herein provided).

Borrower acknowledges and agrees that all Loans shall be cross-defaulted, meaning that a default under any of the Loans shall constitute a default under all Loans, and (b) all Loans shall be cross-collateralized, meaning that the Collateral, and all other collateral in which the Lender is granted a security interest in connection with the Loans, shall secure all of the Loans, and all other Indebtedness.

SECTION 5. GUARANTORS.

The payment and performance of all indebtedness, liabilities and obligations of the Borrower to the Lender, whether now existing or hereafter created or arising, including, without limitation, the Loans (and all renewals, extensions, modifications, amendments, refinancings and consolidations thereof or thereto), shall be jointly and severally unconditionally guaranteed by Guarantors, pursuant to continuing guaranties, in form and substance satisfactory to the Lender.

The Guaranty of J. Cameron Drecoll shall be unlimited. The Guaranties of Patrick Rosmonowski and Dennis Palmer shall each be limited to the aggregate sum of $50,000.00 each.

SECTION 6. CONDITIONS PRECEDENT TO INITIAL LOAN DISBURSEMENT.

The obligation of the Lender to make the Loans to Borrower is subject to the fulfillment of each and every one of the following conditions precedent:

(a) The Lender shall have received on or before the day of the initial disbursement of the Loans, each of the following, in form, substance and execution satisfactory to the Lender and

its counsel: this Agreement, the Notes, Guaranties, UCC Financing Statements, Negative Pledge Agreement, Stock Pledge Agreement, Collateral Assignment of Life Insurance, lockbox agreement, Borrower’s opinion of counsel, consent of shareholders, authority to procure loans, authorization certificate, insurance certificates, projected opening day balance sheet prepared on a compiled basis (prepared by a firm of independent certified public accountants acceptable to Lender), cash flow projections, solvency affidavit, and such other documents, instruments, certificates, affidavits, debt subordination, landlord’s waiver certificate(s), supporting documents, approvals, evidence of insurance coverages, payoff letters, and searches of public records required by the Lender in connection with the Loans.

(b) The Lender shall have received from Seller on or before the day of the initial disbursement of the Loans (i) the original executed Equipment Lease in pledge, a security agreement and assignment of lease (the “Security Agreement-Leased Equipment”) and UCC financing statements, each in such form and content satisfactory to the Lender, and sufficient to grant to the Lender a first priority security interest in the Equipment Lease and Leased Equipment, (ii) a certified copy of the Seller Note, in such form and content satisfactory to the Lender, which Seller Note shall contain a legend on the face page thereof disclosing that the indebtedness evidenced thereby has been subordinated to all indebtedness owed by the Borrower to the Lender pursuant to the intercreditor agreement hereafter described, (iii) an intercreditor agreement executed by Seller, in form and content satisfactory to the Lender, whereby Seller shall have subordinated its security interest in the Collateral to the Lender’s security interest therein, and its right to payment of the Seller Note and the Equipment Lease, to the Lender’s right to receive payment of the Indebtedness (the “Seller/Bank Intercreditor Agreement”); and (iv) copies of the final security agreement and UCC financing statement to be executed by Borrower in favor of Seller (which UCC financing statement shall contain a legend on the face page thereof, in form acceptable to the Lender, disclosing that the Seller’s security interest in the collateral described therein is subordinate to the Lender’s security interest in such collateral pursuant to the Seller/Bank Intercreditor Agreement.

(c) The Lender shall have received on or before the day of the initial disbursement of the Loans copies of all other documents to be delivered by Borrower and Seller or others in connection with the Acquisition, including, without limit, a complete copy of the asset purchase agreement, bill of sale, consulting and employment agreements, leases or subleases of leased premises, and all other documents and instruments executed in connection with the Agreement, and the Lender shall have approved the terms and conditions thereof, in its sole discretion.

(d) Borrower shall have furnished to the Lender, in form, content and amount satisfactory to the Lender, a negative pledge agreement (the “Negative Pledge Agreement”), agreeing not to mortgage, encumber or sell the commercial real property commonly known as 1310 S. 47th Avenue, Cicero, Illinois, being acquired from Seller.

(e) Lender shall have received such valuations, appraisals and certifications as it may require to satisfy itself as to the value of the Collateral and the Leased Equipment and the financial condition of the Borrower and the Guarantors, each satisfactory to the Lender, in its sole discretion.

(f) Borrower shall have complied with all conditions set forth in the Lender Commitment, and no Event of Default shall have occurred thereunder.

(g) The Borrower shall be in full compliance with all of the terms and conditions of this Agreement and the other Loan Documents, and the Borrower and other obligors shall be in full compliance with all of the terms and conditions of the Collateral Documents.

(h) The Lender shall be satisfied with the corporate and legal structure and capitalization of Borrower, including the terms and conditions of its articles of incorporation and bylaws.

(i) There shall have been no material adverse change in the business of Borrower or the financial condition of Borrower or any Guarantor from the most recent financial statements submitted by each of them to the Lender.

(j) The Lender shall be satisfied with the corporate and legal structure and capitalization of Seller, including the terms and conditions of its articles of incorporation and bylaws.

(k) The representations and warranties of Borrower contained in this Agreement and in all other Loan Documents shall be true and correct on the day of the initial loan disbursement.

(1) The representations and warranties of Seller contained in the security agreement executed by it shall be true and correct on the day of the initial loan disbursement, and no event of default shall have occurred under such agreement.

(m) There shall exist no Event of Default as defined in Section 15 hereof and no condition, event or act which with notice or lapse of time, or both, would constitute an Event of Default.

(n) All actions, proceedings, instruments and documents required to carry out the transactions contemplated by this Agreement or other Loan Documents and all other related legal matters shall have been satisfactory to and approved by legal counsel for the Lender, and said counsel shall have been furnished with such certified copies of actions and proceedings and such other instruments and documents as they shall have reasonably requested.

(o) The Lender shall have been provided with evidence of all requisite governmental and third party approvals required for Borrower, Borrower’s conduct of business and the Real Property.

(p) The Lender shall have been furnished with an original life insurance policy on the life of J. Cameron Drecoll in the sum of $1,000,000.00, together with an executed collateral assignment of such policy by Borrower to the Lender, on the Lender’s form or a form acceptable to Lender (“Collateral Assignment of Life Insurance”), acknowledged by the life insurer, and evidence of the payment of at least one year’s premium. Borrower covenants to provide the Lender annually with evidence of payment of the then current premium for such insurance.

(q) The Guarantors shall have executed and delivered to the Lender security agreements (the “Stock Pledge Agreements”), granting the Lender a second priority security interest in all shares of stock of the Borrower (the “Pledged Stock”), subordinate only to the first priority security interest therein being granted to the Seller. In addition, Guarantors shall execute and deliver to the Lender UCC financing statements and such other documents required by the Lender to perfect its second priority security interest in the Pledged Stock.

(r) The Lender shall receive evidence that Borrower has received a minimum cash infusion of $500,000.00, injected by shareholders of Borrower in accordance with the terms of the Bank Commitment.

(s) Borrower must have a minimum of $500,000.00 of borrowing availability under the Revolving Loan on the date hereof, in accordance with the terms of the Bank Commitment.

(t) On or prior to the initial loan disbursement, Borrower shall have paid all accrued fees and expenses of the Lender.

SECTION 7. SECURITY INTEREST.

7.1 Grant of Security Interest . To secure the prompt and complete payment, observance and performance of the Indebtedness, Borrower hereby gives, grants and pledges to the Lender a continuing security interest in and to all of the Borrower’s right, title and interest in and to the following property and interests in property, whether now owned or existing or hereafter acquired or arising and wheresoever located:

ACCOUNTS: All present and future accounts, accounts receivable, and other rights of the Borrower to payment for goods sold or leased or for services rendered (except those evidenced by instruments or chattel paper), whether now existing or hereafter arising and wherever arising, and whether or not they have been earned by performance (collectively, “Accounts”);

INVENTORY: All inventory and goods now owned or hereafter acquired by the Borrower (wherever located, whether in the possession of the Borrower or of a bailee or other person for sale, storage, transit, processing, use or otherwise and whether consisting of whole goods, spare parts, components, supplies, materials, or consigned, returned, repossessed or reconsigned goods) which are held for sale or lease or to be furnished (or have been furnished) under any contract of service or which are raw materials, work in process or materials used or consumed in the Borrower’s business (collectively, “Inventory”);

EQUIPMENT: All machinery, all manufacturing, distribution, selling, data processing and office equipment, all furniture, furnishings, appliances, fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of every type and description (other than Inventory), in each instance whether now owned or hereafter acquired by the Borrower and wherever located (collectively, “Equipment”);

GENERAL INTANGIBLES: All rights, interests, choses in action, causes of action, claims and other intangible property of the Borrower of every kind and nature (other than Accounts), in each instance whether now owned or hereafter acquired by the Borrower and

however and whenever arising, including, without limitation, all corporate and other business records; all loans and other obligations receivable and all rights, remedies and security with respect thereto, all inventions, designs, all trade processes and trade secrets, computer programs, software, printouts and other computer materials, goodwill, corporate name, trade names, registration, copyrights, royalties, licenses, franchises, customer lists, credit files, correspondence, and advertising materials; all customer and supplier contracts, firm sale orders, rights under license and franchise agreements, and all other contracts and contract rights; all interests in partnerships and joint ventures; all tax refunds and tax refund claims; all right, title and interest under leases, subleases, licenses and concessions and other agreements relating to real or personal property; all payments due or made to Borrower in connection with any reacquisition, confiscation, condemnation, seizure or forfeiture of any property by any person or governmental authority; all deposit accounts (general or special) with any bank or other financial institution, including, without limitation, any deposits or other sums at any time credited by or due to the Borrower from Lender; all credits with and other claims against carriers and shippers; all rights to indemnification; all patents, trademarks, patent applications and trademark applications, and all other intellectual property not described herein, all reversionary interests in pension and profit sharing plans and reversionary, beneficial and residual interest in trusts; all proceeds of insurance of which the Borrower is the beneficiary; and all letters of credits, guaranties, liens, security interests and other security held by or granted to the Borrower; all return insurance premiums, and all other intangible property, whether or not similar to the foregoing (all of the foregoing collectively, “General Intangibles”);

CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all leases, all instruments, all notes and debt instruments and all payments thereunder and instruments and other property from time to time delivered in respect thereof or in exchange therefor and all of the Borrower’s right, title and interest and all of the Borrower’s rights, remedies, collateral security, liens in, and in respect of any of the foregoing, and all bills of lading, warehouse receipts and other documents of title and all other documents, in each instance whether now owned or hereafter acquired by the Borrower;

OTHER PROPERTY: All property and interest in property now owned or hereafter acquired by the Borrower which now may be owned or hereafter may come into the possession, custody or control of the Lender in any way or for any purpose (whether for safekeeping, deposit, custody, pledge, transmission, collection or otherwise); and all rights and interests of the Borrower, now existing or hereafter arising and however and wherever arising, in respect of any and all (i) notes, drafts, letters of credit, stocks, bonds, and debt and equity securities, whether or not certificated. and warrants, options, puts and calls and other rights to acquire or otherwise relating to the same, and all other investment property now owned or hereafter acquired by Borrower; (ii) money; (iii) proceeds of loans, including, without limitation, the Loans; and (iv) insurance proceeds and books and records relating to any of the property covered by this Agreement; together, in each instance, with all accessions and additions thereto, substitutions therefor, and all renewals, replacements, proceeds and products thereof.

7.2 Authorization . The Borrower hereby authorizes the Lender to set-off and retain, without any necessity on the Lender’s part to resort to other security or sources of reimbursement

for the Indebtedness, at any time following the occurrence and during the continuance of any Event of Default, and without further notice to Borrower (such notice being expressly waived), any of the deposits referred to in Section 7.1 or elsewhere in this Agreement (whether general, or special, time or demand, provisional or final) or other sums or property held by Lender, for application against any Indebtedness, irrespective of whether any demand has been made or whether such Indebtedness is mature. The Lender will promptly notify Borrower of the Lender’s receipt of such funds or other property for application against the Indebtedness, but failure to do so will not affect the validity or enforceability thereof.

7.3 Attachment and Continuity of Security Interest . The pledge of, lien upon, and security interest granted and hereby created in the Collateral shall extend and attach to the entire Collateral which is presently in existence and which is owned by Borrower or in which Borrower has an interest, and all Collateral which Borrower may purchase or in which Borrower may acquire an interest at any time and from time to time in the future, whether such Collateral is in transit or in Lender’s constructive, actual or exclusive occupancy or possession or not, or held by Borrower or others for Borrower’s or Lender’s account and wherever the same may be located, including, but without limiting the generality of the foregoing, all Collateral which may be located on Borrower’s premises or upon the premises of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents, consignees, finishers, converters or other third parties who may have possession of the Collateral.

Upon the sale, exchange, or other disposition of the Collateral, the security interest and lien created and provided for herein shall, without break in continuity and without further formality or act, continue in and attach to the instruments for the payment of money, Accounts, documents of title, shipping documents, chattel paper and all other cash and noncash proceeds of such sale, exchange or disposition, including Collateral returned or rejected by customers or repossessed by Borrower or Lender. As to any such sale, exchange or disposition, Lender shall have all the rights of an unpaid seller, including stoppage in transit, replevin and reclamation.

7.4 Perfection and Maintenance of Security Interest . The Borrower agrees that until all of the Indebtedness has been indefeasibly paid in full and this Agreement has been terminated, the Lender’s security interests in and liens on and against the Collateral, and all proceeds and products thereof, shall continue in full force and effect. Borrower shall perform any and all steps reasonably requested by the Lender to perfect, maintain and protect the Lender’s security interests in and liens on and against the Collateral granted or purported to be granted hereby and by the other Loan Documents or Collateral Documents, or to enable the Lender to exercise its rights and remedies hereunder and under the other Loan Documents or Collateral Documents with respect to any Collateral, including, without limitation, (i) executing and filing financing and continuation statements, or amendments thereof, in form and substance reasonably satisfactory to the Lender, (ii) executing and recording the Collateral Documents in form and substance reasonably satisfactory to the Lender, (iii) delivering to the Lender all certificates, notes and other instruments (including, without limitation, all letters of credit on which Borrower is named as a beneficiary) representing or evidencing Collateral duly endorsed and accompanied by duly executed instruments of transfer or assignment, including, but not limited to, note powers, all in form and substance satisfactory to the Lender, (iv) maintaining complete and accurate stock records, (v) delivering to the Lender warehouse receipts covering that portion of the Collateral, if any, located in warehouses and for which warehouse receipts are

issued, (vi) after the occurrence and during the continuance of an Event of Default, transferring Inventory to warehouses designated by the Lender or taking such other steps as are deemed necessary by the Lender to maintain the Lender’s control of the Inventory, (vii) placing notations on Borrower’s books of account to disclose the Lender’s security interest therein and marking conspicuously each document, contract, chattel paper and all records pertaining to the Collateral with a legend, in form and substance satisfactory to the Lender, indicating that such document, contract, chattel paper, or Collateral is subject to the security interest granted herein and (viii) executing and delivering all further instruments and documents, and taking all further action, as the Lender may reasonably request.

7.5 Financing Statements . To the extent permitted by applicable law, the Borrower hereby authorizes the Lender to file one or more financing or continuation statements and amendments thereto, disclosing the security interest granted to the Lender under this Agreement without Borrower’s signature appearing thereon and Lender agrees to notify Borrower when such a filing has been made. Borrower agrees that a carbon, photographic, photostatic, or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement.

SECTION 8. COLLATERAL: ACCOUNTS.

8.1 Verification of Accounts . Any of Lender’s officers, employees or agents shall have the right, at any time or times hereafter, in Lender’s name, or in the name of a firm of independent certified public accountants acceptable to Lender, to verify the validity, amount or any other matter relating to any Accounts by mail, telephone, telegraph or otherwise.

8.2 Assignments, Records and Borrowing Base Certificate . Borrower shall keep accurate and complete records of its Accounts. Borrower shall deliver to Lender a daily Borrowing Base Certificate, together with formal written assignments of all of its Accounts and copies of the invoices related thereto if requested by Lender. Borrower shall also deliver to Lender upon demand, the original copy of all documents, including, without limitation, repayment histories, present status reports and shipment reports, relating to the Accounts included in any Borrowing Base Certificate and such other matters and information relating to the status of then existing Accounts as Lender shall reasonably request.

8.3 Notice Regarding Disputed Accounts . Borrower shall give Lender prompt written notice of any Accounts in excess of Ten Thousand and no/100 ($10,000.00) Dollars which are in dispute between any Account Debtor and Lender.

SECTION 9. COLLATERAL: INVENTORY.

9.1 Sale of Inventory . Until an Event of Default occurs, Borrower may sell Inventory in the ordinary course of its business (which does not include a transfer in partial or total satisfaction of indebtedness).

9.2 Safekeeping of Inventory; Inventory Covenants . Lender shall not be responsible for (i) the safekeeping of the Inventory; (ii) any loss or damage thereto or destruction thereof occurring or arising in any manner or fashion from any cause; (iii) any diminution in the value of

the Inventory; or (iv) any act or default of any carrier, warehouseman, bailee or forwarding agency or any other Person in any way dealing with or handling the Inventory. All risk of loss, damage, distribution or diminution in value of the Inventory shall be borne by the Borrower except in the case of gross negligence or willful misconduct by Lender.

9.3 Records and Schedules of Inventory . Borrower shall keep correct and accurate daily records on a first-in, first-out basis, itemizing and describing the kind, type, quality and quantity of Inventory, and shall, at the request of Lender, furnish to Lender, copies of the working papers related thereto. A physical count of the Inventory shall be conducted no less often than annually and a report based on such count of Inventory shall promptly thereafter be provided to Lender together with such supporting information (including, without limitation, invoices relating to Borrower’s purchase of goods listed in said report) as Lender shall, in its sole and absolute discretion, request.

9.4 Returned and Repossessed Inventory . If at any time prior to the occurrence of an Event of Default, any Account Debtor returns any Inventory to Borrower in excess of Ten Thousand and 00/100 ($10,000.00) Dollars, Borrower shall promptly determine the reason for such return and, if Borrower accepts such return, issue a credit memorandum (with a copy to be sent to Lender if Lender has so requested) in the appropriate amount to such Account Debtor. After the occurrence of an Event of Default, Borrower shall hold all returned Inventory in trust for Lender, shall segregate all returned Inventory from all other property of Borrower or in Borrower’s possession and shall conspicuously label said returned Inventory as the property of Lender. Borrower shall, at all times subsequent to the occurrence of an Event of Default, immediately notify Lender of the return of any Inventory, specifying the reason for such return and the location and condition of the returned Inventory.

SECTION 10. FINANCIAL REPORTING AND AUDITS.

As soon as available, but not later than ninety (90) days after the end of each fiscal year of Borrower, Borrower shall furnish the Lender with annual audited financial statements of Borrower, containing the balance sheet of the Borrower as of the close of each such fiscal year, statements of income and retained earnings and a statement of cash flows for each such fiscal year; and such other comments and financial details as are usually included in similar reports. Such financial statements shall (a) be in form and reporting basis satisfactory to the Lender, (b) be prepared in accordance with GAAP by an independent certified public accounting firm selected by Borrower and acceptable to the Lender (“Borrower’s Accounting Firm”), and (c) contain unqualified opinions as to the fairness of the statements therein contained. Borrower shall also provide to the Lender any management letters that may accompany the statements. Concurrently with such annual statements, Borrower shall furnish to the Lender a copy of Borrower’s corporate federal income tax return and annual updated financial statements of each Guarantor.

As soon as available, but not later than fifteen (15) days after the end of each month, Borrower shall furnish the Lender with (i) internally prepared monthly financial statements of Borrower, in form and content satisfactory to Lender, and (ii) a monthly covenant compliance certificate, in form and content satisfactory to Lender (including a certificate by the chief

executive or financial officer of Borrower containing a computation of, and showing compliance with, each of the financial covenants contained in Section 14.1 hereof). The validity and accuracy of said financial statements shall be certified by the chief executive or financial officer of the Borrower, in a form satisfactory to the Lender.

Borrower shall deliver to the Lender monthly accounts receivable agings and monthly accounts payable agings within fifteen (15) days after month-end, in form acceptable to Lender.

Borrower shall deliver to the Lender a daily borrowing base certificate, in form acceptable to Lender.

Borrower shall deliver to the Lender annually copies of the federal income tax returns of each Guarantor within thirty (30) days after the filing of such returns.

Borrower shall deliver to the Lender a quarterly backlog report within fifteen (15) days after the end of each fiscal quarter.

Upon request by Lender and from time to time (but no more often than annually) Borrower’s Accounting Firm shall issue Borrower and Lender an accountant’s reliance letter, in form and substance acceptable to Lender in its sole discretion.

Borrower shall also promptly provide the Lender with such other information, financial or otherwise, concerning the Borrower or the Guarantors, as the Lender may reasonably request from time to time.

The Lender shall make any and all audits and investigations which it deems reasonably necessary in connection with the Collateral. For the purposes of this Agreement, the Lender shall have free and ready access at all times during normal business hours, upon reasonable advance oral or written notice (unless in the Lender’s reasonable judgment a rapid deterioration or loss to any Collateral is threatened, in which case no notice shall be given and access shall not be limited to normal business hours), to the books of account, records, papers and documents of Borrower. Without limiting the generality of the foregoing, the Lender shall conduct quarterly field audits of the Borrower (or more frequent audits if deemed reasonably necessary by the Lender under the circumstances then existing), and Borrower shall reimburse the Lender for all reasonable costs and expenses incurred by Lender’s internal auditors for such audits, plus $500 per auditor per diem during the duration of the Loans.

SECTION 11. OPINION OF COUNSEL.

Prior to the initial disbursement of the Loans, Borrower shall provide a favorable opinion of counsel for the Borrower, addressed to the Lender in the form required by the Lender.

SECTION 12. INSURANCE.

Borrower shall, at its sole cost and expense, keep and maintain the Collateral insured for its full insurable value against loss or damage by fire, theft, explosion, sprinklers and all other hazards and risks as are customarily insured against by Persons engaged in businesses similar to that of

Borrower with such companies, in such amounts, with such deductibles, and under policies in such form, as shall be reasonably satisfactory to Lender. Each such policy shall contain an endorsement, in form and substance satisfactory to Lender, showing loss under such insurance policies payable to Lender pursuant to a Lender’s Loss Payee endorsement and not containing a co-insurance clause. Such endorsement, or an independent instrument furnished to Lender, shall provide that the insurer shall give Lender at least thirty (30) days written notice before any such policy of insurance is altered or cancelled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Lender to recover under such policy of insurance in case of loss or damage. Borrower hereby directs all insurers under such policies of insurance to pay all proceeds payable thereunder directly to Lender.

In addition, Borrower will maintain, at its sole expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form, as shall be reasonably satisfactory to Lender. Each such policy shall contain an endorsement showing Lender as additional insured thereunder and providing that the insurer shall give Lender at least thirty (30) days written notice before any such policy shall be altered or cancelled.

Upon Lender’s request, Borrower shall deliver to Lender certified copies of all such policies of insurance, together with evidence of payment of all premiums therefor.

If Borrower shall at any time or times hereafter fail to obtain and/or maintain any of the policies of insurance required herein, or fail to pay any premium in whole or in part relating to such policies, after ten (10) days written notice to Borrower, the Lender may, but shall not be obligated to, obtain and/or cause to be maintained insurance coverage(s) required herein, and pay all or any part of the premium therefor, without waiving any default by Borrower; and any sums so disbursed shall be additional loans to Borrower by Lender payable on demand. In the event of loss or damage to any Collateral exceeding $20,000.00 in value, Borrower will give immediate notice to the Lender and the Lender may make proof of loss if not made by Borrower within twenty (20) days after such occurrence. In addition, the Lender shall have the right to settle and compromise any and all claims exceeding $20,000.00 under any of the policies required to be maintained by Borrower hereunder and Borrower hereby appoints the Lender as its attorney-in-fact with power to demand, receive, and receipt for all monies payable thereunder, to execute in the name of Borrower or the Lender or both any proof of loss, notice, draft or other instruments in connection with such policies or any loss thereunder and generally to do and perform any and all acts as Borrower, but for this appointment might or could perform. If on the date of a loss, no Event of Default shall have occurred and be continuing, Borrower will be allowed to employ the insurance proceeds to restore any portion of the Collateral which has been damaged or destroyed.

SECTION 13. REPRESENTATIONS AND WARRANTIES.

13.1 General Representations and Warranties . Borrower hereby represents and warrants to the Lender that:

(a) The correct corporate name of Borrower is set forth in the first paragraph of this Agreement. The Borrower currently conducts business under its correct legal name as set forth

in the first paragraph of this Agreement. Except as set forth in Exhibit B attached hereto, Borrower has not changed its corporate name or used any trade or fictitious name in the last (5) five years. The locations listed on Exhibit C constitute all locations at which Borrower’s Inventory and/or Equipment is located and Borrower has exclusive possession and/or control of its Equipment and Inventory. The chief place of business and chief executive office of the Borrower is located at the Borrower’s address specified above in the first paragraph of this Agreement. All records concerning Borrower’s Accounts, General Intangibles and all originals of all chattel paper which evidence any Account or General Intangible of Borrower are located at the Borrower’s address set forth in the first paragraph of this Agreement, and none of the Borrower’s Accounts or General Intangibles is evidenced by a promissory note or other instrument except for such notes and other instruments delivered to Lender; and

(b) The Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the State of Illinois, and is qualified or licensed to do business in all other countries, states and provinces in which the laws thereof require Borrower to be so qualified and/or licensed; and

(c) The Borrower has the full power and authority to enter into and perform all of its obligations under this Agreement, and all other Loan Documents; and

(d) The execution, delivery and performance by Borrower of this Agreement and all other Loan Documents have been duly authorized by all necessary corporate action and will not violate any provision of law or Borrower’s articles of incorporation or bylaws, or result in the breach of or constitute a default or require any consent under, or result in the creation of any lien, charge, or encumbrance upon any property or assets of Borrower (except the security interest of the Lender) pursuant to any indenture or other agreement or instrument to which Borrower is a party or by which Borrower or its property may be bound or affected; and

(e) This Agreement is, and each of the other Loan Documents when executed and delivered by Borrower under this Agreement will be, the legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms; and

(f) The Borrower is the sole lawful owner of the Collateral and has the sole right and lawful authority to deliver this Agreement. The Collateral and every part thereof is, and will hereafter remain, free and clear of all security interests, liens, attachments, levies, and encumbrances of every kind, nature and description, except the security interest of the Lender and Permitted Liens. Borrower will warrant and defend the Collateral against any claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Lender; and

(g) No financing statement covering the Collateral or any part thereof, is on file in any public office (other than financing statements in favor of Lender and the financing statement evidencing Seller’s subordinate security interest in the Collateral). The security interest in the Collateral granted by Borrower to Lender is valid and enforceable and constitutes a first priority security interest therein. The security interest in the Leased Equipment and Equipment Lease granted by Seller to Lender is valid and enforceable and constitutes a first priority security interest therein. The security interest in the Pledged Stock granted by the Guarantors to Lender is valid and

enforceable and constitute a second priority security interest therein (behind the first priority security interest of Seller therein); and

(h) No authorization, approval or other action by, and no notice to or filing with, any governmental authority that have not already been taken or made and which are in full force and effect, is required (i) for the grant by the Borrower of the security interest in the Collateral granted hereby; (ii) the execution, delivery or performance of this Agreement by the Borrower; or (iii) for the exercise by the Lender of its rights or remedies hereunder; and

(i) Borrower’s use of the proceeds of any advances and readvances by Lender made by Lender to Borrower pursuant to this Agreement are, and will continue to be, legal and proper corporate uses (duly authorized by its Board of Directors, if necessary pursuant to applicable corporate law, rule or regulation) and such uses are consistent with all applicable laws and statutes, as in effect as of the date hereof; and

(j) The balance sheets and statements of income and retained earnings of Borrower, heretofore furnished to the Lender, and all accompanying financial information heretofore furnished to the Lender, are complete and correct in all material respects and fairly represent the financial condition of Borrower as at the dates of said financial statements and the results of its operations for the periods ending on said dates. Borrower has no material contingent obligations, liabilities for taxes, long-term leases, or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheets or the notes thereto; and at the present time there are no material unrealized or anticipated losses from current operations. Said financial statements were prepared in accordance with GAAP; and

(k) Prior to the closing of the Loans, there has been no material change in the financial condition of Borrower or any Guarantor from that set forth in the Borrower’s most recent financial statement, and, to the best of Borrower’s knowledge, the financial statements of Guarantors, and the financial information contained therein was true and correct on the date the statements were issued and there has been no material adverse changes as of the closing date of the Loans; and

(1) There are no suits or proceedings pending, or to the knowledge of Borrower threatened against or affecting Borrower which, if adversely determined, would have an adverse effect on the financial condition or business of Borrower or its ability to perform its obligations under this Agreement or any of the other Loan Documents, and there are no proceedings by or before any court, governmental commission, board, bureau, or other administrative agency pending or, to the knowledge of Borrower, threatened against Borrower; and

(m) Borrower has filed all federal, state and local tax returns required to be filed by it (including, but not limited to, income and payroll tax returns) and other reports, which Borrower is required by law, rule or regulation to file, and all Charges that are due and payable have been paid; and

(n) Now and after consummation of the Loans, Borrower has and shall have capital sufficient to carry on its business and transactions and all businesses and transactions in which it is about to

engage and is now and shall be solvent and able to pay its debts as they mature, and Borrower now owns and shall own property the fair salable value of which is and shall be greater than the amount required to pay Borrower’s debts. For the purposes of this subsection, the term “fair salable value” shall mean the amount that would be agreed upon between a willing buyer and a willing seller under no compulsion to make the sale, in the sale of the assets and business of the Borrower as a going concern; and

(o) Borrower is in compliance with all other statutes, ordinances, governmental rules and regulations to which it is subject, and has not and shall not fail to obtain any licenses, permits, franchises, or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business, which violation or failure to obtain would adversely affect the business, prospects, profits, properties, condition (financial or otherwise) of the Borrower, or the security interest, liens, or rights of the Lender in the Collateral; and

(p) To the best of its knowledge, Borrower has duly complied with, and its businesses, operations, assets, Equipment, property, leaseholds, or other facilities are in compliance with, the provisions of all applicable federal, state, and local environmental, health, and safety laws, codes and ordinances; and

(q) To the best of its knowledge, Borrower’s present uses of the Real Property comply with all federal, state and local environmental laws, and regulations; and Borrower has never received any notice of any violations of environmental laws, rules or regulations and no actions have been commenced or threatened for noncompliance. The Borrower shall immediately provide the Lender with any notice received by the Borrower pertaining to any violations of environmental laws, rules or regulations; and

(r) Neither the business nor the properties of Borrower are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or other casualty (whether or not covered by insurance), materially and adversely affecting such business or properties or the operation of the Borrower; and

(s) The Borrower is not a party to any indenture, loan or credit agreement, or to any lease or other agreement or instrument, or subject to any charter or corporate restriction which could have a material adverse effect on the business, properties, assets, operations, or conditions, financial or otherwise, of the Borrower, or the ability of the Borrower to carry out its obligations under this Agreement and the other Loan Documents. The Borrower is not in default in any material respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument (material to its business) to which it is a party. The Borrower has disclosed to the Lender in writing all facts which might materially and adversely affect the business, credit, operations, financial condition or prospects of the Borrower or any Subsidiary or which might materially and adversely affect any material portion of the Borrower’s properties, or the Borrower’s ability to perform its obligations under this Agreement or the other Loan Documents; and

(t) The Borrower has satisfied all judgments and is not in default with respect to any judgment, writ, injunction, decree, rule, or regulation of any court, arbitrator, or federal, state,

municipal, or other governmental authority, commission, board, bureau, agency, or instrumentality, domestic or foreign; and

(u) To the best of its knowledge, the Borrower has not used Hazardous Materials on or affecting the Real Property in any manner which violates federal, state or local laws, ordinances, statutes, rules, regulations or judgments governing the use, storage, treatment, handling, manufacture, transportation, or disposal of Hazardous Materials (“Environmental Laws”), and that, to the best of Borrower’s knowledge, no prior owner of the Real Property or any current or prior occupant has used Hazardous Materials on or affecting the Real Property in any manner which violates Environmental Laws. The Borrower covenants and agrees that neither it nor any occupant shall use, introduce or maintain Hazardous Materials on the Real Property in any manner unless done in strict compliance with all Environmental Laws.

“Hazardous Materials” includes, without limitation, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (42 U.S.C. Section 1801, et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 9601, et seq.) and in the regulations adopted and publications promulgated pursuant thereto, or any other federal, state or local governmental law, ordinance, rule, or regulation.

13.2 Account Representations and Warranties . Borrower represents and warrants that Lender may rely, in determining which Accounts listed on any Borrowing Base Certificate are Eligible Accounts, without independent investigation of any statements or representations made by Borrower on or with respect to any such Borrowing Base Certificate, and unless otherwise indicated in writing by Borrower, that:

(a) Such Accounts are genuine, are in all respects what they purport to be, are not evidenced by a judgment and, if evidenced by an instrument, agreement, contract or document, are evidenced by only one executed original instrument, agreement, contract or document, which has been endorsed and delivered to Lender;

(b) Such Accounts represent undisputed, bona fide transactions completed in accordance with the terms and provisions contained in any documents related thereto;

(c) Except for credits issued to any Account Debtor in the ordinary course of Borrower’s business for Inventory returned pursuant to Section 9.4 of this Agreement, the amounts shown on the Borrowing Base Certificate, and all invoices and statements delivered to Lender with respect to any Account, are actually and absolutely owing to Borrower and are not contingent for any reason;

(d) To the best of Borrower’s knowledge, except as may be disclosed on such Borrowing Base Certificate, there are no setoffs, counterclaims or disputes existing or asserted with respect to any Accounts included on a Borrowing Base Certificate, and Borrower has not made any agreement with any Account Debtor for any deduction from such Account, except for discounts

or allowances allowed by Borrower in the ordinary course of its business for prompt payment, all of which discounts or allowances are reflected in the calculation of the invoice related to such Account;

(e) To the best of Borrower’s knowledge, there are no facts, events or occurrences which in any way impair the validity or enforcement of any of the Accounts or tend to reduce the amount payable thereunder from the amount of the invoice shown on any Borrowing Base Certificate, and on all contracts, invoices and statements delivered to Lender with respect thereto;

(f) To the best of Borrower’s knowledge, all Account Debtors are solvent and had the capacity to contract at the time any contract or other document giving rise to the Account was executed;

(g) The goods, the sale of which gave rise to the Accounts are not, and were not at the time of the sale thereof, subject to any lien, claim, security interest or other encumbrance, except those of Lender and the subordinate security interest of Seller, and those removed or terminated prior to the date hereof;

(h) Borrower has no knowledge of any fact or circumstance which would impair the validity or collectibility of any of the Accounts;

(i) To the best of Borrower’s knowledge, there are no proceedings or actions which are threatened or pending against any Account Debtor which might result in any material adverse change in its financial or other condition;

(j) The Accounts have not been pledged or assigned to any other Person, and the Lender has a first and valid fully perfected security interest in the Accounts; and

(k) No covenant, representation or warranty contained in this Agreement with respect to such Accounts has been breached.

13.3 Automatic Representation and Warranty and Reaffirmation of Representations and Warranties . Each request for an advance by Borrower pursuant to this Agreement or the other Loan Documents shall-constitute (i) an automatic representation and warranty by Borrower to Lender, as of the date of said request, that there does not exist a Default or an Event of Default, and (ii) a reaffirmation, as of the date of said request, of all of the representations and warranties of Borrower contained in this Agreement and the other Loan Documents.

13.4 Survival of Representations and Warranties . Borrower covenants, warrants and represents to Lender that all representations and warranties of Borrower contained in this Agreement and the other Loan Documents shall be true at the time of Borrower’s execution of this Agreement and the other Loan Documents, and shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.

SECTION 14. COVENANTS AND CONTINUING AGREEMENTS.

14.1 Financial Covenants . Borrower covenants to Lender and agrees that so long as any Indebtedness shall remain unpaid:

(a) Minimum Tangible Net Worth . Borrower will maintain at all times a minimum Tangible Net Worth of not less than $1,250,000.00 (to be tested quarterly).

(b) Cash Flow Coverage . Borrower will maintain at all times a Cash Flow Coverage of not less than 1.3 to 1.0 (to be tested quarterly, initially on a cumulative basis, and after the first four quarters, on a rolling four quarter basis, beginning with the 3/31/97 income statement).

(c) Total Unsubordinated Debt to Tangible Net Worth . Borrower will maintain at all times a ratio of total unsubordinated Debt to Tangible Net Worth of not greater than 6.0 to 1.0.

(d) Capital Expenditures . Borrower will not make or incur Capital Expenditures in excess of $500,000.00 in the aggregate in any fiscal year.

(e) Limit on Lease Expens e. Borrower will not create, incur, assume or suffer to exist any obligation as lessee for the rental or hire of any real or personal property, except leases that do not in the aggregate require the Borrower to make payments (including taxes, insurance, maintenance, and similar expenses required to be paid under the leases) in any fiscal year of Borrower in excess of $120,000.00, exclusive of the lease payments required under the Equipment Lease.

The financial requirements set forth hereinabove shall be computed in accordance with GAAP.

14.2 Affirmative Covenant s. Borrower covenants to Lender and agrees that until the Loans and all other Indebtedness shall be fully paid and discharged, it will:

(a) Preserve and maintain its corporate existence and good standing in the state of Illinois and its qualification to do business in each other country, state or province where, because of the nature of its activities or properties, the failure of Borrower to be so qualified would have a material adverse effect on its financial conditions or operations or on the security interest or rights of the Lender in the Collateral; and

(b) Keep its chief place of business and chief executive office and the office where it keeps its records concerning its Accounts and General Intangibles, and the office where it keeps all originals of all chattel paper which evidence Accounts and General Intangibles, at the Borrower’s address specified above in the first paragraph of this Agreement, or, upon thirty (30) days prior written notice to the Lender, at such other location in the State of Illinois. The Borrower will hold and preserve such records and chattel paper and will permit representatives of the Lender at any time during normal business hours to inspect and make abstracts from such records and chattel paper; and

(c) Keep Borrower’s Equipment, Inventory and all other tangible personal property at the Borrower’s address(es) specified in Exhibit C attached hereto, or, upon thirty (30) days prior written notice to the Lender, at such other location in the State of Illinois; and

(d) Maintain, keep and preserve all of its properties (tangible and intangible) necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted; and

(e) Take all actions necessary or required by law to protect and preserve the Collateral, the rights of the Borrower and Lender thereunder, and the priority of the lien granted thereby, including, without limitation, the payment of all amounts required for that purpose; and

(f) Continue to engage in a business of the same general type as now conducted by it on the date of this Agreement; and

(g) Keep adequate records and books of account, in which complete entries will be made in accordance with GAAP, reflecting all of its financial transactions; and

(h) Keep and maintain at Borrower’s own cost and expense satisfactory and complete records of the Collateral in a manner consistent with Borrower’s current business practice, including, without limitation, a record of all payments received and all credits granted with respect to such Collateral. Borrower shall, for the Lender’s further security, deliver and turn over to the Lender or the Lender’s designated representatives at any time following the occurrence of an Event of Default and upon three (3) days’ notice from the Lender or the Lender’s designated representative, any such books and records (including, without limitation, any and all computer tapes, programs and source codes relating to such Collateral in which Borrower has an interest or any part or parts thereof; in such event Lender shall provide Borrower with true and complete copies of such books and records); and

(i) Furnish Lender, from time to time, with such information relevant to this Agreement and Borrower’s performance hereunder as Lender may request; and

(j) Immediately upon the execution of this Agreement, make appropriate entries upon its books disclosing Lender’s security interest in the Collateral. Upon Lender’s request, following an Event of Default, Borrower will execute and deliver all papers and instruments, and do all things required by Lender to facilitate collection of the Collateral; and

(k) Provide Lender from time to time, promptly upon request of Lender, with a comprehensive updated list of all Account Debtors of Borrower, including their current addresses and telephone numbers; and

(1) Advise the Lender promptly, in reasonable detail, of (i) any lien, security interest, encumbrance, or claim made by or asserted against any or all of the Collateral, and (ii) the occurrence of any other event which would have a material adverse effect on the aggregate value of such Collateral or on the security interests and liens with respect to such Collateral created hereunder; and

(m) At all times during normal business hours, upon reasonable advance notice (unless in the Lender’s reasonable judgment a rapid deterioration or loss to any Collateral is threatened, in which case no notice shall be given), permit the Lender, or any agent or representative thereof to examine and make copies of and abstracts from the records and books of account of Borrower

and visit the properties of Borrower, and to discuss the affairs, finances, and accounts of Borrower with any of its officers, directors and independent accountants; and

(n) Promptly, upon the Borrower’s learning thereof, (a) inform the Lender in writing, of any material delay in Borrower’s performance of any of its obligations to any Account Debtor; and (b) furnish to and inform the Lender of all material adverse information relating to the financial condition of any Account Debtor; and

(o) Comply in all material respects with all applicable laws, ordinances, rules and regulations to which it is subject and not fail to obtain any licenses, permits, franchises, or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business, which violation or failure to obtain would materially and adversely affect the business, prospects, profits, properties, condition (financial or otherwise) of Borrower, or the security interest, or rights of the Lender in the Collateral; and

(p) Promptly after the commencement thereof, give the Lender notice of all actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting Borrower, which, if determined adversely to Borrower, could have a material adverse effect on its financial condition, properties or operations; and

(q) Pay and discharge all material obligations of whatever nature, or otherwise satisfy them at or before maturity or before they become delinquent and any additional costs are imposed as a result thereof, except those contested by Borrower in good faith, with due diligence, provided the Lender’s security interest or rights in the Collateral or any portion thereof, is not, or could not be, in the Lender’s sole opinion, affected, impaired or modified; and

(r) Give the Lender written notice as soon as possible and in any event within three (3) days after Borrower obtains knowledge of the occurrence of each Event of Default hereunder, setting forth the details of such Event of Default and the action which is proposed to be taken by Borrower with respect thereto; and

(s) In any suit, proceeding or action brought by the Lender with respect to any of Borrower’s Accounts or General Intangibles or other property comprising part of the Collateral, the Borrower will save, indemnify and keep the Lender harmless from and against all expenses, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligor thereunder, arising out of a breach by Borrower of any obligation or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligor or its successors from Borrower, and all such obligations of Borrower shall be and shall remain enforceable against and only against Borrower and shall not be enforceable against the Lender; and

(t) Promptly after the sending or filing thereof, provide the Lender with copies of all proxy statements, financial statements, and reports which Borrower sends to its stockholders, and copies of all regular, periodic, and special reports, and all registration statements which Borrower files with the Securities and Exchange Commission or any governmental authority which may be substituted thereof, or with any national securities exchange; and

(u) As soon as possible, and in any event within ten (10) days after Borrower knows or has reason to know that any circumstances exist that constitute grounds entitling the PBGC to institute proceedings to terminate a Plan of Borrower subject to ERISA, and the regulations promulgated thereunder, or to appoint a Trustee to administer such Plan, or to impose withdrawal liability against Borrower, Borrower will notify the Lender in writing setting forth all relevant details and the action which Borrower proposes to take with respect thereto; and

(v) Give Lender written notice thirty (30) days prior to any change in Borrower’s name, mailing address, principal place of business, chief executive office, or location of the Collateral or Borrower’s books and records. Borrower further agrees to advise Lender promptly, in sufficient detail, of any substantial change relating to the type, quantity or quality of the Collateral, or any event which would have a material adverse effect on the value of the Collateral or on the lien and security interest granted to Lender herein; and

(w) Execute and deliver to Lender, concurrently with the execution of this Agreement, and at any time or times thereafter at the reasonable request of Lender, all Financing Statements and other Collateral Documents (and pay the cost of filing and recording the same in all public offices deemed necessary by the Lender) as the Lender may request, in a form reasonably satisfactory to the Lender, to perfect and keep perfected the security interest in the Collateral granted by Borrower to the Lender or to otherwise protect and preserve the Collateral and the Lender’s security interest therein. Should Borrower fail to do so, the Lender is authorized to sign any such Financing Statements as Borrower’s agent; and

(x) Deliver to Lender forthwith upon its demand, such other collateral as the Lender may request from time to time should the value of the Collateral decline, deteriorate, depreciate or become impaired, and Borrower shall execute such documents deemed necessary by the Lender to perfect its security interest in such other collateral; and

(y) In the event any of the Borrower’s Inventory is consigned to third persons dealing in goods of that kind, Borrower agrees to obtain and provide Lender with such Financing Statements, notices and other documents signed by Borrower and the consignees deemed reasonably necessary by Lender to insulate such consigned collateral from the claims of the consignee’s creditors; and

(z) Cause its compliance with all present and future Environmental Laws pertaining to Borrower, the Real Property, or Borrower’s business, and voluntarily to clean up all Hazardous Materials released, discharged, stored or discharged upon their discovery and to be fully liable to the Lender for all costs and expenses incurred by the Lender arising from such Environmental Materials.

The Borrower shall protect, and does hereby agree to defend, indemnify and hold the Lender harmless from and against any and all loss, damage, cost, expense and liability (including without limitation reasonable attorneys’ fees and costs) directly or indirectly arising out of or attributable to the installation, use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or presence of any Hazardous Materials on, under or about the Real Property, including without limitation (i) all foreseeable consequential damages; and (ii) the costs of any required or necessary repair, cleanup, detoxification of the Real

Property; and (iii) the preparation and implementation of any closure, or remedial or other required plans. This indemnity shall survive the satisfaction, release or extinguishment of the lien of the Lender’s security interest in the Collateral; and

(aa) Keep in effect a $1,000,000.00 life insurance policy upon the life of J. Cameron Drecoll with an insurance company acceptable to the Lender and at all times keep the Collateral Assignment of Life Insurance in full force and effect and pay all required policy premiums.

14.3 Negative Covenants . Borrower further covenants to Lender and agrees that until the Loans and all other Indebtedness shall be fully paid and discharged, it will not, without the prior written consent of the Lender:

(a) Create, incur, assume, or suffer to exist, any mortgage, deed of trust, pledge, lien, security interest, hypothecation, assignment, deposit arrangement, or other preferential arrangement, charge, or encumbrance (including, without limitation, any conditional sale, or other title retention agreement, or finance lease), of any nature, upon or with respect to any of its properties, now owned or hereafter acquired, or sign or file, under the UCC of any jurisdiction a financing statement which names the Borrower as a debtor, or sign any agreement authorizing any party thereunder to file such financing statement, except mortgages, deeds of trust, pledges, liens, security interests, assignments, deposit arrangements, or other arrangements, charges, or encumbrances in favor of the Lender and Permitted Liens; or

(b) Sell, lease, transfer or otherwise dispose of any of its now owned or hereafter acquired assets (including, without limitation, shares of stock and indebtedness of Subsidiaries, receivables, and leasehold interests), except for Inventory disposed of in the ordinary course of business, and sales of obsolete, worn out or unusable tangible personal property which is concurrently replaced with similar personal property at least equal in value, quality and condition to that sold, and owned by Borrower free and clear of all liens, claims and encumbrances except the security interest of the Lender and Permitted Liens; or

(c) Store any assets with any third party against whom or with respect to which location, the Lender has not filed such UCC-1 financing statements and taken all other actions as Lender deems necessary to preserve its security interest in such assets unless Borrower gives Lender at least thirty (30) days prior written notice thereof; or

(d) Change its corporate name or adopt any fictitious or trade name unless Borrower gives Lender at least thirty (30) days prior written notice thereof; or

(e) Wind up, liquidate, or dissolve itself, reorganize, merge or consolidate with or into, or convey, sell, assign, transfer, lease, or otherwise dispose of (whether in one transaction or a series of transactions) all or substantially all of it assets (whether now owned or hereafter acquired) or its business to any Person, or acquire all or substantially all of the assets or the business of any Person or enter in the sale of any capital stock of Borrower, which shall result in a change of control of the Borrower; or

(f) Suffer any judgment for money in excess of $10,000.00 to be entered and not discharged, stayed or appealed with a supersedeas bond within a period of thirty (30) days, provided, however, that this subparagraph shall not apply to any judgment for which the Borrower is fully insured, and with respect to which the insurer has admitted liability in writing; or

(g) Permit any change in the ownership of the shares of Borrower which shall result in a change of control of the Borrower; or

(h) Make loans to one or more Persons which in the aggregate exceed $5,000.00 outstanding at any time (including, without limitation, any officer, shareholder, director or employee of Borrower except for temporary advances and reimbursements to such officers and employees for necessary expenses incurred in the ordinary course of business) or purchase or otherwise acquire any capital stock, assets, obligations, or other securities of, make any capital contribution to, or otherwise invest in (except obligations of the United States Government, open market commercial paper rated one of the top two ratings by a rating agency of recognized national standing or certificates of deposit in insured financial institutions) or acquire any interest in any Person, or participate as a partner or joint venturer with any other Person; or

(i) Declare or pay any dividends in any fiscal year (except if Borrower is an S corporation, the minimum amount as shall be necessary for shareholders of Borrower to pay federal and state incomes taxes on net earnings from the Borrower without jeopardizing the Subchapter S election of the Borrower), or purchase, redeem, retire, or otherwise acquire for value any of its capital stock now or hereafter outstanding; or make any distribution of assets to its shareholders as such, whether in cash, assets, or in obligations of the Borrower; or allocate or otherwise set apart any sum for the payment of any dividend or distribution on, or for the purchase, redemption, or retirement of any shares of its capital stock; or make any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock; or

(j) Assume, guaranty, endorse, or otherwise be or become directly or contingently responsible or liable (including, but not limited to, an agreement to purchase any obligation, stock, assets, goods or services or to supply or advance any funds, assets, goods or services, or an agreement to maintain or cause any Person to maintain a minimum working capital or net worth, or otherwise to assure the creditors of any Person against loss) for obligations of any Person, except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; or

(k) Install, use, generate, manufacture, produce, store, release, discharge or dispose of on, under or about the Real Property, nor transport to or from any property, any Hazardous Materials nor allow any other Person to do so, except in full compliance with any and all applicable environmental laws, rules and regulations; or

(1) Directly or indirectly use any part of the proceeds of the Loans for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or to extend credit to any Person for the purpose of purchasing or carrying any such margin stock or for any purpose which violates, or is inconsistent with, Regulation X of said Board of Governors.

SECTION 15. EVENTS OF DEFAULT.

The Notes and any and all other Indebtedness shall, at the option of Lender and notwithstanding any maturity to the contrary, become immediately due and payable, without notice or demand, upon the occurrence of any of the following events of default (each an “Event of Default”):

(a) Borrower shall fail to pay when due, any Indebtedness, including, without limitation, any principal of or interest on any Note, or any other sum payable by the Borrower to the Lender, and such failure shall continue for five (5) days after written notice of such default is sent to Borrower by Lender; or

(b) Borrower shall fail duly and punctually to perform or observe any other agreement, covenant or obligation binding on the Borrower under this Agreement or any of the other Loan Documents and such failure shall continue for ten (10) days after written notice of such default is sent to Borrower by Lender; or

(c) Any warranty, representation, statement or financial statement made by Borrower in this Agreement or by Borrower or any Guarantor in any other Loan Document or in any other agreement, document, instrument, request, report, schedule or certificate executed by Borrower or any Guarantor shall prove to have been incorrect or misleading in any material respect when made; or

(d) Any event occurs or condition exists (other than those described in clauses (a) through (c) above) which is specified as an event of default under any of the Loan Documents; or

(e) Filing of a petition in bankruptcy by or against Borrower, or institution of any proceeding by Borrower for corporate reorganization, readjustment, or similar arrangement under any insolvency statute (and with respect to any involuntary petition or proceeding, such petition or proceeding is not dismissed within sixty (60) days after filing), filing of any proceeding by or against Borrower or any Guarantor for appointment of a receiver, trustee or liquidator of it, him or her, or all or any substantial part of its, his or her assets or properties, filing of a petition for dissolution or liquidation of Borrower, or making by Borrower or any Guarantor of an assignment for the benefit of creditors, or filing or imposition of any tax lien against the Collateral, or Borrower or any Guarantor admits in writing its, his or her inability to pay its, his or her debts as they become due, or Borrower ceases doing business as a going concern; or

(f) The Lender, in good faith, deems itself reasonably insecure for any reason due to any material adverse change in the business, assets or liabilities, financial condition, results of operations or business prospects of Borrower, or in the financial condition of any Guarantor; or

(g) There shall occur any uninsured damage to or loss, theft, or destruction of any of the Collateral exceeding $10,000.00; or

(h) All or any portion of the Collateral is attached, seized, levied upon or subjected to a writ or distress warrant, or comes within the possession of any receiver, trustee, custodian or assignee

for the benefit of creditors; or an application is made by Borrower or any other Person for the appointment of a receiver, trustee, or custodian for such Collateral; or

(i) A notice of lien, levy or assessment is filed of record with respect to all or any portion of Borrower’s assets by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, including, without limitation, the PBGC, or any taxes or debts owing to any of the foregoing becomes a lien or encumbrance upon all or any portion of Borrower’s assets; or

(j) Creation by Borrower of a security interest in any Collateral now existing or hereafter acquired by Borrower in favor of any Person other than the Lender and the Permitted Liens; or

(k) Borrower is enjoined, restrained, or in any way prevented by the order of any court or any administrative or regulatory agency from conducting all or any part of its business affairs; or

(1) Insolvency of any Guarantor, or any Guarantor shall file a petition in bankruptcy or shall be adjudicated a bankrupt, or any Guarantor shall die, or become incompetent, or shall terminate, repudiate, revoke or disavow any of his or her obligations under the Guaranty or breach any of the terms thereof; or

(m) Any judgment or order requiring the payment of money exceeding $10,000.00 shall be rendered against Borrower and such judgment or order shall remain unsatisfied or undischarged and in effect for thirty (30) consecutive days without a stay of enforcement or execution, provided, however, this subparagraph shall not apply to any judgment for which Borrower is fully insured, and with respect to which the insurer has admitted liability in writing; or

(n) This Agreement shall at any time after its execution and delivery and for any reason cease (i) to create a valid and perfected first priority security interest in such of the Collateral owned by Borrower or in which Borrower has rights therein; or (ii) to be in full force and effect or shall be declared null and void, or the validity or enforceability hereof shall be contested by the Borrower or Borrower shall deny it has any further liability or obligation hereunder; or

(o) The Guaranty shall at any time after its execution and delivery and for any reason 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 any Guarantor or any Guarantor shall deny he or she has any further liability or obligation thereunder, or shall fail to perform his or her obligations thereunder; or

(p) Any event shall occur which results in the acceleration of the maturity of any indebtedness of Borrower to any other lender or creditor exceeding $20,000.00; or

(q) Any proceeding shall be commenced or filing made under applicable law by any stockholder, officer or director of Borrower to dissolve or liquidate the Borrower, or any order, judgment or decree shall be entered against Borrower decreeing its involuntary dissolution or split up; or Borrower shall otherwise dissolve or cease to exist; or

(r) An event of default shall occur under any of the Stock Pledge Agreements, and shall not be cured within the applicable grace period, if any; or

(s) An event of default shall occur under the Security Agreement-Leased Equipment, and shall not be cured within the applicable grace period, if any; or

(t) Borrower shall default in the payment or performance of the Equipment Lease, and such default shall not be cured within the applicable grace period, if any; or

(u) Borrower shall make any payment to Seller in violation of the terms of the Seller/Bank Intercreditor Agreement; or

(v) If within one hundred twenty (120) days from the date of this Agreement, Borrower shall fail to provide to Lender all of the following documents, in form and substance acceptable to Lender: (i) an original executed release (in recordable form) of that certain mortgage dated January 15, 1987 and recorded January 21, 1987 in the office of the Recorder of Deeds of Cook County as Document No. 87040330 in favor of American National Bank and Trust Company of Chicago (the “Trustee”), as Trustee under Trust Agreement dated April 25, 1966 and known as Trust No. 23191 and its beneficiaries, (ii) an original landlord waiver for the Borrower’s leased premises commonly known as 1309 S. Cicero Avenue, Cicero, Illinois, executed by the Trustee and all current beneficiaries of the Trustee, and (iii) a lease extension letter extending the lease for such premises executed by the Trustee and all such beneficiaries; or

(w) If the life insurance policy described in Section 6 hereof shall expire, lapse or otherwise cease to be in full force and effect or Borrower shall fail to pay any premium for such policy when due.

SECTION 16. REMEDIES. (a) if any Event of Default shall have occurred and be continuing:

(i) The Lender may: (x) immediately terminate the Lender’s commitment hereunder to make any further advances under the Revolving Loan and/or (y) declare the Indebtedness, including, without limitation, all principal of and interest accrued on the Notes and all other Indebtedness, to be forthwith due and payable, whereupon the same shall become forthwith due and payable, notwithstanding the maturity date or dates expressed in any evidence thereof. Borrower waives presentment and protest of any instruments and notice thereof, notice of default and all other notices to which Borrower might otherwise be entitled except as specifically provided herein.

(ii) The Lender or its designee may notify the Account Debtors under any Accounts, General Intangibles and chattel paper, of the assignment of such Accounts, General Intangibles and chattel paper, to the Lender and direct such Account Debtors to make payment of all amounts due or to become due to the Borrower thereunder directly to the Lender and, upon such notification and at the expense of the Borrower, Lender or its designee may enforce collection of any such Accounts, General Intangibles and chattel paper, and adjust, settle and compromise the amount or payment thereof, in the same manner and to the same extent as the Borrower might have done. After such notification all amounts and proceeds (including instruments) received in any manner by the Borrower in respect of the Accounts, General Intangibles and chattel paper, shall be segregated from other funds of the Borrower and shall be forthwith paid over to the Lender in the same form as received (with any necessary endorsement), and the Borrower shall

not adjust, settle or compromise the amount of payment of any Account, General Intangibles or chattel paper, or release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon. To facilitate the foregoing collection rights of the Lender, the Borrower hereby agrees to provide the Lender with such information and documentation which the Lender reasonably requests.

(iii) The Lender may exercise and pursue any and all rights and remedies available to it hereunder, and under the other Loan Documents, the Collateral Documents and applicable law, including, but not limited to, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral), or any other applicable law. The Lender may without notice, demand or legal process of any kind, all of which Borrower waives, at any time or times, (x) peaceably enter into the Borrower’s premises and take physical possession of the Collateral and maintain such possession on the Borrower’s premises, at no cost to the Lender, or remove the Collateral, or any part thereof, to such other place(s) as the Lender may desire or (y) require the Borrower to, and the Borrower hereby agrees that it will at its expense and upon request of the Lender forthwith, assemble all or any part of the Collateral (and the records pertaining thereto) as directed by the Lender and make it available to the Lender at a place to be designated by the Lender which is reasonably convenient to the Lender and (z) without notice except as specified below, sell, lease, assign, grant an option or options to purchase or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of the Lender’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Lender may deem reasonable (and Lender may, to the extent permitted by applicable law, purchase the Collateral at any such sale). The Borrower agrees that, to the extent notice of sale shall be required by law, ten (10) days’ notice to the Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Lender shall not be obligated to make any sale of Collateral regardless of a notice of sale having been given. The Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(iv) The Lender shall apply all net cash proceeds received in respect of any sale of, collection from, or other realization upon all or any part of the Collateral (after deducting all costs, expenses and reasonable attorneys’ fees incurred at any time in the collection of the Indebtedness and in the protection and sale of the Collateral and after payment of any amounts payable to the Lender pursuant to Section 20), for the benefit of the Lender, against all or any part of the Indebtedness in such order as Lender shall determine in its sole discretion. Any surplus of such cash or cash proceeds held by the Lender and remaining after payment in full of all the Indebtedness shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive such surplus. Borrower and the Guarantors shall remain liable for any deficiency remaining after such application, and shall pay such deficiency forthwith. In addition to all other sums due the Lender, the Borrower shall pay the Lender all costs and expenses incurred by the Lender, including court costs and reasonable attorneys’ fees, to obtain, liquidate and/or enforce payment of the Collateral or the Indebtedness, including the Loans and all other Indebtedness, or in the prosecution or defense of any action or proceeding either against the

Lender or against Borrower concerning any matter arising out of or connected with the Collateral, this Agreement, or the Indebtedness.

(b) Borrower waives all claims, damages and demands against the Lender arising out of the repossession, retention or sale of any of the Collateral, or any part or parts thereof, except any such claims, damages and awards arising out of the gross negligence or willful misconduct of the Lender.

(c) The rights and remedies provided under this Agreement are cumulative and may be exercised singly or concurrently and are not exclusive of any rights and remedies provided by law or equity.

(d) To the extent that the Indebtedness is now or hereafter secured by property other than the Collateral or by the guarantee, endorsement or property of any other person, firm or corporation, then Lender shall have the right in its sole discretion to determine which rights, security, liens, security interests or remedies Lender shall at any time pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of them or any of Lender’s rights hereunder.

SECTION 17. EXERCISE OF REMEDIES. In connection with the exercise of its remedies pursuant to Section 16, the Lender may (i) exchange, enforce, waive or release any portion of the Collateral or Collateral Documents in favor of the Lender or relating to any other security for the Indebtedness; (ii) apply such Collateral or security and direct the order or manner of sale thereof as the Lender may, from time to time, determine; and (iii) settle, compromise, collect or otherwise liquidate any such Collateral or security in any manner following the occurrence of an Event of Default, without affecting or impairing the Lender’s right to take any other further action with respect to any Collateral or security or any part thereof.

SECTION 18. LICENSE. The Lender is hereby granted a license or other right to use, following the occurrence and during the continuance of an Event of Default, without charge, the Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, customer lists and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral, and the Borrower’s rights under all licenses and all franchise agreements shall inure to the Lender’s benefit.

SECTION 19. INJUNCTIVE RELIEF. The Borrower recognizes that in the event the Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Lender; therefore, the Borrower agrees that the Lender, if the Lender so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

SECTION 20. EXPENSES. The Borrower will upon demand reimburse the Lender for all costs, fees, and expenses incurred by the Lender in connection with the negotiation, preparation and conclusion of this Agreement, the other Loan Documents, the Collateral Documents, and any amendment thereof, including, but not limited to, reasonable attorneys’

fees, corporate status, audit fees, appraisal fees, survey fees, lien and title searches, title insurance policy fees and charges, all taxes and filing or recording fees payable in connection with the transactions contemplated by this Agreement, the other Loan Documents and the Collateral Documents and, after the occurrence of an Event of Default, all reasonable attorneys’ fees and all other costs, fees and expenses incurred by Lender as a result of, or following such Event of Default, in collection of the Indebtedness, or the sale or other disposition of the Collateral. All of the foregoing fees, costs and expenses shall be part of the Indebtedness, payable upon demand, and secured by the Collateral.

SECTION 21. NOTICES. All notices and other communications provided for hereunder shall be given in writing and shall be addressed to the party intended to receive the same at its address hereinbefore set forth (or to such other and different address as Borrower or Lender may designate pursuant to a written notice sent in accordance with the provisions hereof), and will be deemed given or furnished (i) when delivered at such address to such party (or to an officer of such party) or (ii) when received if deposited in the United States mail as first-class registered or certified mail, return receipt requested, postage prepaid, or (iii) when received if deposited at the office of a nationally-recognized overnight delivery service; or (iv) when received if sent by facsimile transmission.

SECTION 22. CONTINUING SECURITY INTEREST; TERMINATION. (a) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until payment in full of the Indebtedness and the termination of this Agreement, (ii) be binding upon the Borrower, its successors and assigns (except that Borrower shall not assign any of its rights nor delegate any of its obligations under this Agreement without the prior written consent of the Lender, and no such consent by the Lender shall, in any event, relieve Borrower of any of its obligations under this Agreement), and (iii) inure, together with the rights and remedies of the Lender hereunder, to the benefit of the Lender, and any successor Lender. Nothing set forth herein or in any other Loan Document is intended or shall be construed to give any other Person any right, remedy or claim under, to or in respect of this Agreement or any other Loan Document or any Collateral. The Borrower’s successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession thereof or therefor.

(b) Upon the payment in full of the Indebtedness and the termination of this Agreement, Lender shall terminate its security interest by executing UCC-3 termination statements, and thereupon, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Borrower. Upon any such termination of security interest, the Borrower shall be entitled to the return, upon its request and at its expense, of such of the Collateral held by the Lender as shall not have been sold or otherwise applied pursuant to the terms hereof and the Lender will, at the Borrower’s expense, execute and deliver to the Borrower such other documents as the Borrower shall reasonably request to evidence such termination.

SECTION 23. NON-WAIVER. The Lender’s failure at any time or times hereafter to require strict performance by the Borrower of any provision of this Agreement shall not waive, affect or diminish any right of the Lender thereafter to demand strict compliance and performance therewith. Any suspension or waiver by the Lender of a default by the Borrower under this Agreement shall not suspend, waive or affect any other default by Borrower under this

Agreement, whether the same is prior or subsequent thereto and whether of the same or of a different kind or character. None of the undertakings, agreements, warranties, covenants and representations of the Borrower contained in this Agreement and no default by the Borrower hereunder shall be deemed to have been suspended or waived by the Lender unless such suspension or waiver is in writing signed by an officer of the Lender and directed to the Borrower specifying such suspension or waiver.

SECTION 24. PERFORMANCE OF BORROWER’S DUTIES. If not discharged or paid when due, Lender may (but shall not be obligated to) discharge or pay any amounts required to be discharged or paid by Borrower under this Agreement, including, without limitation, all taxes, liens, security interests, encumbrances, and other claims, at any time levied or placed on the Collateral. Lender may also (but shall not be obligated to) pay all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the highest default rate set forth in the Notes from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses shall automatically become a part of the Indebtedness secured hereby, and, at Lender’s option, will be payable on demand.

SECTION 25. SEVERABILITY. It is the parties’ intention that this Agreement be interpreted in such a way that it is valid and effective under applicable law. However, if one or more of the provisions of this Agreement shall for any reason be found to be invalid or unenforceable, the remaining provisions of this Agreement shall be unimpaired.

SECTION 26. CAPTIONS. The captions and headings of the various sections used in this Agreement are for convenience only, and are not to be construed as confining or limiting in any way the scope or intent of the provisions hereof.

SECTION 27. REINSTATEMENT OF INDEBTEDNESS. To the extent that Borrower makes a payment or payments to Lender or Lender receives any payment or proceeds of the Collateral for Borrower’s benefit, which payment(s) or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or 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(s) or proceeds received, the Indebtedness or part thereof intended to be satisfied shall be reinstated and shall continue in full force and effect, as if such payment(s) or proceeds had not been received by Lender.

SECTION 28. INDEMNITY. In addition to all of the Borrower’s other Indebtedness under this Agreement, the Borrower agrees to defend, protect, indemnify, pay and hold harmless the Lender and its officers, directors, employees, attorneys, consultants, agents and affiliates (collectively, the “Indemnitees”) from and against any and all losses, damages, liabilities, obligations, penalties, fees, costs, and expenses (including, without limitation, attorneys’ and paralegals’ fees, costs and expenses) incurred by such Indemnitees, whether prior to or from and after the initial loan disbursement hereunder, whether direct, indirect or consequential, as a result of or arising from or relating to any suit, investigation, action or proceeding by any Person, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any Person under any statute or regulation (other than suits or other actions by Borrower against an

Indemnitee), including, without limitation, any federal or state securities or labor laws, or under any federal, state or local environmental, health or safety laws, regulations, or common law principles, arising from or in connection with the past, present or future operations of the Borrower, any of its Subsidiaries or its predecessors in interest, or the past, present or future environmental condition of the Real Property), the presence of any Hazardous Materials on the Real Property, or the release or threatened release of any Hazardous Materials into the environment from the Real Property, or under any common law or equitable cause or otherwise, arising from or in connection with any of the following: (i) the negotiation, preparation, execution or performance of this Agreement or of any document executed in connection with the transactions contemplated by this Agreement, (ii) the Lender’s furnishing of funds to the Borrower under this Agreement, including, without limitation, the management of the Loans, or (iii) any matter relating to the financing transactions contemplated by this Agreement or by any document executed in connection with the transactions contemplated by this Agreement (collectively, the “Indemnified Matters”), provided, however, the Borrower shall not be liable to indemnify any Indemnitee for claims arising as a result of such Indemnitee’s gross negligence or willful misconduct. Such indemnification for all of the foregoing losses, damages, liabilities, obligations, fees, penalties, costs and expenses of Lender shall be part of the Indebtedness. In no event shall the Lender be liable to Borrower for indirect, special, consequential or punitive damages as a result of or arising from or relating to any suit, investigation, action or proceeding by Borrower against the Lender.

SECTION 29. BANK ACCOUNTS. Borrower covenants to Lender and agrees to establish and maintain all of its operating accounts with Lender at all times so long as the Loans or any other Indebtedness owed by Borrower to Lender shall remain outstanding.

SECTION 30. BROKERAGE FEES. Borrower covenants to Lender that there is no broker fee due in connection with the Loans. Borrower agrees to indemnify and hold the Lender harmless with respect to any costs, expenses or liabilities relating to any such claims.

SECTION 31. LAWFUL INTEREST. It is the intent of the Borrower and Lender that the rates of interest and other charges to Borrower under this Agreement shall be lawful; therefore, if for any reason the interest or other charges payable under this Agreement are found by a court of competent jurisdiction, in a final determination, to exceed the limit which the Lender may lawfully charge Borrower, then the obligation to pay interest and other charges shall automatically be reduced to such limit, and if any amount in excess of such limit shall have been paid, then such amount shall be refunded to Borrower.

SECTION 32. SURVIVAL. All covenants, agreements, representations, warranties and indemnities made herein and in all other Loan Documents shall survive the making by the Lender of the Loans herein contemplated and shall continue in full force and effect for so long as the Loans and any other Indebtedness remain outstanding and unpaid.

SECTION 33. ENTIRE AGREEMENT. This Agreement, together with the other Loan Documents, constitute the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound

by the alteration or amendment. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Borrower herefrom shall in any event be effective unless the same shall be given in writing and signed by the Lender and Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 34. CHOICE OF LAW. ANY DISPUTE BETWEEN THE LENDER AND BORROWER, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS AND NOT THE CONFLICTS OF LAW PROVISIONS OF THE STATE OF ILLINOIS.

SECTION 35. PERSONAL JURISDICTION.

(i) Exclusive Jurisdiction . EXCEPT AS PROVIDED IN SUBSECTION (ii) BELOW, THE LENDER AND BORROWER AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED WITH, RELATED, TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS. BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

(ii) Other Jurisdictions . BORROWER AGREES THAT THE LENDER SHALL HAVE THE RIGHT TO PROCEED AGAINST BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE LENDER TO OBTAIN A JUDGMENT AGAINST THE BORROWER OR TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE LENDER. BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE LENDER HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH.

SECTION 36. WAIVER OF JURY TRIAL. BORROWER AND THE LENDER EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE LENDER AND BORROWER OR ANY OF ITS SUBSIDIARIES ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

SECTION 37. WAIVER OF NOTICE, HEARING AND BOND. BORROWER WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE LENDER OF ITS RIGHTS, FROM AND AFTER THE OCCURRENCE

OF AN EVENT OF DEFAULT, TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL, OR OTHER SECURITY FOR THE INDEBTEDNESS. BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE LENDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH, OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE INDEBTEDNESS TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE LENDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT, OR ANY OTHER OF THE LOAN DOCUMENTS.

SECTION 38. ADVICE OF COUNSEL. BORROWER REPRESENTS TO THE LENDER THAT IT HAS DISCUSSED THIS AGREEMENT WITH ITS LAWYER.

IN WITNESS WHEREOF, the Borrower and Lender have caused this Agreement to be duly executed and delivered by their duly authorized officers thereunto duly authorized as of the date first above written.

BORROWER:		LENDER:

BFG ACQUISITION CORP.		LASALLE BANK NI

By:	/s/ J. Cameron Drecoll	By:	/s/ [ILLEGIBLE]
	J. Cameron Drecoll
Title:	President	Title:	Commercial Loan Officer

Attest:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

EXHIBIT 10.18

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

This Third Amendment to Loan and Security Agreement is dated as of March 30, 1998 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE NATIONAL BANK formerly known as LaSalle Bank NI (“Lender”).

WHEREAS, Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 (such agreement, as amended, the “Loan Agreement”) with regard to a $2,200,000.00 revolving line of credit loan (the “Revolving Loan”) extended by Lender to Borrower, and a $2,700,000.00 (the “Term Loan”) made by Lender to Borrower; and

WHEREAS, Borrower has requested that Lender make Borrower an equipment loan of up to $1,500,000.00 (the “Equipment Loan”) and extend to Borrower an $850,000.00 non-revolving equipment line of credit (the “Equipment Line of Credit”); and

WHEREAS, Borrower has further requested that Lender (i) release the existing guaranties of Dennis Palmer and Patrick Rosmonowski, (ii) limit the existing guaranty of J. Cameron Drecoll to the sum of $750,000.00, and (iii) make certain changes to the Loan Agreement; and

WHEREAS, Lender has agreed to the foregoing requests provided (a) Borrower executes and delivers such documents and instruments required by Lender, including, promissory notes to evidence the Equipment Loan and Equipment Line of Credit and this Amendment, and (b) J. Cameron Drecoll executes and delivers to the Lender an Amendment and Reaffirmation of Guaranty and Consent; and

WHEREAS, as a condition precedent to making the Equipment Loan and Equipment Line of Credit, the Lender requires that the Borrower confirm and assure that the Collateral (as defined in the Loan Agreement) will secure payment of the Equipment Loan and Equipment Line of Credit, and all other Indebtedness (as defined in the Loan Agreement).

NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. Section 1.1 of the Loan Agreement is amended to add the following new definitions:

(a) “Equipment Line of Credit” shall mean the equipment line of credit described in Section 3B hereof and all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof or thereto.

(b) “Equipment Line Note” shall mean the promissory note evidencing the Equipment Line of Credit executed by Borrower in accordance with Section 3B hereof and all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof or thereto.

(c) “Equipment Loan” shall mean the equipment loan described in Section 3A hereof and all extensions, renewals, amendments, refinancings, modifications, consolidations, and conversions thereof or thereto.

(d) “Equipment Note” shall mean the promissory note evidencing the Equipment Loan executed by Borrower in accordance with Section 3A hereof and all extensions, renewals, amendments, refinancings, modifications, consolidations, and conversions thereof or thereto.

3. The following definitions in Section 1.1 of the Loan Agreement are amended as follows:

(a) the definition of “Guarantors” is hereby deleted, and the following definition is hereby substituted therefor:

“Guarantor” shall mean J. Cameron Drecoll.

(b) the definition of “Guaranties” is hereby deleted, and the following definition is hereby substituted therefor:

“Guaranty” shall mean the continuing guaranty to be executed by the Guarantor in accordance with Section 5 hereof, pursuant to which the Guarantor unconditionally guarantees repayment to the Lender of all the Indebtedness, subject to the limitation of liability described in Section 5.

“Loans” shall mean collectively, the Revolving Loan, the Term Loan, the Equipment Loan, the Equipment Line of Credit, and all extensions, renewals, amendments, refinancings, modifications, consolidations, conversions, and increases thereof or thereto.

(d) the definition of the term “Notes” is hereby amended in its entirety to read as follows:

“Notes” shall mean collectively, the Revolving Note, the Term Note, the Equipment Note, the Equipment Line Note, and all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof or thereto.

4. In the second paragraph of Section 2.3 of the Loan Agreement, the words “plus one-half percent” in the fourth line are deleted and the words “minus one-half percent” are substituted therefor.

5. Section 2.4 of the Loan Agreement entitled “ Lock Box ” is hereby amended to add the following new last paragraph thereto:

“Notwithstanding anything contained in this Section 2.4 to the contrary, so long as no Event of Default shall have occurred and be continuing, the requirement of maintaining the Lock Box shall be at Borrower’s option, and not mandatory. However, if an Event of Default shall occur and be continuing, the maintenance of the Lock Box shall become mandatory, and Borrower shall forthwith strictly comply with all of the terms of this Section 2.4.”

6. In the twelfth line of the first paragraph of Section 3.1 of the Loan Agreement, the words “plus one-half percent” are deleted, and the words “minus one-half percent” are substituted therefor.

7. The Loan Agreement is hereby amended to insert the following new Section 3A and Section 3B thereto:

“SECTION 3A. EQUIPMENT LOAN.

3A.1 Equipment Loan . The Lender agrees to make the Borrower a secured equipment loan in the principal amount of up to One Million Five Hundred Thousand and no/100 ($1,500,000.00) Dollars (herein, the “Equipment Loan”). The Equipment Loan shall be evidenced by an equipment note dated March 30, 1998, executed by Borrower, in the principal sum of One Million Five Hundred Thousand and no/100 ($1,500,000.00) Dollars (the “Equipment Note”), payable to the order of the Lender in eighty-three (83) successive equal monthly installments of principal in an amount calculated by dividing the amount advanced under the Equipment Note by eighty-four (84), plus interest, commencing June 1, 1998, and payable on the first (1st) day of each month thereafter, followed by a final payment of the entire unpaid principal balance and accrued interest due on May 1, 2005. Interest shall be payable monthly on the unpaid principal balance of the Equipment Note (concurrently with each principal payment), calculated at a per annum rate equal to the Prime Rate less one-half percent (1/2%), and after default or maturity, at a rate per annum equal to the Prime Rate plus three percent (3%) per annum. In addition, a late charge equal to three percent (3%) of each late payment may be charged on any payment not received by the Lender within five (5) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default or Event of Default. Interest on the Equipment Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.

The proceeds of the Equipment Loan shall be used by Borrower solely to purchase a Pfauter Gear Grinder. The Lender will advance to Borrower the lesser of (i) one hundred percent (100%) of the cost of such equipment, and (ii) $1,500,000.00. Borrower will provide the Lender with copies of the invoice and any purchase agreement for such equipment. Upon payment for such equipment, Borrower shall obtain a final bill of sale from the supplier of the equipment, and provide a copy thereof to Lender.

SECTION 3B. EQUIPMENT LINE OF CREDIT.

3B.1 Equipment Line of Credit . The Lender agrees to extend to the Borrower a secured equipment line of credit in the principal amount of Eight Hundred Fifty Thousand and no/100 ($850,000.00) Dollars (herein, the “Equipment Line of Credit”). The Equipment Line of Credit shall be evidenced by an equipment line note dated March 30, 1998, executed by Borrower, in the principal sum of Eight Hundred Fifty Thousand and no/100 ($850,000.00) Dollars (the “Equipment Line Note”), payable to the order of the Lender as follows: interest only payable monthly until the “Conversion Date” as therein defined, followed by eighty-four (84) equal successive monthly installments of principal (the amount of each such principal payment to be calculated by dividing the outstanding principal balance of such Note on the Conversion Date by eighty-four (84)), plus interest as provided in the following sentence, commencing on the first day of the first full month following the Conversion Date and continuing on the same day of each successive month thereafter, provided that the 84th payment shall be in an amount equal to the entire remaining principal balance of such Note, plus all accrued and unpaid interest. Interest will be payable monthly (concurrently with each payment of principal) on the unpaid principal balance thereof from time to time unpaid calculated at a variable rate per annum equal to the Prime Rate minus one-half percent (1/2%), and after default or maturity, at a rate per annum equal to the Prime Rate plug three percent (3%) per annum. In addition, a late charge equal to three percent (3%) of each late payment may be charged on any payment not received by the Lender within five (5) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default or Event of Default. Interest on the Equipment Line Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.

The proceeds of the Equipment Line of Credit shall be used by Borrower solely to purchase two Toshiba Vertical Boring Mills. Borrower will provide the Lender with copies of the invoice and any purchase agreement for such equipment. Upon payment for such equipment, Borrower shall obtain a final bill of sale from the supplier of the equipment, and provide a copy thereof to Lender.”

8. Section 5 of the Loan Agreement is hereby amended in its entirety to read as follows:

“SECTION 5. GUARANTOR.

The payment and performance of all indebtedness, liabilities and obligations of the Borrower to the Lender, whether now existing or hereafter created or arising, including, without limitation, the Loans (and all renewals, extensions, modifications, amendments, refinancings and consolidations thereof or thereto), shall be unconditionally guaranteed by Guarantor, pursuant to a continuing guaranty, in form and substance satisfactory to the Lender (the “Guaranty”). The Guaranty shall provide that the liability of the Guarantor shall not exceed the aggregate sum of $750,000.00.”

9. In Section 8.2, the word “daily” in the third line, is deleted, and the word “monthly” is substituted therefor.

10. In Section 10:

(a) The fourth paragraph is amended in its entirety to read as follows:

“Borrower shall deliver to the Lender a monthly borrowing base certificate, in form acceptable to Lender, within fifteen (15) days after month-end.”

(b) The following last paragraph is added at the end of Section 10:

“Notwithstanding anything contained hereinabove to the contrary, commencing with the December 31, 1997 fiscal year end financial statements, the annual financial statements to be furnished by Borrower to Lender shall be reviewed annual financial statements instead of audited annual financial statements.”

11. Section 14.1(c) of the Loan Agreement is hereby amended in its entirety to read as follows:

“(c) Total Unsubordinated Debt to Tangible Net Worth . Borrower will maintain at all times a ratio of total unsubordinated Debt to Tangible Net Worth of not greater than 3.0 to 1.0.”

12. Section 14.1(d) of the Loan Agreement is hereby amended in its entirety to read as follows:

“(d) Capital Expenditures . Borrower will not make or incur Capital Expenditures in excess of (i) $3,000,000.00 in the aggregate during fiscal year 1998, and (ii) $500,000.00 in the aggregate during fiscal year 1999, and iii) $500,000.00 in the aggregate during fiscal year 2000.”

13. The Loan Agreement is further amended to change the address of the Lender, wherever it appears therein, to read: 135 S. LaSalle Street, Chicago, Illinois 60603.

14. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Line Note, and all other Indebtedness.

Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Line Note, and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and

continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

This Amendment confirms and assures a lien and continuing security interest in the Collateral heretofore granted in favor of the Lender under the Loan Agreement, and nothing contained herein shall in any manner impair the priority of such lien and security interest.

15. In order to induce Lender to extend the Equipment Loan and Equipment Line of Credit to Borrower as aforesaid, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no event of default as defined in the Loan Agreement, as amended hereby, or any other event which with the lapse of time, the giving of notice or both would constitute such an event of default, has occurred and is continuing.

16. Except as specifically amended and modified hereby, all of the terms and conditions of the Loan Agreement shall stand and remain unchanged and in full force and effect. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois.

IN WITNESS WHEREOF, the parties have entered into this Third Amendment to Loan and Security Agreement as of the 30th day of March, 1998.

BRAD FOOTE GEAR WORKS, INC.		LASALLE NATIONAL BANK
Borrower		Lender


By:	/s/ J. Cameron Drecoll	By:	/s/ [ILLEGIBLE]
	J. Cameron Drecoll

Title:	President	Title:	First Vice President

Attest:

By:	/s/ Joan M. Drecoll
	Joan M. Drecoll

Title:	Secretary

EXHIBIT 10.19

FOURTH AMENDMENT TO LOAN AND SECRITYAGREFMENT

This Fourth Amendment to Loan and Security Agreement is dated as of December 1, 1998 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE NATIONAL BANK formerly known as LaSalle Bank NI (“Lender”).

WHEREAS, Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and that certain Third Amendment to Loan and Security Agreement dated as of March 30, 1998 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans extended by Lender to Borrower: (i) a $2,200,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a $2,700,000.00 term loan (the “Term Loan”), (iii) a $1,500,000.00 equipment loan (the “Equipment Loan”), and (iv) an $850,000.00 non-revolving equipment line of credit (the “Equipment Line of Credit”); and

WHEREAS, Borrower has further requested that Lender (i) modify the interest rates charged on the foregoing loans, (ii) release the existing guaranty of J. Cameron Drecoll, and (iii) modify certain financial covenants and restrictions set forth in the Loan Agreement; and

WHEREAS, Lender has agreed to the foregoing requests provided Borrower executes and delivers such documents and instruments required by Lender, including amended and restated promissory notes to reflect the changes in the applicable interest rates charged on the aforesaid loans and this Amendment;

NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. Section 1.1 of the Loan Agreement is amended to delete the definitions of “Guarantor” and “Guaranty” without substitution.

3. The first three paragraphs in Section 2.3 of the Loan Agreement are deleted, and the following paragraphs are substituted therefor:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by an amended and restated revolving note, executed by the Borrower, dated December 1, 1998, payable to the Lender on April 1, 1999, and in the principal sum of Two Million Two Hundred Thousand and 00/100 ($2,200,000.00) Dollars (the “Revolving Note”). The date and amount of each advance under the Revolving Loan made by the Lender and of each repayment of principal thereon received by the Lender shall be recorded by the Lender in its records. The aggregate unpaid principal amount so recorded by the Lender shall be rebuttable presumptive evidence as to the

principal amount outstanding thereunder, provided , however , that the failure by the Lender so to record any such amount or any error in so recording any such amount shall not limit or otherwise affect the obligations of the Borrower under this Agreement or the Revolving Note to repay the principal amount of the entire Revolving Loan together with all interest accrued or accruing thereon.

Interest on the Revolving Note shall be payable at the times, in the manner, and at the applicable rates set forth in the Revolving Note. Interest on the Revolving Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.”

4. Section 3.1 of the Loan Agreement is deleted, and the following paragraphs are substituted therefor:

“3.1 Term Loan . The Lender has made the Borrower a secured term loan in the principal amount of Two Million Seven Hundred Thousand and no/100 ($2,700,000.00) Dollars (herein, the “Term Loan”) previously evidenced by that certain Term Note dated January 17, 1997 in the principal sum of $2,700,000.00. On and after December 1, 1998, the Term Loan shall be evidenced by an amended and restated term note dated December 1, 1998, executed by Borrower, in the principal sum of One Million Nine Hundred Ninety Two Thousand Eight Hundred Fifty Four and 00/100 ($1,992,854.00) Dollars (the “Term Note”), payable to the order of the Lender in successive monthly installments of principal in the sum of $32,143.00 each, commencing January 1,1999, and payable on the first (1st) day of each month thereafter, followed by a final balloon payment of the entire unpaid principal balance and accrued interest due on April 1, 1999.

Interest on the Term Note shall be payable at the times, in the manner, and at the applicable rates set forth in the Term Note. Interest on the Term Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.”

5. Section 3A of the Loan Agreement is deleted, and the following paragraphs are substituted therefor:

“SECTION 3A. EQUIPMENT LOAN.

3A.1 Equipment Loan . The Lender has made the Borrower a secured equipment loan in the principal amount of up to One Million Five Hundred Thousand and no/100 ($1,500,000.00) Dollars (herein, the “Equipment Loan”) previously evidenced by that certain Equipment Note dated March 30, 1998 in the principal sum of $1,500,000.00. On and after December 1, 1998, the Equipment Loan shall be evidenced by an amended and restated equipment note dated December 1, 1998, executed by Borrower, in the principal sum of One Million Three Hundred Seventy Five Thousand and 02/100 ($1,375,000.02) Dollars (the “Equipment Note”), payable to the order of the Lender in successive monthly installments of principal in the sum of $17,857.14 each, commencing January 1, 1999, and payable on the first (1st) day of each month thereafter, followed by a final payment of the entire unpaid principal balance and accrued interest due on May 1, 2005.

Interest on the Equipment Note shall be payable at the times, in the manner, and at the applicable rates set forth in the Equipment Note. Interest on the Equipment Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.”

6. Section 3B of the Loan Agreement is deleted, and the following paragraphs are substituted therefor:

“SECTION 3B. EQUIPMENT LINE OF CREDIT

3B.1 Equipment Line of Credit . The Lender has extended to the Borrower a secured equipment line of credit in the principal amount of up to Eight Hundred Fifty Thousand and no/100 ($850,000.00) Dollars (herein, the “Equipment Line of Credit”) previously evidenced by that certain Equipment Line Note dated March 30, 1998 in the principal sum of $850,000.00. Said line of credit has previously converted to a term loan in accordance with the terms of said note. On and after December 1, 1998, the Equipment Line of Credit shall be evidenced by an amended and restated equipment line note dated December 1, 1998, executed by Borrower, in the principal sum of Six Hundred Seventy Eight Thousand Three Hundred Thirty Three and 29/100 ($678,333.29) Dollars (the “Equipment Line Note”), payable to the order of the Lender in successive monthly installments of principal in the sum of $8,809.53 each, commencing January 1, 1999, and payable on the first (1st) day of each month thereafter, followed by a final payment of the entire unpaid principal balance and accrued interest due on May 1, 2005.

Interest on the Equipment Line Note shall be payable at the times, in the manner, and at the applicable rates set forth in the Equipment Line Note. Interest on the Equipment Line Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.”

7. Section 5 of the Loan Agreement is hereby deleted without substitution. All other references in the Loan Agreement to the capitalized term “Guarantor” or “Guarantors” are hereby deleted, without substitution.

compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default, or any other event which with the lapse of time, the giving of notice or both would constitute such an Event of Default, has occurred and is continuing.

13. Except as specifically amended and modified hereby, all of the terms and conditions of the Loan Agreement shall stand and remain unchanged and in full force and effect. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois.

IN WITNESS WHEREOF, the parties have entered into this Fourth Amendment to Loan and Security Agreement as of the 4th day of January, 1999.

BRAD FOOTE GEAR WORKS, INC.		LASALLE NATIONAL BANK
Borrower		Lender


By:	/s/ J. Cameron Drecoll	By:	/s/ Raymond J. Feldman
	J. Cameron Drecoll		Raymond J. Feldman

Title:	President	Title:	Vice President

Attest:


By:	/s/ Joan M. Drecoll
	Joan M. Drecoll

Title:	Secretary

EXHIBIT 10.20

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT is dated as of June 1, 1999 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS , Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third and Fourth Amendments to Loan and Security Agreement dated as of March 30, 1998 and December 1, 1998, respectively (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans extended by Lender to Borrower: (i) a $2,200,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a $1,992,854.00 term loan (the “Term Loan”), (iii) a $1,375,000.02 equipment loan (the “Equipment Loan”), and (iv) a $678,333.29 non-revolving equipment line of credit (the “Equipment Line of Credit”); and

WHEREAS , Borrower has requested that Lender (i) renew the Revolving Loan and increase the amount thereof to $3,000,000.00, (ii) provide a $200,000.00 subline under the Revolving Loan for standby letters of credit, (iii) renew the Equipment Line of Credit, and (iv) modify one of the financial covenants set forth in the Loan Agreement; and

WHEREAS , Lender has agreed to the foregoing requests provided Borrower executes and delivers such documents and instruments required by Lender, including new promissory notes to evidence the aforesaid loans being renewed and increased and this Amendment;

NOW, THEREFORE , for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. Section 1.1 of the Loan Agreement is amended as follows:

a. The definition of “Commitment Amount” is amended in its entirety to read as follows:

“Commitment Amount” shall mean, as of any applicable date of determination, Three Million and 00/100 ($3,000,000.00) Dollars, less the Letter of Credit Outstanding.

b. The following new definitions are hereby inserted in Section 1.1:

“Letter of Credit” shall mean any irrevocable letter of credit issued pursuant to Section 2.9 hereof, which letters of credit shall be (i) standby letters of credit, (ii) issued for such purposes as are reasonably acceptable to the Lender, (iii) denominated in Dollars, and (iv) otherwise in such form as may be approved from time to time by the Lender.

“Letter of Credit Outstanding” shall mean at any time, the sum of (i) the aggregate stated amount of all Letters of Credit then outstanding, plus (ii) all amounts theretofore drawn under Letters of Credit and not then reimbursed.

c. The definition of “Indebtedness” is hereby amended to add the following new subsection (7) thereto after the end of subsection (6) thereof:

“and (7) all obligations, contingent or otherwise, of the Borrower under or related to (i) any Letters of Credit now or hereafter issued by the Lender pursuant to the terms of this Agreement, and (ii) any other letters of credit heretofore, now or hereafter issued by Lender.”

d. The definition of “Loan Documents” is hereby amended to add the following words after the words “financing statements”: “letter of credit applications and/or reimbursement agreements,”

e. In the definition of “Revolving Loan”, the figure “$2,200,000.00” is deleted, and the figure “$3,000,000.00” is substituted therefor.

f. The definition of “Termination Date” is amended in its entirety to read as follows:

“Termination Date” shall mean December 31, 2000, or such earlier date upon which the Revolving Note becomes due and payable.

3. The first two paragraphs in Section 2.3 of the Loan Agreement are deleted, and the following paragraphs are substituted therefor:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by a renewal revolving note, executed by the Borrower, dated June 1, 1999, payable to the Lender on December 31, 2000, and in the principal sum of Three Million and 00/100 ($3,000,000.00) Dollars (the “Revolving Note”). The date and amount of each advance under the Revolving Loan made by the Lender and of each repayment of principal thereon received by the Lender shall be recorded by the Lender in its records. The aggregate unpaid principal amount so recorded by the Lender shall be rebuttable presumptive evidence as to the principal amount outstanding thereunder, provided , however , that the failure by the Lender so to record any such amount or any error in so recording any such amount shall not limit or otherwise affect the obligations of the Borrower under this Agreement or the Revolving Note to repay the principal amount of the entire Revolving Loan together with all interest accrued or accruing thereon.

4. The Loan Agreement is hereby amended to add the following new subsection 2.9 thereto:

“ 2.9 Letters of Credit . Borrower may request Lender at any time and from time to time after the date hereof and prior to the Termination Date, to issue, and subject to the terms and conditions of this Agreement, Lender shall issue for the account of Borrower one or more Letters of Credit, provided that no Letter of Credit shall be issued if after giving effect to such issuance, (i) the aggregate Letter of Credit Outstanding shall exceed $200,000.00, or (ii) such proposed Letter of Credit issuance would cause the aggregate unpaid principal amount of the Revolving Loan outstanding under this Agreement to exceed the lesser of the Commitment Amount or the Borrowing Base on the date of such issuance. No Letter of Credit shall expire later than the Termination Date. If any Letter of Credit should by its term expire after the Termination Date or if an Event of Default shall occur and not be cured by the applicable cure period, if any, Borrower will (i) cause all Letters of Credit to be returned to Lender undrawn and marked “canceled”, or (ii) if the Borrower is unable to do so, deposit cash in an account directed by Lender, sufficient to fully reimburse Lender for any future draw on the Letter of Credit.

In connection with each Letter of Credit issued by the Lender, Borrower will execute and deliver to the Lender a letter of credit application (using the Lender’s form) and such other documents required by the Lender. Borrower shall pay the Lender an annual fee equal to one percent (1.00%) per annum of the amount of each standby Letter of Credit issued by the Lender, payable quarterly in arrears. Borrower shall pay the Lender its customary fees and charges in connection with the issuance and processing of each commercial Letter of Credit issued by the Lender.

When Borrower desires the Lender to issue a Letter of Credit hereunder, it shall give Lender at least five (5) Business Days’ prior written notice (including telegraphic, telex, facsimile or cable communication) specifying the date on which the proposed Letter of Credit is to be issued (which shall be a Business Day), the stated amount of the Letter of Credit so requested, the expiration date of such Letter of Credit, the name and address of the beneficiary thereof, and such other information requested by Lender in connection therewith.

The obligations of the Borrower to reimburse the Lender for drawings made under any Letter of Credit shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation (i) any lack of validity or enforceability of any Letter of Credit, (ii) the existence of any claim, setoff, defense or other right which the Borrower may have at any time against a beneficiary of any Letter of Credit, (iii) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, (iv) payment by the Lender of any Letter of Credit against presentation of a demand, draft, or certificate or other document which does not comply with the terms of such Letter of Credit, (v) any other circumstance or happening whatsoever, which is similar to any of the foregoing, or (vi) the fact that any Event of Default shall have occurred and be continuing.

Borrower further acknowledges and agrees that in the event any Letter of Credit is drawn upon, the funds disbursed by Lender in connection therewith shall be deemed to constitute a disbursement by Lender to Borrower under the Revolving Note as of the date of said disbursement, and shall constitute principal indebtedness evidenced by the Revolving Note, and shall bear interest at the rate provided in the Revolving Note.”

5. Section 3.1 of the Loan Agreement is deleted, and the following paragraphs are substituted therefor:

“3.1 Term Loan . The Lender has made the Borrower a secured term loan in the principal amount of Two Million Seven Hundred Thousand and no/100 ($2,700,000.00) Dollars (herein, the “Term Loan”) originally evidenced by that certain Term Note dated January 17, 1997 in the principal sum of $2,700,000.00. On and after June 1, 1999, the Term Loan shall be evidenced by a renewal term note dated June 1, 1999, executed by Borrower, in the principal sum of One Million Eight Hundred Thirty Two Thousand One Hundred Thirty Nine and 00/100 ($1,832,139.00) Dollars (the “Term Note”), payable to the order of the Lender in successive monthly installments of principal in the sum of $32,143.00 each, commencing 1, 1999, and payable on the first (1st) day of each month thereafter, followed by a final balloon payment of the entire unpaid principal balance and accrued interest due on December 31, 2000.

6. Section 14.1 of the Loan Agreement is hereby amended as follows:

(a) Subsection 14.1(a) is hereby amended in its entirety to read as follows:

“(a) Minimum Tangible Net Worth. Borrower will maintain at all times a minimum Tangible Net Worth of not less than $4,000,000.00 (to be tested quarterly).”

7. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Line Note (as such terms are defined in the Loan Agreement, as amended hereby), and all other Indebtedness.

Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower, thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Line Note, and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

8. In order to induce Lender to enter into this Agreement, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default or Default has occurred and is continuing.

9. Except as specifically amended and modified hereby, all of the terms and conditions of the Loan Agreement shall stand and remain unchanged and in full force and effect. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois.

IN WITNESS WHEREOF, the parties have entered into this Fifth Amendment to Loan and Security Agreement as of the 1st day of June, 1999.

BRAD FOOTE GEAR WORKS, INC.		LASALLE BANK NATIONAL
Borrower		ASSOCIATION, Lender


By:	/s/ J. Cameron Drecoll	By:	/s/ Raymond J. Feldman
	J. Cameron Drecoll		Raymond J. Feldman
Title:	President	Title:	Vice President


Attest:

By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

Exhibit 10.21

NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT is dated as of April 30, 2002, between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS , Borrower has asked Lender to renew the Revolving Loan until April 29, 2003; and

WHEREAS , Lender has agreed to the foregoing requests provided Borrower executes and delivers such documents and instruments required by Lender, including a new renewal revolving note described below and this Amendment;

NOW, THEREFORE , for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. The definitions of “Borrowing Base”, “Termination Date” and “UCC” in Section 1.1 of the Loan Agreement are each amended in its entirety to read as follows:

“ Borrowing Base ” shall mean, as of any applicable date of determination, an amount equal to eighty percent (80%) of Borrower’s Eligible Accounts.

“ Termination Date ” shall mean April 29, 2003, or such earlier date upon which the Revolving Note becomes due and payable.

“ UCC ” shall mean the Uniform Commercial Code as in effect in the State of Illinois from time to time.

3. The first sentence of the first paragraph in Section 2.3 of the Loan Agreement is amended to read as follows:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by a renewal revolving note, executed by the Borrower, dated April 30, 2002, payable to the Lender on April 29, 2003,

and in the principal sum of Two Million and 00/100 ($2,000,000.00) Dollars (the “Revolving Note”).”

Hereafter, all references in the Loan Agreement and in this Amendment to the term “Revolving Note” shall be deemed to refer to the aforesaid renewal revolving note dated April 30, 2002, in the principal sum of $2,000,000.00, executed by Borrower, payable to the order of Lender on April 29, 2003, together with interest payable monthly as therein described.

4. Section 7.1 of the Loan Agreement is amended as follows:

(a) The definition of “Accounts” is hereby amended in is entirety to read as follows:

“ACCOUNTS: All present and future accounts, accounts receivable, health-care-insurance receivables, and other rights of the Borrower to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed of authorized to operate the game by a State or governmental unit of a State (excluding (i) rights to payment evidenced by chattel paper or an instrument, (iii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card) (collectively, “Accounts”);”.

(b) To add the following new last paragraphs at the end of Section 7.1:

“Without limiting the generality of the foregoing, to secure the prompt and complete payment, observance and performance of the Liabilities, Borrower hereby gives, grants and pledges to the Lender a continuing security interest in and to all of the Borrower’s right, title and interest in and to the following additional property and interests in property, whether now owned or existing or hereafter acquired or arising and wheresoever located: all letter-of-credit rights, supporting obligations, software, embedded software contained in Inventory and/or Equipment, commercial tort claims, notes secured by real estate, payment intangibles, and software together, in each instance, with all accessions and additions thereto, substitutions therefore, and all renewals, replacements, proceeds and products thereof.

Capitalized words and phrases used in this Section 7.1 herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the UCC.”

5. Section 7.5 of the Loan Agreement is hereby amended to add the following new last paragraph thereto:

“In addition to the foregoing paragraph, Borrower hereby irrevocably authorizes the Lender at any time and from time to time to file in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of

Borrower or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC or the Uniform Commercial Code of such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether Borrower is an organization, the type of organization and any organization identification number issued to Borrower and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. The Borrower agrees to furnish any such information to the Lender promptly upon request. To the extent applicable, Borrower also ratifies its authorization for the Lender to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date of this authorization. Borrower also authorizes the Lender to amend any existing UCC financing statements filed by the Lender against Borrower to reflect the Collateral.”

6. Section 13.1 of the Loan Agreement is amended to add the following new subsection thereto:

“(v) The Borrower’s organizational identification number issued by the Secretary of State of Illinois is ________. The exact legal name of the Borrower is as set forth in the first paragraph of this Agreement, and the Borrower currently does not conduct, nor has it during the last five (5) years conducted, business under any other name or trade name, except as reflected in Exhibit B attached hereto. The Borrower will not change its organizational identification number, its type of organization, its jurisdiction of organization or other legal structure.”

7. Section 15 of the Loan Agreement is hereby amended to add the following new subsections thereto:

“(x) If the Lender receives a notice from any other secured party of a proposed disposition of the Collateral or any portion thereof or otherwise learns of any such proposed disposition (whether or not such security interest is permitted by the terms of this Agreement; nothing in this subsection shall be construed to constitute consent by Lender to the creation of any security interest in the Collateral other than the Lender’s security interest)”

8. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note (as renewed as aforesaid), the Term Note and all other Indebtedness.

aforesaid), the Term Note and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

This Amendment confirms and assures a lien and continuing first priority security interest in the Collateral heretofore granted in favor of the Lender under the Loan Agreement, and nothing contained herein shall in any manner impair the priority of such lien and security interest.

9. In order to induce Lender to enter into this Agreement, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default or Default has occurred and is continuing.

10. Except as specifically amended and modified hereby, all of the terms and conditions of the Loan Agreement shall stand and remain unchanged and in full force and effect. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois.

11. Borrower further agrees to reimburse the Lender for its legal fees incurred in documenting the Revolving Loan renewal and other changes hereinabove described.

IN WITNESS WHEREOF, the parties have entered into this Ninth Amendment to Loan and Security Agreement as of the 30th day of April, 2002.

BRAD FOOTE GEAR WORKS, INC.		LASALLE BANK NATIONAL
Borrower		ASSOCIATION, Lender

By:	/s/ J. Cameron Drecoll	By:	/s/ Dean Best
	J. Cameron Drecoll		Dean Best
Title:	President	Title:	Vice President

Attest:

By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

Exhibit 10.22

THIRTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS THIRTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Agreement”) is dated as of April 29, 2004 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS , Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh and Twelfth Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003 and July 3, 2003, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $2,000,000.00 revolving line of credit loan (the “Revolving Loan”), and (ii) a consolidated term loan in the original principal sum of $6,290,373.00 (the “Term Loan”), and (iii) a $4,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”); and

WHEREAS , Borrower has asked Lender to (i) renew the Revolving Loan for one year in the increased amount of $2,500,000.00, (ii) consolidate the outstanding principal balances of the Term Loan and Equipment Loan into one consolidated term loan in the principal sum of $6,096,791.00, (iii) extend to Borrower a new $2,000,000.00 non-revolving equipment line of credit loan with a five year conversion feature, and (iv) make certain other changes to the Loan Agreement; and

WHEREAS , Lender has agreed to the foregoing requests provided Borrower executes and delivers such documents and instruments required by Lender, including, the new notes described below and this Amendment;

NOW, THEREFORE , for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. The definitions of a “Commitment Amount”, “Revolving Loan” and “Termination Date” in Section 1.1 of the Loan Agreement, are each amended in its entirety to read as follows:

“Commitment Amount” shall mean, as of any applicable date of determination, Two Million Five Hundred Thousand and 00/100 ($2,500,000.00) Dollars.

“Revolving Loan” shall mean the $2,500,000.00 revolving line of credit loan extended by the Lender to the Borrower under Section 2 of this Agreement, and any and all extensions, renewals, amendments, modifications, refinancings, conversions, consolidations and increases thereof or thereto.

“Termination Date” shall mean April 29, 2005, or such earlier date upon which the Revolving Note becomes due and payable.

3. In Section 1.1 of the Loan Agreement, the definition of “Indebtedness” is amended to add the following new subsection therein following Subsection (2A) therein:

“(2B) any and all Rate Management Obligations; and”

4. Section 1.1 of the Loan Agreement is hereby amended to add the following new definitions:

“Rate Management Agreement” means any Rate Management Transactions and any other agreement, device or arrangement providing for payments which are related to fluctuations of interest rates, exchange rates, forward rates or commodity prices, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, including, without limitation, any agreement between the Borrower and the Lender or any of its affiliates, and any schedules, confirmations and documents, and other confirming evidence between the parties confirming transactions thereunder, all whether now existing or hereafter arising, and in each case, as amended, modified or supplemented from time to time.

“Rate Management Obligations” means any and all obligations of the Borrower to the Lender or any of its affiliates, whether absolute, contingent or otherwise and howsoever and whensoever (whether now or hereafter) created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under or in connection with (i) any and all Rate Management Agreements, and (ii) any and all cancellations, buy-backs, reversals, terminations or assignments of any Rate Management Agreement.

“Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into between the Borrower and the Lender or any of its affiliates, which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures, or any other transaction which is governed by any Rate Management Agreement between the Borrower and the Lender or any of its affiliates.

5. The first sentence of the first paragraph in Section 2.3 of the Loan Agreement is amended to read as follows:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by a renewal revolving note, executed by the Borrower, dated April 29, 2004, payable to the Lender on April 29, 2005, and in the principal sum of Two Million Five Hundred Thousand and 00/100 ($2,500,000.00) Dollars (the “Revolving Note”).”

Hereafter, all references in the Loan Agreement and in this Amendment to the term “Revolving Note” shall be deemed to refer to the aforesaid renewal revolving note dated April 29, 2004 in the principal sum of $2,500,000.00, executed by Borrower, payable to the order of Lender on April 29, 2005, together with interest payable monthly as therein described.

6. Section 3A of the Loan Agreement is hereby amended in its entirety to read as follows:

“SECTION 3A. EQUIPMENT LOAN .

3A.1 Equipment Line of Credit . The Lender agrees to extend to the Borrower a non-revolving equipment line of credit in the principal amount of Two Million and 00/100 ($2,000,000.00) Dollars (such loan, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, the “Equipment Loan”). The Equipment Loan shall be evidenced by an equipment line note executed by Borrower in the principal sum of Two Million and 00/100 ($2,000,000.00) Dollars (such note, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, the “Equipment Note”). The Equipment Note shall be payable to the order of the Lender in installments of principal and interest, calculated at the applicable rate set forth in the Equipment Note, the terms of which are incorporated herein by reference.

The proceeds of the Equipment Loan shall be used by Borrower solely to purchase new and used equipment to be used in Borrower’s business. Lender shall advance one hundred percent (100%) against the invoice cost (excluding all soft costs) of the equipment being purchased. Borrower will provide the Lender with copies of the invoices and any purchase agreements for such equipment.

3A.2. Prepayment Penalty . If the Equipment Note provides that Borrower is required to pay a prepayment penalty in connection with any prepayment thereon, upon the occurrence of each prepayment on such Equipment Note, the Borrower shall pay the Lender the prepayment penalty calculated in accordance with the terms of the Equipment Note.”

7. Section 3.1 of the Loan Agreement is deleted, and the following paragraphs are substituted therefor:

“3.1 Term Loan . The Lender has previously made the following loans to Borrower: (i) a consolidated term loan in the principal sum of $6,290,373.00 evidenced by Borrower’s consolidated term note dated December 19, 2000 in said principal sum, payable to the order of

Lender in installments of principal plus interest as therein described, and (ii) a $4,000,000.00 non-revolving equipment line of credit loan evidenced by Borrower’s equipment line note dated July 3, 2003 payable to the order of Lender in installments of principal plus interest as therein described. At Borrower’s request, Lender has agreed to consolidate the outstanding principal balances of such loans into one consolidated term loan in the amount of $6,096,791.00 and renew such loan (hereafter, such consolidated and renewed loan, the “Term Loan”). The Term Loan shall be evidenced by an amended and restated consolidated term note dated April 29, 2004, executed by Borrower, in the principal sum of Six Million Ninety Six Thousand Seven Hundred Ninety One and 00/100 ($6,096,791.00) Dollars (the “Term Note”), payable to the order of the Lender in successive monthly installments of principal in the sum of $101,613.18 each, commencing May 1, 2004, and payable on the same day of each month thereafter, followed by a final payment of the entire unpaid principal balance and accrued interest due on April 1, 2009. Interest on the Term Note shall be payable at the times, in the manner, and at the applicable rates set forth in the Term Note. Interest on the Term Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.

3.2. Prepayment Penalty . If the Term provides that Borrower is required to pay a prepayment penalty in connection with any prepayment thereon, upon the occurrence of each prepayment on such Term Note, the Borrower shall pay the Lender the prepayment penalty calculated in accordance with the terms of the Term Note.”

8. Section 15 of the Loan Agreement is hereby amended to add the following new subsection thereto:

“(x) Nonpayment by Borrower of any Rate Management Obligation when due or the breach by Borrower of any term, provision or condition contained in any Rate Management Agreement.”

9. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note and all other Indebtedness.

Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

10. In order to induce Lender to enter into this Agreement, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default or Default has occurred and is continuing.

11. Except as specifically amended and modified hereby, all of the terms and conditions of the Loan Agreement shall stand and remain unchanged and in full force and effect. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois.

12. Borrower further agrees to reimburse the Lender for its legal fees incurred in documenting the aforesaid loans and other modifications hereinabove described.

IN WITNESS WHEREOF, the parties have entered into this Thirteenth Amendment to Loan and Security Agreement as of date first above written.

BRAD FOOTE GEAR WORKS, INC.		LASALLE BANK NATIONAL
Borrower		ASSOCIATION, Lender

By:	/s/ J. Cameron Drecoll	By:	/s/ Stephen Mares
	J. Cameron Drecoll		Stephen Mares
Title:	President	Title:	AVP

Attest:

By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

EXHIBIT 10.23

SEVENTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS SEVENTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of February 1, 2006 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS , Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth and Sixteenth Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15, 2004, April 29, 2005 and June 15, 2005, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $3,500,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan in the original principal sum of $6,096,791.00 (the “Term Loan”), (iii) a $3,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”), and (iv) a $1,500,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan No. 2”); and

WHEREAS , Borrower has asked Lender to grant the following loan requests: (i) consolidate the outstanding principal balances of the Term Loan, the Equipment Loan and the Equipment Loan No. 2 into one consolidated term loan in the principal sum of $7,899,332.98, and (ii) make Borrower a new $7,100,000.00 non-revolving equipment line of credit loan with a term conversion feature; and

WHEREAS , Lender has agreed to the foregoing requests provided Borrower executes and delivers such documents and instruments required by Lender, including, the notes described below and this Amendment;

NOW, THEREFORE , for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. The definitions of “Loans” and “Notes” in Section 1.1 of the Loan Agreement, are each amended in its entirety to read as follows:

“ Loans ” shall mean collectively, the Revolving Loan, the Term Loan, the Equipment Loan, all future loans made by the Lender to the Borrower, and all extensions, renewals, amendments, refinancings, modifications, consolidations, conversions, and increases thereof or thereto.

“ Notes ” shall mean collectively, the Revolving Note, the Term Note, the Equipment Note, all notes executed by Borrower evidencing future loans made by Lender to Borrower, and all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof or thereto.

3. Section 1.1 of the Loan Agreement is amended to delete the definitions: “Equipment Loan No. 2” and “Equipment Note No. 2”.

4. In Section 1.1 of the Loan Agreement, the definition of “Indebtedness” is amended to delete the following subsection therein following Subsection (2) therein:

“(2B) the Equipment Loan No. 2, together with all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof; and”

5. Section 3B of the Loan Agreement entitled: “Equipment Loan No. 2” is hereby deleted. All other references in the Loan Agreement to “Equipment Loan No. 2” or “Equipment Note No. 2” are hereby deleted.

6. Section 3.1 of the Loan Agreement is deleted, and the following paragraphs are substituted therefor:

“3.1 Term Loan . The Lender has previously made the following loans to Borrower: (i) a consolidated term loan in the principal sum of $6,096,791.00 evidenced by Borrower’s amended and restated consolidated term note dated April 29, 2004 in said principal sum, payable to the order of Lender in installments of principal plus interest as therein described, and (ii) a $3,000,000.00 non-revolving equipment line of credit loan with term conversion evidenced by Borrower’s amended and restated equipment line note dated November 15, 2004 payable to the order of Lender in installments of principal plus interest as therein described, and (iii) a $1,500,000.00 non-revolving equipment line of credit loan with term conversion evidenced by Borrower’s equipment line note dated June 15, 2005 payable to the order of Lender in installments of principal plus interest as therein described. At Borrower’s request, Lender has agreed to consolidate the outstanding principal balances of such loans into one consolidated term loan in the amount of $7,899,332.98 and extend such loan (hereafter, such consolidated and extended loan, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, hereafter called the “Term Loan”). The Term Loan shall be evidenced by a consolidated term note dated February 1, 2006, executed by Borrower, in the principal sum of Seven Million Eight Hundred Ninety Nine Thousand Three Hundred Thirty Two and 98/100 ($7,899,332.98) Dollars (such note, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, hereafter called the “Term Note”), payable to the order of the Lender in successive monthly installments of principal in the sum of $131,655.55 each, commencing February 28, 2006, and payable on the last day of each month thereafter, followed by a final payment of the entire unpaid principal balance and accrued interest due on January 31, 2011. Interest on the Term Note shall be payable at the times, in the manner, and at the applicable rates set forth in the Term Note. Interest on the Term Note shall be calculated on the basis of a 360-day year for the actual number of days the principal is outstanding.

3.2 Prepayment Penalty . If the Term Note provides that Borrower is required to pay a prepayment penalty in connection with any prepayment thereon, upon the occurrence of each prepayment on such Term Note, the Borrower shall pay the Lender the prepayment penalty calculated in accordance with the terms of the Term Note.”

7. Section 3A of the Loan Agreement is hereby amended in its entirety to read as follows:

“ SECTION 3A. EQUIPMENT LOAN.

3A.1 Equipment Line of Credit . The Lender agrees to extend to the Borrower a non-revolving equipment line of credit in the principal amount of Seven Million One Hundred Thousand and 00/100 ($7,100,000.00) Dollars (such loan, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, the “Equipment Loan”). The Equipment Loan shall be evidenced by an equipment line note dated February 1, 2006 executed by Borrower in the principal sum of Seven Million One Hundred Thousand and 00/100 ($7,100,000.00) Dollars (such note, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, hereafter called the “Equipment Note”). The Equipment Note shall be payable to the order of the Lender in installments of principal and interest, calculated at the applicable rate set forth in the Equipment Note, the terms of which are incorporated herein by reference.

8. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note and all other Indebtedness.

Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the

rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

9. In order to induce Lender to enter into this Amendment, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default or Default has occurred and is continuing.

11. Borrower further agrees to reimburse the Lender for its reasonable legal fees and other out-of-pocket costs incurred in documenting the aforesaid loan requests and modifications.

IN WITNESS WHEREOF, the parties have entered into this Seventeenth Amendment to Loan and Security Agreement as of date first above written.

Borrower:

BRAD FOOTE GEAR WORKS, INC.

By:	/s/ J. Cameron Drecoll
Title:	President

Attest:

By:	/s/ Joan M. Drecoll
Title:	Secretary

Lender:

LASALLE BANK NATIONAL ASSOCIATION

By:	/s/ Stephen P. Mares
Title:	Vice President

EXHIBIT 10.24

NINETEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS NINETEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of November 10, 2006 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS , Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth and Eighteenth Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15, 2004, April 29, 2005, June 15, 2005, February 1, 2006 and April 29, 2006, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $3,500,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan in the original principal sum of $7,899,332.98 (the “Term Loan”), and (iii) a $7,100,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”); and

WHEREAS , Borrower has asked Lender to (i) increase the Revolving Loan from $3,500,000.00 to $5,000,000.00, and (ii) increase the amount of the Equipment Loan to $11,000,000.00 and change the conversion date to April 29, 2007, and (iii) make certain other changes to the Loan Agreement; and

WHEREAS , Lender has agreed to the foregoing requests provided Borrower executes and delivers such documents and instruments required by Lender, including, the promissory notes described below and this Amendment;

NOW, THEREFORE , for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. The definitions of “Commitment Amount” and “EBITDA” in Section 1.1 of the Loan Agreement are each amended in its entirety to read as follows:

“ Commitment Amount ” shall mean, as of any applicable date of determination, Five Million and 00/100 ($5,000,000.00) Dollars.

(including the Illinois replacement tax), minus (v) unfinanced capital expenditures, minus (vi) distributions.

3. The first sentence of the first paragraph in Section 2.3 of the Loan Agreement is amended to read as follows:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by an amended and restated renewal revolving note, executed by the Borrower, dated November 10, 2006, payable to the Lender on April 29, 2007, and in the principal sum of Five Million and 00/100 ($5,000,000.00) Dollars (the “Revolving Note”).”

Hereafter, all references in the Loan Agreement and in this Amendment to the term “Revolving Note” shall be deemed to refer to the aforesaid amended and restated renewal revolving note dated November 10, 2006 in the principal sum of $5,000,000.00, executed by Borrower, payable to the order of Lender on April 29, 2007, together with interest payable monthly as therein described.

4. Section 3A of the Loan Agreement is hereby amended in its entirety to read as follows:

“ SECTION 3A. EQUIPMENT LOAN .

3A.1 Equipment Line of Credit . The Lender agrees to extend to the Borrower a non-revolving equipment line of credit in the principal amount of Eleven Million and 00/100 ($11,000,000.00) Dollars (such loan, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, the “Equipment Loan”). The Equipment Loan shall be evidenced by an amended and restated equipment line note dated November 10, 2006 executed by Borrower in the principal sum of Eleven Million and 00/100 ($11,000,000.00) Dollars (such note, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, hereafter called the “Equipment Note”). The Equipment Note shall be payable to the order of the Lender in installments of principal and interest, calculated at the applicable rate set forth in the Equipment Note, the terms of which are incorporated herein by reference.

5. Section 14.1 of the Loan Agreement is amended in its entirety to read as follows:

“14.1 Financial Covenants . Borrower covenants to Lender and agrees that so long as any Indebtedness shall remain unpaid:

(a) Minimum Tangible Net Worth . Borrower will maintain at all times a minimum Tangible Net Worth of not less than $4,000,000.00 (to be tested quarterly by the Lender).

(b) Cash Flow Coverage . Borrower will maintain at the end of each fiscal year of Borrower a Cash Flow Coverage of not less than 1.3 to 1.0 (to be tested annually by the Lender).

(c) Total Unsubordinated Debt to Tangible Net Worth . Borrower will maintain at all times a ratio of total unsubordinated Debt to Tangible Net Worth of not greater than 3.5 to 1.0 (to be tested quarterly by the Lender).

The financial requirements set forth hereinabove shall be computed in accordance with GAAP.”

6. The first paragraph of Section 10 of the Loan Agreement is hereby amended in its entirety to read as follows:

“As soon as available, but not later than ninety (90) days after the end of each fiscal year of Borrower, commencing with the fiscal year ended December 31, 2007, Borrower shall furnish the Lender with annual audited financial statements of Borrower, containing the balance sheet of the Borrower as of the close of each such fiscal year, statements of income and retained earnings and a statement of cash flows for each such fiscal year; and such other comments and financial details as are usually included in similar reports. Such financial statements shall (a) be in form and reporting basis satisfactory to the Lender, (b) be prepared in accordance with GAAP by an independent certified public accounting firm selected by Borrower and acceptable to the Lender (“Borrower’s Accounting Firm”), and (c) contain unqualified opinions as to the fairness of the statements therein contained. Borrower shall also provide to the Lender any management letters that may accompany the statements.”

7. The last paragraph of Section 10 of the Loan Agreement is hereby amended in its entirety to read as follows:

“The Lender shall make any and all audits and investigations which it deems reasonably necessary in connection with the Collateral. For the purposes of this Agreement, the Lender shall have free and ready access at all times during normal business hours, upon reasonable advance oral or written notice (unless in the Lender’s reasonable judgment a rapid deterioration or loss to any Collateral is threatened, in which case no notice shall be given and access shall not be limited to normal business hours), to the books of account, records, papers and documents of Borrower. Without limiting the generality of the foregoing, the Lender shall conduct an annual field audit of the Borrower (or more frequent audits if deemed reasonably necessary by the Lender under the circumstances then existing), and Borrower shall reimburse the Lender for all reasonable costs and expenses incurred by Lender’s for such audits.

8. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note and all other Indebtedness.

9. Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

10. In order to induce Lender to enter into this Amendment, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default or Default has occurred and is continuing.

12. Borrower further agrees to reimburse the Lender for its legal fees incurred in documenting the aforesaid loan modifications hereinabove described.

IN WITNESS WHEREOF, the parties have entered into this Nineteenth Amendment to Loan and Security Agreement as of date first above written.

Borrower:

BRAD FOOTE GEAR WORKS, INC.

By:	/s/ J. Cameron Drecoll
Title:	President

Attest:

By:	/s/ Joan M. Drecoll
Title:	Secretary

Lender:

LASALLE BANK NATIONAL ASSOCIATION

By:	/s/ Stephen P. Mares
Title:	Vice President

Exhibit 10.25

TWENTY-SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS TWENTY-SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of June 30, 2007 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS, Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth and Twenty-First Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15, 2004, April 29, 2005, June 15, 2005, February 1, 2006, April 29, 2006, November 10, 2006, January 8, 2007 and April 29, 2007, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $6,500,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan in the original principal sum of $7,899,332.98 (the “Term Loan”), and (iii) an $11,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”); and

WHEREAS, Borrower has asked Lender to (i) renew the Revolving Loan until June 30, 2008, and (ii) make Borrower a new $9,000,000.00 non-revolving equipment line of credit loan with term conversion feature, (iii) eliminate one of Borrower’s financial covenants set forth in the Loan Agreement, and (iv) make certain other changes to the Loan Agreement; and

WHEREAS, Lender has agreed to the foregoing loan requests provided Borrower executes and delivers such documents and instruments required by Lender, including, the promissory note described below and this Amendment;

NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. The definitions of “Loans”, “Notes”, and “Termination Date” in Section 1.1 of the Loan Agreement, are each amended in its entirety to read as follows:

“Loans” shall mean collectively, the Revolving Loan, the Term Loan, the Equipment Loan, the Equipment Loan No. 2, all future loans made by the Lender to the Borrower, and all

extensions, renewals, amendments, refinancings, modifications, consolidations, conversions, and increases thereof or thereto.

“Notes” shall mean collectively, the Revolving Note, the Term Note, the Equipment Note, the Equipment Note No. 2, all notes executed by Borrower evidencing future loans made by Lender to Borrower, and all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof or thereto.

“Termination Date” shall mean June 30, 2008, or such earlier date upon which the Revolving Note becomes due and payable.

3. Section 1.1 of the Loan Agreement is amended to add the following new definitions:

“Equipment Loan No. 2” shall have the meaning set forth in Section 3B hereof.

“Equipment Note No. 2” shall have the meaning set forth in Section 3B hereof.

4. In Section 1.1 of the Loan Agreement, the definition of “Indebtedness” is amended to add the following new subsection therein following Subsection (2A) therein:

“(2B) the Equipment Loan No. 2, together with all extensions, renewals, amendments, refinancings, modifications, consolidations and conversions thereof; and”

5. The first sentence of the first paragraph in Section 2.3 of the Loan Agreement is amended to read as follows:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by a renewal revolving note, executed by the Borrower, dated June 30, 2007, payable to the Lender on June 30, 2008, and in the principal sum of Six Million Five Hundred Thousand and 00/100 ($6,500,000.00) Dollars (the “Revolving Note”).”

Hereafter, all references in the Loan Agreement and in this Amendment to the term “Revolving Note” shall be deemed to refer to the aforesaid renewal revolving note dated June 30, 2007 in the principal sum of $6,500,000.00, executed by Borrower, payable to the order of Lender on June 30, 2008, together with interest payable monthly as therein described.

6. The Loan Agreement is hereby amended to add the following new subsection 3B thereto:

“ SECTION 3B. EQUIPMENT LOAN NO. 2.

3B.1 Equipment Line of Credit . The Lender agrees to extend to the Borrower a non-revolving equipment line of credit in the principal amount of Nine Million and 00/100 ($9,000,000.00) Dollars (such loan, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, the “Equipment Loan No. 2”). The Equipment Loan No. 2 shall be evidenced by an equipment line note dated June 30, 2007 executed by Borrower in the principal sum of Nine Million and 00/100

($9,000,000.00) Dollars (such note, together with any and all extensions, renewals, amendments, refinancings, modifications, conversions or consolidations thereof or thereto, the “Equipment Note No. 2”). The Equipment Note No. 2 shall be payable to the order of the Lender in installments of principal and interest, calculated at the applicable rate set forth in the Equipment Note No. 2, the terms of which are incorporated herein by reference.

The proceeds of the Equipment Loan No. 2 shall be used by Borrower solely to purchase new and used equipment to be used in Borrower’s business. Lender shall advance one hundred percent (100%) against the invoice cost (excluding all soft costs) of the equipment being purchased. Borrower will provide the Lender with copies of the invoices and any purchase agreements for such equipment.

3B.2. Prepayment Penalty . If the Equipment Note No. 2 provides that Borrower is required to pay a prepayment penalty in connection with any prepayment thereon, upon the occurrence of each prepayment on such Equipment Note No. 2, the Borrower shall pay the Lender the prepayment penalty calculated in accordance with the terms of the Equipment Note No. 2.”

7. Section 14.1 of the Loan Agreement is amended in its entirety to read as follows:

“ 14.1 Financial Covenants . Borrower covenants to Lender and agrees that so long as any Indebtedness shall remain unpaid:

(a) Cash Flow Coverage . Borrower will maintain at the end of each fiscal year of Borrower a Cash Flow Coverage of not less than 1.3 to 1.0 (to be tested annually by the Lender).

(b) Total Unsubordinated Debt to Tangible Net Worth . Borrower will maintain at all times a ratio of total unsubordinated Debt to Tangible Net Worth of not greater than 3.5 to 1.0 (to be tested quarterly by the Lender).

The financial requirements set forth hereinabove shall be computed in accordance with GAAP.”

8. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment No. 2 and all other Indebtedness.

thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Note No. 2 and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

12. Borrower further agrees to reimburse the Lender for its legal fees incurred in documenting the aforesaid loan renewal, new equipment loan and other modifications hereinabove described.

IN WITNESS WHEREOF, the parties have entered into this Twenty-Second Amendment to Loan and Security Agreement as of date first above written.

Borrower:

BRAD FOOTE GEAR WORKS, INC.

By:	/s/ J. Cameron Drecoll
	J. Cameron Drecoll
Title:	President

Attest:

By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

Lender:

LASALLE BANK NATIONAL ASSOCIATION

By:	/s/ [ILLEGIBLE]
Title:

EXHIBIT 10.26

TWENTY-THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS TWENTY-THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of October 4, 2007 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS , Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First and Twenty-Second Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15, 2004, April 29, 2005, June 15, 2005, February 1, 2006, April 29, 2006, November 10, 2006, January 8, 2007, April 29, 2007 and June 30, 2007, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $6,500,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan in the original principal sum of $7,899,332.98 (the “Term Loan”), and (iii) an $11,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”); and

WHEREAS , Borrower has asked Lender to (i) increase the amount of the Revolving Loan to $7,000,000.00, and (ii) modify the borrowing base formula for the Revolving Loan to provide for advances against eligible inventory, and (iii) make certain other changes to the Loan Agreement; and

WHEREAS , Lender has agreed to the foregoing loan requests provided Borrower executes and delivers such documents and instruments required by Lender, including, the promissory note described below and this Amendment;

NOW, THEREFORE , for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. The definitions of “Borrowing Base”, “Commitment Amount” and “Revolving Loan” in Section 1.1 of the Loan Agreement, are each amended in its entirety to read as follows:

“Borrowing Base” shall mean, as of any applicable date of determination, an amount equal to the sum of (i) eighty percent (80%) of Borrower’s Eligible Accounts, and (ii) the lesser

of (a) twenty-five percent (25%) of Borrower’s Eligible Inventory, or (b) Two Million Dollars ($2,000,000.00).

“Commitment Amount” shall mean, as of any applicable date of determination, Seven Million and 00/100 ($7,000,000.00) Dollars.

“Revolving Loan” shall mean the $7,000,000.00 revolving line of credit loan extended by the Lender to the Borrower under Section 2 of this Agreement, and any and all extensions, renewals, amendments, modifications, refinancings, conversions, consolidations and increases thereof or thereto.

3. Section 1.1 of the Loan Agreement is hereby amended to add the following additional definition:

“Eligible Inventory” shall mean such items of Inventory included in a Borrowing Base Certificate which, as of the date of such Borrowing Base Certificate and at all times thereafter: (i) satisfy the requirements for eligibility as described in Section 2.6A of this Agreement, (ii) do not violate the negative covenants and other provisions of this Agreement and do satisfy the affirmative covenants and other provisions of this Agreement, and (iii) are deemed by Lender, in its sole credit judgment, to be Eligible Inventory.

4. The first sentence of the first paragraph in Section 2.3 of the Loan Agreement is amended to read as follows:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by an amended and restated renewal revolving note, executed by the Borrower, dated October 4, 2007, payable to the Lender on June 30, 2008, and in the principal sum of Seven Million and 00/100 ($7,000,000.00) Dollars (the “Revolving Note”).”

Hereafter, all references in the Loan Agreement and in this Amendment to the term “Revolving Note” shall be deemed to refer to the aforesaid amended and restated renewal revolving note dated October 4, 2007 in the principal sum of $7,000,000.00, executed by Borrower, payable to the order of Lender on June 30, 2008, together with interest payable monthly as therein described.

5. The Loan Agreement is hereby amended to add the following new subsection 2.6A thereto:

“2.6A. Eligible Inventory . Upon Borrower’s delivery to Lender of a Borrowing Base Certificate, Lender shall determine, in its sole discretion, which Inventory listed thereon is “Eligible Inventory”. In making this determination, Lender will consider the following requirements:

(a) the Inventory consists solely of raw materials or finished goods (but not work-in-progress);

(b) the Inventory is in good and merchantable condition, is not slow-moving, obsolete or discontinued;

(d) the Inventory is not covered by or subject to a seller’s right to repurchase, or any consensual or nonconsensual lien or security interest, other than in favor of Lender;

(e) the Inventory does not consist of packaging or supplies;

(f) the Inventory was not produced in violation of the Fair Labor Standards Act and subject to the “hot goods” provisions contained in Title 29 U.S.C. §215;

(g) the Inventory is not subject to any agreement or license which would restrict the Lender’s ability to sell or otherwise dispose of such Inventory;

(h) the Inventory is not identified to any purchase order or contract to the extent progress or advance payments are received with respect to such Inventory; and

(i) the Lender shall not have determined in its reasonable discretion that the Inventory is unacceptable due to age, type, category, quality, quantity and/or any other reason whatsoever.

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

2.6A.1 Reserves . The Lender may establish reserves in such amounts, and with respect to such matters, as Lender shall, in its sole reasonable credit judgment, deem necessary or appropriate, against the amount of Revolving Loan which Borrower may otherwise request under this Section 2, including, without limitation, with respect to (i) price adjustments, damages, unearned discounts, returned products or other matters for which credit memoranda are issued in the ordinary course of Borrower’s business; (ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against Borrower’s loan account under any section of this Agreement; and (v) such other matters, events, conditions or contingencies as to which the Lender, in its sole discretion, determines from time to time should be established.”

6. The Loan Agreement is hereby amended to add the following new subsection 13.2A thereto:

“13.2A Inventory Representations and Warranties . Borrower represents and warrants that Lender may rely, in determining which Inventory listed on any Borrowing Base Certificate is Eligible Inventory, without independent investigation of any statements or representations made by Borrower on or with respect to any such Borrowing Base Certificate, and unless otherwise indicated in writing by Borrower, that:

(a) The Inventory consists solely of raw materials or finished goods (and not work-in-progress);

(b) the Inventory is in good and merchantable condition, is not slow-moving, obsolete or discontinued;

(d) the Inventory is not subject to any lien, claim, security interest or other encumbrance whatsoever, except the security interest of Lender hereunder;

(e) the Inventory does not consist of packaging or supplies;

(f) the Inventory has not been consigned;

(g) the Inventory is not now, and shall not at any time or times hereafter be, stored with a bailee, warehouseman or similar party without Lender’s prior written consent, and, if Lender gives such consent, Borrower will concurrently therewith cause any such bailee, warehouseman or similar party to execute and deliver to Lender, a warehouseman’s or similar agreement, in form and substance acceptable to Lender;

(h) the Inventory was not produced in violation of the Fair Labor Standards Act and subject to the “hot goods” provisions contained in Title 29 U.S.C. §215;

(i) the Inventory is not subject to any agreement or license which would restrict the Lender’s ability to sell or otherwise dispose of such Inventory;

(j) the Inventory is not identified to any purchase order or contract to the extent progress or advance payments are received with respect to such Inventory; and

(k) No covenant, representation or warranty contained in this Agreement with respect to such Inventory has been breached.”

8. Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Note No. 2 and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist

under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

11. Borrower further agrees to reimburse the Lender for its legal fees incurred in documenting the aforesaid Revolving Loan increase and other modifications hereinabove described.

[signature page follows]

IN WITNESS WHEREOF, the parties have entered into this Twenty-Third Amendment to Loan and Security Agreement as of date first above written.

Borrower:

BRAD FOOTE GEAR WORKS, INC.


By:	/s/ J. Cameron Drecoll
	J. Cameron Drecoll
Title:	President

Attest:

By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary


Lender:

LASALLE BANK NATIONAL ASSOCIATION

By:	/s/ [ILLEGIBLE]
Title:

EXHIBIT 10.27

TWENTY-FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS TWENTY-FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of October 18, 2007 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS, Borrower and Lender have entered into that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second and Twenty-Third Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15, 2004, April 29, 2005, June 15, 2005, February 1, 2006, April 29, 2006, November 10, 2006, January 8, 2007, April 29, 2007, June 30, 2007, and October 4, 2007, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $7,000,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan in the original principal sum of $7,899,332.98 (the “Term Loan”), (iii) an $11,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”), and (iv) a $9,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan No. 2”); and

WHEREAS, Borrower has informed Lender that ownership of all shares of the capital stock of Borrower has been or is about to be purchased by Tower Tech Holdings Inc., a Nevada corporation (“Tower Tech”), who, upon the consummation of such sale, is now or will become the parent company of the Borrower, and Borrower has become or will become a wholly-owned subsidiary of the Borrower [sic]; and

WHEREAS, Borrower has asked Lender to (i) waive Borrower’s violation of the change in control provisions in the Loan Agreement and modify such provision prospectively, and (ii) modify the Borrower’s financial covenants set forth in the Loan Agreement, and (iii) make certain other changes to the Loan Agreement; and

WHEREAS, Lender has agreed to the foregoing loan requests provided Borrower executes and delivers such documents and instruments required by Lender, including the promissory note described below and this Amendment;

NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. In Section 1.1 of the Loan Agreement, the definitions of “Capital Expenditures”, “Debt”, “EBITDA” and “Net Income” are hereby deleted.

3. Section 10 of the Loan Agreement is hereby amended to add the following additional paragraph at the end of Section 10:

“As soon as available, but not later than one hundred twenty (120) days after the end of each fiscal year of Tower Tech Holdings Inc., a Nevada corporation (“Tower Tech”), Borrower shall furnish the Lender with annual audited financial statements of Tower Tech, containing the balance sheet of Tower Tech as of the close of each such fiscal year, statements of income and retained earnings and a statement of cash flows for each such fiscal year, and including consolidating statements of any and all subsidiaries of Tower Tech, including, but not limited to the Borrower, and such other comments and financial details as are usually included in similar reports. Such financial statements shall (a) be in form and reporting basis satisfactory to the Lender, (b) be prepared in accordance with GAAP and certified by an independent certified public accounting firm of recognized standing selected by Tower Tech and reasonably acceptable to the Lender, and (c) contain unqualified opinions as to the fairness of the statements therein contained and be without adverse reference to going concern. Borrower shall also provide to the Lender any management letters that may accompany such statements.”

4. Borrower has informed Lender that ownership of all shares of the capital stock of Borrower has been or is about to be purchased by Tower Tech, and that upon consummation of such sale, Tower Tech is or will be the parent company of the Borrower, and Borrower has become or will become a wholly-owned subsidiary of the Borrower [sic]. The consummation of such sale would violate the terms of Section 14.3(e) and Section 14.3(g) of the Loan Agreement. Lender hereby waives Borrower’s violation of the foregoing covenants set forth in Section 14.3(e) and Section 14.3(g) of the Loan Agreement, triggered by the aforesaid sale of all the capital stock of Tower Tech. Said waivers are limited solely to such specific covenant violations, and shall not waive, suspend, or affect any other default by Borrower under the Loan Agreement, and Lender expressly reserves all of its rights and remedies with respect to any such other default(s).

5. Section 14.1 of the Loan Agreement is amended in its entirety to read as follows:

“14.1 Financial Covenants . Borrower covenants to Lender and agrees that so long as any Indebtedness shall remain unpaid:

(a) No Distributions . Borrower will make no distributions or dividends of any kind, except as expressly permitted by Section 14.3(i) hereof. This covenant will be measured at all times.

(b) Limitation on Debts Owed To Or By Affiliates . Indebtedness owed by Borrower to Affiliates and/or from Affiliates to Borrower will not exceed Five Hundred Thousand Dollars

($500,000.00) in the aggregate at all times. The foregoing sentence shall not be deemed to prohibit or apply to the approximate $25,000,000.00 in aggregate principal debt owed by Tower Tech to Tontine Overseas Funds, Ltd., Tontine Partners, L.P. and Tontine Capital Overseas Master Fund, L.P., which debt shall be evidenced by senior subordinated convertible promissory notes executed by Tower Tech in favor of such payees, and subordinated to all present and future indebtedness owed by Borrower to Lender pursuant to written subordination agreements in form acceptable to Lender.

(c) Subordinated Debt Payments . Borrower will not make any payments on Subordinated Debt except for interest payments thereon permitted in accordance with Section 14.3(i) hereof.

(d) Senior Debt to EBITDA . As of the end of each of its fiscal quarters, the Borrower shall maintain a ratio of Senior Debt to EBITDA of not greater than 3.0 to 1.0. This covenant will be tested quarterly on a trailing twelve month basis, beginning with the quarter ended December 31, 2007.

(e) Cash Flow Coverage . Borrower will maintain at the end of each fiscal year of Borrower a Cash Flow Coverage of not less than 1.20 to 1.0 (to be tested annually by the Lender).

For purposes of the foregoing financial covenants, the following definitions shall have the following meaning:

“ Affiliate ” of any Person shall mean (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person, (b) any officer or director of such Person, and (c) with respect to the Lender, any entity administered or managed by the Lender, or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans. A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract, ownership of voting securities, membership interests or otherwise.

“ Capital Expenditures ” shall mean all expenditures (including capitalized lease obligations) which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Borrower, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

“ Cash Flow Coverage ” shall have the meaning set forth in Section 1.1 hereof.

“ Debt ” shall mean, as to any Person, without duplication: (a) all indebtedness of such Person; (b) all borrowed money of such Person (including principal, interest, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments; (c) all obligations to pay the

deferred purchase price of property or services; (d) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person, and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; (e) all indebtedness secured by any lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such lien at the time of determination); (f) the aggregate amount of all capitalized lease obligations of such Person; (g) all contingent liabilities of such Person, whether or not reflected on its balance sheet; (h) all hedging obligations of such Person; (i) all Debt of any partnership of which such Person is a general partner; and (j) all monetary obligations of such Person under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). Notwithstanding the foregoing, Debt shall not include trade payables and accrued expenses incurred by such Person in accordance with customary practices and in the ordinary course of business of such Person.

“ Depreciation ” shall mean the total amounts added to depreciation, amortization, obsolescence, valuation and other proper reserves, as reflected on the Borrower’s financial statement and determined in accordance with GAAP.

“ EBITDA ” shall mean, for any period, (a) the sum of such period of: (i) Net Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes (including the Illinois replacement tax), plus (iv) Depreciation and amortization expense, plus (v) non-cash management compensation expense, plus (vi) all other non-cash charges, minus (b) the sum of such period of (i) unfinanced Capital Expenditures, and (ii) income or loss attributable to equity in any Affiliate or Subsidiary, in each case to the extent included in determining Net Income for such period (iii) distributions.

“ Interest Charges ” shall mean, for any period, the sum of: (a) all interest, charges and related expenses payable with respect to that fiscal period to a lender in connection with borrowed money or the deferred purchase price of assets that are treated as interest in accordance with GAAP, plus (b) the portion of capitalized lease obligations with respect to that fiscal period that should be treated as interest in accordance with GAAP, plus (c) all charges paid or payable (without duplication) during that period with respect to any hedging agreements.

“ Net Income ” shall mean, with respect to the Borrower for any period, the net income (or loss) of the Borrower for such period as determined in accordance with GAAP, excluding any extraordinary gains and any gains from discontinued operations.

“ Senior Debt ” shall mean all Debt of the Borrower other than Subordinated Debt.

The financial requirements set forth hereinabove shall be computed in accordance with GAAP.”

6. Section 14.3(e), Section 14.3(g) and Section 14.3(i) of the Loan Agreement are hereby each amended to read as follows:

“(e) Wind up, liquidate, or dissolve itself, reorganize, merge or consolidate with or into, or convey, sell, assign, transfer, lease, or otherwise dispose of (whether in one transaction or a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) or its business to any Person, or acquire all or substantially all of the assets or the business of any Person or enter in the sale of any capital stock of Borrower, which shall result in a change of control of the Borrower (other than the sale of the Borrower’s capital stock to Tower Tech Holdings Inc., a Nevada corporation; hereafter, “Tower Tech”); or”

“(g) Permit any change in the ownership of the shares of Borrower which shall result in a change of control of the Borrower (other than the sale of the Borrower’s capital stock to Tower Tech); or”

“(i) (1) make any distribution or dividend (other than stock dividends), whether in cash or otherwise, to any of its equityholders, (2) purchase or redeem any of its equity interest or any warrants, options or other rights in respect thereof, (3) pay any management fees or similar fees to any of its equityholders or any Affiliate thereof, (4) pay or prepay interest on, principal of, premium, if any, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or any other payment in respect of any Subordinated Debt, or (5) set aside funds for any of the foregoing. Notwithstanding the foregoing, so long as no Default or Event of Default exists or would result therefrom, the Borrower may make regularly scheduled payments of interest in respect of Subordinated Debt to the extent permitted under any subordination agreement executed by the Lender and any subordinated noteholder; or”

8. Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, and the Equipment Note, the Equipment Note No. 2 and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and all obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

11. Borrower further agrees to reimburse the Lender for its legal fees incurred in preparing and documenting the aforesaid loan modifications hereinabove described.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have entered into this Twenty-Fourth Amendment to Loan and Security Agreement as of date first above written.

Borrower:

BRAD FOOTE GEAR WORKS, INC.


By:	/s/ J. Cameron Drecoll
	J. Cameron Drecoll
Title:	President

Attest:


By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

Lender:

LASALLE BANK NATIONAL ASSOCIATION


By:	/s/ Stephen P. Mares
	Stephen P. Mares
Title:	FVP

Exhibit 10.28

TWENTY-SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS TWENTY-SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of January 15, 2008 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS, Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second, Twenty-Third, Twenty-Fourth and Twenty-Fifth Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15, 2004, April 29, 2005, June 15, 2005, February 1, 2006, April 29, 2006, November 10, 2006, January 8, 2007, April 29, 2007, June 30, 2007, October , 2007, October 18, 2007 and November 1, 2007, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $8,000,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan in the original principal sum of $7,899,332.98 (the “Term Loan”), (iii) an $11,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”), and (iv) a $9,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan No. 2”); and

WHEREAS, Borrower has asked Lender to (i) increase the amount of the Revolving Loan to $10,000,000.00, (ii) modify the borrowing base formula for the Revolving Loan, and (iii) make certain other changes to the Loan Agreement; and

NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Loan Agreement.

2. The definitions of “Borrowing Base”, “Commitment Amount” and “Revolving Loan” in Section 1.1 of the Loan Agreement, are each amended in its entirety to read as follows:

“Borrowing Base” shall mean, as of any applicable date of determination, an amount equal to the sum of (i) eighty percent (80%) of Borrower’s Eligible Accounts, and (ii) the lesser

of (a) fifty percent (50%) of Borrower’s Eligible Inventory, or (b) Four Million Dollars ($4,000,000.00).

“Commitment Amount” shall mean, as of any applicable date of determination, Ten Million and 00/100 ($10,000,000.00) Dollars.

“Revolving Loan” shall mean the $10,000,000,00 revolving line of credit loan extended by the Lender to the Borrower under Section 2 of this Agreement, and any and all extensions, renewals, amendments, modifications, refinancings, conversions, consolidations and increases thereof or thereto.

3. The first sentence of the first paragraph in Section 2.3 of the Loan Agreement is amended to read as follows:

“2.3 Revolving Note . The Revolving Loan shall be evidenced by an amended and restated renewal revolving note, executed by the Borrower, dated January 15, 2008, payable to the Lender on June 30, 2008, and in the principal sum of Ten Million and 00/100 ($10,000,000.00) Dollars (the “Revolving Note”).”

Hereafter, all references in the Loan Agreement and in this Amendment to the term “Revolving Note” shall be deemed to refer to the aforesaid amended and restated renewal revolving note dated January 15, 2008 in the principal sum of $10,000,000.00, executed by Borrower, payable to the order of Lender on June 30, 2008, together with interest payable monthly as therein described.

4. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of (a) all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment No. 2 and all other Indebtedness.

5. Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Note No. 2 and all other Indebtedness, it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

6. In order to induce Lender to enter into this Amendment, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default or Default has occurred and is continuing.

7. Except as specifically amended and modified hereby, all of the terms and conditions of the Loan Agreement shall stand and remain unchanged and in full force and effect. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois (exclusive of choice of law principles).

8. Borrower further agrees to reimburse the Lender for its legal fees incurred in documenting the aforesaid Revolving Loan increase and other modifications hereinabove described.

[signature page follows]

IN WITNESS WHEREOF, the parties have entered into this Twenty-Sixth Amendment to Loan and Security Agreement as of date first above written.

Borrower:

BRAD FOOTE GEAR WORKS, INC.


By:	/s/ Steven A. Huntington
	Steven A. Huntington
Title: Chief Financial Officer


Lender:

LASALLE BANK NATIONAL ASSOCIATION


By:	/s/ Stephen P. Mares
	Stephen P. Mares
Title: FVP

Exhibit 10.30

TWENTY-EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS TWENTY-EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of April 11, 2008 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

WHEREAS, Borrower and Lender have entered in that certain Loan and Security Agreement dated as of January 17, 1997, as amended by those certain letter amendments dated February 28, 1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second, Twenty-Third, Twenty-Fourth, Twenty-Fifth, Twenty-Sixth and Twenty-Seventh Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1, 1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15, 2004, April 29, 2005, June 15, 2005, February 1, 2006, April 29, 2006, November 10, 2006, January 8, 2007, April 29, 2007, June 30, 2007, October 4 2007, October 18, 2007, November 1, 2007, January 15, 2008 and January 31, 2008, respectively, and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the following loans made by Lender to Borrower: (i) a $10,000,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan in the original principal sum of $7,899,332.98 (the “Term Loan”), (iii) an $11,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan”), (iv) a $9,000,000.00 non-revolving equipment line of credit loan with term conversion feature (the “Equipment Loan No. 2”) and (v) all other Indebtedness (as defined in the Loan Agreement); and

WHEREAS, Lender has been asked ^. to waive Borrower’s violation of certain financial covenant set forth in the Loan Agreement and to make certain other modifications thereto; and

WHEREAS, Lender has agreed to the foregoing loan requests provided, among other conditions, that Borrower executes and delivers to this Amendment;

NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the foregoing premises, the parties hereto agree as follows:

1. The capitalized terms used herein without definition shall have the same meaning

herein as such terms have in the Loan Agreement.

2. Lender hereby waives Borrower’s violation of the foregoing covenants set forth in the Loan Agreement: (i) Borrower’s violation of the Senior Debt to EBITDA covenant set forth in Section 14.1(d) of the Loan Agreement for the fiscal quarters ended December 31, 2007 and March 31, 2008, and (ii) Borrower’s violation of the Cash Flow Coverage covenant set forth in Section 14.1(e) of the Loan Agreement for the fiscal year ended December 31, 2007. Said waivers are limited solely to such specific covenant violations for such periods, and shall not waive, suspend, or affect any other default by Borrower under the Loan Agreement, and Lender expressly reserves all of its rights and remedies with respect to any such other default(s).

3. Section 14.1 of the Loan Agreement is amended in its entirety to read as follows:

“14.1 Financial Covenants . Borrower covenants to Lender and agrees that so long as any Indebtedness shall remain unpaid:

(a) No Distributions . Borrower will make no distributions or dividends of any kind, except as expressly permitted by Section 14.3(i) hereof. This covenant will be measured at all times.

(b) Limitation on Debts Owed To Or By Affiliates . Indebtedness owed by Borrower to Affiliates and/or from Affiliates to Borrower will not exceed Five Hundred Thousand Dollars ($500,000.00) in the aggregate at all times. The foregoing sentence shall not be deemed to prohibit or apply to the approximate $25,000,000.00 in aggregate principal debt (hereafter, the “Tontine Debt”) owed by Broadwind Energy, Inc. f/ka Tower Tech Holdings Inc. (“Broadwind Energy”) to Tontine Overseas Funds, Ltd., Tontine Partners, L.P. and Tontine Capital Overseas Master Fund, L.P., which debt shall be evidenced by senior subordinated convertible promissory notes executed by Broadwind Energy in favor of such payees, and subordinated to all present and future indebtedness owed by Borrower to Lender pursuant to written subordination agreements in form acceptable to Lender. Any other indebtedness (including inter-company payables) owed by Borrower to Affiliates (other than described in the two preceding sentences) will be subordinated to all present and future indebtedness owed by Borrower to Lender in a manner satisfactory to the Lender.

(c) Subordinated Debt Payments . Borrower will not make any payments on Subordinated Debt except for interest payments thereon permitted in accordance with Section 14.3(i) hereof.

(d) Senior Debt to EB11DA . As of the end of each of its fiscal quarters beginning with the quarter ended June 30, 2008, the Borrower shall maintain a ratio of Senior Debt to annualized EBITDA of not greater than 3.0 to 1.0. This covenant will be tested quarterly beginning with the fiscal quarter ended June 30, 2008.

(e) Cash Flow Coverage . As of the end of each of its fiscal quarters beginning

with the quarter ended March 31, 2008, the Borrower shall maintain a Cash Flow Coverage of not less than the following (i) 1.5 to 1.0 at March 31, 2008, and (ii) 2.0 to 1.0 June 30, 2008 and thereafter (to be tested quarterly by the Lender commencing with the quarter ended March 31, 2008).

(f) Minimum EBITDA . As of the end of each of its fiscal quarters beginning with the quarter ended June 30, 2008, the Borrower shall maintain minimum EBITDA of not less than the following: (i) $7,500,000 at June 30, 2008, (ii) $15,000,000 at September 30, 2008, and (iii) $22,500,000 at December 31, 2008 and thereafter. This covenant will be tested quarterly beginning with the fiscal quarter ended June 30, 2008.

(g) Minimum Excess Borrowing Availability . Borrower will at all times on and after May 15, 2008, have $3,000,000.00 in excess of borrowing availability under the Revolving Loan.

For purposes of the foregoing financial covenants, the following definitions shall have the following meaning:

“ Cash Flow Coverage ” shall have the meaning set forth in Section 1.1 hereof.

“ Debt ” shall mean, as to any Person, without duplication, (a) all indebtedness of such Person; (b) all borrowed money of such Person (including principal, interest, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments; (c) all obligations to pay the deferred purchase price of property or services; (d) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account

of such Person, and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; (e) all indebtedness secured by any lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such lien at the time of determination); (f) the aggregate amount of all capitalized lease obligations of such Person; (g) all contingent liabilities of such Person, whether or not reflected on its balance sheet; (h) all hedging obligations of such Person; (i) all Debt of any partnership of which such Person is a general partner; and (j) all monetary obligations of such Person under (i) a so-called synthetic, of balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). Notwithstanding the foregoing, Debt shall not include trade payables and accrued expenses incurred by such Person in accordance with customary practices and in the ordinary course of business of such Person.

“ EBITDA ” shall mean, for any period, (a) the sum for such period of: (i) Net Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes (including the Illinois replacement tax), plus (iv) Depreciation and amortization expense, plus (v) non-cash management compensation expense, plus (vi) all other non-cash charges, minus (b) the sum for such period of (i) unfinanced Capital Expenditures, and (ii) income or loss attributable to equity in any Affiliate or Subsidiary, in each case to the extent included in determining Net Income for such period (iii) distributions.

“ Net Income ” shall mean means, with respect to the Borrower for any period, the net income (or loss) of the Borrower for such period as determined in accordance with GAAP, excluding any extraordinary gains and any gains from discontinued operations.

“ Senior Debt ” shall mean all Debt of the Borrower excluding Subordinated Debt.

The financial requirements set forth hereinabove shall be computed in accordance with

GAAP.”

4. All other references in the Loan Agreement to “Tower Tech Holdings Inc.” are amended to read Broadwind Energy, Inc. f/k/a Tower Tech Holdings Inc.

5. The Borrower acknowledges and agrees that the Loan Agreement is and as amended hereby shall remain in full force and effect, and that the Collateral is and shall remain subject to the lien and security interest granted and provided for by the Loan Agreement as amended hereby, for the benefit and security of (a) all obligations and indebtedness heretofore, now or hereafter owed by Borrower to Lender, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment No. 2 and all other Indebtedness (including, without limitation, the repayment of all sums when due under the Subsidiary Guaranty).

6. Without limiting the foregoing, the Borrower hereby agrees that, notwithstanding the execution and delivery hereof, (i) all rights and remedies of the Lender under the Loan Agreement, (ii) all obligations and indebtedness of the Borrower thereunder, and (iii) the lien and security interest granted and provided for thereby are and as amended hereby shall remain in full force and effect for the benefit and security of all obligations and indebtedness of the Borrower thereunder, including, without limitation, the indebtedness evidenced by the Revolving Note, the Term Note, the Equipment Note, the Equipment Note No. 2 and all other Indebtedness (including, without limitation, the repayment of all sums when due under the Subsidiary Guaranty), it being specifically understood and agreed that this Amendment shall constitute and be an acknowledgment and continuation of the rights, remedies, lien and security interest in favor of the Lender, and the obligations and indebtedness of the Borrower to the Lender, which exist under the Loan Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral.

7. In order to induce Lender to enter into this Amendment, the Borrower hereby represents and warrants to the Lender that as of the date hereto, each of the representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct and the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement, as amended hereby, and no Event of Default or Default has occurred and is continuing.

8. Except as specifically amended and modified hereby, all of the terms and conditions of the Loan Agreement shall stand and remain unchanged and in full force and effect. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois (exclusive of choice of law principles).

9. Borrower further agrees to reimburse the Lender for its reasonable legal fees incurred in documenting the aforesaid modifications hereinabove described.

[signature page follows]

IN WITNESS WHEREOF, the parties have entered into this Twenty-Eighth Amendment to Loan and Security Agreement as of date first above written.

Borrower:

BRAD FOOTS GEAR WORKS, INC.

By:
	J. Cameron Drecoll
Title:	Chief Executive Officer


Lender:

LASALLE BANK NATIONAL ASSOCIATION

EXHIBIT 10.31

AMENDED AND RESTATED RENEWAL REVOLVING NOTE

Amount: $10,000,000.00		Date: January 15, 2008
		Chicago, Illinois

On or before June 30, 2008 (the “Maturity Date”), the undersigned, BRAD FOOTE GEAR WORKS, INC., f/k/a BFG Acquisition Corp., an Illinois corporation (the “Borrower”), with its chief executive office located at 1309 S. Cicero Avenue, Cicero, Illinois 60804, for value received, hereby promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI, a national banking association (collectively, together with any holder hereof, the “Bank”), at the Bank’s main offices at 135 South LaSalle Street, Chicago, Illinois 60603, or such other address hereafter designated by the Bank in writing, the principal sum of Ten Million and 00/100 ($10,000,000.00) Dollars (U.S.), or if less, the aggregate unpaid principal amount of all advances (“Advances”) made by the Bank to the Borrower under this Note, plus all accrued and unpaid interest calculated and payable at the applicable rates and in the manner described below. Except as otherwise specifically provided herein and subject to the terms and conditions set forth in the Loan Agreement (as hereinafter defined), amounts borrowed hereunder may be repaid and reborrowed at any time and from time to time until the Maturity Date.

The outstanding principal balance of each Advance under this Note shall bear interest, at the Borrower’s option to be selected in the manner hereinafter set forth, at the Base Rate (as hereinafter defined) or “Adjusted LIBOR” (as hereinafter defined). Interest accruing on Advances bearing interest at the Base Rate shall be calculated on the basis of a year consisting of 360 days and shall be paid for the actual number of days elapsed. Interest accruing on Advances bearing interest at Adjusted LIBOR shall be calculated on the basis of a year consisting of 360 days and shall be paid for the actual number of days elapsed from the first day of the applicable Interest Period (as hereinafter defined) but not including the last day thereof.

Any amount of principal which is not paid when due, whether at the stated maturity, by acceleration, or otherwise, shall bear interest payable on demand at a fluctuating interest rate per annum equal at all times to the Base Rate plus three percent (the “Default Rate”). In addition, a late charge equal to three percent (3%) of each late payment may be charged on any payment not received by the Bank within five (5) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default or Event of Default.

Borrower hereby confirms that as of the execution date of this Note that the outstanding principal balance of this Note shall bear interest at the Base Rate unless and until Borrower exercises its option to select the Adjusted LIBOR rate option hereinabove described. Borrower furthers acknowledges and agrees that if no interest rate option is selected by Borrower for any one or more Advances for any applicable period during the term of this Note, such Advance(s) shall bear interest at the Base Rate.

Interest on the unpaid balance of each outstanding Advance bearing interest at the Base Rate shall be payable monthly on the last Banking Day of each month.

The term “Base Rate” shall mean the “Prime Rate” minus one hundred (100) basis points. The term “Prime Rate” at any time means the rate of interest in effect from time to time as set by the Bank and called its Prime Rate. The effective date of any change in the Prime Rate shall for purposes hereof be the date the rate is changed by the Bank. The Bank shall not be obligated to give notice of any change in the Prime Rate. It is expressly agreed that the use of the term “Prime Rate” is not intended nor does it imply that said rate of interest is a preferred rate of interest or one which is offered by the Bank to its most creditworthy customers.

At any time and from time to time, the Borrower may identify no more than five (5) portions of the outstanding principal balance of this Note (each such portion herein, a “LIBOR Loan”) which will bear interest at “Adjusted LIBOR”. Each LIBOR Loan must equal a minimum of $250,000.00, or if greater, in integral multiples of $50,000.00. “Adjusted LIBOR” means a rate of interest equal to one and three-quarters percent (1.75%) per annum in excess of the per annum rate of interest at which U.S. dollar deposits in an amount comparable to the amount of the relevant LIBOR Loan and for a period equal to the relevant “Interest Period” (as hereinafter defined) are offered generally to the Bank in the London Interbank Eurodollar market at 11.00 a.m. (London time) two Banking Days prior to the commencement of each Interest Period, as displayed in the Bloomberg Financial Markets system, or other authoritative source selected by the Bank in its sole discretion, divided by a number determined by subtracting from 1.00 the maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency liabilities, such rate to remain fixed for such Interest Period. “Interest Period” shall mean successive 30 day periods as selected from time to time by the Borrower by written notice given to the Bank not less than three Banking Days prior to the first day of each respective Interest Period; provided that: (i) each such 30 day period occurring after such initial period shall commence on the day on which the next preceding period expires; (ii) the final Interest Period shall be such that its expiration occurs on or before the Maturity Date; (iii) at any time any Interest Period expires less than 30 days before the Maturity Date, then for the period commencing on such expiration date and ending on the Maturity Date, such LIBOR Loan shall convert to a loan bearing interest at the Base Rate; (iv) any Interest Period which commences on the last Banking Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Banking Day of the appropriate subsequent calendar month; and (v) each Interest Period which would otherwise end on a day which is not a Banking Day shall end on the next succeeding Banking Day, or, if such next succeeding Banking Day falls in the next succeeding calendar month, on the next preceding Banking Day. Interest on each LIBOR Loan shall be payable on the last Banking Day of each Interest Period, at maturity, after maturity on demand, and on the date of any payment hereon on the amount paid. The Borrower hereby further promises to pay to the order of the Bank, on demand, interest on the unpaid principal amount of each LIBOR Loan after maturity (whether by acceleration or otherwise) at the Default Rate. As used herein, “Banking Day(s)” shall mean each and all days other than a Saturday, Sunday or a legal holiday on which national banks are authorized or required to be closed for the conduct of commercial banking business in Chicago, Illinois.

The Bank’s determination of Adjusted LIBOR as provided above shall be conclusive, absent manifest error. Furthermore, if the Bank determines, in good faith (which determination

shall be conclusive, absent manifest error) prior to the commencement of any Interest Period that: (a) U.S. dollar deposits of sufficient amount and maturity for funding any LIBOR Loan are not available to the Bank in the London Interbank Eurodollar market in the ordinary course of business, or (b) by reason of circumstances affecting the London Interbank Eurodollar market, adequate and fair means do not exist for ascertaining the rate of interest to be applicable to the relevant LIBOR Loan, the Bank shall promptly notify the Borrower and such LIBOR Loan shall automatically convert on the last day of its then-current Interest Period to a loan bearing interest at the Base Rate.

If, after the date hereof, the introduction of, or any change in, any applicable law, treaty, rule, regulation, or guideline, or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdiction over the Bank or its lending office (a “Regulatory Change”) shall, in the opinion of counsel to the Bank, make it unlawful or impossible for the Bank to make or maintain any LIBOR Loan evidenced hereby, then the Bank shall promptly notify the Borrower and such LIBOR Loan shall automatically convert on the last day of its then-current Interest Period (or earlier if required by such Regulatory Change) to a loan bearing interest at the Base Rate.

If, for any reason, any LIBOR Loan is paid prior to the last Banking Day of its then-current Interest Period, the Borrower agrees to indemnify the Bank against any loss (including any loss on redeployment of the funds repaid), cost or expense incurred by the Bank as a result of such prepayment.

If any Regulatory Change (whether or not having the force of law) shall (a) impose, modify or deem applicable any assessment, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by, or any other acquisition of funds or disbursements by, the Bank; (b) subject the Bank or any LIBOR Loan to any tax, duty, charge, stamp tax or fee or change in the basis of taxation of payments to the Bank of principal or interest due from the Borrower to the Bank hereunder (other than a change in the taxation of the overall net income of the Bank); or (c) impose on the Bank any other condition regarding such LIBOR Loan or the Bank’s funding thereof, and the Bank shall determine (which determination shall be conclusive, absent manifest error) that the result of the foregoing is to increase the cost to the Bank of making or maintaining such LIBOR Loan or to reduce the amount of principal or interest received by the Bank hereunder, then the Borrower shall pay to the Bank, on demand, such additional amounts as the Bank shall, from time to time, determine are sufficient to compensate and indemnify the Bank for such increased cost or reduced amount.

The amount and date of each Advance, its applicable interest rate, its Interest Period, if any, and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided, however, any failure by Bank to make any such notation, or any error in any such notation, shall not relieve Borrower of its obligations to repay Bank the amount of any Advances, all accrued and unpaid interest thereon, and all other amounts payable by Borrower to Bank under or pursuant to this Note.

Unless otherwise agreed, all payments shall be first applied to accrued interest to the date of payment, then to unpaid principal, and any remaining amount toward Bank’s costs and

expenses incurred in collecting or attempting to collect this Note or incurred in any other matter or proceeding relating to this Note.

This Note is issued pursuant to, is entitled to the benefits of, and is secured by, among other documents, the Loan and Security Agreement dated as of January 17, 1997 between the Bank and the Borrower (such agreement, as amended, restated, supplemented or otherwise modified from time to time hereafter, the “Loan Agreement”), to which reference is hereby made for a more complete statement of the terms and conditions under which the revolving loan evidenced hereby is made, and the terms and conditions governing the collateral security for the obligations of the Borrower hereunder. Capitalized terms used in this Note without definition shall have the meaning set forth in the Loan Agreement.

This Note evidences an amendment and restatement of, increase to, and replacement and substitution for, that certain $8,000,000.00 revolving loan extended by the Bank to Borrower previously evidenced by Borrower’s Renewal Revolving Note dated November 1, 2007 in the principal sum of $8,000,000.00 (the “Prior Note”). The outstanding indebtedness evidenced by the Prior Note is continuing indebtedness evidenced hereby, and nothing herein shall be deemed to constitute a payment, settlement or novation of the Prior Note, or to release or otherwise adversely affect any lien, mortgage or security interest securing such indebtedness or any rights of the Bank against any guarantor, surety or other party primarily or secondarily liable for such indebtedness.

If any Event of Default shall occur, then this Note and all other Indebtedness, at the option of the Bank, shall immediately become due and payable, without notice or demand on the Borrower, together with all expenses, costs and attorneys’ fees incurred or expended by the Bank in enforcing its rights hereunder which shall become additional indebtedness immediately due and payable hereon, and the Bank may exercise any of the remedies provided by the Loan Agreement, or any other document securing this Note, or under the Illinois Uniform Commercial Code or other applicable law.

The Bank may, at any time or times hereafter, after an Event of Default shall occur, appropriate and apply toward the payment of this Note any moneys, credits, deposits, checks, accounts, drafts, securities, certificates of deposit or other property belonging to the Borrower, in the possession of or under the control of the Bank, as well as any indebtedness of the Bank to the Borrower, then due or to become due.

Borrower hereby waives presentment, demand, notice of dishonor and all other notices and demands in connection with the enforcement of the Bank’s rights hereunder. Any failure of the Bank to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other right at any other time.

The Borrower hereby authorizes the Bank to rely upon the telephonic or written instructions of any person identifying himself or herself as an officer or employee designated by the Borrower from time to time in any schedule or certificate, which schedule or certificate shall become effective when received by Bank, and upon any signature which it believes to be genuine, and the Borrower shall be bound thereby in the same manner as if such person were

actually authorized or such signature were genuine. The Borrower also agrees to indemnify the Bank and hold it harmless from any and all claims, damages, liabilities, losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) which may arise or be created by the acceptance of instructions for making Advances hereunder, and to pay all legal and other costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by the Bank in obtaining payment of the amounts payable by the Borrower. The Bank will perform a verification as to validity of signatures under its normal established procedures.

Borrower agrees to reimburse the holder or owner of this Note upon demand for any and all costs and expenses (including, without limit, court costs, legal expenses and reasonable attorney’s fees, whether inside or outside counsel is used, whether or not suit is instituted, and, if suit is instituted, whether at the trial court level, appellate level, in a bankruptcy, probate or administrative proceeding or otherwise) incurred in collecting or attempting to collect this Note or incurred in any other matter or proceeding relating to this Note. Any amounts payable with respect to the loan evidenced by this Note which shall not be paid when due, including, without limitation, principal, interest and the aforesaid costs and expenses, shall bear interest at the Default Rate from the date payable until the date they are paid in full.

Borrower hereby represents that the principal amount of the loan (including all Advances hereafter made hereunder) is a business loan, that the proceeds thereof shall be used for business purposes only and that the same is exempt from limitations upon lawful interest, pursuant to the terms of Section 205/4 of Chapter 815 of the Illinois Compiled Statutes.

This Note may not be amended, modified or changed nor shall any waiver of any of the provisions hereof be effective, except only by an instrument in writing, signed by the party against whom enforcement of any waiver, amendment, change, modification or discharge is sought.

No reference herein to the Loan Agreement, and no provision of this Note, the Loan Agreement, or any of the other Loan Documents, shall alter or impair the obligation of the Borrower, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

The provisions of this Note shall be binding upon Borrower, its successors and assigns, and shall inure to the benefit of and extend to the Bank and any holder hereof.

THIS NOTE HAS BEEN EXECUTED AND DELIVERED TO BANK AND ACCEPTED BY BANK IN THE STATE OF ILLINOIS, IN WHICH STATE IT SHALL BE PERFORMED BY BORROWER. THIS NOTE SHALL, IN ALL RESPECTS, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ILLINOIS, INCLUDING ALL MATTERS OF INTERPRETATION, ENFORCEMENT, CONSTRUCTION, VALIDITY, PERFORMANCE AND EFFECT.

EXCEPT AS PROVIDED IN THE FOLLOWING PARAGRAPH, THE BANK AND BORROWER AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF,

CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS. BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

BORROWER AGREES THAT THE BANK SHALL HAVE THE RIGHT TO PROCEED AGAINST BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION NECESSARY TO ENABLE THE BANK TO OBTAIN A JUDGMENT AGAINST THE BORROWER OR TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE BANK. BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE BANK HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH.

BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE BANK AND BORROWER ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

Bank hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and Bank’s policies and practices, Bank is required to obtain, verify and record certain information and documentation that identifies Borrower, which information includes the name and address of Borrower and such other information that will allow Bank to identify Borrower in accordance with the Act. In addition, Borrower shall (a) ensure that no person who owns a controlling interest in or otherwise controls Borrower or any subsidiary of Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (b) not use or permit the use of the proceeds of this Note to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.

[signature page follows]

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered as of the date first above written.

		BRAD FOOTE GEAR WORKS, INC.


		By:	/s/ J. Cameron Drecoll
			J. Cameron Drecoll
		Title:	President

Attest:


By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

Exhibit 10.32

EQUIPMENT LINE NOTE
(Non-Revolving Line With Conversion)

Amount: $9,000,000.00		Date: June 30, 2007
		Chicago, Illinois

The undersigned, BRAD FOOTE GEAR WORKS, INC., f/k/a BFG Acquisition Corp., an Illinois corporation (the “Borrower”), with its chief executive office located at 1309 S. Cicero Avenue, Cicero, Illinois 60650, for value received, hereby promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI, a national banking association (collectively, together with any holder hereof, the “Bank”), at the Bank’s main offices at 135 South LaSalle Street, Chicago, Illinois 60603, or such other address hereafter designated by the Bank in writing, the principal sum of Nine Million and 00/100 ($9,000,000.00) Dollars (U.S.) or if less, the aggregate unpaid principal amount of all advances (“Advances”) made by the Bank to the Borrower under this Note, plus all accrued and unpaid interest calculated and payable at the applicable rates and in the manner described below. Amounts borrowed and repaid under this Note may not be reborrowed.

The term “Conversion Date” shall mean June 30, 2008.

Prior to the Conversion Date, interest shall be payable monthly on this Note, commencing on July 31, 2007 and continuing on the last Business Day of each month thereafter, calculated on the unpaid principal balances hereof at a variable rate per annum equal to the Prime Rate (as hereinafter defined) minus one percent (1.0%). The term “Prime Rate” at any time means the rate of interest then most recently announced or published by the Bank as its prime rate. Each change in the interest rate on this Note shall take effect on the effective date of the change in the Prime Rate. It is expressly agreed that the use of the term “Prime Rate” is not intended nor does it imply that said rate of interest is a preferred rate of interest or one which is offered by the Bank to its most creditworthy customers. Bank shall be under no obligation to notify Borrower of any change in the Prime Rate. Interest shall be computed on the basis of a year consisting of 360 days and paid for actual days elapsed.

Upon the Conversion Date, the outstanding principal balance of this Note will be repayable in fifty-nine (59) successive monthly installments of principal (based on a sixty month amortization), plus interest as hereinafter provided (except that if the Fixed Interest Rate, as hereinafter defined, is selected by Borrower, this Note shall be repayable in monthly installments of principal and interest (or principal plus interest if the Variable Interest Rate option is chosen), as calculated by the Bank), commencing on July 31, 2008, and payable on the last Business Day of each month thereafter, followed by a final payment of the entire unpaid principal balance and accrued interest due on June 30, 2013 (the “Maturity Date”). Interest on this Note after the Conversion Date shall be payable concurrently with each principal payment, and shall at Borrower’s election (which shall be designated by Borrower in a writing delivered to the Bank prior to the Conversion Date) be calculated at either (i) a variable rate equal to the Prime Rate minus one percent (1.0%) (the “Variable Interest Rate”), or (ii) a fixed rate equal to two percent (2.0%) above the “Swap Rate” (as hereinafter defined) (such fixed rate, the “Fixed Interest Rate”).

Said election for either the Variable Interest Rate or Fixed Interest Rate shall be made only once and shall remain in effect for the balance of the term of this Note. The term “Swap Rate” shall mean a rate of interest equal to the per annum rate of interest at which the Bank determines to be its cost of funds equal to the yield on United States Treasury Notes or Securities having a maturity closest to the Maturity Date plus a corresponding swap spread as published in “Bloomberg’s Financial Markets Commodities News”, in effect on the Conversion Date, and in the absence of such publication, as determined by the Bank in its sole discretion.

Advances under this Note will be made in accordance with the terms of Section 3B of the Loan Agreement (as hereafter defined), the terms of which are incorporated herein by reference.

Any amount of principal which is not paid when due, whether at the stated maturity, by acceleration, or otherwise, shall bear interest payable on demand at an interest rate per annum equal at all times to the interest rate otherwise then prevailing on this Note plus three percent (the “Default Rate”). In addition, a late charge equal to five percent (5%) of each late payment may be charged on any payment not received by the Bank within five (5) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default or Event of Default.

Unless otherwise agreed, all payments shall be first applied to accrued interest to the date of payment, then to unpaid principal, and any remaining amount toward Bank’s costs and expenses incurred in collecting or attempting to collect this Note or incurred in any other matter or proceeding relating to this Note.

All payments made on account of the principal and interest hereof shall be evidenced by entries on the books and records of the Bank and shall be rebuttable presumptive evidence of the principal amount and interest owing hereon. The failure to so record any such amount or any error so recording any such amount shall not, however, limit or otherwise affect the obligations of the Borrower hereunder to repay the principal amount borrowed hereunder and all interest accruing thereon.

If Borrower prepays this Note while its bears interest at a variable rate, no prepayment penalty shall be charged Borrower for any such prepayment. If Borrower prepays this Note while it bears interest at the Fixed Interest Rate, such prepayment of the principal balance of this Note, whether in whole or in part, shall be subject to the following conditions:

(i) Not less than five (5) days prior to the date upon which Borrower desires to make such prepayment, Borrower shall deliver to the Bank written notice of its intention to prepay, which notice shall be irrevocable and state the prepayment amount and the prepayment date;

(ii) Borrower shall pay to the Bank, concurrently with such prepayment, a prepayment premium calculated in accordance with the following paragraph.

(iii) Borrower shall pay to the Bank all accrued and unpaid interest through the date of such prepayment on the principal balance being prepaid; and

(iv) Borrower shall pay to the Bank any other obligations of Borrower to the Bank then due with respect to this Note which remain unpaid.

Concurrently with any prepayment on this Note, the Borrower shall pay Bank a prepayment premium calculated as follows: (i) an amount equal to five percent (5%) of the principal amount prepaid if paid in the first (1st) loan year, (ii) four percent (4%) of the principal amount prepaid if paid in the second (2nd) loan year, (iii) three percent (3%) of the principal amount prepaid if paid in the third (3rd) loan year, (iv) two percent (2%) of the principal amount prepaid if paid in the fourth (4th) loan year, and (v) one percent (1%) if paid in the fifth (5th) loan year. For purposes of this Note, a “loan year” shall mean each 12 month period following the Conversion Date. Borrower acknowledges that the loan evidenced hereby was made on the basis and assumption that the Bank would receive the payments of principal and interest set forth herein for the full term hereof. Therefore, whenever the maturity hereof has been accelerated by the Bank by reason of the occurrence of an Event of Default or for any other reason, while this Note bears interest at the Fixed Interest Rate, there shall be due, in addition to the outstanding principal balance, accrued interest and other sums due hereunder, a premium equal to the prepayment premium that would be payable pursuant to the preceding paragraph if such principal balance had voluntarily been prepaid by Borrower.

This Note is issued pursuant to and entitled to the benefits of, and is secured by, the Loan and Security Agreement dated as of January 17, 1997 between the Borrower and the Bank (such agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter, the “Loan Agreement”) and the other Loan Documents (as such terms are defined in the Loan Agreement), to which reference is hereby made for a more complete statement of the terms and conditions under which the loan evidenced hereby is made, and the terms and conditions governing the collateral security for the obligations of the Borrower hereunder. Capitalized terms used herein without definition shall have the meaning set forth in the Loan Agreement.

The Bank may, at any time or times hereafter, after an Event of Default shall occur, appropriate and apply toward the payment of this Note any moneys, credits, deposits, checks, accounts, drafts, securities, certificates of deposit or other property belonging to the Borrower (or any of them), in the possession of or under the control of the Bank, as well as any indebtedness of the Bank to the Borrower, then due or to become due.

Borrower hereby represents that the principal amount of the loan is a business loan, that the proceeds thereof shall be used for business purposes only and that the same is exempt from limitations upon lawful interest, pursuant to the terms of Section 205/4 of Chapter 815 of the Illinois Compiled Statutes.

The provisions of this Note shall be binding upon Borrower, its successors and assigns, and shall inure to the benefit of and extend to the Bank and any holder hereof.

EXCEPT AS PROVIDED IN THE FOLLOWING PARAGRAPH, THE BANK AND BORROWER AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS. BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

[signature page follows]

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered as of the date first above written.

		BRAD FOOTE GEAR WORKS, INC.


		By:	/s/ J. Cameron Drecoll
			J. Cameron Drecoll
		Title:	President

Attest:


By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

Exhibit 10.33

AMENDED AND RESTATED EQUIPMENT LINE NOTE

(Non-Revolving Line With Conversion)

Amount: $11,000,000.00		Date: November 10, 2006
		Chicago, Illinois

The undersigned, BRAD FOOTE GEAR WORKS, INC., f/k/a BFG Acquisition Corp., an Illinois corporation (the “Borrower”), with its chief executive office located at 1309 S. Cicero Avenue, Cicero, Illinois 60650, for value received, hereby promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI, a national banking association (collectively, together with any holder hereof, the “Bank”), at the Bank’s main offices at 135 South LaSalle Street, Chicago, Illinois 60603, or such other address hereafter designated by the Bank in writing, the principal sum of Eleven Million and 00/100 ($11,000,000.00) Dollars (U.S.) or if less, the aggregate unpaid principal amount of all advances (“Advances”) made by the Bank to the Borrower under this Note, plus all accrued and unpaid interest calculated and payable at the applicable rates and in the manner described below. Amounts borrowed and repaid under this Note may not be reborrowed.

The term “Conversion Date” shall mean April 29, 2007.

Prior to the Conversion Date, interest shall be payable monthly on this Note, commencing on November 30, 2006 and continuing on the last Business Day of each month thereafter, calculated on the unpaid principal balances hereof at a variable rate per annum equal to the Prime Rate (as hereinafter defined) minus one percent (1.0%). The term “Prime Rate” at any time means the rate of interest then most recently announced or published by the Bank as its prime rate. Each change in the interest rate on this Note shall take effect on the effective date of the change in the Prime Rate. It is expressly agreed that the use of the term “Prime Rate” is not intended nor does it imply that said rate of interest is a preferred rate of interest or one which is offered by the Bank to its most creditworthy customers. Bank shall be under no obligation to notify Borrower of any change in the Prime Rate. Interest shall be computed on the basis of a year consisting of 360 days and paid for actual days elapsed.

Upon the Conversion Date, the outstanding principal balance of this Note will be repayable in fifty-nine (59) successive monthly installments of principal (based on a sixty month amortization), plus interest as hereinafter provided (except that if the Fixed Interest Rate, as hereinafter defined, is selected by Borrower, this Note shall be repayable in monthly installments of principal and interest (or principal plus if Variable Interest Rate option chosen), as calculated by the Bank), commencing on May 31, 2007, and payable on the last Business Day of each month thereafter, followed by a final payment of the entire unpaid principal balance and accrued interest due on April 30, 2012 (the “Maturity Date”). Interest on this Note after the Conversion Date shall be payable concurrently with each principal payment, and shall at Borrower’s election (which shall be designated by Borrower in a writing delivered to the Bank prior to the Conversion Date) be calculated at either (i) a variable rate equal to the Prime Rate minus one percent (1.0%) (the “Variable Interest Rate”), or (ii) a fixed rate equal to two percent (2.0%) above the “Swap Rate” (as hereinafter defined) (such fixed rate, the “Fixed Interest Rate”).

Advances under this Note will be made in accordance with the terms of Section 3C of the Loan Agreement (as hereafter defined), the terms of which are incorporated herein by reference.

(ii) Borrower shall pay to the Bank, concurrently with such prepayment, a prepayment premium calculated in accordance with the following paragraph.

(iii) Borrower shall pay to the Bank all accrued and unpaid interest through the date of such prepayment on the principal balance being prepaid; and

(iv) Borrower shall pay to the Bank any other obligations of Borrower to the Bank then due with respect to this Note which remain unpaid.

This Note evidences an amendment and restatement of, increase to, and replacement and substitution for, that certain $7,100,000.00 equipment line loan extended by the Bank to Borrower previously evidenced by Borrower’s Equipment Line Note dated February 1, 2006 in the principal sum of $7,100,000.00 (the “Prior Note”). The indebtedness evidenced by the Prior Note is continuing indebtedness evidenced hereby, and nothing herein shall be deemed to constitute a payment, settlement or novation of the Prior Note, or to release or otherwise adversely affect any lien, mortgage or security interest securing such indebtedness or any rights of the Bank against any guarantor, surety or other party primarily or secondarily liable for such indebtedness.

The Bank may, at any time or times hereafter, after an Event of Default shall occur, appropriate and apply toward the payment of this Note any moneys, credits, deposits, checks, accounts, drafts, securities, certificates of deposit or other property belonging to the Borrower (or any of them), in the possession of or under the control of the Bank, as well as any indebtedness of the Bank to the Borrower, then due or to become due.

The provisions of this Note shall be binding upon Borrower, its successors and assigns, and shall inure to the benefit of and extend to the Bank and any holder hereof.

[signature page follows]

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered as of the date first above written.

		BRAD FOOTE GEAR WORKS, INC.


		By:	/s/ J. Cameron Drecoll
			J. Cameron Drecoll
		Title:	President
Attest:


By:	/s/ Joan M. Drecoll
	Joan M. Drecoll
Title:	Secretary

Exhibit 10.34

CONSOLIDATED TERM NOTE

Amount: $7,899,332.98		Date: February 1, 2006
		Chicago, Illinois

FOR VALUE RECEIVED, the undersigned, BRAD FOOTE GEAR WORKS, INC., f/k/a BFG Acquisition Corp., an Illinois corporation (the “Borrower”), with its chief executive office located at 1309 S. Cicero Avenue, Cicero, Illinois 60650, hereby promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle National Bank, f/k/a LaSalle Bank NI, a national banking association (collectively, together with any holder hereof, the “Bank”), at the Bank’s main offices at 135 South LaSalle Street, Chicago, Illinois. 60603, or such other address hereafter designed by the Bank in writing, the principal sum of Seven Million Eight Hundred Ninety Nine Thousand Three Hundred Thirty Two and 98/100 ($7,899,332.98) Dollars (U.S.) in fifty-nine (59) equal successive monthly installments of principal of $131,655.55, commencing on February 28, 2006 and continuing on the last Business Day of each month thereafter, to and including December 31, 2010, followed by a final payment of the entire remaining principal balance plus all accrued and unpaid interest due on January 31, 2011 (the “Maturity Date”).

Borrower promises to pay to the Bank interest on the unpaid principal balance hereof calculated at a variable rate per annum equal to the Prime Rate (as hereinafter defined) minus one percent (1.0%), subject to Borrower’s one-time option set forth below to convert the rate charged on this Note to a fixed rate. Accrued interest shall be payable monthly concurrently with each principal payment and on the Maturity Date.

The term “Prime Rate” at any time means the rate of interest then most recently announced or published by the Bank as its prime rate. Each change in the interest rate on this Note shall take effect on the effective date of the change in the Prime Rate. It is expressly agreed that the use of the term “Prime Rate” is not intended nor does it imply that said rate of interest is a preferred rate of interest or one which is offered by the Bank to its most creditworthy customers. Bank shall be under no obligation to notify Borrower of any change in the Prime Rate. Interest shall be computed on the basis of a year consisting of 360 days and paid for actual days elapsed.

Borrower shall have a one-time option exercisable at any time during the term hereof and provided no Event of Default shall then exist, upon two Business Days prior written notice to the Bank to convert this Note to a fixed rate note (the “Fixed Rate Conversion”) and two Business Days after Bank’s receipt of such written notice (the “Fixed Rate Conversion Date”), and for the balance of the term of this Note, the entire unpaid principal balance of this Note shall bear interest at the Fixed Rate (as hereinafter defined). The “Fixed Rate” shall mean two hundred (200) basis points over the Swap Rate (as hereinafter defined), as determined by the Bank as of the Fixed Rate Conversion Date. Upon the Fixed Rate Conversion: (i) the outstanding principal balance of this Note shall be payable in equal monthly installments of principal and interest in an amount sufficient to fully amortize the outstanding principal balance of this Note, bearing interest at the Fixed Rate, by the Maturity Date, (ii) the Bank will notify the Borrower in writing as to the amount of such monthly payments, and (iii) such monthly payments shall remain

payable on the last Business Day of each month thereafter, with a final payment of the entire unpaid principal balance and all accrued and unpaid interest due on the Maturity Date.

The term “Swap Rate” shall mean a rate of interest equal to the per annum rate of interest at which the Bank determines to be its cost of funds equal to the yield on United States Treasury Notes or Securities having a maturity closest to the Maturity Date plus a corresponding swap spread as published in “Bloomberg’s Financial Markets Commodities News”, in effect on the Fixed Rate Conversion Date, and in the absence of such publication, as determined by the Bank in its sole discretion.

Borrower may prepay the principal balance of this Note in whole or in part at any time while this Note bears interest at a variable rate. Borrower may voluntarily prepay the principal balance of this Note in whole or in part at any time after the Fixed Rate Conversion Date, subject to the following conditions:

(i) Not less than 14 days prior to the date upon which Borrower desires to make such prepayment, Borrower shall deliver to Bank written notice of its intention to prepay, which notice shall be irrevocable and state the prepayment amount and the prepayment date;

(ii) Borrower shall pay to Bank, concurrently with such prepayment, the Prepayment Premium (as hereinafter defined);

(iii) Borrower shall pay to Bank all accrued and unpaid interest through the date of such prepayment on the principal balance being prepaid; and

(iv) Borrower shall pay to Bank any other obligations (related to this Note) of Borrower to Bank then due which remain unpaid.

Borrower acknowledges that the loan evidenced hereby was made on the basis and assumption that Bank would receive the payments of principal and interest set forth herein for the full term hereof. Therefore, whenever the maturity hereof has been accelerated by Bank by reason of the occurrence of an Event of Default, there shall be due, in addition to the outstanding principal balance, accrued interest and other sums due hereunder, a premium equal to the Prepayment Premium that would be payable pursuant to the preceding paragraph if such principal balance had been voluntarily prepaid by Borrower.

For purposes of this Note, the “Prepayment Premium” shall be the amount calculated as follows: (i) an amount equal to five percent (5%) of the principal amount prepaid if paid in the first loan year, (ii) an amount equal to four percent (4%) of the principal amount prepaid if paid

in the second loan year, (iii) an amount equal to three percent (3%) of the principal amount prepaid if paid in the third loan year, (iv) an amount equal to two percent (2%) of the principal amount prepaid if paid in the fourth loan year, and (v) an amount equal to one percent (1%) of the principal amount prepaid if paid in the fifth loan year or at any time thereafter. For purposes of this Note, a “loan year” shall mean each twelve-month period following the Fixed Rate Conversion Date.

Unless otherwise agreed, all payments shall be first applied to accrued interest to the date of payment, then to unpaid principal, and any remaining amount toward the Bank’s costs and expenses incurred in collecting or attempting to collect this Note or incurred in any other matter or proceeding relating to this Note.

This Note is issued pursuant to, is entitled to the benefits of, and is secured by, among other documents, the Loan and Security Agreement dated as of January 17, 1997 between the Bank and the Borrower (such agreement, as the same has heretofore or now been, or hereafter may be, amended, restated, supplemented or otherwise modified from time to time hereafter, the “Loan Agreement”), to which reference is hereby made for a more complete statement of the terms and conditions under which the loan evidenced hereby is made, and the terms and conditions governing the collateral security for the obligations of the Borrower hereunder. Capitalized terms used in this Note without definition shall have the meaning set forth in the Loan Agreement.

This Note evidences a consolidation and extension of prior loans made by the Bank to the Borrower in the original principal sums of $6,096,791.00, $3,000,000.00 and $1,500,000.00, evidenced by Borrower’s Amended and Restated Consolidated Term Note dated April 29, 2004 in the principal sum of $6,096,791.00, Borrower’s Amended and Restated Equipment Line Note dated November 15, 2004 in the principal sum of $3,000,000.00 and Borrower’s Equipment Line Note dated June 15, 2005 in the principal sum of $1,500,000.00 (collectively, the “Prior Notes”). The indebtedness evidenced by the Prior Notes is continuing indebtedness evidenced hereby, and nothing herein shall be deemed to constitute a payment, settlement or novation of the Prior Notes, or to release or otherwise adversely affect any lien, mortgage or security interest securing such indebtedness or any rights of the Bank against any guarantor, surety or other party primarily or secondarily liable for such indebtedness.

If any Event of Default shall occur, then this Note, at the option of the Bank, shall immediately become due and payable, without notice or demand on the Borrower, together with all expenses, costs and attorneys’ fees incurred or expended by the Bank in enforcing its rights hereunder which shall become additional indebtedness immediately due and payable hereon, and the Bank may exercise any of the remedies provided by the Loan Documents, or under the Illinois Uniform Commercial Code or other applicable law.

No reference herein to the Loan Agreement and no provision of this Note, the Loan Agreement, or any of the other Loan Documents shall alter or impair the obligation of the Borrower, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

The provisions of this Note shall be binding upon Borrower, its successors and assigns, and shall inure to the benefit of and extend to the Bank and any holder hereof.

EXCEPT AS PROVIDED IN THE FOLLOWING PARAGRAPH, THE BANK AND BORROWER AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS. BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered by its duly authorized officers as of the date first above written.

BRAD FOOTE GEAR WORKS, INC.


By:	/s/J. Cameron Drecoll
	J. Cameron Drecoll

Title:		President

Attest:

By:	/s/Joan M. Drecoll
	Joan M. Drecoll

Title:

Secretary

Exhibit 10.35

AGREEMENT GOVERNING EXTENSIONS OF CREDIT

This Agreement, dated October 4, 2007, is between Investors Community Bank (the “Bank”) and Tower Tech Systems Inc. (the “Borrower”).

RECITALS

A. Bank and Borrower are parties to certain extensions of credit, which extensions of credit are evidenced by loan documentation existing on the date hereof and may be evidenced by additional loan documentation executed by one or both parties from time to time; and

B. Bank and Borrower desire to enter into this Agreement relating to all such loan documentation.

AGREEMENT

1. Collateral .

i. Debt Documents; Obligations . Bank and Borrower have executed and anticipate that from time to time they may execute loan agreements, notes, guaranties and other documentation evidencing a debt or obligation of Borrower to Bank from time to time. All documents at any time executed by Borrower and evidencing a debt or obligation of Borrower to Bank are referred to herein as “Debt Documents.” All obligations of Borrower to Bank under Debt Documents and all other obligations of Borrower to Bank from time to time are referred to herein as “Obligations.” Obligations include but are not limited to obligations to repay loans, debts occurring by reason of overdrafts of checking accounts, obligations to take action such as purchasing insurance or maintaining property, and all other obligations of Borrower to Bank, including those obligations that exist on the date hereof and those obligations that may be incurred on or after the date hereof.

The following existing documents are Debt Documents:

Commercial Promissory Note and Commercial Loan Agreement dated 10/4/2007, Guaranty of R. B. A. Inc dated 10/4/2007, Guaranty of Tower Tech Holdings Inc. dated 10/4/2007.

ii. Security Documents; Collateral . Borrower has granted to Bank certain collateral, and Bank and Borrower anticipate that Borrower may grant to Bank additional collateral from time to time. All documents at any time granting to Bank a lien or security interest in any property are referred to herein as “Security Documents.” A document may be both a Debt Document and a Security Document. All of Borrower’s property in which Bank has a lien or security interest on the date hereof, and all property in which Bank may have a lien or security interest in the future, including but not limited to real estate and personal property, is referred to herein as “Collateral.”

The following existing documents are Security Documents:

Commercial Security Agreement dated 10/4/2007, Commercial Security Agreement dated 10/4/2007 pledged by R. B. A. Inc. and Commercial Security Agreement dated 10/4/2007 pledged by Tower Tech Holdings Inc.

iii. Cross Collateralization . All Collateral shall at all times be security for all Obligations. If Borrower grants Bank a lien or security interest at any time, such lien or security interest shall continue, and the Borrower’s property shall continue to be collateral for all Obligations, until all Obligations are paid in full and Bank and Borrower enter into a termination or release of the applicable Security Document.

2. Cross Default . Any time there is a default under any Debt Document, any Security Document or this Agreement, such default shall be a default under all Debt Documents, all Security Documents and this Agreement.

3. Cross Collateralization and Cross Default with Obligations of R. B. A. Inc . Borrower has guarantied the obligations of R. B. A. Inc. Such guaranty is a Debt Document secured by all Security Documents. Any default by R. B. A. Inc. under any agreements with Bank shall be a default under all of the Borrower’s Debt Documents and Security Documents and under this Agreement.

4. Covenants and Agreements . In addition to all agreements contained in the Debt Documents and Security Documents, Borrower agrees to comply with all of the following:

i.		Minimum Debt to Tangible Net Worth of consolidated companies (R. B. A. Inc. and Tower Tech Holdings LLC) 1 to 1 or greater based on Year end financial statements.
ii.		Minimum Debt service coverage ratio of 1.25 to 1 tested annually at year end.
iii.		Minimum Tangible Net Worth of consolidated companies (R. B. A. Inc. and Tower Tech Holdings LLC) of $10 Million or greater at year end.
iv.		Primary Depository account kept at Investors Community Bank for all companies listed above.
v.		No loans or leases to be entered into without the bank’s prior approval.

Annually, Borrower will provide to Lender Borrower’s financial statements, tax returns, annual internal audit reports or those prepared by independent accountants within 90 days after the close of each fiscal year. Any annual financial statements that Borrower provides will be:

o audited statements. o reviewed statements. x compiled statements.

x Borrower will provide Lender with interim financial reports on a quarterly basis, and within 45 days after the close of this business period. Interim financial statements will be:

o audited o reviewed x compiled statements.

5. This Agreement to Control . The Bank and Borrower intend for this Agreement to apply to all transactions between them, and this Agreement shall continue in effect until the Borrower and Bank enter into a termination agreement. Even if a particular Security Document ever describes certain Obligations without describing all Obligations, that Security Document shall secure all Obligations.

6. Effect of Agreement . This Agreement applies to all extensions of credit between Bank and Borrower. This Agreement is not an agreement to extend credit. Bank shall not be obligated under this Agreement to loan money to Borrower or otherwise extend credit to Borrower.

7. Participants; Assigns; Guarantors; Disclosure . The Borrower agrees that the Bank may, at its option, sell to one or more other financial institutions or other parties interests in the Obligations. Bank may, at Bank’s sole option, disclose to the purchaser of any such interest and to any guarantor of all or any part of the Obligations financial and other information concerning the Borrower.

8. Amendment . This Agreement may be amended only by a writing signed by the party to be bound thereby.

9. Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Wisconsin without giving effect to applicable principles of conflict of laws to the extent that the application of the laws of another jurisdiction would be required thereby.

10. Counterparts . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

11. Severability . In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

BORROWER :

Tower Tech Systems Inc.

a Wisconsin Corporation

By:	/s/ Steven A. Huntington
Steven A. Huntington
Title: C.F.O.

BANK :

INVESTORS COMMUNITY BANK

By:	/s/ Robert Boerger
Robert Boerger
Title: Sr. Commercial Lender

AGREEMENT OF GUARANTOR

The undersigned Guarantor has executed or may execute one or more guaranties of the obligations of Borrower to Bank. Each Guaranty executed by Guarantor shall guaranty all of the Obligations described above. Guarantor agrees to be bound by the foregoing Agreement. Guarantor guaranties all Obligations described above, including Obligations that may be created in the future if the Bank makes additional loans to the Borrower. Bank may make additional loans and Bank may agree to changes to the Debt Documents and Security Documents, all without affecting the obligations of Guarantor to Bank. Guarantor shall be responsible for keeping informed as to the transactions between Bank and Borrower, and Bank shall have no obligation to provide any notices or other information to Guarantor.

GUARANTOR :


R. B. A. Inc.		Tower Tech Holdings Inc.

a Wisconsin Corporation		a Nevada Corporation

By:	/s/ Steven A. Huntington	By:	/s/ Steven A. Huntington
Steven A. Huntington		Steven A. Huntington
Title: C.F.O.		Title: C.F.O.

Exhibit 10.36

BORROWER NAME AND ADDRESS	LENDER NAME AND ADDRESS	LOAN DESCRIPTION

Tower Tech Systems Inc.	Investors Community Bank
101 S. 16th St., P.O. Box 1957	860 N. Rapids Road	Number	44938101 mas
Manitowoc, WI 54221-1957	P.O. Box 700	Amount	$2,500,000.00
	Manitowoc, WI 54221-0700	Date	10-04-2007

o Refer to the attached Signature Addendum, incorporated herein, for additional Borrowers and their signatures.

COMMERCIAL PROMISSORY NOTE

DATE. The date of this Promissory Note (Note) is 10-04-2007.

GOVERNING AGREEMENT. This Note is further governed by the Commercial Loan Agreement between Lender and Borrower dated 10-04-2007, as modified, amended, or supplemented. All definitions of terms in the Commercial Loan Agreement apply to this Note as well. Upon execution of this Note, Borrower represents that Borrower has reviewed and is in compliance with all Loan Documents and the Commercial Loan Agreement.

PROMISE TO PAY. For value received, Borrower promises to pay Lender or Lender’s order, at Lender’s address, x $2,500,000.00 (Principal).

o $ (Principal) or the Borrowing Base, whichever is less.

o Single Advance. Borrower will receive all of this Principal in one advance. No additional advances are contemplated under this Note.

x Multiple Advances. The Principal amount stated above is the maximum amount of Principal that Borrower may borrow under this Note. On 10-04-2007 Borrower will receive $0.00 and future advances are contemplated. The conditions for future advances are stated in the Commercial Loan Agreement.

INTEREST. Borrower agrees to pay interest on the outstanding Principal balance of this Note at the rate of 6.880 percent per year until 11-01-2007.

x Variable Rate. This rate may then change as follows. The future rate will be 1.750% above The Previous Month Average 30 Day Libor Rate published in the Wall Street Journal. The rate may change as often as every month. The rate may never be higher than N/A or less than 6.000%. A change in the interest rate will affect the amount of each payment and the amount due at maturity.

x Post Maturity/Default Interest. Borrower agrees to pay interest on the unpaid balance of this Note owing after maturity at the applicable rate plus 3.00%

MATURITY/DEMAND. This Note is due on 10-04-2008.

PAYMENT. Borrower agrees to pay this Note as follows unless and until demand is made (if applicable):

Monthly payments of accrued interest calculated on the amount of credit outstanding beginning on 11-04-2007 and principal due on 10-04-2008. This is a variable rate loan and the payment amounts may change. The final payment may also change.

All payments must be made in United States dollars. Each payment Borrower makes on this Note will be applied first to any charges Borrower owes other than Principal and interest, then to interest that is due, and finally to Principal that is due. If Lender and Borrower agree to a different application of payments, that application will be described on this Note. The actual amount of Borrower’s final payment will depend upon Borrower’s payment record.

USE OF PROCEEDS: This loan is for business purposes.

WAIVERS AND CONSENT. Borrower waives protest, presentment for payment, demand, and notices of acceleration, intent to accelerate, and dishonor (if allowed by law).

x ADDITIONAL TERMS. Each payment borrower makes on this note will be applied first to interest that is due, then to Principal that is due and finally to any charges Borrower owes;

Interest is computed for the actual number of days principal is unpaid on the basis of a 360 day year;

This note is secured by all mortgages, security agreements and other documents granting a lien or security interest in the borrower’s property to the bank and all guaranties of borrower’s obligations to bank including but not limited to Com Sec Agree dated 10/4/2007, Com Sec Agree dated 10/4/2007 pledged by R.B.A. Inc. and Com Sec Agree dated 10/4/2007 pledged by Tower Tech Holdings Inc.

SIGNATURES. By signing under seal, Borrower agrees to the terms contained in this Note. Borrower also acknowledges receipt of a copy of this Note .

BORROWER:

Tower Tech Systems Inc.
Entity Name

/s/Steven A. Huntington		(Seal)			(Seal)
Signature Steven A. Huntington, C.F.O	Date		Signature	Date

		(Seal)			(Seal)
Signature	Date		Signature	Date

LENDER:

Investors Community Bank
Entity Name

/s/Robert Boerger		(Seal)			(Seal)
Signature Robert Boerger, Senior Commercial Lender	Date		Signature	Date

COMMERCIAL PROMISSORY NOTE (not to be used for FNMA, FHLMC, FHA or VA or for consumer loans)

Exhibit 10.37

BORROWER NAME AND ADDRESS	LENDER NAME AND ADDRESS	LOAN DESCRIPTION

Tower Tech Systems Inc. 101 S. 16th St., P.O. Box 1957 Manitowoc, WI 54221-1957	Investors Community Bank 860 N. Rapids Road P.O. Box 700 Manitowoc, WI 54221-0700	Number 44938101 mas Amount $2,500,000.00 Date 10-04-2007

o Refer to the attached Signature Addendum, incorporated herein, for additional Borrowers and their signatures.

COMMERCIAL LOAN AGREEMENT

LOAN STRUCTURE. This Commercial Loan Agreement (Agreement) contemplates o a single advance term Loan o a multiple advance draw Loan x a revolving multiple advance draw Loan. The principal balance will not exceed $2,500,000.00. Borrower will pay down a revolving draw Loan’s outstanding Principal to $ (Pay Down Balance) (Time Period). This Loan is for o agricultural x business purposes.

o Borrower may not voluntarily prepay the Loan in full at any time. x Borrower may prepay the Loan under the following terms and conditions (Any partial prepayment will not excuse any later scheduled payments until the Loan is paid in full.): None

x LATE CHARGES. If a payment is made more than 10 days after it is due, Borrower will pay a late charge of 5.000% of the late amount.

FEES. Borrower agrees to pay the following fees in connection with this Loan at closing or as otherwise requested by Lender:

Maker agrees to pay a charge of $20.00 for each check, automatic debit or ACH item presented for payment under this note which is returned unsatisfied.

REQUESTS FOR ADVANCES. Borrower authorizes Lender to honor a request for an advance from Borrower or any person authorized by Borrower. The requests for an advance must be in writing, by telephone, or any other manner agreed upon by Borrower and Lender, and must specify the requested amount and date and be accompanied with any agreements, documents, and instruments that Lender requires for the Loan. Lender will make same day advances, on any day that Lender is open for business, when the request is received before 2:00 P.M. (Advance Cut-Off Time). Lender will disburse the advance into Borrower’s demand deposit account (if any), account number , or in any other agreed upon manner. All advances will be made in United States dollars.

x These requests must be made by at least 1 (Number Required To Draw) persons, acting together, of those persons authorized to act on Borrower’s behalf.

o Advances will be made in the amount of at least $ (Minimum Amount Of Advance).

o Advances will be made no more frequently than (Minimum Frequency Of Advance).

x Discretionary Advances. Lender will make all Loan advances at Lender’s sole discretion.

o Obligatory Advances. Lender will make all Loan advances subject to this Agreement’s terms and conditions.

FINANCIAL INFORMATION. Borrower will prepare and maintain Borrower’s financial records using consistently applied generally accepted accounting principles then in effect. Borrower will provide Lender with financial information in a form acceptable to Lender and under the following terms.

A. Frequency. Annually, Borrower will provide to Lender Borrower’s financial statements, tax returns, annual internal audit reports or those prepared by independent accountants within 90 days after the close of each fiscal year. Any annual financial statements that Borrower provides will be o audited statements. o reviewed statements. x compiled statements.

o Borrower will provide Lender with interim financial reports on a (Monthly, Quarterly) basis, and within days after the close of this business period. Interim financial statements will be o audited o reviewed o compiled statements.

B. Requested Information. Borrower will provide Lender with any other information about Borrower’s operations, financial affairs and condition within 30 days after Lender’s request.

o C. Leverage Ratio. Borrower will maintain at all times a ratio of total liabilities to tangible net worth, determined under consistently applied generally accepted accounting principles, of (Total Liabilities to Tangible Net Worth Ratio) or less.

o D. Minimum Tangible Net Worth. Borrower will maintain at all times a total tangible net worth, determined under consistently applied generally accepted accounting principles, of $ (Minimum Tangible Net Worth) or more. Tangible net worth is the amount by which total assets exceed total liabilities. For determining tangible net worth, total assets will exclude all intangible assets, including without limitation goodwill, patents, trademarks, trade names, copyrights, and franchises, and will also exclude any accounts receivable that do not provide for a repayment schedule.

o E. Minimum Current Ratio. Borrower will maintain at all times a ratio of current assets to current liabilities, determined under consistently applied generally accepted accounting principles, of (Minimum Current Ratio) or more.

o F. Minimum Working Capital. Borrower will maintain at all times a working capital, determined under consistently applied generally accepted accounting principles by subtracting current liabilities from current assets, of $

(Minimum Working Capital) or more. For this determination, current assets exclude (Excluded Current Assets). Likewise, current liabilities include (1) all obligations payable on demand or within one year after the date on which the determination is made, and (2) final maturities and sinking fund payments required to be made within one year after the date on which the determination is made, but exclude all liabilities or obligations that Borrower may renew or extend to a date more than one year from the date of this determination.

ATTACHMENTS. The following documents are incorporated by reference into this Agreement: o Asset Based Financing Agreement addendum dated x Commercial Security Agreement addendum dated 10-04-2007 o Other.

ADDITIONAL TERMS: This loan agreement includes the Agreement Governing Extensions of Credit dated 10/4/2007.

x ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER) AND US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. BY SIGNING THIS AGREEMENT, THE PARTIES AFFIRM THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM.

SIGNATURES. By signing under seal, I agree to all the terms and conditions beginning on page 1 through the bottom of page 2 of this Agreement. Borrower also acknowledges receipt of a copy of this Agreement.

BORROWER:

Tower Tech Systems Inc.
Entity Name

/s/ Steven A. Huntington		(Seal)			(Seal)
Signature Steven A. Huntington, C.F.O Date				Signature Date
		(Seal)			(Seal)
Signature Date				Signature Date

LENDER:

Investors Community Bank
Entity Name

/s/ Robert Boerger	(Seal)
Signature Robert Boerger, Senior Commercial Lender Date

COMMERCIAL LOAN AGREEMENT: to be used with Form COMM-NOTE			NOT TO BE USED FOR LOANS SUBJECT TO CONSUMER LENDING LAWS

DEFINITIONS . In this Agreement, the following terms have the following meanings.

Accounting Terms . Accounting terms that are not specifically defined will have their customary meanings under consistently applied generally accepted accounting principles.

Loan. Loan refers to all advances made under the terms of this Agreement.

Loan Documents. Loan Documents include this Agreement and all documents prepared pursuant to the terms of this Agreement including all present and future promissory notes (Notes), security instruments, guaranties, and supporting documentation as modified, amended or supplemented.

Property. Property is any collateral, real, personal or intangible, that secures Borrower’s performance of the obligations of this Agreement.

ADVANCES. To the extent permitted by law, Borrower will indemnify Lender and hold Lender harmless for reliance on any request for advance that Lender reasonably believes to be genuine. Lender’s records are conclusive evidence as to the number and amount of advances and the Loan’s unpaid principal and interest. If any advance results in an overadvance (when the total amount of the Loan exceeds the principal balance) Borrower will pay the overadvance, as requested by Lender. Regarding Borrower’s demand deposit account(s) with Lender, Lender may, at its option, consider presentation for payment of a check or other charge exceeding available funds as a request for an advance under this Agreement. Any such payment by Lender will constitute an advance on the Loan.

CONDITIONS. Borrower will satisfy all of the following conditions before Lender makes any advances under this Agreement. If this Agreement provides for discretionary advances, satisfaction of these conditions does not commit Lender to making advances.

No Default. There has not been a default under the Loan Documents nor would a default result from making the advance.

Information. Borrower has provided all required documents, information, certifications and warranties, all properly executed on forms acceptable to Lender.

Inspections. Borrower has accommodated, to Lender’s satisfaction, all inspections.

Conditions and Covenants. Borrower has performed and complied with all conditions required for an advance and all covenants in the Loan Documents.

Warranties and Representations. The warranties and representations contained in this Agreement are true and correct at the time of making the advance.

Financial Statements. Borrower’s most recently delivered financial statements and reports are current, complete, true and accurate in all material respects and fairly represent Borrower’s financial condition.

Bankruptcy Proceedings. No proceeding under the United States Bankruptcy Code has been commenced by or against Borrower or any of Borrower’s affiliates.

WARRANTIES AND REPRESENTATIONS. Borrower makes these warranties and representations which will continue as long as this Agreement is in effect.

Power. Borrower is duly organized, validly existing and in good standing in all jurisdictions in which Borrower operates. Borrower has the power and authority to enter into this transaction and to carry on its business or activity as it is now being conducted. All persons who are required by applicable law and the governing documents of Borrower have executed and delivered to Lender this Agreement and other Loan Documents.

Authority. The execution, delivery and performance of this Agreement and the obligation evidenced by the Loan Documents are within Borrower’s duly authorized powers, has received all necessary governmental approval, will not violate any provision of law or order of court or governmental agency, and will not violate any agreement to which Borrower is a parry or to which Borrower or Borrower’s property is subject.

Name and Place of Business. Other than previously disclosed in writing to Lender, Borrower has not changed its name or principal place of business within the last ten years and has not used any other trade or fictitious name. Without Lender’s prior written consent, Borrower will not use any other name and will preserve Borrower’s existing name, trade names and franchises.

No Other Liens. Borrower owns or leases all property that is required for its business and except as disclosed, the property is free and clear of all liens, security interests, encumbrances and other adverse interests.

Compliance With Laws. Borrower is not violating any laws, regulations, rules, orders, judgments or decrees applicable to Borrower or its property, except as disclosed to Lender.

Financial Statements. Borrower represents and warrants that all financial statements Borrower provides fairly represent Borrower’s financial condition for the stated periods, are current, complete, true and accurate in all material respects, include all direct or contingent liabilities, and that there has been no material adverse change in Borrower’s financial condition, operations or business since the date the financial information was prepared.

COVENANTS. Until the Loan and all related debts, liabilities and obligations under the Loan Documents are paid and discharged, Borrower will comply with the following terms, unless Lender waives compliance in writing.

Inspection and Disclosure. Borrower will allow Lender or its agents to enter any of Borrower’s premises during mutually agreed upon times, to do the following: (1) inspect, audit, review and obtain copies from Borrower’s books, records, orders, receipts, and other business related data; (2) discuss Borrower’s finances and business with anyone who claims to be Borrower’s creditor; (3) inspect Borrower’s Property, audit for the use and disposition of the Property’s proceeds; or do whatever Lender decides is necessary to preserve and protect the Property and Lender’s interest in the Property. As long as this Agreement is in effect, Borrower will direct all of Borrower’s accountants and auditors to permit Lender to examine and make copies of Borrower’s records in their possession, and to disclose to Lender any other information that they know about Borrower’s financial condition and business operations. Lender may provide Lender’s regulator with required information about Borrower’s financial condition, operation and business or that of Borrower’s parent, subsidiaries or affiliates.

Business Requirements. Borrower will preserve and maintain its present existence and good standing in jurisdictions where Borrower is organized and operates. Borrower will continue its business or activities as presently conducted, by obtaining licenses, permits and bonds where needed. Borrower will obtain Lender’s prior written consent before ceasing business or engaging in any line of business that is materially different from its present business.

Compliance with Laws. Borrower will not violate any laws, regulations, rules, orders, judgments or decrees applicable to Borrower or Borrower’s property, except for those which Borrower challenges in good faith through proper proceedings after providing adequate reserves to fully pay the claim and its appeal should Borrower lose. On request, Borrower will provide Lender with written evidence that Borrower has fully and timely paid taxes, assessments and other governmental charges levied or imposed on Borrower and its income, profits and property. Borrower will adequately provide for the payment of taxes, assessments and other charges that have accrued but are not yet due and payable.

New Organizations. Borrower will obtain Lender’s written consent before organizing, merging into, or consolidating with an entity; acquiring all or substantially all of the assets of another; or materially changing legal structure, management, ownership or financial condition.

Other Liabilities. Borrower will not incur, assume or permit any debt evidenced by notes, bonds or similar obligations except debt in existence on the date of this Agreement and fully disclosed to Lender; debt subordinated in payment to Lender on terms acceptable to Lender; accounts payable incurred in the ordinary course of business and paid under customary trade terms or contested in good faith with reserves satisfactory to Lender; or as otherwise agreed to by Lender.

Notice. Borrower will promptly notify Lender of any material change in financial condition, a default under the Loan Documents, or a default under any agreement with a third party which materially and adversely affects Borrower’s property, operations or financial condition.

Dispose of No Assets. Without Lender’s prior written consent, Borrower will not sell, lease, assign, or otherwise distribute all or substantially all of its assets.

Insurance. Borrower will obtain and maintain insurance with insurers in amounts and coverages that are acceptable to Lender and customary with industry practice. This may include without limitation credit insurance, insurance policies for public liability, fire, hazard and extended risk, workers compensation, and, at Lender’s request, business interruption and/or rent loss insurance. Borrower may obtain insurance from anyone Borrower wants that is acceptable to Lender. Borrower’s choice of insurance provider will not affect the credit decision or interest rate. At Lender’s request, Borrower will deliver to Lender certified copies of all of these insurance policies, binders or certificates. Borrower will obtain and maintain a mortgagee or loss payee endorsement for Lender when these endorsements are available. Borrower will require all insurance policies to provide at least 10 days prior written notice to Lender of cancellation or modification. Borrower consents to Lender using or disclosing information relative to any contract of insurance required for the Loan for the purpose of replacing this insurance. Borrower also authorizes its insurer and Lender to exchange all relevant information related to any contract of insurance executed as required by any Loan Documents.

Property Maintenance. Borrower will keep property that is necessary or useful in its business in good working condition by making all needed repairs, replacements and improvements and by making payments due on the property.

DEFAULT. If the Loan is payable on demand, Lender may demand payment at any time whether or not any of the following events have occurred. Borrower will be in default if any one or more of the following occur. (1) Borrower fails to make a payment in full when due. (2) Borrower makes an assignment for the benefit of creditors or becomes insolvent, either because Borrower’s liabilities exceed its assets or Borrower is unable to pay debts as they become due; or Borrower petitions for protection under any bankruptcy, insolvency or debtor relief laws, or is the subject of such a petition or action and fails to have the petition or action dismissed within a reasonable period of time. (3) Borrower fails to perform any condition or to keep any promise or covenant on this Agreement or any debt or agreement Borrower has with Lender. (4) A default occurs under the terms of any instrument evidencing or pertaining to this Agreement. (5) If Borrower is a producer of crops, Borrower fails to plant, cultivate and harvest crops in due season. (6) Any loan proceeds are used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity, as further explained by federal law. (7) Anything else happens that either significantly impairs the value of the Property or, unless controlled by the New Jersey Banking Law, causes Lender to reasonably believe that Lender will have difficulty collecting the Loan.

REMEDIES. After Borrower defaults, and after Lender gives any legally required notice and opportunity to cure, Lender may at its option use any and all remedies Lender has under state or federal law or in any of the Loan Documents, including, but not limited to, terminating any commitment or obligation to make additional advances or making all or any part of the amount owing immediately due. Lender may set-off any amount due and payable under the terms of the Loan against Borrower’s right to receive money from Lender, unless prohibited by applicable law. Except as otherwise required by law, by choosing any one or more of these remedies Lender does not give up Lender’s right to use any other remedy. Lender does not waive a default if Lender chooses not to use a remedy, and may later use any remedies if the default continues or occurs again.

COLLECTION EXPENSES AND ATTORNEYS’ FEES. To the extent permitted by law, Borrower agrees to pay all expenses of collection, enforcement and protection of Lender’s rights and remedies under this Agreement. Expenses include, but are not limited to, reasonable attorneys’ fees including attorney fees as permitted by the United States Bankruptcy Code, court costs and other legal expenses. These expenses will bear interest from the date of payment until paid in full at the contract interest rate then in effect for the Loan. FL: Attorneys’ fees will be 10 percent of the principal sum due or a larger amount as the court judges as reasonable and just. GA: Attorneys’ fees will be 15 percent of the principal and interest owing.

GENERAL PROVISIONS. This Agreement is governed by the laws of the jurisdiction where Lender is located, the United States of America and to the extent required, by the laws of the jurisdiction where the Property is located.

Joint And Individual Liability And Successors. Each Borrower, individually, has the duty of fully performing the obligations on the Loan. Lender can sue all or any of the Borrowers upon breach of performance. The duties and benefits of this Loan will bind and benefit the successors and assigns of Borrower and Lender.

Amendment, Integration And Severability. The Loan Documents may not be amended or modified by oral agreement. Borrower agrees that any party signing this Agreement as Borrower is authorized to modify the terms of the Loan Documents. Borrower agrees that Lender may inform any party who guarantees this Loan of any Loan accommodations, renewals, extensions, modification, substitutions, or future advances. The Loan Documents are the complete and final expression of the understanding between Borrower and Lender. If any provision of the Loan Documents is unenforceable, then the unenforceable provision will be severed and the remaining provisions will be enforceable.

Waivers And Consent. Borrower, to the extent permitted by law, consents to certain actions Lender may take, and generally waives defenses that may be available based on these actions or based on the status of a party to the Loan. Lender may renew or extend payments on the Loan. Lender may release any borrower, endorser, guarantor, surety, or any other co-signer. Lender may release, substitute, or impair any Property securing the Loan. Lender’s course of dealing, or Lender’s forbearance from, or delay in, the exercise of any of Lender’s rights, remedies, privileges, or right to insist upon Borrower’s strict performance of any provisions contained in the Loan Documents, will not be construed as a waiver by Lender, unless the waiver is in writing and signed by Lender. Lender may participate or syndicate the Loan and share any information that Lender decides is necessary about Borrower and the Loan with the other participants.

Interpretation. Whenever used, the singular includes the plural and the plural includes the singular. The section headings are for convenience only and are not to be used to interpret or define the terms of this Agreement. Unless otherwise indicated, the terms of this Agreement shall be construed in accordance with the Uniform Commercial Code.

Notice. Unless otherwise required by law, any notice will be given by delivering it or mailing it by first class mail to the appropriate party’s address listed in this Agreement, or to any other address designated in writing. Notice to one party will be deemed to be notice to all parties. Time is of the essence.

Exhibit 10.38

DEBTOR NAME AND ADDRESS	LENDER NAME AND ADDRESS		LOAN DESCRIPTION

Tower Tech Holdings Inc.	Investors Community Bank	Number	44938101 mas
101 S. 16th St., P.O. Box 1957	860 N. Rapids Road	Amount $	2,500,000.00
Manitowoc, WI 54221-1957	P.O. Box 700	Date	10-04-2007
	Manitowoc,Wl 54221-0700

o Refer to the attached Signature Addendum, incorporated herein, for additional Debtors and their signatures.

COMMERCIAL SECURITY AGREEMENT

This Commercial Security Agreement (Security Agreement) is an Addendum to a Commercial Loan Agreement, dated 10-04-2007, (Loan Agreement) between Tower Tech Systems Inc . (Borrower) and Lender. This Security Agreement is further governed by the terms of the Loan Agreement, where applicable. References in this Addendum to terms defined in the Loan Agreement shall have the definitions given to them in the Loan Agreement, unless otherwise indicated. Debtor and Borrower may be the same. Where Borrower and Debtor are not the same, Debtor means the owner of the Property subject to this Security Agreement and Borrower means the obligor on the Loan Agreement.

SECURED DEBTS. This Security Agreement will secure the following debts (Secured Debts), together with all extensions, renewals, refinancings, modifications, and replacements of the Secured Debts:

(1)	Sums Advanced. All sums advanced and expenses incurred by Lender under the terms of the Loan Agreement or this Security Agreement.
(2)	Specific Debts . Debts created by the following instruments or agreements ( include items such as borrowers’ names, note amounts, interest rates, maturity dates, etc. ):

x (3) All Debts. Notice - The Property may also serve as collateral for future advances. All present and future debts from Borrower to Lender, even if this Security Agreement is not specifically referenced, or if the future debt is unrelated to or of a different type than this debt. If more than one person signs the Loan Agreement as Borrower, Debtor agrees that this Security Agreement will secure debts incurred by any Borrower either individually or with others who may not sign the Loan Agreement. Nothing in this Security Agreement constitutes a commitment to make additional or future loans or advances. Any such commitment must be in writing pursuant to the terms of the Loan Agreement.

SECURITY INTEREST . To secure the payment and performance of the Secured Debts, Debtor gives Lender a security interest in all of the Property described in this Security Agreement that Debtor owns or has sufficient rights in which to transfer an interest, now or in the future, wherever the Property is or will be located, and all proceeds and products of the Property. “Property” includes all parts, accessories, repairs, replacements, improvements, and accessions to the Property; any original evidence of title or ownership; and all obligations that support the payment or performance of the Property. “Proceeds” includes anything acquired upon the sale, lease, license, exchange, or other disposition of the Property; any rights and claims arising from the Property; and any collections and distributions on account of the Property. This Security Agreement remains in effect until terminated in writing, even if the Secured Debts are paid and Lender is no longer obligated to advance funds to Debtor or Borrower.

PROPERTY DESCRIPTION . The Property is described as follows:

x		Accounts and Other Rights to Payment: All rights to payment, whether or not earned by performance, including, but not limited to, payment for property or services sold, leased, rented, licensed, or assigned. This includes any rights and interests (including all liens) which Debtor may have by law or agreement against any account debtor or obligor of Debtor.

x		Inventory: All inventory held for ultimate sale or lease, or which has been or will be supplied under contracts of service, or which are raw materials, work in process, or materials used or consumed in Debtor’s business.

x		Equipment: All equipment including, but not limited to, machinery, vehicles, furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop equipment, office and record keeping equipment, parts, and tools. The Property includes any equipment described in a list or schedule Debtor gives to Lender, but such a list is not necessary to create a valid security interest in all of Debtor’s equipment.

x		Instruments and Chattel Paper: All instruments, including negotiable instruments and promissory notes and any other writings or records that evidence the right to payment of a monetary obligation, and tangible and electronic chattel paper.

x		General Intangibles: All general intangibles including, but not limited to, tax refunds, patents and applications for patents, copyrights, trademarks, trade secrets, goodwill, trade names, customer lists, permits and franchises, payment intangibles, computer programs and all supporting information provided in connection with a transaction relating to computer programs, and the right to use Debtor’s name.

x		Documents: All documents of title including, but not limited to, bills of lading, dock warrants and receipts, and warehouse receipts.

o		Farm Products and Supplies: All farm products including, but not limited to, all poultry and livestock and their young, along with their produce, products, and replacements; all crops, annual or perennial, and all products of the crops; and all feed, seed, fertilizer, medicines, and other supplies used or produced in Debtor’s farming operations. North Dakota only - This Security Agreement covers crops now growing. This Security Agreement also covers future crops to be grown in the current year or any year hereafter.

x		Government Payments and Programs: All payments, accounts, general intangibles, and benefits including, but not limited to, payments in kind, deficiency payments, letters of entitlement, warehouse receipts, storage payments, emergency assistance and diversion payments, production flexibility contracts, and conservation reserve payments under any preexisting, current, or future federal or state government program.

x		Investment Property: All investment property including, but not limited to, certificated securities, uncertificated securities, securities entitlements, securities accounts, commodity contracts, commodity accounts, and financial assets.

x		Deposit Accounts: All deposit accounts including, but not limited to, demand, time, savings, passbook, and similar accounts.

o		Specific Property Description: The Property includes, but is not limited by, the following (if required, provide real estate description):

USE OF PROPERTY . The Property will be used for o personal x business o agricultural o purposes.

ADDITIONAL TERMS: (include additional Security Agreement terms and contract requirements) .

Debtor Type: o Individual o Partnership x Corporation o State of Registration (if applicable) NV

SIGNATURES . By signing under seal, Debtor agrees to all the terms and conditions beginning on page 1 through the bottom of page 2 of this Agreement. Debtor acknowledges receipt of a copy of this Security Agreement.

DEBTOR:

Tower Tech Holdings Inc.
Entity Name

/s/ Steven A. Huntington			(Seal)			(Seal)
Signature Steven A. Huntington, C.F.O Date					Signature Date
			(Seal)			(Seal)
Signature Date					Signature Date

LENDER:

Investors Community Bank
Entity Name

/s/ Robert Boerger		(Seal)				(Seal)
Signature Robert Boerger, Senior Commercial Lender	Date			Signature Date

COMMERCIAL SECURITY AGREEMENT: to be used with Form COMM-AGREE				NOT TO BE USED FOR LOANS SUBJECT TO CONSUMER LENDING LAWS

GENERALLY . This Security Agreement is governed by the terms of the Loan Agreement and the laws of the state in which Lender is located. In the event of a dispute, the exclusive forum, venue, and place of jurisdiction will be the state in which Lender is located, unless otherwise required by law. Each Debtor’s obligations under this Security Agreement are independent of the obligations of any other Debtor. Lender may sue each Debtor individually or together with any other Debtor. Lender may release any part of the Property and Debtor will remain obligated under this Security Agreement for the remaining Property. The duties and benefits of this Security Agreement will bind and benefit the successors and assigns of Debtor and Lender. No modification of this Security Agreement is effective unless made in writing and signed by Debtor and Lender. If any provision of this Security Agreement is unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable. Whenever used, the plural includes the singular and the singular includes the plural. Section headings are for convenience only and should not he used to define or interpret the terms of this Security Agreement. Time is of the essence.

NAME AND LOCATION . Debtor’s name indicated on page 1 is Debtor’s exact legal name. If Debtor is an individual, Debtor’s address is Debtor’s principal residence. If Debtor is not an individual, Debtor’s address is the location of Debtor’s chief executive offices or sole place of business. If Debtor is an entity organized and registered under state law, Debtor has provided Debtor’s state of registration on page 1. Debtor will provide verification and registration and location upon Lender’s request. Debtor will provide Lender with at least 30 days notice prior to any change in Debtor’s name, address, or state of organization or registration.

WARRANTIES AND REPRESENTATIONS . Debtor owns the Property or, to the extent that this is a purchase money loan, will purchase the Property with the proceeds of the loan. The Property is free and clear of all liens, security interests, encumbrances, and other adverse claims and interests, except those to Lender or to which Lender consents in writing.

DUTIES TOWARD PROPERTY .

Protection of Lender’s Interest . Debtor will defend the Property against any other claim. Debtor agrees to do whatever Lender requires to protect Lender’s security interest and keep Lender’s claim in the Property ahead of the claims of other creditors. Debtor will not do anything to harm Lender’s position. Debtor will keep, and allow Lender reasonable access to, books, records, and accounts about the Property and Debtor’s business in general. If this Security Agreement covers chattel paper or instruments, either as original collateral or proceeds of the Property, Debtor will note Lender’s interest on the face of the chattel paper or instruments.

Use, Location, and Protection of the Property . Debtor will keep the Property in Debtor’s possession and in good repair. Debtor will use the Property only for commercial or agricultural purposes and will not change this specified use without Lender’s prior written consent. Lender has the right of reasonable access to inspect the Property and Debtor will immediately inform Lender of any loss or damage to the Property. Debtor will not cause or permit waste to the Property. Debtor will keep the Property at Debtor’s address unless Lender and Debtor agree that it may be kept at another location. If the Property is to be used in other states, Debtor will give Lender a list of those states. Debtor will notify Lender in writing and obtain Lender’s prior written consent to any change in location of any of the Property. The location of the Property is given to aid in the identification of the Property and does not in any way limit the scope of the security interest granted to Lender. Debtor will not use the Property in violation of any law. Debtor will notify Lender in writing prior to any change in Debtor’s address, name or, if an organization, any change in Debtor’s identity or structure. Debtor will pay all taxes and assessments levied or assessed against Debtor or the Property and provide timely proof of payment of these taxes and assessments upon request.

Selling, Leasing, or Encumbering the Property . Debtor will not sell, offer to sell, lease, grant a security interest in, or otherwise transfer or encumber the Property without Lender’s prior written permission, except for Inventory sold in the ordinary course of business at fair market value, or at a minimum price established between Debtor and Lender. If Debtor is in default under this Security Agreement, Debtor may not sell the Inventory portion of the Property even in the ordinary course of business. Lender’s permission to sell the Property may be reasonably withheld without regard to the creditworthiness of any buyer or transferee. Debtor will not permit the Property to be the subject of any court order affecting Debtor’s rights to the Property in any action by anyone other than Lender.

Insurance . Debtor will keep the tangible Property insured against risks reasonably associated with the Property. This insurance will last until the Property is released from this Security Agreement. Lender may apply insurance proceeds toward what is owed on the Secured Debts. Lender may require added security as a condition of permitting any insurance proceeds to be used to repair or replace the Property. If Lender acquires the Property in damaged condition, Debtor’s right to any insurance policies and proceeds will pass to Lender to the extent of the Secured Debts. If Debtor fails to keep the Property insured, Lender may obtain insurance to protect Lender’s interest in the Property and may include coverages not originally required of Debtor, may be written by a company other than one Debtor would choose, and may incur a higher rate than Debtor could obtain if Debtor purchased the insurance.

Additional Duties Specific to Accounts . If the Property includes Accounts, Debtor will not settle any Account for less than its full value without Lender’s written permission. Debtor will collect all Accounts in the ordinary course of business. Debtor will not dispose of the Accounts by assignment without Lender’s prior written consent. Debtor will keep the proceeds from all the Accounts and any goods which are returned to Debtor or which Debtor takes back and will not commingle them with any of Debtor’s other property. At Lender’s request, Debtor will notify account debtors that their Accounts have been assigned to Lender and should be paid directly to Lender. Debtor will deliver the Accounts to Lender at Lender’s request. If Lender asks Debtor to pay Lender the full price on any returned items or items retaken by Debtor, Debtor will do so. Debtor will make no material change in the terms of any Account, and Debtor will give Lender any statements, reports, certificates, lists of account debtors, invoices applicable to each Account, and other data pertaining to the Accounts as Lender may request.

Additional Duties Specific to Farm Products . If the Property includes farm products, Debtor will provide Lender, at Lender’s request, a written list of the buyers, commission merchants, or selling agents to or through whom Debtor may sell Debtor’s farm products. Debtor remains subject to all applicable penalties for selling Debtor’s farm products in violation of this Security Agreement and the Food Security Act of 1985. If the Property includes crops growing or to be grown, Debtor agrees to plant, cultivate, and harvest the crops in due season. Debtor will be in default if any loan proceeds are used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetland to produce or to make possible the production of an agricultural commodity, further explained in 7 CFR Part 1940, Subpart G, Exhibit M.

AUTHORITY TO PERFORM . Debtor authorizes Leader to do anything Lender deems reasonably necessary to protect the Property and Lender’s interest in the Property. If Debtor fails to perform any of Debtor’s duties under this Security Agreement, Lender is authorized, without notice to Debtor, to perform the duties or cause them to be performed. These authorizations include, but are not limited to, permission to pay for the repair, maintenance, and preservation of the Property and take any action to realize the value of the Property. Lender’s authority to perform for Debtor does not create an obligation to perform, and Lender’s failure to perform will not preclude Lender from exercising any other rights under the law or this Security Agreement. If Lender performs for Debtor, Lender will use reasonable care. Reasonable care will not include any steps necessary to preserve rights against prior parties or any duty to take action in connection with the management of the Property.

If Lender comes into possession of the Property, Lender will preserve and protect the Property to the extent required by law. Lender’s duty of care with respect to the Property will be satisfied if Lender exercises reasonable care in the safekeeping of the Property or in the selection of a third party in possession of the Property. Lender may enforce the obligations of an account debtor or other person obligated on the Property. Lender may exercise Debtor’s rights with respect to the account debtor’s or other person’s obligations to make payment or otherwise render performance to Debtor, and enforce any security interest that secures such obligations.

PURCHASE MONEY SECURITY INTEREST . This Security Agreement creates a Purchase Money Security Interest to the extent the Secured Debts are used to purchase or acquire rights in the Property. The portion of the Property purchased with loan proceeds will remain subject to the Purchase Money Security Interest until the Secured Debts are paid in full. Debtor authorizes Lender, at Lender’s option, to disburse the loan proceeds directly to the seller of the Property. Payments on any non-purchase money loan also secured by this Security Agreement will not be applied to the purchase money loan. Payments on the purchase money loan will be applied first to the non-purchase money portion of the loan, if any, and then to the purchase money portion in the order in which the purchase money Property was acquired. If the purchase money Property was acquired at the same time, then payments will be applied in the order Lender selects. No security interest will be terminated by application of this formula.

COLLATERAL ACCOUNT . If required by Lender, Debtor will establish a Collateral Account, and will immediately deposit all payments from account debtors and other proceeds from the Property, referred to as Funds, in payment of and as security for the Secured Debts. Debtor will continue to deposit these Funds in this Collateral Account until Lender informs Debtor in writing that it is no longer necessary to do so. Debtor may withdraw from this Collateral Account only upon Lender’s prior written consent. Lender has the right at any time, without notice, to withdraw Funds from the Collateral Account and apply those Funds to the Secured Debts or release any of the Funds to Debtor.

DEFAULT . Debtor will be in default if Debtor or Borrower (if not the same) fails to perform any condition, covenant, or make required payments under the Loan Agreement or Debtor fails to perform under this Security Agreement.

REMEDIES . If Debtor is in default, Lender has the option to do any one or more of the following in addition to the remedies provided in the Loan Agreement and other remedies provided by law.

(1) Assembly of Property. Lender may require Debtor to gather the Property and make it available to Lender in a reasonable fashion if allowed by law.

(2) Repossession. Lender may repossess (unless prohibited by law) or otherwise seize the Property as provided by law. Lender may hold, use, and operate Debtor’s property as necessary to preserve the Property or its value without compensation to Debtor.

(3) Sale of Property. Lender may sell the Property as provided by law. Lender may apply the proceeds of the Property to Lender’s expenses, attorneys’ fees and legal expenses (to the extent allowed by law), and any remaining Secured Debt. If what Lender receives from the sale of the Property does not satisfy the Secured Debt, Debtor will be liable for the remaining balance (where permitted by law).

WAIVER . Debtor waives all claims for loss and damage caused by Lender’s acts or omissions where Lender acted reasonably and in good faith. Except to the extent prohibited by law, Debtor waives all rights Debtor has now or in the future as a homestead exemption in the Property.

Connecticut only . Debtor voluntarily and knowingly waives all rights to notice and hearing as allowed under Chapter 903A of the Connecticut General Statutes, as amended, or otherwise allowed by any state or federal law with respect to any prejudgment remedy which Lender may desire to use.

South Carolina only . Lender may immediately seize the Property upon Debtor’s default. Debtor agrees to waive the right to five days’ notice and a preseizure hearing prior to seizure of the Property.

PERFECTION OF SECURITY INTEREST . Debtor authorizes Lender to file a financing statement covering the Property. Debtor will comply with, facilitate, and otherwise assist Lender in connection with obtaining possession or control over the Property for purposes of perfecting Lender’s interest under the Uniform Commercial Code.

ADDITIONAL DOCUMENTS . Debtor will provide any additional information Lender requests, including financial statements and documents relating to the Property. Debtor represents that all documents and information submitted to Lender will be true, correct, and complete as of the date submitted and will update the documents or information as necessary to give Lender a current and accurate assessment of Debtor’s affairs. Debtor agrees to sign, deliver, and file any additional documents, certifications, or records that Lender requires to perfect, continue, and preserve Debtor’s obligations and Lender’s rights under this Security Agreement and to verify Lender’s lien status on the Property. Debtor authorizes Lender to sign, authorize, and execute any documents on Debtor’s behalf in order to preserve or protect Lender’s interest in the Property.

NOTICES . Unless otherwise required by law, any notice will be given by delivering it or mailing it by first class mail to the appropriate party’s address as indicated in this Security Agreement, or any other address designated in writing. Notice to one party is notice to all parties.

WAIVER/CONFESSION (LOUISIANA ONLY) . Debtor waives the benefit of appraisal as provided in the Louisiana Code of Civil Procedure and all other laws with regard to

appraisal upon sales. For purposes of foreclosure under Louisiana executory process procedures, Debtor confesses judgment in Lender’s favor up to the full amount of the Secured Debts including collection costs and attorneys’ fees.

NOTICE (Arizona only) : It is unlawful to fail to return a motor vehicle subject to a security interest within thirty days after receiving notice of default. Any notice of default Lender sends will be mailed to Debtor’s address as indicated in this agreement. It is Debtor’s responsibility to tell Lender if Debtor’s address changes. Unlawful failure to return a motor vehicle subject to a security interest is a class 6 felony which for a first offense carries a maximum jail sentence of 1.5 years. The maximum jail sentence may be greater if the defendant has a prior criminal record. The court also may impose a fine of no more than $150,000.

Exhibit 10.39

AGREEMENT GOVERNING EXTENSIONS OF CREDIT

This Agreement, dated March 21, 2008, is between Investors Community Bank (the “Bank”) and Tower Tech Systems Inc. (the “Borrower”).

RECITALS

B. Bank and Borrower desire to enter into this Agreement relating to all such loan documentation.

AGREEMENT

1. Collateral .

The following existing documents are Debt Documents:

Commercial Promissory Note and Commercial Loan Agreement dated 3/21/2008, Irrevocable Standby Letter of Credit dated 8/31/2007, Guaranty of R. B. A. Inc. dated 3/21/2008, Guaranty of Tower Tech Holdings Inc. dated 3/21/2008

The following existing documents are Security Documents:

Commercial Security Agreement dated 10/4/2007

3. Covenants and Agreements . In addition to all agreements contained in the Debt Documents and Security Documents, Borrower agrees to comply with all of the following:

i. Minimum Debt to Tangible Net Worth of Tower Tech Systems Inc., 1 to 1 or greater based on year end financial statements.

ii. Minimum Debt service coverage ratio of 1.25 to 1 tested annually at year end.

iii. Minimum Tangible Net Worth of Tower Tech Systems Inc., of $10 Million or greater at year end.

iv. Primary Depository account kept at Investors Community Bank.

v. No loans or leases to be entered into without the bank’s prior approval.

o audited statements. o reviewed statements. x compiled statements.

4. This Agreement to Control . The Bank and Borrower intend for this Agreement to apply to all transactions between them, and this Agreement shall continue in effect until the Borrower and Bank enter into a termination agreement. Even if a particular Security Document ever describes certain Obligations without describing all Obligations, that Security Document shall secure all Obligations.

5. Effect of Agreement . This Agreement applies to all extensions of credit between Bank and Borrower. This Agreement is not an agreement to extend credit. Bank shall not be obligated under this Agreement to loan money to Borrower or otherwise extend credit to Borrower.

6. Participants; Assigns; Guarantors; Disclosure . The Borrower agrees that the Bank may, at its option, sell to one or more other financial institutions or other parties interests in the Obligations. Bank may, at Bank’s sole option, disclose to the purchaser of any such interest and to any guarantor of all or any part of the Obligations financial and other information concerning the Borrower.

7. Amendment . This Agreement may be amended only by a writing signed by the party to be bound thereby.

8. Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Wisconsin without giving effect to applicable principles of conflict of laws to the extent that the application of the laws of another jurisdiction would be required thereby.

9. Counterparts . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

10. Severability . In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year fast above written.

BORROWER :

Tower Tech Systems Inc.

a Wisconsin Corporation

By:	/s/ Steven A. Huntington
Steven A. Huntington
Title: C.F.O.

BANK :

INVESTORS COMMUNITY BANK

By:	/s/ Robert Boerger
Robert Boerger
Title: Sr. Commercial Lender

AGREEMENT OF GUARANTOR

GUARANTOR :

R. B. A Inc.		Tower Tech Holdings Inc.

a Wisconsin Corporation		a Wisconsin Corporation

By:	/s/ Steven A. Huntington	By:	/s/ Steven A. Huntington
Steven A. Huntington		Steven A. Huntington
Title: C.F.O.		Title: C.F.O.

Exhibit 10.40

B ORROWER NAME AND ADDRESS	LENDER NAME AND ADDRESS	LOAN DESCRIPTION
Tower Tech Systems Inc. 101 S. 16th St., P.O. Box 1957 Manitowoc, WI 54221-1957	Investors Community Bank 860 N. Rapids Road P.O. Box 700 Manitowoc, WI 54221-0700	Number 44938102 mab Amount $5,500,000.00 Date 03-21-2008

o Refer to the attached Signature Addendum, incorporated herein, for additional Borrowers and their signatures.
COMMERCIAL PROMISSORY NOTE

DATE. The date of this Promissory Note (Note) is 03-21-2008.

GOVERNING AGREEMENT. This Note is further governed by the Commercial Loan Agreement between Lender and Borrower dated 03-21-2008, as modified, amended, or supplemented. All definitions of terms in the Commercial Loan Agreement apply to this Note as well. Upon execution of this Note, Borrower represents that Borrower has reviewed and is in compliance with all Loan Documents and the Commercial Loan Agreement.

PROMISE TO PAY. For value received, Borrower promises to pay Lender or Lender’s order, at Lender’s address, x $ 5,500,000.00 (Principal).

o $ (Principal) or the Borrowing Base, whichever is less.

o Single Advance. Borrower will receive all of this Principal in one advance. No additional advances are contemplated under this Note.

x Multiple Advances. The Principal amount stated above is the maximum amount of Principal that Borrower may borrow under this Note. On 03-21-2008

Borrower will receive $ 0.00 and future advances are contemplated. The conditions for future advances are stated in the Commercial Loan Agreement.

INTEREST. Borrower agrees to pay interest on the outstanding Principal balance of this Note at the rate of 4.348 percent per year until 04-01-2008.

x Variable Rate. This rate may then change as follows. The future rate will be 1.750% above The Previous Month Average 30 Day Libor Rate published in the Wall Street Journal. The rate may change as often as every month. The rate may never be higher than N/A or less than 4.250%. A change in the interest rate will affect the amount of each payment and the amount due at maturity.

x Post Maturity/Default Interest. Borrower agrees to pay interest on the unpaid balance of this Note owing after maturity at the applicable rate plus 3.00%.

MATURITY/DEMAND . This Note is due on 09-21-2008.

PAYMENT . Borrower agrees to pay this Note as follows unless and until demand is made (if applicable):

Monthly payments of accrued interest calculated on the amount of credit outstanding beginning on 04-21-2008 and principal due on 09-21-2008. This is a variable rate loan and the payment amounts may change. The final payment may also change.

USE OF PROCEEDS: This loan is for business purposes.

WAIVERS AND CONSENT . Borrower waives protest, presentment for payment, demand, and notices of acceleration, intent to accelerate, and dishonor (if allowed by law).

x ADDITIONAL TERMS. Each payment Borrower makes on this note will be applied first to interest that is due; then to principal that is due, then to any charges borrower owes; Interest is computed for the actual number of days principal is unpaid on the basis of a 360 day year. This note is secured by all mortgages, security agreements and other documents granting a lien or a security interest in the borrower’s property to the bank and all guaranties of borrower’s obligations to bank.

o Married Borrower . If checked, the obligation evidenced by this note and any agreement securing this note is incurred in the interest of my marriage or family.
x		(Seal)	x		(Seal)

Non-Signing Spouse . The undersigned is married to the borrower signing this note, actually knows of the credit extended under this note, and waives any notice of this extension of credit.
x	(Seal)		x	(Seal)

SIGNATURES. By signing under seal, Borrower agrees to the terms contained in this Note. Borrower also acknowledges receipt of a copy of this Note.

BORROWER:

Tower Tech Systems Inc.
Entity Name

/s/ Steven A. Huntington		(Seal)			(Seal)
Signature: Steven A. Huntington, C.F.O.	Date		Signature	Date

		(Seal)			(Seal)
Signature	Date		Signature	Date

LENDER:

Investors Community Bank
Entity Name

/s/ Robert Boerger		(Seal)			(Seal)
Signature: Robert Boerger, Senior Commercial Lender	Date		Signature	Date

Commercial Promissory Note-WI		COMM-NOTE-WI	8/27/2007
Bankers Systems ™
Wolters Kluwer Financial Services © 1998, 2007	Initials

Exhibit 10.41

B ORROWER NAME AND ADDRESS

LENDER NAME AND ADDRESS

LOAN DESCRIPTION

Tower Tech Systems Inc.

101 S. 16th St., P.O. Box 1957

Manitowoc, WI 54221-1957

Investors Community Bank

860 N. Rapids Road

P.O. Box 700

Manitowoc, WI 54221-0700

Number 44938102 mab

Amount $ 5,500,000.00

Date 03-21-2008

o Refer to the attached Signature Addendum, incorporated herein, for additional Borrowers and their signatures.

COMMERCIAL LOAN AGREEMENT

LOAN STRUCTURE. This Commercial Loan Agreement (Agreement) contemplates o a single advance term Loan o a multiple advance draw Loan x a revolving multiple advance draw Loan. The principal balance will not exceed $ 5,500,000.00 . Borrower will pay down a revolving draw Loan’s outstanding Principal to $ (Pay Down Balance) (Time Period). This Loan is for o agricultural x business purposes.

x LATE CHARGES. If a payment is made more than 10 days after it is due, Borrower will pay a late charge of 5.000% of the late amount.

FEES. Borrower agrees to pay the following fees in connection with this Loan at closing or as otherwise requested by Lender: Maker agrees to pay a charge of $20.00 for each check, automatic debit or ACH item presented for payment under this note which is returned unsatisfied.

x These requests must be made by at least 1 (Number Required To Draw) persons, acting together, of those persons authorized to act on Borrower’s behalf.

o Advances will be made in the amount of at least $ (Minimum Amount Of Advance).

o Advances will be made no more frequently than (Minimum Frequency Of Advance).

x Discretionary Advances. Lender will make all Loan advances at Lender’s sole discretion.

o Obligatory Advances. Lender will make all Loan advances subject to this Agreement’s terms and conditions.

B. Requested Information. Borrower will provide Lender with any other information about Borrower’s operations, financial affairs and condition within 30 days after Lender’s request.

o D. Minimum Tangible Net Worth. Borrower will maintain at all times a total tangible net worth, determined under consistently applied generally accepted accounting principles, of $ (Minimum Tangible Net Worth) or more. Tangible net worth is the amount by which total assets exceed total liabilities. For determining tangible net worth, total assets will exclude all intangible assets, including without limitation goodwill, patents, trademarks, trade names, copyrights, and franchises, and will also exclude any amounts receivable that do not provide for a repayment schedule.

ADDITIONAL TERMS : This loan agreement includes the Agreement Governing Extensions of Credit dated 3/21/2008.

x ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER) AND US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. BY SIGNING THIS AGREEMENT, THE PARTIES AFFIRM THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM.

BORROWER:

Tower Tech Systems Inc.
Entity Name


/s/ Steven A. Huntington		(Seal)			(Seal)
Signature: Steven A. Huntington, C.F.O.	Date		Signature	Date

		(Seal)			(Seal)
Signature	Date		Signature	Date

LENDER:

Investors Community Bank
Entity Name

/s/ Robert Boerger		(Seal)
Signature: Robert Boerger, Senior Commercial Lender	Date

COMMERCIAL LOAN AGREEMENT: to be used with Form COMM-NOTE
	1998, 2001 Bankers Systems, Inc., St. Cloud, MN Form COMM-AGREE 7/1/2004	NOT TO BE USED FOR LOANS SUBJECT TO CONSUMER LENDING LAWS

DEFINITIONS. In this Agreement, the following terms have the following meanings.

Accounting Terms. Accounting terms that are not specifically defined will have their customary meanings under consistently applied generally accepted accounting principles.