MVS Machinery Valuation Services Inc.
ASSOCIATION OF MACHINERY & EQUIPMENT APPRAISERS - CERTIFIED APPRAISERS ON STAFF
Jack Mendenhall, CEA, CSA • John F. Roedel, CEA
19131 Industrial Blvd • Elk River, Minnesota 55330 • Tel:(763)441-5152 • Fax:(763)441-5075

May 22, 2004

SAMPLE APPRAISAL

Mr. Kurt Vise

ABC National Bank

1234 Main Street

Minneapolis, Minnesota 55437

Dear Mr. Vise:

Pursuant to your request, I have prepared an appraisal of XYZ Tool & Engineering, Inc., facility located in Osseo Minnesota, a copy of which is enclosed. This report is intended for use only by you and/or other parties chosen by you, and is intended to be used in discussions surrounding asset based lending. Use of this report by others is not intended by the appraiser, nor is the report intended for any other use unless express written consent is further granted. No investigation has been made for possible encumbrances against the subject items. I, as an AMEA Certified Appraiser of Machinery Valuation Services, Inc., have prepared this report to presently accepted USPAP (Uniform Standards of Professional Appraisal Practice) standards.

On May 11, 2001, I personally viewed the subject machinery and equipment. Following my inspection, I conducted an investigation into the market conditions for this type of equipment, in order to prepare this impartial report.

The cost, income, and market approaches to value have been considered for this appraisal and have either been utilized where necessary or deemed inappropriate for the value conclusions found therein.

It is my opinion that the "Orderly Liquidation Value" of the subject machinery and equipment as of May 11, 2001 is $462,000.00

The "Orderly Liquidation Value" as used in this report being as follows: A professional opinion of the estimated most probable price expressed in terms of currency which the subject equipment could typically realize at a privately negotiated sale, properly advertised and professionally managed, by a seller obligated to sell over an extended period of time, usually within six to twelve months as of the effective date of the appraisal report. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers is considered. All assets are to be sold on a piecemeal basis AS IS, with purchasers responsible for removal of assets at their own risk and expense. Any deletions or additions to the total assets appraised could change the psychological and/or monetary appeal necessary to gain the value indicated.

It is my opinion that the "Fair Market Value" of the subject machinery and equipment as of May 11, 2001 is $606,750.00

The "Fair Market Value" as used in this report being as follows: A professional opinion of the estimated most probable price expressed in terms of currency to be realized between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell, and both parties fully aware of all relevant facts, as of the effective date of the appraisal report

As an agent of Machinery Valuation Services, Inc., I do certify that neither I nor Machinery Valuation Services Inc, or any of its employees have any present or future interest in the appraised property. The fees charged for this appraisal were not contingent on the values reported nor were any undisclosed fees, commissions, or other compensation received. Our liability for loss, if any, arising from the services we provided shall not exceed our collected fee.

Yours Truly,

Jack Mendenhall, CEA

Machinery Valuation Services, Inc.

]

Machinery Valuation Services, Inc.

14329 Northdale Boulevard

Rogers, Minnesota 55374

(763) 428-3755

DOES

-CERTIFY-

That on the date given in this certificate, the subject property of

XYZ TOOL & ENGINEERING, INC.

3564 JEFFERSON HIGHWAY

OSSEO, MINNESOTA 55369

Was well and reasonably worth

1) $462,000.00 on the basis of its "Orderly Liquidation Value" Appraisal

2) $606,750.00 on the basis of its "Fair Market Value" Appraisal

EFFECTIVE DATE: May 11, 2001

BY: _________________________________

Jack Mendenhall, CEA

Comments

The machinery and equipment which is the subject of this report was inspected by the Signature Appraiser on May 11, 2001, which is being used as the effective date of this appraisal..

The purpose of this appraisal is to provide ABC Bank.with information to be used in asset based lending. The value definitions used in this report were chosen by Kurt Vise as being appropriate under the circumstances.

The values placed on the individual items were determined by:

1)The experience of the Appraiser.

2)Comparable data gathered in the form of price quotations on similar offerings from other sources.

3)Discussions with other Used Machinery Dealers and Appraisers (being specialists in certain areas), New Machinery Agents, and Machine Tool Builders.

4)Consulting recent auction reports.

The values placed on the machinery and equipment were determined by implementing standard and accepted appraisal procedures. This included the physical inspection of each item. During this procedure the model, serial number, capacities, tooling, and characteristics determined to have an impact on value were identified. The ages of many items were determined by utilizing the Serial Number Reference Book. The majority of equipment was in operation when inspected, and appeared clean, well maintained, and in good operating condition.

Machinery Valuation Services, Inc.

14329 Northdale Boulevard

Rogers, Minnesota

(763) 428-3755

May 11, 2001

XYZ TOOL & ENGINEERING, INC.

3564 JEFFERSON HIGHWAY

OSSEO, MINNESOTA 55369

Capital Equipment Appraisal