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<SEC-DOCUMENT>0000950152-07-009479.txt : 20071206
<SEC-HEADER>0000950152-07-009479.hdr.sgml : 20071206
<ACCEPTANCE-DATETIME>20071206163107
ACCESSION NUMBER:		0000950152-07-009479
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20071205
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Termination of a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20071206
DATE AS OF CHANGE:		20071206

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GRAHAM CORP
		CENTRAL INDEX KEY:			0000716314
		STANDARD INDUSTRIAL CLASSIFICATION:	GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560]
		IRS NUMBER:				161194720
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08462
		FILM NUMBER:		071289834

	BUSINESS ADDRESS:	
		STREET 1:		20 FLORENCE AVE
		STREET 2:		POST OFFICE BOX 719
		CITY:			BATAVIA
		STATE:			NY
		ZIP:			14020
		BUSINESS PHONE:		5853432216

	MAIL ADDRESS:	
		STREET 1:		20 FLORENCE AVENUE
		STREET 2:		POST OFFICE BOX 719
		CITY:			BATAVIA
		STATE:			NY
		ZIP:			14021-0719
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>l29093ae8vk.htm
<DESCRIPTION>GRAHAM CORPORATION   8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>Graham Corporation   8-K</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, DC 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT REPORT<BR>
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Date of Report (Date of earliest event reported): <u> <B>December&nbsp;5, 2007</B></u></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>Graham Corporation<BR>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact Name of Registrant as Specified in its Charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>1-8462</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>16-1194720</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or Other Jurisdiction of <BR>
Incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission<BR>
File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(IRS Employer<BR>
Identification No.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="center"><B>20 Florence Avenue, Batavia, New York</B><BR></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>14020</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="center">(Address of principal executive offices)<BR></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Registrant&#146;s telephone number, including area code: <u> <B>(585)&nbsp;343-2216</B></u>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>N/A</B><BR>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Former name or former address, if changed since last report)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the Registrant under any of the following provisions:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</TD>
</TR>

</TABLE>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">Item&nbsp;1.01. Entry into a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">Item&nbsp;1.02. Termination of a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">Item&nbsp;9.01. Financial Statements and Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003"> SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="l29093aexv99w1.htm">EX-99.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="l29093aexv99w2.htm">EX-99.2</A></TD></TR>
<TR><TD colspan="9"><A HREF="l29093aexv99w3.htm">EX-99.3</A></TD></TR>
<TR><TD colspan="9"><A HREF="l29093aexv99w4.htm">EX-99.4</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link1 "Item&nbsp;1.01. Entry into a Material Definitive Agreement" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01. Entry into a Material Definitive Agreement.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;5, 2007 Graham Corporation (the &#147;Company&#148;) entered into a Loan Agreement (the &#147;New
Loan Agreement&#148;) with Bank of America, N.A. (the &#147;Bank&#148;). The New Loan Agreement has a three year
term and provides the Company with a $30,000,000 revolving credit facility, with no sublimits for
either the issuance of letters of credit or the issuance of bank guarantees on the obligations of
the Company&#146;s Chinese subsidiary by the Bank&#146;s Shanghai, China branch. Amounts outstanding under
the New Loan Agreement will bear interest at a rate equal to the Bank&#146;s Prime Rate (as defined in the New Loan Agreement) less a margin.
The amount of the margin will be based on the Company&#146;s ratio of Total Liabilities to Tangible Net
Worth (each as defined in the New Loan Agreement) and may range from -0.50% to -1.25%. The Company
may also choose to have borrowings outstanding under the New Loan Agreement bear interest at a rate
equal to the LIBOR Rate (as defined in the New Loan Agreement) plus a margin. In the event the Company chooses a LIBOR-based interest
rate, the amount of the margin will also be based on the above ratio, but will range from 1.25% to 0.50%. Amounts available for borrowing under the New Loan Agreement are subject to an unused commitment
fee of between 0.25% to 0.125%, depending on the above ratio.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has the option of converting any balance due under the New Loan Agreement, at the
end of the term of the New Loan Agreement, into a two year term loan. During the term of the New
Loan Agreement, the Company may also convert not less than $2,000,000 and up to $9,000,000 in
outstanding borrowings thereunder into a two year term loan. In either event, the principal amount
of the term loan shall be amortized over the course of the two year period and the interest rate
under such term loan shall be determined in the same manner as set forth in the preceding
paragraph. Should the Company choose to convert borrowings outstanding under the New Loan
Agreement into a term loan during the term of the New Loan Agreement, the amount available for
borrowing under the New Loan Agreement shall be reduced by a corresponding amount.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The New Loan Agreement replaces in its entirety that certain Amended and Restated
Credit Facility Agreement dated July&nbsp;12, 2005 with the Bank (the &#147;Prior Facility&#148;). Letters of
credit and bank guarantees outstanding under the Prior Facility in the aggregate amount of
$11,253,565 as of the date of this Current Report on Form 8-K have been transferred by the Bank to
the New Loan Agreement. Under the New Loan Agreement, the Company covenants to maintain a ratio of
Total Liabilities to Tangible Net Worth not to exceed 1.35 to 1. The New Loan Agreement also
increases the amount the Company is permitted to pay annually in dividends to $1,200,000 from
$600,000 under the Prior Facility and contains other representations, warranties, covenants, terms
and conditions customary to similar agreements. In connection with its execution of the New Loan
Agreement, the Company has granted the Bank a security interest in all the Company&#146;s tangible and
intangible property. The Company entered into the New Loan Agreement in order to support its
anticipated working capital and letter of credit requirements as well as its strategic growth
objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A copy of the New Loan Agreement is attached to this Current Report on Form 8-K as Exhibit
99.1. Copies of the Security Agreement, Patent Security Agreement and Trademark Security
Agreement between the Company and the Bank, which taken together grant a security interest in all of the Company&#146;s tangible and
intangible property in favor of the Bank, are attached to this Current Report on
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Form&nbsp;8-K as Exhibits 99.2, 99.3 and 99.4, respectively. The above summary of the terms of the
New Loan Agreement, Security Agreement, Patent Security Agreement and Trademark Security
Agreement are qualified in their entirety by reference to the actual text of such agreements.
</DIV>
<!-- link1 "Item&nbsp;1.02. Termination of a Material Definitive Agreement" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.02. Termination of a Material Definitive Agreement.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The disclosure contained in Item&nbsp;1.01 of this Current Report on Form&nbsp;8-K is incorporated into this Item&nbsp;1.02 by reference.
</DIV>


<!-- link1 "Item&nbsp;9.01. Financial Statements and Exhibits" -->
<DIV align="left"><A NAME="002"></A></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01. Financial Statements and Exhibits.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(d)&nbsp;Exhibits</I>. The following is attached as an exhibit to this Form 8-K:
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan Agreement between Graham Corporation and Bank of America,
N.A., dated as of December&nbsp;5, 2007.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Security Agreement between Graham Corporation and Bank of
America, N.A., dated as of December&nbsp;5, 2007</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patent Security Agreement between Graham Corporation and Bank
of America, N.A., dated as of December&nbsp;5, 2007</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Trademark Security Agreement between Graham Corporation and
Bank of America, N.A., dated as of December&nbsp;5, 2007</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 " SIGNATURES" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>Graham Corporation</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date:  December 6, 2007&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ J. Ronald Hansen
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">J. Ronald Hansen&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Vice President &#151; Finance &#038; Administration and
Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>l29093aexv99w1.htm
<DESCRIPTION>EX-99.1
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-99.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;99.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">LOAN AGREEMENT
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement dated as of December&nbsp;5, 2007, is between Bank of America, N.A. (the &#147;Bank&#148;) and
Graham Corporation, a corporation formed under the laws of the State of Delaware with offices at 20
Florence Avenue, Batavia, New York 14020 (the &#147;Borrower&#148;).
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD colspan="3">1. FACILITY NO. 1 &#151; REVOLVING LINE OF CREDIT</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Line of Credit Amount</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the availability period described below, the Bank will provide a line of credit to the
Borrower. The amount of the line of credit (the &#147;Facility No.&nbsp;1 Commitment&#148;) is Thirty
Million Dollars ($30,000,000).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This is a revolving line of credit. During the availability period, the Borrower may repay
principal amounts and reborrow them so long as the aggregate principal amount outstanding at
any time does not exceed $30,000,000, reduced as provided in Section&nbsp;1.7(b).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Availability Period</U>.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The line of credit is available between the date of this Agreement and the date three years after
the date of this Agreement, or such earlier date as the availability may terminate as provided in
this Agreement (the &#147;Facility No.&nbsp;1 Expiration Date&#148;).
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Repayment Terms</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower will pay interest on the first day of each month thereafter, or as otherwise
provided in Section&nbsp;2.1, until payment in full of any principal outstanding under this
facility.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to the Facility No.&nbsp;1 Expiration Date, the Borrower may elect to convert not less than
$2,000,000 and up to $9,000,000 (the &#147;Converted Amount&#148;) in the aggregate of then-outstanding
principal amounts under the Facility No.&nbsp;1 Commitment (excluding the face amount of any
outstanding Letters of Credit and Bank Guaranties) into a two-year term loan on a date
established by the Borrower (the &#147;Conversion Date&#148;). If the Borrower so elects, (i)&nbsp;the
amount available for reborrowing pursuant to Section&nbsp;1.1(b) shall be reduced by the Converted
Amount, and (ii)&nbsp;the Borrower will repay the Converted Amount in equal installments beginning
on the first day of the first month following the Conversion Date, and on the same day of each
month thereafter, and ending on the date two years after the conversion date (the
&#147;Amortization Period&#148;). Each principal installment shall be in an amount sufficient to fully
amortize the Converted Amount over the Amortization Period. In any event, on the last day of
the Amortization Period, the Borrower will repay the remaining principal balance of the
Converted Amount plus any interest then due.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With respect to amounts outstanding, other than Converted Amounts, the Borrower will either
(i)&nbsp;repay in full the principal amount outstanding on the Facility No.&nbsp;1 Expiration Date, or
(ii)&nbsp;repay the principal amount outstanding on the Facility No.&nbsp;1 Expiration Date in equal
installments beginning on the first day of the first month following the Facility No.&nbsp;1
Expiration Date, and on the first day of each month thereafter, and ending on the date two
years after the Facility No.&nbsp;1 Expiration Date (the &#147;Repayment Period&#148;). Each principal
installment shall be in an amount sufficient to fully amortize the principal amount over the
Repayment Period. In any event, on the last day of the Repayment Period, the Borrower will
repay the remaining principal balance plus any interest then due.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower may prepay the loans in full or in part at any time. During any Amortization
Period with respect to Converted Amounts, and during the Repayment Period, the prepayment will
be applied to the most remote payment of principal due under this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Interest Rate</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The interest rate is a rate per year equal to the Bank&#146;s Prime Rate plus the Applicable Rate,
each as defined below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The &#147;Prime Rate&#148; is the rate of interest publicly announced from time to time by the Bank as
its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the
Bank&#146;s costs and desired return, general economic conditions and other factors, and is used as
a reference point for pricing some loans. The Bank may price loans to its customers at,
above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening
of business on the day specified in the public announcement of a change in the Bank&#146;s Prime
Rate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Optional Interest Rates</U>.<BR></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Instead of the interest rate based on the rate stated in the paragraph entitled &#147;Interest Rate&#148;
above, the Borrower may, from time to time with respect to all or part of the principal amount
outstanding, elect the optional interest rate listed below for this Facility No.&nbsp;1 during interest
periods selected by the Borrower:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>The LIBOR Rate (as defined in Section&nbsp;2.2) plus the Applicable Rate, each as defined
below.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The optional interest rate shall be subject to the terms and conditions described later in this
Agreement. Any principal amount bearing interest at an optional rate under this Agreement is
referred to as a &#147;Portion.&#148; Any interest period for an optional interest rate (as described below)
shall expire no later than the Facility No.&nbsp;1 Expiration Date.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Applicable Rate</U>.<BR></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Applicable Rate shall be the following amounts per annum, based upon the ratio of Total
Liabilities to Tangible Net Worth (as defined in the &#147;Covenants&#148; section of this Agreement, the
&#147;Financial Test&#148;), as set forth in the most recent compliance certificate (or, if no compliance
certificate is required, the Borrower&#146;s most recent financial statements) received by the Bank as
required in the Covenants section. Until the Bank receives the first compliance certificate or
financial statement, the Applicable Rate shall be the amounts indicated for pricing level 4 set
forth below:
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Applicable Rate<BR>
(in percentage points per annum)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Total Liabilities/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unused</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Tangible Net</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Commitment</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Pricing Level</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Worth</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">LIBOR &#043;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">PRIME &#043;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Fee</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1
</DIV></TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top">&#62; 1.25
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.250</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-0.50%
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.2500</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2
</DIV></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="left" valign="top"><FONT style="font-family: symbol">&#163;</FONT> 1.25 and &#062;1.0
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.000</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-0.75%
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.2500</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: symbol">&#163;</FONT> 1.00 and &#062;.75
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.875</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-1.00%
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.1875</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: symbol">&#163;</FONT> .75 and &#062;.50
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.625</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-1.25%
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.1875</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: symbol">&#163;</FONT> .50
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.500</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-1.25%
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.1250</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Applicable Rate shall be in effect from the date the most recent compliance certificate or
financial statement is received by the Bank until the date the next compliance certificate or
financial statement is received; provided, however, that if the Borrower fails to timely deliver
the next compliance certificate or financial statement, the Applicable Rate from the date such
compliance certificate or financial statement was due until the date such compliance certificate or
financial statement is received by the Bank shall be the highest pricing level set forth above.
If, as a result of any restatement of or other adjustment to the financial statements of the
Borrower or for any other reason, the Borrower or the Bank determines that (i)&nbsp;the Financial Test
as calculated by the Borrower as of any applicable date was inaccurate and (ii)&nbsp;a proper
calculation of the Financial Test would have resulted in higher pricing for such period, the
Borrower shall immediately and retroactively be obligated to pay to the Bank an amount equal to the
excess of the amount of interest and fees that should have been paid for such period over the
amount of interest and fees actually paid for such period. The Bank&#146;s acceptance of payment of
such amounts will not constitute a waiver of any default under this Agreement. The Borrower&#146;s
obligations under this paragraph shall survive the termination of this Agreement and the repayment
of all other obligations.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Letters of Credit; Bank Guarantees</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the availability period, at the request of the Borrower, the Bank will issue:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Letters of credit; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Guarantees issued by the Bank&#146;s Shanghai, China branch (&#147;Bank Guarantees&#148;) of
obligations of Borrower&#146;s Chinese subsidiary, Graham Vacuum and Heat Transfer
Technology (Suzhou) Co., Ltd. (&#147;Graham China&#148;).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amount of the letters of credit outstanding at any one time (including the drawn and
unreimbursed amounts of the letters of credit) plus 105% of the amount of Bank Guarantees may
not exceed the Facility No.&nbsp;1 Commitment. In calculating the principal amount outstanding
under the Facility No.&nbsp;1 Commitment, the calculation shall include the amount of any letters
of credit outstanding (including the drawn and unreimbursed amounts of the letters of credit)
plus 105% of the outstanding amount of Bank Guarantees. The Bank will revalue the outstanding
amount of Bank Guarantees from time to time at its discretion. If as a result of currency
fluctuations the value in US Dollars of outstanding Bank Guarantees has increased by more than
5%, the amount available under the Facility No.&nbsp;1 Commitment shall be correspondingly reduced
by the amount of the excess.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Letters of credit and Bank Guarantees shall have a maximum maturity of three (3)&nbsp;years from
the date of issuance, and may not to extend more than three (3)&nbsp;years beyond the Facility No.
1 Expiration Date; provided, however, a maximum of $7,500,000 of letters of credit and Bank
Guarantees may have a maximum maturity of five (5)&nbsp;years from the date of issuance and extend
up to five (5)&nbsp;years beyond the Facility No.&nbsp;1 Expiration Date.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Letters of credit and Bank Guarantees in the aggregate amount of $11,253,564.65 are
outstanding from the Bank for the account of the Borrower as of December&nbsp;4, 2007. As of the
date of this Agreement, these letters of credit and Bank Guarantees shall be deemed to be
outstanding under this Agreement, and shall be subject to all the terms and conditions stated
in this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any sum drawn under a letter of credit or Bank Guarantee may, at the option of
the Bank, be added to the principal amount outstanding under this Agreement. The
amount will bear interest and be due as described elsewhere in this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If there is a default under this Agreement, to immediately cash collateralize
any outstanding letters of credit and Bank Guarantees.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The issuance of any letter of credit or Bank Guarantee and any amendment
thereto is subject to the Bank&#146;s written approval and must be in form and content
satisfactory to the Bank and in favor of a beneficiary acceptable to the Bank.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To sign the Bank&#146;s applicable form Application and Agreement for Letter of
Credit, or agreements related to Bank Guarantees, as applicable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To pay any issuance and/or other fees that the Bank notifies the Borrower will
be charged for issuing and processing letters of credit and Bank Guarantees for the
account of the Borrower, including without limitation a $150 administrative fee for
each letter of credit issued.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vi)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To allow the Bank to automatically charge its checking account for applicable
fees, discounts, and other charges.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To be responsible for any foreign exchange or conversion costs related to
converting RMB to United States Dollars for any drawings under Bank Guarantees, and
such costs shall be added to amounts outstanding under Facility No.&nbsp;1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(viii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To pay the Bank a non-refundable fee equal to the Applicable Rate set forth for LIBOR
in Section&nbsp;1.6 hereof per annum on the outstanding undrawn amount of each standby
letter of credit and outstanding undrawn amount of each Bank Guarantee, and 0.25% per
annum of the outstanding undrawn amount of each documentary letter of credit, payable
annually in advance, calculated on the basis of the amount outstanding on the day the
fee is calculated. Commissions on letters of credit with maturities of less than one
year shall be charged ratably.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Reduction of Commitment</U>.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Borrower may, upon notice to Bank, from time to time permanently reduce the Facility Number 1
Commitment; provided that (i)&nbsp;any such notice shall be received by Bank not later than 11:00&nbsp;a.m.
five Business Days prior to the date of termination or reduction, (ii)&nbsp;any such reduction shall be
in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof, and
(iii)&nbsp;Borrower shall not terminate or reduce the Facility Number 1 Commitment if, after giving
effect thereto and to any concurrent prepayments hereunder, the total outstanding amount under
Facility Number 1 (including outstanding undrawn amounts of Letters of Credit and 105% of
outstanding undrawn Bank Guarantees) would exceed the reduced Facility Number 1 Commitment.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2.
OPTIONAL INTEREST RATES</div>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Optional Rates</U>.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each optional interest rate is a rate per year. Interest will be paid on the last day of each
interest period until payment in full of any principal outstanding under this Agreement. No
Portion will be converted to a different interest rate during the applicable interest period.
During the existence of an event of default under this Agreement that has not been waived in
writing by the Bank, the Bank may suspend the availability of optional interest rates for interest
periods commencing after the default occurs. At the end of any interest period, the interest rate
will revert to the rate stated in the section entitled &#147;Interest Rate&#148; above, unless the Borrower
has designated another optional interest rate for the Portion.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>LIBOR Rate</U>.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The election of LIBOR Rates shall be subject to the following terms and requirements:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The interest period during which the LIBOR Rate will be in effect will be one, two, or three
months. The first day of the interest period must be a day other than a Saturday or a Sunday
on which banks are open for
business in New York and London and dealing in offshore dollars (a &#147;LIBOR Banking Day&#148;).
The last day of the interest period and the actual number of days during the interest period
will be determined by the Bank using the practices of the London inter-bank market.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each LIBOR Rate Portion will be for an amount not less than One Hundred Thousand Dollars
($100,000).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The &#147;LIBOR Rate&#148; means the interest rate determined by the following formula. (All amounts
in the calculation will be determined by the Bank as of the first day of the interest period.)</TD>
</TR>

</TABLE>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">LIBOR Rate = <FONT style="border-bottom: 1px solid #000000">London Inter-Bank Offered Rate</FONT><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1.00 &#151; Reserve Percentage)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where,</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;London Inter-Bank Offered Rate&#148; means, for any applicable interest period, the
rate per annum equal to the British Bankers Association LIBOR Rate (&#147;BBA LIBOR&#148;), as
published by Reuters (or other commercially available source providing quotations of
BBA LIBOR as selected by the Bank from time to time) at approximately 11:00&nbsp;a.m. London
time two (2)&nbsp;London Banking Days before the commencement of the interest period, for
U.S. Dollar deposits (for delivery on the first day of such interest period) with a
term equivalent to such interest period. If such rate is not available at such time
for any reason, then the rate for that interest period will be determined by such
alternate method as reasonably selected by the Bank. A &#147;London Banking Day&#148; is a day
on which banks in London are open for business and dealing in offshore dollars.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Reserve Percentage&#148; means the total of the maximum reserve percentages for
determining the reserves to be maintained by member banks of the Federal Reserve System
for Eurocurrency Liabilities, as defined by the Federal Reserve Board Regulation&nbsp;D,
rounded upward to the nearest 1/100 of one percent. The percentage will be expressed
as a decimal, and will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower shall irrevocably request a LIBOR Rate Portion no later than 12:00 noon New York
time on the LIBOR Banking Day preceding the day on which the London Inter-Bank Offered Rate
will be set, as specified above. For example, if there are no</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>intervening holidays or weekend
days in any of the relevant locations, the request must be made at least three days before the
LIBOR Rate takes effect.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Bank will have no obligation to accept an election for a LIBOR Rate Portion if any of the
following described events has occurred and is continuing:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Dollar deposits in the principal amount, and for periods equal to the interest
period, of a LIBOR Rate Portion are not available in the London inter-bank market; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the LIBOR Rate does not accurately reflect the cost to the Bank of maintaining
a LIBOR Rate Portion.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of acceleration or
otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and, if
the prepayment is made on a date other than the last day of the interest period for such
Portion, a LIBOR Rate Portion prepayment fee as described below. A &#147;prepayment&#148; is a payment
of an amount on a date earlier than the scheduled payment date for such amount as required by
this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The LIBOR Rate Portion prepayment fee shall be in an amount sufficient to compensate the Bank
for any loss, cost or expense incurred by it as a result of the prepayment, including any loss
of anticipated profits and any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Portion or from fees payable to terminate the deposits
from which such funds were obtained. The Borrower shall also pay any customary administrative
fees charged by the Bank in connection with the foregoing. For purposes of this paragraph,
the Bank shall be deemed to have funded each Portion by a matching deposit or other borrowing
in the applicable interbank market, whether or not such Portion was in fact so funded.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">


    <TD align="left" colspan="3">3. FEES AND EXPENSES</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Fees</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Loan Fee</U>. The Borrower agrees to pay a loan fee in the amount of Thirty Thousand
Dollars ($30,000). This fee is due on the date of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Unused Commitment Fee</U>. The Borrower agrees to pay a fee on any difference between
the Facility No.&nbsp;1 Commitment and the amount of credit it actually uses, determined by the
average of the daily amount of credit outstanding during the specified period. The fee will
be calculated at the Applicable Rate according to Section&nbsp;1.6 hereof. The calculation of
credit outstanding shall include the undrawn amount of letters of credit as well as the
undrawn amount of Bank Guarantees.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This fee is due on the first day of each calendar quarter until the expiration of the
availability period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Waiver Fee</U>. If the Bank, at its discretion, agrees to waive or amend any terms of
this Agreement, the Borrower will, at the Bank&#146;s option, pay the Bank a fee for each waiver or
amendment in an amount advised by the Bank at the time the Borrower requests the waiver or
amendment. Nothing in this paragraph shall imply that the Bank is obligated to agree to any
waiver or amendment requested by the Borrower. The Bank may impose additional requirements as
a condition to any waiver or amendment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Late Fee</U>. To the extent permitted by law, the Borrower agrees to pay a late fee in
an amount not to exceed four percent (4%) of any payment that is more than fifteen (15)&nbsp;days
late. The imposition and payment of a late fee shall not constitute a waiver of the Bank&#146;s
rights with respect to the default.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Expenses</U>.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower agrees to immediately repay the Bank for expenses that include, but are not limited
to, filing, recording and search fees, appraisal fees, title report fees, and documentation fees.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Reimbursement Costs</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees to reimburse the Bank for any expenses it incurs in the preparation of
this Agreement and any agreement or instrument required by this Agreement. Expenses include,
but are not limited to, reasonable attorneys&#146; fees, including any allocated costs of the
Bank&#146;s in-house counsel to the extent permitted by applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees to reimburse the Bank for the cost of periodic field examinations of the
Borrower&#146;s books, records and collateral, and appraisals of the collateral, at such intervals
as the Bank may reasonably require. The actions described in this paragraph may be performed
by employees of the Bank or by independent appraisers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Obligations Related to Swap Contracts</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that the Borrower enters into any Swap Contract with the Bank or any of its
affiliates, any costs incurred by the Bank or its affiliates in connection therewith,
including without limitation any interest, expenses, fees, premiums, penalties or other
charges associated with any obligations undertaken by the Bank or its affiliates to hedge or
offset the Bank&#146;s or its affiliates obligations pursuant to such agreement, or the termination
of any such obligations, shall be (i)&nbsp;deemed additional interest and/or a related expense (to
be determined in the sole discretion of the Bank) and due as part of the obligations of the
Borrower hereunder and (ii)&nbsp;secured by all collateral and guarantees granted to or made in
favor of the Bank to the full extent thereof, and included in any judgment in any proceeding
instituted by the Bank.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Swap Contract&#148; means any interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, securities puts, calls, collars, options or forwards or any combination of,
or option with respect to, these or similar transactions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">


    <TD align="left" colspan="3">4. COLLATERAL</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Personal Property</U>.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to one or more security agreements executed by Borrower at the request of the Bank, the
personal property described therein (which may at the Bank&#146;s discretion include all personal
property now owned or owned in the future by the Borrower) will secure the Borrower&#146;s obligations
to the Bank under this Agreement. In addition, all personal property collateral owned by the
Borrower securing this Agreement shall also secure all other present and future obligations of the
Borrower to the Bank. All personal property collateral securing any other present or future
obligations of the Borrower to the Bank shall also secure this Agreement.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Continuing Liens</U>.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The security interests and liens previously granted by Borrower to Bank are intended to continue in
full force and effect and are reaffirmed as modified by any written agreement between Borrower and
Bank made in connection herewith.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

    <TD nowrap align="left" colspan"3">5. DISBURSEMENTS, PAYMENTS AND COSTS</TD>
</TR>
</TABLE>
</DIV>
<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Disbursements and Payments</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each payment by the Borrower will be made in U.S. Dollars and immediately available funds by
debit to a deposit account, as described in this Agreement or otherwise authorized by the
Borrower. For payments not made by direct debit, payments will be</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>made by mail to the address
shown on the Borrower&#146;s statement or at one of the Bank&#146;s banking centers in the United
States, or by such other method as may be permitted by the Bank.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Bank may honor instructions for advances or repayments given by the Borrower (if an
individual), or by any one of the individuals authorized to sign loan agreements on behalf of
the Borrower, or any other individual designated by any one of such authorized signers (each
an &#147;Authorized Individual&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For any payment under this Agreement made by debit to a deposit account, the Borrower will
maintain sufficient immediately available funds in the deposit account to cover each debit.
If there are insufficient immediately available funds in the deposit account on the date the
Bank enters any such debit authorized by this Agreement, the Bank may reverse the debit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each disbursement by the Bank and each payment by the Borrower will be evidenced by records
kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to sign
one or more promissory notes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to the date each payment of principal and interest and any fees from the Borrower
becomes due (the &#147;Due Date&#148;), the Bank will mail to the Borrower a statement of the amounts
that will be due on that Due Date (the &#147;Billed Amount&#148;). The calculations in the bill will be
made on the assumption that no new extensions of credit or payments will be made between the
date of the billing statement and the Due Date, and that there will be no changes in the
applicable interest rate. If the Billed Amount differs from the actual amount due on the Due
Date (the &#147;Accrued Amount&#148;), the discrepancy will be treated as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Billed Amount is less than the Accrued Amount, the Billed Amount for the
following Due Date will be increased by the amount of the discrepancy. The Borrower
will not be in default by reason of any such discrepancy.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Billed Amount is more than the Accrued Amount, the Billed Amount for the
following Due Date will be decreased by the amount of the discrepancy.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Regardless of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without
compounding. The Bank will not pay the Borrower interest on any
overpayment.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><u>Telephone and Telefax Authorization.</u></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Bank may honor telephone or telefax instructions for advances or repayments, or for the
designation of optional interest rates<B>, </B>and telefax requests for the issuance of letters of
credit given, or purported to be given, by any one of the Authorized Individuals.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Advances will be deposited in and repayments will be withdrawn from account number &#95;&#95;&#95;
owned by the Borrower, or such other of the Borrower&#146;s accounts with the Bank as designated in
writing by the Borrower.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower will indemnify and hold the Bank harmless from all liability, loss, and costs in
connection with any act resulting from telephone or telefax instructions the Bank reasonably
believes are made by any Authorized Individual. This paragraph will survive this Agreement&#146;s
termination, and will benefit the Bank and its officers, employees, and agents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Direct Debit</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees that on the Due Date the Bank will debit the Billed Amount from deposit
account number &#95;&#95;&#95; owned by the Borrower, or such other of the</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Borrower&#146;s accounts with
the Bank as designated in writing by the Borrower (the &#147;Designated Account&#148;).</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5.4 <U>Banking Days</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unless otherwise provided in this Agreement, a banking day is a day other than a Saturday,
Sunday or other day on which commercial banks are authorized to close, or are in fact closed, in
the state where the Bank&#146;s lending office is located, and, if such day relates to amounts bearing
interest at an offshore rate (if any), means any such day on which dealings in dollar deposits are
conducted among banks in the offshore dollar interbank market. All payments and disbursements
which would be due on a day which is not a banking day will be due on the next banking day. All
payments received on a day which is not a banking day will be applied to the credit on the next
banking day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5.5 <U>Interest Calculation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as otherwise stated in this Agreement, all interest and fees, if any, will be computed
on the basis of a 360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used. Installments of principal which are not
paid when due under this Agreement shall continue to bear interest until paid.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5.6 <U>Default Rate</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Upon the occurrence of any default or after maturity or after judgment has been rendered on
any obligation under this Agreement, all amounts outstanding under this Agreement, including any
interest, fees, or costs which are not paid when due, will at the option of the Bank bear interest
at a rate which is 4.0&nbsp;percentage point(s) higher than the rate of interest otherwise provided
under this Agreement. This may result in compounding of interest. This will not constitute a
waiver of any default.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5.7 <U>Taxes</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If any payments to the Bank under this Agreement are made from outside the United States, and
if in connection therewith any foreign taxes are imposed on any payments made by the Borrower
(including payments under this
paragraph), the Borrower will pay such taxes and will also pay to the Bank, at the time
interest is paid, any additional amount which the Bank specifies as necessary to preserve the
after-tax yield (except for the effects of income or franchise taxes imposed on the Bank or
measured by its net income by the United States) the Bank would have received if such taxes had not
been imposed. The Borrower will confirm that it has paid the taxes by giving the Bank official tax
receipts (or notarized copies) within thirty (30)&nbsp;days after the due date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6. CONDITIONS
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Before the Bank is required to extend any credit to the Borrower under this Agreement, it must
receive any documents and other items it may reasonably require, in form and content acceptable to
the Bank, including any items specifically listed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.1 <U>Authorizations</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Evidence that the execution, delivery and performance by the Borrower of this Agreement and
any instrument or agreement required under this Agreement have been duly authorized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.2 <U>Governing Documents</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A copy of the Borrower&#146;s organizational documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.3 <u>Security Agreements.</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Signed original security agreements covering the personal property collateral which the Bank requires.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.4 <u>Perfection and Evidence of Priority.</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Evidence that the security interests and liens in favor of the Bank are valid, enforceable,
properly perfected in a manner acceptable to the Bank and prior to all others&#146; rights and
interests, except those the Bank consents to in writing, to the extent that (i)&nbsp;such security
interests and liens can be perfected and achieve priority by the filing of financing statements
under the Uniform Commercial Code, or (ii)&nbsp;such security interests and liens cover specific
collateral not covered by clause (i)&nbsp;with respect to which the Bank has specifically requested
perfection and priority of its security interests and liens.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.5 <U>Payment of Fees</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payment of all fees and other amounts due and owing to the Bank, including without limitation
payment of all accrued and unpaid expenses incurred by the Bank as required by the section entitled
&#147;Reimbursement Costs.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.6 <U>Good Standing</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certificates of good standing for the Borrower from its state of formation and, if requested by the
Bank, from any other state in which the Borrower is required to qualify to conduct its business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.7 <U>Legal Opinion</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A written opinion from the Borrower&#146;s legal counsel, covering such matters as the Bank may require.
The legal counsel and the terms of the opinion must be acceptable to the Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.8 <U>Insurance</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Evidence of insurance coverage, as required in the &#147;Covenants&#148; section of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7. REPRESENTATIONS AND WARRANTIES
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">When the Borrower signs this Agreement, and until the Bank is repaid in full, the Borrower makes
the following representations and warranties. Each request for an extension of credit constitutes
a renewal of these representations and warranties as of the date of the request:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.1 <U>Formation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower is duly formed and existing under the laws of the state where organized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.2 <u>Authorization.</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement, and any instrument or agreement required hereunder, are within the Borrower&#146;s
powers, have been duly authorized, and do not conflict with any of its organizational papers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.3 <U>Enforceable Agreement</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement is a legal, valid and binding agreement of the Borrower, enforceable against the
Borrower in accordance with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and enforceable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.4 <U>Good Standing</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In each state in which the Borrower does business, it is properly licensed, in good standing, and,
where required, in compliance with fictitious name statutes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.5 <U>No Conflicts</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement does not conflict with any law, agreement, or obligation by which the Borrower is bound.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.6 <u>Financial Information.</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All financial and other information that has been or will be supplied to the Bank is in compliance
with Section&nbsp;11.1 of this Agreement. Since the date of the most recent financial statement
provided to the Bank, there has been no material adverse change in the business condition
(financial or otherwise), operations, properties or prospects of the Borrower.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.7 <U>Lawsuits</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There is no lawsuit, tax claim or other dispute pending or threatened against the Borrower which is
required to be disclosed in Borrower&#146;s reports to the Securities and Exchange Commission which has
not been so disclosed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.8 <U>Collateral</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All Borrower&#146;s collateral that is subject to any security agreement in favor of the Bank is owned
by the grantor of the security interest free of any title defects or any liens or interests of
others, except those which have been approved by the Bank in writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.9 <U>Permits, Franchises</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower possesses all permits, memberships, franchises, contracts and licenses required and
all trademark rights, trade name rights, patent rights, copyrights, and fictitious name rights
necessary to enable it to conduct the business in which it is now engaged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.10 <U>Other Obligations</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower is not in default on any obligation for borrowed money, any purchase money obligation
or any other material lease, commitment, contract, instrument or obligation, except as have been
disclosed in writing to the Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.11 <U>Tax Matters</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower has no knowledge of any pending assessments or adjustments of its income tax for any
year and all taxes due have been paid, except as have been disclosed in writing to the Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.12 <U>No Event of Default</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There is no event which is, or with notice or lapse of time or both would be, a default under this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.13 <u>Insurance.</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower has obtained, and maintained in effect, the insurance coverage required in the
&#147;Covenants&#148; section of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.14 <U>ERISA Plans</U>.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Plan (other than a multiemployer plan) is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law. Each Plan has
either: (i)&nbsp;received a favorable determination letter from the IRS and to the best knowledge
of the Borrower, nothing has occurred which would cause the loss of such qualification, or
(ii)&nbsp;is entitled to rely upon an IRS opinion letter stating that such Plan is qualified under
Section 401(a) of the Code.. The Borrower has fulfilled its obligations, if any, under the
minimum funding standards of ERISA and the Code with respect to each Plan, and has not
incurred any liability with respect to any Plan under Title IV of ERISA.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>There are no claims, lawsuits or actions (including by any governmental authority), and there
has been no prohibited transaction or violation of the fiduciary responsibility rules, with
respect to any Plan which has resulted or could reasonably be expected to result in a material
adverse effect.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With respect to any Plan subject to Title IV of ERISA:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No reportable event has occurred under Section 4043(c) of ERISA for which the
PBGC requires 30-day notice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No action by the Borrower or any ERISA Affiliate to terminate or withdraw from
any Plan has been taken and no notice of intent to terminate a Plan has been filed
under Section&nbsp;4041 of ERISA.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No termination proceeding has been commenced with respect to a Plan under
Section&nbsp;4042 of ERISA, and no event has occurred or condition exists which might
constitute grounds for the commencement of such a proceeding.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following terms have the meanings indicated for purposes of this Agreement:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Code&#148; means the Internal Revenue Code of 1986, as amended from time to time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;ERISA&#148; means the Employee Retirement Income Security Act of 1974, as amended
from time to time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;ERISA Affiliate&#148; means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section&nbsp;414(b) or (c)&nbsp;of
the Code.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;PBGC&#148; means the Pension Benefit Guaranty Corporation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Plan&#148; means a pension, profit-sharing, or stock bonus plan intended to qualify
under Section 401(a) of the Code, maintained or contributed to by the Borrower or any
ERISA Affiliate, including any multiemployer plan within the meaning of Section
4001(a)(3) of ERISA.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">7.15 <U>Location of Borrower</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The chief executive office of the Borrower is located at the address listed on the signature page
of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8. COVENANTS
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower agrees, so long as credit is available under this Agreement and until the Bank is repaid in full:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.1 <u> Use of Proceeds</u>.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To use the proceeds of Facility No.&nbsp;1 only for general corporate purposes, including letters
of credit and capital expenditures. Proceeds from Facility No.&nbsp;1 may also be used to finance
acquisitions, subject to bank approval of same.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>That proceeds of Facility No.&nbsp;1 may not be used directly or indirectly to purchase or carry
any &#147;margin stock&#148; as that term is defined in Regulation&nbsp;U of the Board of Governors of the
Federal Reserve System, or extend credit to or invest in other parties for the purpose of
purchasing or carrying any such &#147;margin stock,&#148; or to reduce or retire any indebtedness
incurred for such purpose. None of the proceeds of this Loan Agreement may be used directly
or indirectly in furtherance of any transaction or series of transactions to acquire a
controlling interest in any publicly-traded company unless the Bank otherwise consents in
writing.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.2 <U>Financial Information</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To provide the following financial information and statements in form and content acceptable to the
Bank, and such additional information as requested by the Bank from time to time. The Bank
reserves the right, upon written notice to the Borrower, to require the Borrower to deliver
financial information and statements to the Bank more frequently than otherwise provided below, and
to use such additional information and statements to measure any applicable financial covenants in
this Agreement.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By July&nbsp;31 of each year<B>, </B>the annual financial statements of Borrower, certified and dated by
an authorized financial officer. These financial statements must be audited (with an opinion
satisfactory to the Bank) by a Certified Public Accountant acceptable to the Bank. The
statements shall be prepared on a consolidated basis.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Within 50&nbsp;days of the period&#146;s end (including the last period in each fiscal year)<B>, </B>quarterly
financial statements of Borrower, certified and dated by an authorized financial officer. The
statements shall be prepared on a consolidated basis.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With each financial statement provided pursuant to Section&nbsp;8.2(a) and (b), a compliance
certificate of the Borrower, signed by an authorized financial officer and setting forth (i)
the information and computations (in sufficient detail) to establish compliance with all
financial covenants at the end of the period covered by the financial statements then being
furnished and (ii)&nbsp;whether there existed as of the date of such financial statements and
whether there exists as of the date of the certificate, any default under this Agreement and,
if any such default exists, specifying the nature thereof and the action the Borrower is
taking and proposes to take with respect thereto.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Promptly, upon sending or receipt, copies of any management letters and correspondence
relating to management letters, sent or received by the Borrower to or from the Borrower&#146;s
auditor. If no management
letter is prepared, the Bank may, in its discretion, request a letter from such auditor
stating that no deficiencies were noted that would otherwise be addressed in a management
letter.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Annual business plan, including financial projections covering a time period acceptable to
the Bank and specifying the assumptions used in creating the projections. The annual business
plan shall be provided to the Bank no less often than 60&nbsp;days after the end of each fiscal
year.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.3 <U>Debt to Worth Ratio</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To maintain on a consolidated basis a ratio of Total Liabilities (excluding the non-current portion
of Subordinated Liabilities) to Tangible Net Worth not exceeding 1.35:1.0.
&#147;Total Liabilities&#148; means the sum of all liabilities shown on the Borrower&#146;s balance sheet as of
the applicable date of determination, determined in accordance with GAAP including without
limitation subordinated debt.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#147;Tangible Net Worth&#148; means total assets, after deduction of depreciation, depletion, and reserves,
but excluding subordinated debt and accounts from and other obligations payable by officers and
Affiliates (defined in Section&nbsp;8.10(c)) and further excluding all assets required to be classified
as intangible assets in accordance with GAAP (including without limitation organizational expense,
good will, unamortized debt discount, research and development costs, patents, trademarks,
copyrights, other intellectual property rights, franchises, and deferred assets), less Total
Liabilities as determined by GAAP.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.4 <U>Dividends and Distributions</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not to declare or pay any dividends, redemptions of stock, distributions and withdrawals to its
owners, except:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>dividends payable in capital stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provided that immediately before and after such declaration or payment no event of default
has occurred, Borrower is in compliance with Section&nbsp;8.3 and Borrower has earnings available
for such purposes, dividends, redemptions of stock, distributions and withdrawals to its
owners not in excess of One Million Two Hundred Thousand Dollars ($1,200,000) per fiscal year
in the aggregate<B>.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.5 <U>Bank as Principal Depository</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To maintain the Bank as its principal depository bank, including for the maintenance of business,
cash management, operating and administrative deposit accounts.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.6 <U>Other Debts</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not to have outstanding or incur any Indebtedness or contingent liabilities (as defined under
generally accepted accounting principles, &#147;Contingent Liabilities&#148;) other than to the Bank, or
become liable for the liabilities of others without the Bank&#146;s written consent. This does not
prohibit:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Acquiring goods, supplies, or merchandise on normal trade credit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payroll and compensation obligations incurred in the ordinary course of business.
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Endorsing negotiable instruments received.</td>
</tr>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Liabilities, lines of credit and leases described in Schedule&nbsp;8.6 to this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Additional Indebtedness for business purposes which do not exceed an aggregate total
principal amount of $1,000,000 outstanding at any one time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Additional Contingent Liabilities (not including liabilities treated as Indebtedness under
subsection (e)&nbsp;which do not exceed an aggregate total principal amount of $1,000,000
outstanding at any one time.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#147;Indebtedness&#148; means all of the following, whether or not included as indebtedness or liabilities
in accordance with GAAP:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all obligations of such person for borrowed money and all obligations of such person
evidenced by bonds, debentures, notes, loan agreements or other similar instruments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all direct or contingent obligations of such person arising under letters of credit
(including standby and commercial), bankers&#146; acceptances, bank guaranties, surety bonds and
similar instruments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>net obligations of such person under any Swap Contract;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all obligations of such person to pay the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business and, in each case, not
past due for more than 60&nbsp;days after the date on which such trade account payable was
created);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>indebtedness (excluding prepaid interest thereon) secured by a lien on property owned or
being purchased by such person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness shall have been assumed by
such person or is limited in recourse;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>capital leases and synthetic lease obligations; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all guarantees of such person in respect of any of the foregoing.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For all purposes hereof, the Indebtedness of any person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such person. The amount of any net obligation under
any Swap Contract on any date shall be deemed to be the swap termination value thereof as of such
date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.7 <U>Other Liens</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not to create, assume, or allow any security interest or lien (including judicial liens) on
property the Borrower now or later owns, without the written consent of Bank, except:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Liens and security interests in favor of the Bank.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Liens outstanding on the date of this Agreement disclosed in writing to the Bank on Schedule
8.6 to this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Liens securing debt and lease obligations incurred pursuant to Section&nbsp;8.6(e) which do not
secure more than an aggregate total principal amount of $1,000,000 outstanding at any one
time.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.8 <U>Negative Pledge</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not to enter into any agreement with anyone other than the Bank in which Borrower agrees not to
pledge or otherwise transfer or encumber any asset of Borrower now or hereafter owned, whether or
not such asset has been pledged to the Bank, except negative pledge agreements regarding liens
which would be permitted by Section&nbsp;8.7 hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.9 <U>Maintenance of Assets</U>.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not to sell, assign, lease, transfer or otherwise dispose of any material part of the
Borrower&#146;s business or assets except in the ordinary course of the Borrower&#146;s business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not to sell, lease, transfer, or otherwise dispose of any assets for less than fair market
value, or enter into any agreement to do so.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not to enter into any sale and leaseback agreement covering any of its fixed assets.<BR></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To maintain and preserve all rights, privileges, and franchises the Borrower now has.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To make any repairs, renewals, or replacements to keep the Borrower&#146;s properties in good
working condition, ordinary war and tear and obsolescence excepted.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.10 <U>Investments; Loans</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not to have any existing, or make any new, investments in any individual or entity, or make any
capital contributions or other transfers of assets to any individual or entity, or make loans,
advances or other extensions of credit to any individual or entity, except for:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Existing investments disclosed to the Bank in writing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investments in any of the following:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>certificates of deposit;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>U.S. treasury bills and other obligations of the federal government;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>readily marketable securities (including commercial paper, but excluding
restricted stock and stock subject to the provisions of Rule&nbsp;144 of the Securities and
Exchange Commission).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investments in and loans to the Borrower&#146;s then current &#147;Affiliates&#148; (not including the WOFE
described below) that do not exceed an aggregate amount of $1,000,000 at any one time
outstanding, investments permitted under Section&nbsp;8.12(b), and investments in and loans to
other persons and entities that do not exceed an aggregate amount of $500,000 outstanding at
any one time.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Affiliate&#148; shall mean any entity which directly or indirectly, or through one or more
intermediaries, controls or is controlled by or is under common control with the Borrower.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investments in and loans to Borrower&#146;s Wholly Owned Foreign Enterprise (the &#147;WOFE&#148;) formed in
China which investments and loans shall not exceed an aggregate amount of $2,500,000
outstanding at any one time.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.11 <U>Change of Management</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not to make any change in the present president, chief operating officer, or chief financial
officer of the Borrower other than for cause unless Borrower shall have provided for a successor
reasonably acceptable to the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.12 <U>Additional Negative Covenants</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not to, without the Bank&#146;s written consent:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Enter into any consolidation, merger, or other combination, or become a partner in a
partnership, a member of a joint venture, or a member of a limited liability company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Acquire or purchase a business or its assets for a consideration, including assumption of
direct or contingent debt, which together with all other such acquisitions exceed $7,000,000
in the aggregate; provided, however, that no such acquisition shall be made unless on a pro
forma basis the Borrower will continue to comply with the covenants contained in this
Agreement, including without limitation the covenants contained in Section&nbsp;8.3, on a going
forward basis after completion of such acquisition.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Engage in any business activities substantially different from the Borrower&#146;s present
business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Liquidate or dissolve the Borrower&#146;s business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.13 <U>Notices to Bank</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To promptly notify the Bank in writing of:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any substantial dispute between any governmental authority and the Borrower.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any event of default under this Agreement, or any event which, with notice or lapse of time
or both, would constitute an event of default.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any material adverse change in the Borrower&#146;s business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any change in the Borrower&#146;s name, legal structure, place of business, or chief executive
office if the Borrower has more than one place of business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any actual Contingent Liabilities of the Borrower, and any such Contingent Liabilities which
are reasonably foreseeable, where such liabilities are in excess of $1,000,000 in the
aggregate.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.14 <U>Insurance</U>.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>General Business Insurance</U>. To maintain insurance satisfactory to the Bank as to
amount, nature and carrier covering property damage (including loss of use and occupancy) to
any of the Borrower&#146;s properties, business interruption insurance, public liability insurance
including coverage for contractual liability, product liability and workers&#146; compensation, and
any other insurance which is usual for the Borrower&#146;s business. Each policy shall provide for
at least thirty (30)&nbsp;days prior notice to the Bank of any cancellation thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Insurance Covering Collateral</U>. To maintain all risk property damage insurance
policies (including without limitation windstorm coverage, and hurricane coverage as
applicable)
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>covering the tangible property comprising the collateral. Each insurance policy
must be for the full replacement cost of the collateral and include a replacement cost
endorsement. The insurance must be issued by an insurance company acceptable to the Bank and
must include a lender&#146;s loss payable endorsement in favor of the Bank in a form acceptable to
the Bank.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Evidence of Insurance</U>. Upon the request of the Bank, to deliver to the Bank a copy
of each insurance policy, or, if permitted by the Bank, a certificate of insurance listing all
insurance in force.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.15 <U>Compliance with Laws. </U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To comply with the laws (including any fictitious or trade name statute), regulations, and orders
of any government body with authority over the Borrower&#146;s business. The Bank shall have no
obligation to make any advance to the Borrower except in compliance with all applicable laws and
regulations and the Borrower shall fully cooperate with the Bank in complying with all such
applicable laws and regulations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.16 <U>ERISA Plans</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Promptly during each year, to pay and cause any subsidiaries to pay contributions adequate to meet
at least the minimum funding standards under ERISA with respect to each and every Plan; file each
annual report required to be filed pursuant to ERISA in connection with each Plan for each year;
and notify the Bank within ten (10)&nbsp;days of the occurrence of any Reportable Event that might
constitute grounds for termination of any Plan by the Pension Benefit Guaranty Corporation or for
the appointment by the appropriate United States District Court of a trustee to administer any
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#147;ERISA&#148; means the Employee Retirement Income Security Act of 1974, as amended from time to time.
Capitalized terms in this paragraph shall have the meanings defined within ERISA.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.17 <U>ERISA Plans &#151; Notices</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">With respect to a Plan subject to Title IV of ERISA, to give prompt written notice to the Bank of:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The occurrence of any reportable event under Section 4043(c) of ERISA for which the PBGC
requires 30-day notice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any action by the Borrower or any ERISA Affiliate to terminate or withdraw from a Plan or the
filing of any notice of intent to terminate under Section&nbsp;4041 of ERISA.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The commencement of any proceeding with respect to a Plan under Section&nbsp;4042 of ERISA.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.18 <U>Books and Records</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To maintain adequate books and records.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.19 <u> Audits</u>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To allow the Bank and its agents to inspect the Borrower&#146;s properties and examine, audit, and make
copies of books and records at any reasonable time. If any of the Borrower&#146;s properties, books or
records are in the possession of a third party, the Borrower authorizes that third party to permit
the Bank or its agents to have access to perform inspections or audits and to respond to the Bank&#146;s
requests for information concerning such properties, books and records.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.20 <U>Perfection of Liens</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To help the Bank perfect and protect its security interests and liens, and reimburse it for related
costs it incurs to protect its security interests and liens.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.21 <U>Cooperation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To take any action reasonably requested by the Bank to carry out the intent of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9. HAZARDOUS SUBSTANCES
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.1 <U>Indemnity Regarding Hazardous Substances</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower will indemnify and hold harmless the Bank from any loss or liability the Bank incurs
in connection with or as a result of this Agreement, which directly or indirectly arises out of the
use, generation, manufacture, production, storage, release, threatened release, discharge, disposal
or presence of a hazardous substance. This indemnity will apply whether the hazardous substance is
on, under or about the Borrower&#146;s property or operations or property leased to the Borrower. The
indemnity includes but is not limited to attorneys&#146; fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the Bank, its parent,
subsidiaries and all of their directors, officers, employees, agents, successors, attorneys and
assigns.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9.2 <U>Compliance Regarding Hazardous Substances</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower represents and warrants that the Borrower has complied with all current and future
laws, regulations and ordinances or other requirements with the effect or force of law pertaining
to Borrower&#146;s use, generation, manufacture, production, storage, release, threatened release,
discharge, or disposal of hazardous substances.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9.3 <U>Notices Regarding Hazardous Substances</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Until full repayment of the loan, the Borrower will promptly notify the Bank in writing of any
threatened or pending investigation of the Borrower or its operations by any governmental agency
under any current or future law, regulation or ordinance pertaining to any hazardous substance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9.4 <U>Site Visits, Observations and Testing</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Bank and its agents and representatives will have the right at any reasonable time, after
giving reasonable notice to the Borrower, to enter and visit any locations where the collateral
securing this Agreement (the &#147;Collateral&#148;) is located for the purposes of observing the Collateral,
taking and removing environmental samples, and conducting tests. The Borrower shall reimburse the
Bank on demand for the costs of any such environmental investigation and testing. The Bank will
make reasonable efforts during any site visit, observation or testing conducted pursuant this
paragraph to avoid interfering with the Borrower&#146;s use of the Collateral. The Bank is under no
duty to observe the Collateral or to conduct tests, and any such acts by the Bank will be solely
for the purposes of protecting the Bank&#146;s security and preserving the Bank&#146;s rights under this
Agreement. No site visit, observation or testing or any report or findings made as a result
thereof (&#147;Environmental Report&#148;) (i)&nbsp;will result in a waiver of any default of the Borrower; (ii)
impose any liability on the Bank; or (iii)&nbsp;be a representation or warranty of any kind regarding
the Collateral (including its condition or value or compliance with any laws) or the Environmental
Report (including its accuracy or completeness). The Bank shall provide copies of any
Environmental Reports prepared by, for, or on behalf of the Bank to the Borrower. In the
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">event the
Bank has a duty or obligation under applicable laws, regulations or other legally binding
requirements to disclose an environmental condition or Environmental Report to the Borrower, any
governmental agency, or any other party, the Borrower authorizes the Bank to make such a
disclosure; provided,
however, that if the Bank may do so without violation of laws, regulations, or legally binding
requirements, the Bank will make good faith efforts to (i)&nbsp;first notify the Borrower of the
environmental condition or proposed disclosure of the Environmental Report, (ii)&nbsp;give the Borrower
an opportunity to assess the environmental condition requiring disclosure, and (iii)&nbsp;consider
timely, reasonable, and good faith arguments by Borrower that disclosure is not required. The
Borrower further understands and agrees that any Environmental Report, condition, or other
information regarding a site visit, observation or testing that is disclosed to the Borrower by the
Bank or its agents and representatives is to be evaluated (including any reporting or other
disclosure obligations of the Borrower) by the Borrower without advice or assistance from the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9.5 <U>Definition of Hazardous Substances</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#147;Hazardous substances&#148; means any substance, material or waste that is or becomes designated or
regulated as &#147;toxic,&#148; &#147;hazardous,&#148; &#147;pollutant,&#148; or &#147;contaminant&#148; or a similar designation or
regulation under any current or future federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation of such, including
without limitation petroleum.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9.6 <U>Continuing Obligation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower&#146;s obligations to the Bank under this Article, except the obligation to give notices to
the Bank, shall survive termination of this Agreement and repayment of the Borrower&#146;s obligations
to the Bank under this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10. DEFAULT AND REMEDIES
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If any of the following events of default occurs, the Bank may do one or more of the following:
declare the Borrower in default, stop making any additional credit available to the Borrower, and
require the Borrower to repay its entire debt immediately and without prior notice. If an event
which, with notice or the passage of time, will constitute an event of default has occurred and is
continuing, the Bank has no obligation to make advances or extend additional credit under this
Agreement. In addition, if any event of default occurs, the Bank shall have all rights, powers and
remedies available under any instruments and agreements required by or executed in connection with
this Agreement, as well as all rights and remedies available at law or in equity. If an event of
default occurs under the paragraph entitled &#147;Bankruptcy,&#148; below, with respect to the Borrower, then
the entire debt outstanding under this Agreement will automatically be due immediately.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.1 <U>Failure to Pay</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower fails to make a payment of principal under this Agreement when due, or fails to make a
payment of interest, any fee or other sum under this Agreement within ten (10)&nbsp;days after the date
when due.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.2 <U>Other Bank Agreements</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any default occurs under any other agreement the Borrower or any of the Borrower&#146;s related entities
or Affiliates has with the Bank or any Affiliate of the Bank, including among others any default
occurs under any guaranty, subordination agreement, security agreement, deed of trust,
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">mortgage, or
other document required by or delivered in connection with this Agreement or any such document is
no longer in effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.3 <U>Cross-default</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any default occurs under any agreement in connection with any credit of $250,000 or more that the
Borrower or any of the Borrower&#146;s related entities or Affiliates has obtained from anyone else or
which the Borrower or any of the Borrower&#146;s related entities or Affiliates has guaranteed, or any
default occurs by Borrower with respect to any other material agreement with any third person which
default could reasonably be expected to have a material adverse effect on the property, business,
operations, financial condition, prospects, liabilities, or capitalization of the Borrower or the
financial capacity of the Borrower to perform any of its obligations under this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.4 <U>False Information</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower has given the Bank materially false or misleading information or representations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.5 <u> Bankruptcy</u>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower files a bankruptcy petition, a bankruptcy petition is filed against any of the
foregoing parties, or the Borrower makes a general assignment for the benefit of creditors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.6 <U>Receivers</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A receiver or similar official is appointed for a substantial portion of the Borrower&#146;s business,
or the business is terminated, or, if Borrower is liquidated or dissolved.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.7 <U>Lien Priority</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Bank fails to have an enforceable first lien (except for any prior liens to which the Bank has
consented in writing) on or security interest in any property given as security for this Agreement
if (i)&nbsp;the security interest and lien can be perfected and achieve priority by the filing of
financing statements under the Uniform Commercial Code, or (ii)&nbsp;the security interest and lien
covers specific collateral not covered by clause (i)&nbsp;with respect to which the Bank has
specifically requested perfection and priority of its security interest and lien.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.8 <U>Judgments</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any judgments or arbitration awards are entered against the Borrower, or the Borrower enters into
any settlement agreements with respect to any litigation or arbitration, in an aggregate amount of
$250,000 or more in excess of any insurance coverage.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.9 <U>Government Action</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any government authority takes action that the Bank believes materially adversely affects the
Borrower&#146;s financial condition or ability to repay.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.10 <U>ERISA Plans</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any one or more of the following events occurs with respect to a Plan of the Borrower subject to
Title IV of ERISA, provided such event or events could reasonably be expected, in the judgment of
the Bank, to subject the Borrower to any tax, penalty or liability (or any combination of the
foregoing) which, in the aggregate, could have a material adverse effect on the financial condition
of the Borrower:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A reportable event shall occur under Section 4043(c) of ERISA with respect to a Plan.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any Plan termination (or commencement of proceedings to terminate a Plan) or the full or
partial withdrawal from a Plan by the Borrower or any ERISA Affiliate.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.11 <U>Other Breach Under Agreement</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A default occurs under any other term or condition of this Agreement not specifically referred to
in this Article. This includes any failure or anticipated failure by the Borrower (or any other
party named in the Covenants section) to comply with any financial covenants set forth in this
Agreement, whether such failure is evidenced by financial statements delivered to the Bank or is
otherwise known to the Borrower or the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11. ENFORCING THIS AGREEMENT; MISCELLANEOUS
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">11.1 <U>GAAP</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as otherwise stated in this Agreement, all financial information provided to the Bank and
all financial covenants will be made under generally accepted accounting principles, consistently
applied.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.2 <U>Governing Law</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement shall be governed by and construed in accordance with the laws of New York. To the
extent that the Bank has greater rights or remedies under federal law, whether as a national bank
or otherwise, this paragraph shall not be deemed to deprive the Bank of such rights and remedies as
may be available under federal law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.3 <U>Successors and Assigns</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement is binding on the Borrower&#146;s and the Bank&#146;s successors and assignees. The Borrower
agrees that it may not assign this Agreement without the Bank&#146;s prior consent. The Bank may sell
participations in or assign this loan, and may exchange information about the Borrower (including,
without limitation, any information regarding any hazardous substances) with actual or potential
participants or assignees. If a participation is sold or the loan is assigned, the purchaser will
have the right of set-off against the Borrower.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.4 <U>Dispute Resolution Provision</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This paragraph, including the subparagraphs below, is referred to as the &#147;Dispute Resolution
Provision.&#148; This Dispute Resolution Provision is a material inducement for the parties entering
into this agreement.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Dispute Resolution Provision concerns the resolution of any controversies or claims
between the parties, whether arising in contract, tort or by statute, including but not
limited to controversies or claims that arise out of or relate to: (i)&nbsp;this agreement
(including any renewals, extensions or modifications); or (ii)&nbsp;any document related to this
agreement (collectively a &#147;Claim&#148;). For the purposes of this Dispute
Resolution Provision only, the term &#147;parties&#148; shall include any parent corporation,
subsidiary or affiliate of the Bank involved in the servicing, management or administration
of any obligation described or evidenced by this agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the request of any party to this agreement, any Claim shall be resolved by binding
arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the &#147;Act&#148;).
The Act will apply even though this agreement provides that it is governed by the law of a
specified state.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Arbitration proceedings will be determined in accordance with the Act, the then-current rules
and procedures for the arbitration of financial services disputes of the American Arbitration
Association or any successor thereof (&#147;AAA&#148;), and the terms of this Dispute Resolution
Provision. In the event of any inconsistency, the terms of this Dispute
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Resolution Provision
shall control. If AAA is unwilling or unable to (i)&nbsp;serve as the provider of arbitration or
(ii)&nbsp;enforce any provision of this arbitration clause, the Bank may designate another
arbitration organization with similar procedures to serve as the provider of arbitration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The arbitration shall be administered by AAA and conducted, unless otherwise required by law,
in any U.S. state where real or tangible personal property collateral for this credit is
located or if there is no such collateral, in the state specified in the governing law section
of this agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be
decided by three arbitrators. All arbitration hearings shall commence within ninety (90)&nbsp;days
of the demand for arbitration and close within ninety (90)&nbsp;days of commencement and the award
of the arbitrator(s) shall be issued within thirty (30)&nbsp;days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the
hearing for up to an additional sixty (60)&nbsp;days. The arbitrator(s) shall provide a concise
written statement of reasons for the award. The arbitration award may be submitted to any
court having jurisdiction to be confirmed and have judgment entered and enforced.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may
dismiss the arbitration on the basis that the Claim is barred. For purposes of the application
of any statutes of limitation, the service on AAA under applicable AAA rules of a notice of
Claim is the equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitrable shall be determined by the arbitrator(s), except as
set forth at subparagraph (h)&nbsp;of this Dispute Resolution Provision. The arbitrator(s) shall
have the power to award legal fees pursuant to the terms of this agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This paragraph does not limit the right of any party to: (i)&nbsp;exercise self-help remedies,
such as but not limited to, setoff; (ii)&nbsp;initiate judicial or non-judicial foreclosure against
any real or personal property collateral; (iii)&nbsp;exercise any judicial or power of sale rights,
or (iv)&nbsp;act in a court of law to obtain an interim remedy, such as but not limited to,
injunctive relief, writ of possession or appointment of a receiver, or additional or
supplementary remedies.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The filing of a court action is not intended to constitute a waiver of the right of any
party, including the suing party, thereafter to require submittal of the Claim to arbitration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any arbitration or trial by a judge of any Claim will take place on an individual basis
without resort to any form of class or representative action (the &#147;Class&nbsp;Action Waiver&#148;).
Regardless of anything else in this Dispute Resolution Provision, the validity and effect of
the Class&nbsp;Action Waiver may be determined only by a court and not by an arbitrator. The
parties to this Agreement acknowledge that the Class&nbsp;Action Waiver is material and essential
to the arbitration of any disputes between the parties and is nonseverable from the agreement
to arbitrate Claims. If the Class&nbsp;Action Waiver is limited, voided or found unenforceable,
then the parties&#146; agreement to arbitrate shall be null and void with respect to such
proceeding, subject to the right to appeal the limitation or invalidation of the Class&nbsp;Action
Waiver. <B>The Parties acknowledge and agree that under no circumstances will a class action be
arbitrated.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right
they may have to a trial by jury in respect of any Claim. Furthermore, without intending in</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the
parties irrevocably and voluntarily waive any right they may have to a trial by jury in
respect of such Claim. This waiver of jury trial shall remain in effect even if the Class
Action Waiver is limited, voided or found unenforceable. <B>WHETHER THE CLAIM IS DECIDED BY
ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS
AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY
LAW.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.5 <U>Severability; Waivers</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If any part of this Agreement is not enforceable, the rest of the Agreement may be enforced. The
Bank retains all rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be in writing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.6 <U>Attorneys&#146; Fees</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower shall reimburse the Bank for any reasonable costs and attorneys&#146; fees incurred by the
Bank in connection with the enforcement or preservation of any rights or remedies under this
Agreement and any other documents executed in connection with this Agreement, and in connection
with any amendment, waiver, &#147;workout&#148; or restructuring under this Agreement. In the event of a
lawsuit or arbitration proceeding, the prevailing party is entitled to recover costs and reasonable
attorneys&#146; fees incurred in connection with the lawsuit or arbitration proceeding, as determined by
the court or arbitrator. In the event that any case is commenced by or against the Borrower under
the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute, the Bank is
entitled to recover costs and reasonable attorneys&#146; fees incurred by the Bank related to the
preservation, protection, or enforcement of any rights of the Bank in such a case. As used in this
paragraph, &#147;attorneys&#146; fees&#148; includes the allocated costs of the Bank&#146;s in-house counsel.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.7 <U>One Agreement</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement and any related security or other agreements required by this Agreement,
collectively:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>represent the sum of the understandings and agreements between the Bank and the Borrower
concerning this credit;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>replace any prior oral or written agreements between the Bank and the Borrower concerning
this credit; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>are intended by the Bank and the Borrower as the final, complete and exclusive statement of
the terms agreed to by them.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the event of any conflict between this Agreement and any other agreements required by this
Agreement, this Agreement will prevail. Any reference in any related document to a &#147;promissory
note&#148; or a &#147;note&#148; executed by the Borrower and dated as of the date of this Agreement shall be
deemed to refer to this Agreement, as now in effect or as hereafter amended, renewed, or restated.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.8 <U>Indemnification</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower will indemnify and hold the Bank harmless from any loss, liability, damages,
judgments, and costs of any kind relating to or arising directly or indirectly out of (a)&nbsp;this
Agreement or any document required hereunder, (b)&nbsp;any credit extended or committed by the
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Bank to
the Borrower hereunder, and (c)&nbsp;any litigation or proceeding related to or arising out of this
Agreement, any such document, or any such credit; provided, however, that the Borrower shall not be
obligated to indemnify the Bank or any other person or entity for the Bank&#146;s own gross negligence
or willful misconduct. This indemnity includes but is not limited to attorneys&#146; fees (including
the allocated cost of in-house counsel). This indemnity extends to the Bank, its parent,
subsidiaries and all of their directors, officers, employees, agents, successors, attorneys, and
assigns. This indemnity will survive repayment of the Borrower&#146;s obligations to the Bank. All
sums due to the Bank hereunder shall be obligations of the Borrower, due and payable immediately
without demand.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.9 <U>Notices</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unless otherwise provided in this Agreement or in another agreement between the Bank and the
Borrower, all notices required under this Agreement shall be personally delivered or sent by first
class mail, postage prepaid, or by overnight courier, to the addresses on the signature page of
this Agreement, or sent by facsimile to the fax numbers listed on the signature page, or to such
other addresses as the Bank and the Borrower may specify from time to time in writing. Notices and
other communications shall be effective (i)&nbsp;if mailed, upon the earlier of receipt or five (5)&nbsp;days
after deposit in the U.S. mail, first class, postage prepaid, (ii)&nbsp;if telecopied, when transmitted
if appropriate confirmation of receipt has been received, or (iii)&nbsp;if hand-delivered, by courier or
otherwise (including telegram, lettergram or mailgram), when delivered.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.10 <U>Headings</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Article and paragraph headings are for reference only and shall not affect the interpretation or
meaning of any provisions of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.11 <U>Counterparts</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement may be executed in as many counterparts as necessary or convenient, and by the
different parties on separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.12 <U>Borrower Information</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower authorizes the Bank at any time to verify or check any information given by the
Borrower to the Bank, check the Borrower&#146;s credit references, and obtain credit reports.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.13 <U>Prior Agreement Superseded</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement supersedes the Amended and Restated Credit Facility Agreement dated as of July&nbsp;12,
2005 by and between the Bank and the Borrower, as amended, and any credit outstanding thereunder
shall be deemed to be outstanding under this Agreement. For the avoidance of doubt, the Continuing
and Unconditional Guaranty made by the Borrower in favor of the Bank guaranteeing the obligations
of Graham Vacuum and Heat Transfer Technology (Suzhou) Co., Ltd. to the Bank remains in full force
and effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11.14 <U>Limitation of Interest and Other Charges</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If, at any time, the rate of interest, together with all amounts which constitute interest and
which are reserved, charged or taken by the Bank as compensation for fees, services or expenses
incidental to the making, negotiating or collection of the loan evidenced hereby, shall be deemed
by any competent court of law, governmental agency or tribunal to exceed the maximum rate of
interest permitted to be charged by the Bank to the Borrower under applicable law, then, during
such time as such rate of interest would be deemed excessive, that portion of each sum paid
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">attributable to that portion of such interest rate that exceeds the maximum rate of interest so
permitted shall be deemed a voluntary prepayment of principal. As used herein, the term
&#147;applicable law&#148; shall mean the law in effect as of the date hereof; provided, however, that in the
event there is a change in the law which results in a higher permissible rate of interest, then
this Agreement shall be governed by such new law as of its effective date.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower executed this Agreement as of the date stated at the top of the first page, intending
to create an instrument executed under seal.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left">Bank of America, N.A.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Graham Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>(Seal)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap colspan="3" valign="top" align="left">Typed Name</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" valign="top" align="left">Typed Name</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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<TR valign="bottom">
    <TD colspan="5" valign="top" align="left">Address where notices to</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">Address where notices to</TD>
</TR>
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left">the Bank are to be sent:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">the Borrower are to be sent:</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD colspan="5" valign="top" align="left">One East Avenue</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">20 Florence Avenue</TD>
</TR>
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left">Rochester, NY 14638</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">Batavia, New York 14020</TD>
</TR>
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left">Facsimile: (585)&nbsp;546-9278</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Telephone:</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
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    <TD colspan="3" valign="top" align="left">Facsimile:</TD>
    <TD>&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
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<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>USA Patriot Act Notice</U>. Federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account or obtains a loan. The
Bank will ask for the Borrower&#146;s legal name, address, tax ID number and other identifying
information. The Bank may also ask for additional information or documentation or take other
actions reasonably necessary to verify the identity of the Borrower, guarantors or other related
persons.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
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<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>l29093aexv99w2.htm
<DESCRIPTION>EX-99.2
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<TITLE>EX-99.2</TITLE>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;99.2</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="l29093al2909301.gif" alt="(BANK OF AMERICA LOGO)">
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SECURITY AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. THE SECURITY. The undersigned Graham Corporation, a corporation formed under the laws of
the State of Delaware (the &#147;Pledgor&#148;) hereby assigns and grants to Bank of America, N.A. (the
&#147;Bank&#148;) a security interest in the following described property now owned or hereafter acquired by
the Pledgor (&#147;Collateral&#148;):
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All accounts, contract rights, chattel paper, instruments, deposit accounts,
letter of credit rights, payment intangibles and general intangibles, including all amounts
due to the Pledgor from a factor; rights to payment of money from the Bank under any Swap
Contract (as defined in Paragraph&nbsp;2 below); and all returned or repossessed goods which, on
sale or lease, resulted in an account or chattel paper.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All inventory, including all materials, work in process and finished goods.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All machinery, furniture, fixtures and other equipment of every type now owned
or
hereafter acquired by the Pledgor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All of the Pledgor&#146;s deposit accounts with the Bank. The Collateral shall
include
any renewals or rollovers of the deposit accounts, any successor accounts, and any general
intangibles and choses in action arising therefrom or related thereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) All instruments, notes, chattel paper, documents, certificates of deposit,
securities and investment property of every type. The Collateral shall include all liens,
security agreements, leases and other contracts securing or otherwise relating to the
foregoing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) All general intangibles, including, but not limited to, (i)&nbsp;all patents,
and all
unpatented or unpatentable inventions; (ii)&nbsp;all trademarks, service marks, and trade names;
(iii)&nbsp;all copyrights and literary rights; (iv)&nbsp;all computer software programs; (v)&nbsp;all mask
works of semiconductor chip products; (vi)&nbsp;all trade secrets, proprietary information,
customer lists, manufacturing, engineering and production plans, drawings, specifications,
processes and systems. The Collateral shall include all good will connected with or
symbolized by any of such general intangibles; all contract rights, documents, applications,
licenses, materials and other matters related to such general intangibles; all tangible
property embodying or incorporating any such general intangibles; and all chattel paper and
instruments relating to such general intangibles.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) All negotiable and nonnegotiable documents of title covering any Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) All accessions, attachments and other additions to the Collateral, and all
tools,
parts and equipment used in connection with the Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) All substitutes or replacements for any Collateral, all cash or non-cash
proceeds,
product, rents and profits of any Collateral, all income, benefits and property receivable
on account of the Collateral, all rights under warranties and insurance contracts, letters
of credit, guaranties or other supporting obligations covering the Collateral, and any
causes of action relating to the Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) All books and records pertaining to any Collateral, including but not limited
to
any computer-readable memory and any computer hardware or software necessary to process such
memory (&#147;Books and Records&#148;).
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-1-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. THE INDEBTEDNESS. The Collateral secures and will secure all Indebtedness of the Pledgor
to the Bank and any of its affiliates. Each party obligated under any Indebtedness is referred to
in this Agreement as a &#147;Debtor.&#148; &#147;Indebtedness&#148; means all debts, obligations or liabilities now or
hereafter existing, absolute or contingent of the Debtor to the Bank and any of its affiliates,
whether voluntary or involuntary, whether due or not due, or whether incurred directly or
indirectly or acquired by the Bank and any of its affiliates by assignment or otherwise, including
without limitation liabilities related to credit cards, treasury or cash management products, and
overdrafts. Indebtedness shall include, without limitation, all obligations of the Debtor arising
under any Swap Contract. &#147;Swap Contract&#148; means any interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate
swap, currency option, securities puts, calls, collars, options or forwards or any combination of,
or option with respect to, these or similar transactions now or hereafter entered into between the
Debtor and the Bank and any of its affiliates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. PLEDGOR&#146;S COVENANTS. The Pledgor represents, covenants and warrants that unless
compliance is waived by the Bank in writing:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Pledgor will properly preserve the Collateral; defend the Collateral
against
any adverse claims and demands; and keep accurate Books and Records.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Pledgor&#146;s chief executive office is located in the state specified on
the
signature page hereof. In addition, the Pledgor is incorporated in or organized under the
laws of the state specified on such signature page. The Pledgor shall give the Bank at
least thirty (30)&nbsp;days notice before changing its chief executive office or state of
incorporation or organization. Subject to its right to transfer and dispose of Collateral
as provided herein, the Pledgor will notify the Bank in writing prior to any change in the
location of any Collateral, including the Books and Records.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Pledgor will notify the Bank in writing prior to any change in the
Pledgor&#146;s
name, identity or business structure.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as permitted by the Amended and Restated Loan Agreement dated on even
date
herewith made between the Bank and the Pledgor (including as the same is modified, extended,
or replaced from time to time, the &#147;Loan Agreement&#148;), the Pledgor has not granted and will
not grant any security interest in any of the Collateral except to the Bank, and will keep
the Collateral free of all liens, claims, security interests and encumbrances of any kind or
nature except the security interest of the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Pledgor will promptly notify the Bank in writing of any event which affects
the value of the Collateral, the ability of the Pledgor or the Bank to dispose of the
Collateral, or the rights and remedies of the Bank in relation thereto, including, but not
limited to, the levy of any legal process against any Collateral and the adoption of any
marketing order, arrangement or procedure affecting the Collateral, whether governmental or
otherwise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Pledgor shall pay all costs necessary to preserve, defend, enforce and
collect
the Collateral, including but not limited to taxes, assessments, insurance premiums,
repairs, rent, storage costs and expenses of sales, and any costs to perfect the Bank&#146;s
security interest (collectively, the &#147;Collateral Costs&#148;). Without waiving the Pledgor&#146;s
default for failure to make any such payment, the Bank at its option may pay any such
Collateral Costs, and discharge encumbrances on the Collateral, and such Collateral Costs
payments shall be a part of the Indebtedness and bear interest at the rate set out in the
Loan Agreement. The Pledgor agrees to reimburse the Bank on demand for any Collateral Costs
so incurred.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Until the Bank exercises its rights to make collection, the Pledgor will
diligently collect all Collateral in the ordinary course of business.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio --> -2- <!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) If any Collateral is or becomes the subject of any registration certificate,
certificate of deposit or negotiable document of title, including any warehouse receipt or
bill of
lading, the Pledgor shall immediately deliver such document to the Bank, together with any
necessary endorsements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Pledgor will not sell, lease, agree to sell or lease, or otherwise dispose
of
any Collateral except with the prior written consent of the Bank; provided, however, the
Pledgor may sell inventory in the ordinary course of business, may sell or otherwise dispose
of equipment that is worn out, obsolete, or no longer used or useful in Borrower&#146;s business,
and so long as no event of default exists that has not been waived may sell property
described in Section 1(e) at any time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Pledgor will maintain and keep in force insurance covering the Collateral
against fire and extended coverages (including without limitation windstorm coverage, and
hurricane coverage as applicable), to the extent that any Collateral is of a type which can
be so insured. Such insurance shall require losses to be paid on a replacement cost basis,
be issued by insurance companies acceptable to the Bank and include a loss payable
endorsement in favor of the Bank in a form acceptable to the Bank. Upon the request of the
Bank, the Pledgor will deliver to the bank a copy of each insurance policy, or, if permitted
by the Bank, a certificate of insurance listing all insurance in force.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Pledgor will not attach any Collateral to any real property or fixture in a
manner which might cause such Collateral to become a part thereof unless the Pledgor first
obtains the written consent of any owner, holder of any lien on the real property or
fixture, or other person having an interest in such property to the removal by the Bank of
the Collateral from such real property or fixture. Such written consent shall be in form
and substance acceptable to the Bank and shall provide that the Bank has no liability to
such owner, holder of any lien, or any other person.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <U>Exhibit&nbsp;A</U> to this Agreement is a complete list of all patents,
trademark
and service mark registrations, copyright registrations, mask work registrations, and all
applications therefor, in which the Pledgor has any right, title, or interest, throughout
the world. To the extent required by the Bank in its discretion, the Pledgor will promptly
notify the Bank of any acquisition (by adoption and use, purchase, license or otherwise) of
any patent, trademark or service mark registration, copyright registration, mask work
registration, and applications therefor, and unregistered trademarks and service marks and
copyrights, throughout the world, which are granted or filed or acquired after the date
hereof or which are not listed on the Exhibit. The Pledgor authorizes the Bank, without
notice to the Pledgor, to modify this Agreement by amending the Exhibit to include any such
Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Unless the failure to do so would not have a material adverse effect on the
Borrower&#146;s business or financial condition taken as a whole:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Pledgor will, at its expense, diligently
prosecute all patent, trademark or
service mark or copyright applications pending on or after the date hereof, will maintain in
effect all issued patents and will renew all trademark and service mark registrations,
including payment of any and all maintenance and renewal fees relating thereto, except for
such patents, service marks and trademarks that are being sold, donated or abandoned by the
Pledgor pursuant to the terms of its intellectual property management program.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Pledgor will promptly make application on
any patentable but unpatented
inventions, registerable but unregistered trademarks and service marks, and copyrightable
but uncopyrighted works.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Pledgor will at its expense protect and
defend all rights in the Collateral
against any material claims and demands of all persons other than the Bank and
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-3-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">will, at its
expense, enforce all rights in the Collateral against any and all infringers of the
Collateral where such infringement would materially impair the value or use of the
Collateral to the Pledgor or the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Pledgor will not license or transfer any of
the Collateral, except for such
licenses as are customary in the ordinary course of the Pledgor&#146;s business, or except with
the Bank&#146;s prior written consent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. ADDITIONAL OPTIONAL REQUIREMENTS. The Pledgor agrees that the Bank may at its option at
any time, whether or not the Pledgor is in default:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Require the Pledgor to deliver to the Bank (i)&nbsp;copies of or extracts from
the
Books and Records, and (ii)&nbsp;information on any contracts or other matters affecting the
Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Examine the Collateral, including the Books and Records, and make copies of or
extracts from the Books and Records, and for such purposes enter at any reasonable time upon
the property where any Collateral or any Books and Records are located.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Require the Pledgor to deliver to the Bank any instruments, chattel paper or
letters of credit which are part of the Collateral, and to assign to the Bank the proceeds
of any such letters of credit.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notify any account debtors, any buyers of the Collateral, or any other persons
of
the Bank&#146;s interest in the Collateral.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. DEFAULTS. Any one or more of the following shall be a default hereunder:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any event of default occurs as described in Article&nbsp;10 of the Loan
Agreement (or
any successor Article), after giving effect to any applicable grace or cure periods provided
therein.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Pledgor breaches any term, provision, warranty or representation under this
Agreement and such breach remains uncured after any applicable cure period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Bank fails to have an enforceable first lien (except for any prior liens to
which the Bank has consented in writing) on or security interest in the Collateral if (i)
the security interest and lien can be perfected and achieve priority by the filing of
financing statements under the Uniform Commercial Code, or (ii)&nbsp;the security interest and
lien covers specific Collateral not covered by clause (i)&nbsp;with respect to which the Bank has
specifically requested perfection and priority of its security interest and lien.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any custodian, receiver or trustee is appointed to take possession, custody or
control of all or a substantial portion of the Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Any involuntary lien of any kind or character attaches to any Collateral,
except
for liens for taxes not yet due.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. BANK&#146;S REMEDIES AFTER DEFAULT. In the event of any default, the Bank may do any one or
more of the following, to the extent permitted by law:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Declare any Indebtedness immediately due and payable, without notice or demand.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Enforce the security interest given hereunder pursuant to the Uniform
Commercial
Code and any other applicable law.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-4-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Enforce the security interest of the Bank in any deposit account of the Pledgor
maintained with the Bank by applying such account to the Indebtedness.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Require the Pledgor to obtain the Bank&#146;s prior written consent to any
sale, lease,
agreement to sell or lease, or other disposition of any Collateral consisting of inventory.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Require the Pledgor to segregate all collections and proceeds of the Collateral
so
that they are capable of identification and deliver daily such collections and proceeds to
the Bank in kind.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Require the Pledgor to direct all account debtors to forward all payments and
proceeds of the Collateral to a post office box under the Bank&#146;s exclusive control.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Require the Pledgor to assemble the Collateral, including the Books and
Records,
and make them available to the Bank at a place designated by the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Enter upon the property where any Collateral, including any Books and Records,
are
located and take possession of such Collateral and such Books and Records, and use such
property (including any buildings and facilities) and any of the Pledgor&#146;s equipment, if the
Bank deems such use necessary or advisable in order to take possession of, hold, preserve,
process, assemble, prepare for sale or lease, market for sale or lease, sell or lease, or
otherwise dispose of, any Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Demand and collect any payments on and proceeds of the Collateral. In
connection
therewith the Pledgor irrevocably authorizes the Bank to endorse or sign the Pledgor&#146;s name
on all checks, drafts, collections, receipts and other documents, and to take possession of
and open the mail addressed to the Pledgor and remove therefrom any payments and proceeds of
the Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Grant extensions and compromise or settle claims with respect to the Collateral
for less than face value, all without prior notice to the Pledgor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Use or transfer any of the Pledgor&#146;s rights and interests in any
Intellectual
Property now owned or hereafter acquired by the Pledgor, if the Bank deems such use or
transfer necessary or advisable in order to take possession of, hold, preserve, process,
assemble, prepare for sale or lease, market for sale or lease, sell or lease, or otherwise
dispose of, any Collateral. The Pledgor agrees that any such use or transfer shall be
without any additional consideration to the Pledgor. As used in this paragraph,
&#147;Intellectual Property&#148; includes, but is not limited to, all trade secrets, computer
software, service marks, trademarks, trade names, trade styles, copyrights, patents,
applications for any of the foregoing, customer lists, working drawings, instructional
manuals, and rights in processes for technical manufacturing, packaging and labeling, in
which the Pledgor has any right or interest, whether by ownership, license, contract or
otherwise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Have a receiver appointed by any court of competent jurisdiction to take
possession of the Collateral. The Pledgor hereby consents to the appointment of such a
receiver and agrees not to oppose any such appointment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Take such measures as the Bank may deem necessary or advisable to take
possession
of, hold, preserve, process, assemble, insure, prepare for sale or lease, market for sale or
lease, sell or lease, or otherwise dispose of, any Collateral, and the Pledgor hereby
irrevocably constitutes and appoints the Bank as the Pledgor&#146;s attorney-in-fact to perform
all acts and execute all documents in connection therewith.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Without notice or demand to the Pledgor, set off and apply against any and all
of
the Indebtedness any and all deposits (general or special, time or demand, provisional or
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-5-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">final) and any other indebtedness, at any time held or owing by the Bank or any of the
Bank&#146;s agents or affiliates to or for the credit of the account of the Pledgor or any
guarantor or endorser of the Pledgor&#146;s Indebtedness.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Exercise any other remedies available to the Bank at law or in equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. MISCELLANEOUS.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any waiver, express or implied, of any provision hereunder and any delay or
failure by the Bank to enforce any provision shall not preclude the Bank from enforcing any
such provision thereafter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Pledgor shall, at the request of the Bank, execute such other agreements,
documents, instruments, or financing statements in connection with this Agreement as the
Bank may reasonably deem necessary.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All notes, security agreements, subordination agreements and other documents
executed by the Pledgor or furnished to the Bank in connection with this Agreement must be
in form and substance satisfactory to the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This Agreement shall be governed by and construed in accordance with the laws
of
the State of New York. To the extent that the Bank has greater rights or remedies under
federal law, whether as a national bank or otherwise, this paragraph shall not be deemed to
deprive the Bank of such rights and remedies as may be available under federal law.
Jurisdiction and venue for any action or proceeding to enforce this Agreement shall be the
forum appropriate for such action or proceeding against the Pledgor, to which jurisdiction
the Pledgor irrevocably submits and to which venue the Pledgor waives to the fullest extent
permitted by law any defense asserting an inconvenient forum in connection therewith.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) All rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies otherwise provided by law. Any single or partial exercise of any right
or remedy shall not preclude the further exercise thereof or the exercise of any other right
or remedy.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) All terms not defined herein are used as set forth in the Uniform Commercial
Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) In the event of any action by the Bank to enforce this Agreement or to protect
the
security interest of the Bank in the Collateral, or to take possession of, hold, preserve,
process, assemble, insure, prepare for sale or lease, market for sale or lease, sell or
lease, or otherwise dispose of, any Collateral, the Pledgor agrees to pay immediately the
costs and expenses thereof, together with reasonable attorneys&#146; fees and allocated costs for
in-house legal services to the extent permitted by law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) In the event the Bank seeks to take possession of any or all of the Collateral
by
judicial process, the Pledgor hereby irrevocably waives any bonds and any surety or security
relating thereto that may be required by applicable law as an incident to such possession,
and waives any demand for possession prior to the commencement of any such suit or action.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) This Agreement shall constitute a continuing agreement, applying to all future
as
well as existing transactions, whether or not of the character contemplated at the date of
this Agreement, and if all transactions between the Bank and the Pledgor shall be closed at
any time, shall be equally applicable to any new transactions thereafter.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-6-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Bank&#146;s rights hereunder shall inure to the benefit of its successors
and
assigns. In the event of any assignment or transfer by the Bank of any of the Indebtedness
or the Collateral, the Bank thereafter shall be fully discharged from any responsibility
with respect to the Collateral so assigned or transferred, but the Bank shall retain all
rights and powers hereby given with respect to any of the Indebtedness or the Collateral not
so assigned or transferred. All representations, warranties and agreements of the Pledgor
if more than one are joint and several and all shall be binding upon the personal
representatives, heirs, successors and assigns of the Pledgor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Pledgor agrees that the Collateral may be sold as provided for in this
Security Agreement and expressly waives any rights of notice of sale, advertisement
procedures, or related provisions granted under applicable law, including the New York Lien
Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8. </B><U><B>FINAL AGREEMENT</B></U><B>. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT:
(A)&nbsp;THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF, (B)&nbsp;THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN
OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT
LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE
CONTRARY, (C)&nbsp;THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D)&nbsp;THIS DOCUMENT MAY
NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
UNDERSTANDINGS OF THE PARTIES.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement continues the Bank&#146;s security interests granted by, but amends and restates in
its entirety, (i)&nbsp;the Amended and Restated Security Agreement (Accounts, Inventory, Chattel Paper,
Documents, Technology, and General Intangibles) dated November&nbsp;3, 1999 made between Borrower and
Fleet National Bank (predecessor by merger to the Bank) and (ii)&nbsp;the Amended and Restated Security
Agreement (Goods and Equipment) dated November&nbsp;3, 1999 made between Borrower and Fleet National
Bank.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The parties executed this Agreement as of December&nbsp;5, 2007, intending to create an instrument
executed under seal.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">BANK OF AMERICA, N.A.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Address for Notices:<br>
One East Avenue<br>
Rochester, New York 14638</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">GRAHAM CORPORATION</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD align="right">&nbsp;(Seal)</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pledgor&#146;s Location and Mailing Address:<BR>
20 Florence Avenue<BR>
Batavia, New York 14020

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pledgor&#146;s state of incorporation: Delaware

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --> -7- <!-- /Folio -->
</DIV>



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<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>l29093aexv99w3.htm
<DESCRIPTION>EX-99.3
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-99.3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;99.3</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PATENT SECURITY AGREEMENT
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECURITY AGREEMENT, dated as of December&nbsp;5, 2007 Graham Corporation, a corporation formed
under the laws of the State of Delaware with offices at 20 Florence Avenue, Batavia, New York
14020, and Bank of America, N.A., a national banking association with offices at One East Avenue,
Rochester, New York 14638 (the &#147;Secured Party&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debtor and Secured Party hereby agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definitions; Interpretation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Certain Defined Terms</U>. As used in this Agreement, the following terms shall have
the following meanings:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Collateral&#148; has the meaning set forth in Section&nbsp;2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Credit Agreement&#148; means that certain Credit Agreement, dated as of the date hereof, between
Debtor and Secured Party, as the same may be modified, amended or replaced from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;PTO&#148; means the United States Patent and Trademark Office.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;UCC&#148; means the Uniform Commercial Code as in effect in the State of New York.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Terms Defined in UCC</U>. Where applicable in the context of this Agreement and
except as otherwise defined herein, terms used in this Agreement shall have the meanings assigned
to them in the UCC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Construction</U>. In this Agreement, the following rules of construction and
interpretation shall be applicable: (i)&nbsp;no reference to &#147;proceeds&#148; in this Agreement authorizes any
sale, transfer, or other disposition of any Collateral by Debtor; (ii) &#147;includes&#148; and &#147;including&#148;
are not limiting; (iii) &#147;or&#148; is not exclusive; and (iv) &#147;all&#148; includes &#147;any&#148; and &#147;any&#148; includes
&#147;all.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Security Interest</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Grant of Security Interest</U>. As security for the payment and performance of the
Debtor&#146;s obligations to Secured Party under the Credit Agreement (&#147;Obligations&#148;), Debtor hereby
assigns, transfers and conveys to Secured Party, and grants to Secured Party a security interest in
all of Debtor&#146;s right, title and interest in, to and under the following property, in each case
whether now or hereafter existing or arising or in which Debtor now has or hereafter owns, acquires
or develops an interest and wherever located (collectively, the &#147;Collateral&#148;):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;all patents and patent applications, domestic or foreign, all licenses relating to any of
the foregoing and all income and royalties with respect to any licenses (including such patents and
patent applications as described in <U>Schedule&nbsp;A</U>), all rights to sue for past, present or
future infringement thereof, all rights arising therefrom and pertaining thereto and all reissues,
divisions, continuations, renewals, extensions and continuations-in-part thereof;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;all general intangibles and all intangible intellectual or other similar property of
Debtor of any kind or nature, associated with or arising out of any of the aforementioned
properties and assets and not otherwise described above; and
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;all proceeds of any and all of the foregoing Collateral (including license royalties,
rights to payment, accounts and proceeds of infringement suits) and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is the loss payee thereof) or
any indemnity, warranty or guaranty payable by reason of loss or damage to or otherwise with
respect to the foregoing Collateral.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Continuing Security Interest</U>. Debtor agrees that this Agreement shall create a
continuing security interest in the Collateral which shall remain in effect until terminated in
accordance with Section&nbsp;11.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Supplement to Credit Agreement</U>. This Agreement has been entered into in
conjunction with the security interests granted to Secured Party under the Security Agreement
(&#147;Security Agreement&#148;) made by Debtor in favor of Secured Party dated on even date herewith in
conjunction with the Credit Agreement. The rights and remedies of Secured Party with respect to
the security interests granted herein are without prejudice to, and are in addition to those set
forth in the Credit Agreement, the Security Agreement, or any other security documents referred to
therein, all terms and provisions of which are incorporated herein by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Representations and Warranties</U>. Debtor represents and warrants to Secured Party
that a true and correct list of all of the existing Collateral consisting of patents and patent
applications or registrations owned by Debtor, in whole or in part, is set forth in <U>Schedule
A</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Further Acts</U>. On a continuing basis, Debtor shall make, execute, acknowledge and
deliver, and file and record in the proper filing and recording places, all such instruments and
documents, and take all such action as may be reasonably necessary or advisable or may be
reasonably requested by Secured Party to carry out the intent and purposes of this Agreement, or
for assuring, confirming or protecting the grant or perfection of the security interest granted or
purported to be granted hereby, to ensure Debtor&#146;s compliance with this Agreement or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with respect to the
Collateral, including any documents for filing with the PTO or any other applicable office.
Secured Party may record this Agreement, an abstract thereof, or any other document describing
Secured Party&#146;s interest in the Collateral with the PTO, at the expense of Debtor. In addition,
Debtor authorizes Secured Party to file financing statements describing the Collateral in any UCC
filing office deemed appropriate by Secured Party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Authorization to Supplement</U>. If Debtor shall obtain rights to any new patentable
inventions or become entitled to the benefit of any patent application or patent for any reissue,
division, or continuation, of any patent, the provisions of this Agreement shall automatically
apply thereto. Debtor shall give prompt notice in writing to Secured Party with respect to any
such new patent rights. Without limiting Debtor&#146;s obligations under this Section&nbsp;6, Debtor
authorizes Secured Party unilaterally to modify this Agreement by amending <U>Schedule&nbsp;A</U> to
include any such new patent rights. Notwithstanding the foregoing, no failure to so modify this
Agreement or amend <U>Schedule&nbsp;A</U> shall in any way affect, invalidate or detract from Secured
Party&#146;s continuing security interest in all Collateral, whether or not listed on <U>Schedule
A</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Binding Effect</U>. This Agreement shall be binding upon, inure to the benefit of and
be enforceable by Debtor, Secured Party and their respective successors and assigns. Debtor may
not assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder except as specifically permitted by the Credit Agreement.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by, and construed in accordance
with, the law of the State of New York, except as required by mandatory provisions of law or to the
extent the perfection or priority of the security interests hereunder, or the remedies hereunder,
in respect of any Collateral are governed by the law of a jurisdiction other than New York.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Entire Agreement; Amendment</U>. This Agreement and the Credit Agreement, together
with the Schedules hereto and thereto, contains the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior drafts and communications relating to such
subject matter. Neither this Agreement nor any provision hereof may be modified, amended or waived
except by the written agreement of the parties, as provided in the Credit Agreement.
Notwithstanding the foregoing, Secured Party unilaterally may re-execute this Agreement or modify,
amend or supplement <U>Schedule&nbsp;A</U> hereto as provided in Section&nbsp;6 hereof. To the extent that
any provision of this Agreement conflicts with any provision of the Credit Agreement, the provision
giving Secured Party greater rights or remedies shall govern, it being understood that the purpose
of this Agreement is to add to, and not detract from, the rights granted to Secured Party under the
Credit Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Counterparts</U>. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of this Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart. Any party hereto delivering a counterpart of this
Agreement by facsimile shall also deliver a manually executed counterpart, but the failure to so
deliver a manually executed counterpart shall not affect the validity, enforceability, or binding
effect hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Termination</U>. Upon payment and performance in full of all Obligations, the
security interests created by this Agreement shall terminate and Secured Party (at Debtor&#146;s
expense) shall promptly execute and deliver to Debtor such documents and instruments reasonably
requested by Debtor as shall be necessary to evidence termination of all such security interests
given by Debtor to Secured Party hereunder, including cancellation of this Agreement by written
notice from Secured Party to the PTO.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>No Inconsistent Requirements</U>. Debtor acknowledges that this Agreement and the
other documents, agreements and instruments entered into or executed in connection herewith may
contain covenants and other terms and provisions variously stated regarding the same or similar
matters, and Debtor agrees that all such covenants, terms and provisions are cumulative and all
shall be performed and satisfied in accordance with their respective terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Severability</U>. If one or more provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect in any jurisdiction or with respect to any party,
such invalidity, illegality or unenforceability in such jurisdiction or with respect to such party
shall, to the fullest extent permitted by applicable law, not invalidate or render illegal or
unenforceable any such provision in any other jurisdiction or with respect to any other party, or
any other provisions of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Notices</U>. All notices and other communications hereunder shall be in writing and
shall be mailed, sent or delivered in accordance with the Credit Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;Signature Page Follows&#093;
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of the date first
above written.
</DIV>
<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
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    <TD colspan="5" valign="top" align="left">Bank of America, N.A.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Graham Corporation</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD align="left" valign="top">By</TD>
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</TR>
<TR style="font-size: 1px">
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    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="4" valign="top" align="left" nowrap>Typed Name</TD>

    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="4" valign="top" align="left" nowrap>Typed Name</TD>

    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
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</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD align="left" valign="top">Title</TD>
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    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
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<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>5
<FILENAME>l29093aexv99w4.htm
<DESCRIPTION>EX-99.4
<TEXT>
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<TITLE>EX-99.4</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><b>Exhibit&nbsp;99.4</b>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>TRADEMARK SECURITY AGREEMENT</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECURITY AGREEMENT, dated as of December&nbsp;5, 2007, Graham Corporation, a corporation formed
under the laws of the State of Delaware with offices at 20 Florence Avenue, Batavia, New York
14020, and Bank of America, N.A., a national banking association with offices at One East Avenue,
Rochester, New York 14638 (the &#147;Secured Party&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debtor and Secured Party hereby agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definitions; Interpretation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Certain Defined Terms</U>. As used in this Agreement, the following terms shall have
the following meanings:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Collateral&#148; has the meaning set forth in Section&nbsp;2.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Credit Agreement&#148; means that certain Credit Agreement, dated as of the date hereof, between
Debtor and Secured Party, as the same may be modified, amended, or replaced from time to time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;PTO&#148; means the United States Patent and Trademark Office.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;UCC&#148; means the Uniform Commercial Code as in effect in the State of New York.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Terms Defined in UCC</U>. Where applicable in the context of this Agreement and
except as otherwise defined herein, terms used in this Agreement shall have the meanings assigned
to them in the UCC.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Construction</U>. In this Agreement, the following rules of construction and
interpretation shall be applicable: (i)&nbsp;no reference to &#147;proceeds&#148; in this Agreement authorizes any
sale, transfer, or other disposition of any Collateral by Debtor; (ii) &#147;includes&#148; and &#147;including&#148;
are not limiting; (iii) &#147;or&#148; is not exclusive; and (iv) &#147;all&#148; includes &#147;any&#148; and &#147;any&#148; includes
&#147;all.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Security Interest</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(a) </I><U>Grant of Security Interest</U>. As security for the payment and performance of all of
the Debtor&#146;s obligations to Secured Party under the Credit Agreement (&#147;Obligations&#148;), Debtor hereby
grants to Secured Party a security interest in all of Debtor&#146;s right, title and interest in, to and
under the following property, in each case whether now or hereafter existing or arising or in which
Debtor now has or hereafter owns, acquires or develops an interest and wherever located
(collectively, the &#147;Collateral&#148;):
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;all state (including common law), federal and foreign trademarks, service marks and trade
names, and applications for registration of such trademarks, service marks and trade names (but
excluding any application to register any trademark, service mark or other mark prior to the filing
under applicable law of a verified statement of use (or the equivalent) for such trademark, service
mark or other mark to the extent the creation of a security interest therein or the grant of a
mortgage thereon would void or invalidate such trademark, service mark or other mark), all licenses
relating to any of the foregoing and all income and royalties with respect to any licenses
(including such marks, names and
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">applications as described in <U>Schedule&nbsp;A</U>), whether registered or unregistered and
wherever registered, all rights to sue for past, present or future infringement or unconsented use
thereof, all rights arising therefrom and pertaining thereto and all reissues, extensions and
renewals thereof;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;the entire goodwill of or associated with the businesses now or hereafter conducted by
Debtor connected with and symbolized by any of the aforementioned properties and assets;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;all general intangibles and all intangible intellectual or other similar property of
Debtor of any kind or nature, associated with or arising out of any of the aforementioned
properties and assets and not otherwise described above; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;all proceeds of any and all of the foregoing Collateral (including license royalties,
rights to payment, accounts and proceeds of infringement suits) and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is the loss payee thereof) or
any indemnity, warranty or guaranty payable by reason of loss or damage to or otherwise with
respect to the foregoing Collateral.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Continuing Security Interest</U>. Debtor agrees that this Agreement shall create a
continuing security interest in the Collateral which shall remain in effect until terminated in
accordance with Section&nbsp;11.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Supplement to Credit Agreement</U>. This Agreement has been entered into in
conjunction with the security interests granted to Secured Party under the Security Agreement
(&#147;Security Agreement&#148;) made by Debtor in favor of Secured Party dated on even date herewith in
conjunction with the Credit Agreement. The rights and remedies of Secured Party with respect to
the security interests granted herein are without prejudice to, and are in addition to those set
forth in the Credit Agreement, the Security Agreement, or any other security documents referred to
therein, all terms and provisions of which are incorporated herein by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Representations and Warranties</U>. Debtor represents and warrants to Secured Party
that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Trademarks</U>. A true and correct list of all of the existing Collateral consisting
of trademarks, trademark registrations or applications owned by Debtor, in whole or in part, is set
forth in <U>Schedule&nbsp;A</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Further Acts</U>. On a continuing basis, Debtor shall make, execute, acknowledge and
deliver, and file and record in the proper filing and recording places, all such instruments and
documents, and take all such action as may be reasonably necessary or advisable or may be
reasonably requested by Secured Party to carry out the intent and purposes of this Agreement, or
for assuring, confirming or protecting the grant or perfection of the security interest granted or
purported to be granted hereby, to ensure Debtor&#146;s compliance with this Agreement or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with respect to the
Collateral, including any documents for filing with the PTO or any other applicable office.
Secured Party may record this Agreement, an abstract thereof, or any other document describing
Secured Party&#146;s interest in the Collateral with the PTO, at the expense of Debtor. In addition,
Debtor authorizes Secured Party to file financing statements describing the Collateral in any UCC
filing office deemed appropriate by Secured Party.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Authorization to Supplement</U>. If Debtor shall obtain rights to any new trademarks,
the provisions of this Agreement shall automatically apply thereto. Debtor shall give prompt notice
in writing to Secured Party with respect to any such new trademarks or renewal or extension of any
trademark registration. Without limiting Debtor&#146;s obligations under this Section&nbsp;6, Debtor
authorizes Secured Party unilaterally to modify this Agreement by amending <U>Schedule&nbsp;A</U> to
include any such new patent or trademark rights. Notwithstanding the foregoing, no failure to so
modify this Agreement or amend <U>Schedule&nbsp;A</U> shall in any way affect, invalidate or detract
from Secured Party&#146;s continuing security interest in all Collateral, whether or not listed on
<U>Schedule&nbsp;A</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Binding Effect</U>. This Agreement shall be binding upon, inure to the benefit of and
be enforceable by Debtor, Secured Party and their respective successors and assigns. Debtor may not
assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder except as specifically permitted by the Credit Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by, and construed in accordance
with, the law of the State of New York, except as required by mandatory provisions of law or to the
extent the validity, perfection or priority of the security interests hereunder, or the remedies
hereunder, in respect of any Collateral are governed by the law of a jurisdiction other than New
York.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Entire Agreement; Amendment</U>. This Agreement and the Credit Agreement, together
with the Schedules hereto and thereto, contains the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior drafts and communications relating to such
subject matter. Neither this Agreement nor any provision hereof may be modified, amended or waived
except by the written agreement of the parties, as provided in the Credit Agreement.
Notwithstanding the foregoing, Secured Party unilaterally may re-execute this Agreement or modify,
amend or supplement the Schedules hereto as provided in Section&nbsp;6 hereof. To the extent that any
provision of this Agreement conflicts with any provision of the Credit Agreement, the provision
giving Secured Party greater rights or remedies shall govern, it being understood that the purpose
of this Agreement is to add to, and not detract from, the rights granted to Secured Party under the
Credit Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Counterparts</U>. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of this Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart. Any party hereto delivering a counterpart of this
Agreement by facsimile shall also deliver a manually executed counterpart, but the failure to so
deliver a manually executed counterpart shall not affect the validity, enforceability, or binding
effect hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Termination</U>. Upon payment and performance in full of all Obligations, the
security interests created by this Agreement shall terminate and Secured Party (at Debtor&#146;s
expense) shall promptly execute and deliver to Debtor such documents and instruments reasonably
requested by Debtor as shall be necessary to evidence termination of all such security interests
given by Debtor to Secured Party hereunder, including cancellation of this Agreement by written
notice from Secured Party to the PTO.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>No Inconsistent Requirements</U>. Debtor acknowledges that this Agreement and the
other documents, agreements and instruments entered into or executed in connection
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">herewith may contain covenants and other terms and provisions variously stated regarding the
same or similar matters, and Debtor agrees that all such covenants, terms and provisions are
cumulative and all shall be performed and satisfied in accordance with their respective terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Severability</U>. If one or more provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect in any jurisdiction or with respect to any party,
such invalidity, illegality or unenforceability in such jurisdiction or with respect to such party
shall, to the fullest extent permitted by applicable law, not invalidate or render illegal or
unenforceable any such provision in any other jurisdiction or with respect to any other party, or
any other provisions of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Notices</U>. All notices and other communications hereunder shall be in writing and
shall be mailed, sent or delivered in accordance with the Credit Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;Remainder of page intentionally left blank.&#093;
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of the date first
above written.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
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    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left">Bank of America, N.A.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Graham Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
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