<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>revolvingcreditagmt.txt
<DESCRIPTION>EXHIBIT 10.1 MODIFIED & RESTATED REVOLVING CREDIT AGREEMENT
<TEXT>
Exhibit 10.1


                MODIFIED AND RESTATED REVOLVING CREDIT AGREEMENT
                ------------------------------------------------


                MODIFIED AND RESTATED REVOLVING CREDIT AGREEMENT
                (the "Agreement" or "Revolving Credit Agreement")
                              dated April 16, 2008


                                 by and between


                           CVD EQUIPMENT CORPORATION,
                             a New York corporation
                               with an address at:
                             1860 Smithtown Avenue,
                           Ronkonkoma, New York 11779
                                (the "Borrower")


                                       and


                               Capital One, N.A.,
                     successor by merger to North Fork Bank
                                having offices at
                              275 Broadhollow Road
                            Melville, New York 11747
                                  (the "Bank").


                                    RECITALS
                                    --------

     WHEREAS, Borrower has previously borrowed from North Fork Bank (now Capital
One,  N.A., as successor by merger to North Fork Bank) the  principal  amount of
Two Million and 00/100  ($2,000,000.00)  Dollars by  revolving  credit  facility
dated  June 1, 2007 which such loan is  evidenced  by,  among  other  things,  a
Revolving Credit Agreement,  a Revolving Line of Credit Note, a Revolving Credit
Security Agreement and other documents all dated on or about June 1, 2007; and

         WHEREAS, Borrower has requested an increase in the revolving line of
credit in the principal amount of Three Million ($3,000,000.00) Dollars; and

     WHEREAS,  the Bank has agreed to increase the  revolving  line of credit in
said  amount  provided  that the  said  Borrower  be  liable  for the  increased
revolving line of credit; and

     WHEREAS, the increased revolving line of credit in the new principal sum of
Five Million and 00/100 ($5,000,000.00)  Dollars (at times, the "Loan") shall be
secured by, among other things,  (i) a first position  security  interest in all



                                       1
<PAGE>

assets of the Borrower  evidenced by a Modified  and Restated  Revolving  Credit
Security  Agreement  made by the  Borrower  in favor  of the  Bank of even  date
herewith;  and (ii) a  security  interest  in and  assignment  and pledge of all
monies, deposits, or other sums now or hereafter held by the Bank on deposit, in
safekeeping, transit or otherwise, at any time credited by or due from Bank (its
successors and/or assigns as their interests may appear) to the Borrower,  or in
which the Borrower shall have an interest  evidenced by a Pledge  Agreement made
by the  Borrower  in  favor  of the  Bank of even  date  herewith;  and  (iii) a
collateral  Assignment  to the  Bank  of a  portion  of the  proceeds  of a life
insurance  policy issued on the life of Leonard A. Rosenbaum,  President and CEO
of the Borrower, in the amount of Five Hundred Thousand and 00/100 ($500,000.00)
Dollars  which such  policy was  issued by Pruco Life  Insurance  Company of New
Jersey (a Stock Company of the Prudential  Insurance Company of America),  under
policy no.  [intentionally  omitted]  (contract date October 14, 2006) and has a
face value of Two Million and 00/100 ($2,000,000.00) Dollars; and

     WHEREAS,  the Bank is willing to make the Loan on the terms and  conditions
set forth herein.

     NOW, THEREFORE,  IT IS HEREBY AGREED by the parties hereto in consideration
of the terms, covenants and conditions hereinafter set forth as follows:

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

     Section 1.01.  Defined Terms.  As used in this  Agreement,  all capitalized
terms  shall  have the  meanings  set forth  herein  (except  where the  context
otherwise requires,  terms defined in the singular to have the same meaning when
used in the plural and vice versa).

     "Note" or "Revolving Line of Credit Note" shall mean the  Consolidated  and
Restated  Revolving  Line of Credit Note of even date  herewith in the principal
amount of Five Million and 00/100  ($5,000,000.00)  Dollars, made by Borrower in
favor of the Bank.

     "Indebtedness"  shall mean collectively all of Borrower's  obligation(s) to
pay any amount(s)  due, and to perform and observe every  provision of and under
this  Agreement,  the Note or any other  Loan  Documents  of even date  herewith
executed by Borrower in favor of the Bank.

     The terms "Borrower's Liabilities" as used herein and in the Revolving Line
of Credit Note and Loan  Documents  shall mean duties,  debts,  liabilities  and
obligations   of  the   Borrower   (or  its   successors,   assigns   or   legal
representatives)  to the Bank,  present  or  future,  whether  now or  hereafter
existing,  contingent  or  absolute,  which are arising or incurred or evidenced
under this  Agreement,  the  Revolving  Line of Credit  Note,  the  Modified and
Restated Revolving Credit Security Agreement, and/or any and all other documents
executed and delivered to the Bank in furtherance of this Revolving Credit Loan.

     "Collateral"  shall mean the assets of the Borrower pledged in favor of the
Bank as described  with more  particularity  herein and in the Revolving  Credit
Security Agreement of even date herewith.


                                       2
<PAGE>

     "Loan  Documents"  as used herein  shall mean this  Modified  and  Restated
Revolving Credit  Agreement,  the  Consolidated  and Restated  Revolving Line of
Credit Note dated April 16, 2008 in the principal sum of Five Million and 00/100
($5,000,000.00)  Dollars,  the Modified and Restated  Revolving  Credit Security
Agreement  (defined  herein),  the  Pledge  Agreement(s)  and any and all  other
documents executed and delivered in connection herewith.

     Section 1.02.  Accounting  Terms.  All  accounting  terms not  specifically
defined herein shall be construed in accordance  with GAAP  consistent with that
applied in the preparation of the financial  statements  referred to herein, and
all financial  data submitted  pursuant to this  Agreement  shall be prepared in
accordance with such principles.


                                   ARTICLE II
                  AMOUNT AND TERMS OF THE REVOLVING CREDIT LOAN

     Section 2.01.  Revolving Loan. The Bank agrees, on the terms and conditions
hereinafter set forth and those set forth in the Note, to make certain revolving
loans to Borrower (each an "Advance" or, collectively, the "Advances") up to the
aggregate  total  principal  amount of Five  Million and 00/100  ($5,000,000.00)
Dollars (at times, the "Commitment Amount") (the "Loan").

     Subject to the terms and conditions  hereof, the Bank will make Advances to
the  Borrower  from time to time until the close of business on April 30,  2011,
the  "Revolving  Credit  Termination  Date",  in such sums as the  Borrower  may
request, provided that the aggregate principal amount of all Advances at any one
time outstanding  hereunder shall not exceed the Commitment Amount. The Borrower
may borrow,  repay  pursuant to Article II and  reborrow,  from the date of this
Agreement until the Revolving  Credit  Termination  Date, the full amount of the
Commitment  Amount or any lesser sum that is at least $20,000.00 and in integral
multiples of $10,000.00.  All Advances must be repaid with interest as set forth
herein by the Maturity Date.

     Section 2.02.  Notice and Manner of Borrowing.  (1) The sums to be advanced
under the Note shall be advanced  from time to time by the Bank upon its receipt
of  a  requisition  from  Borrower,  in  such  form  and  with  such  supporting
documentation  as may be required by the Bank.  Whenever the Borrower desires to
obtain an Advance  hereunder,  it shall  notify the Bank (which  notice shall be
irrevocable)  in  writing  in  substantially  the form of  Exhibit  B hereto  by
facsimile or other  writing  received no later than 2:00  p.m.(eastern  standard
time) on that  business day on which the requested  Advance is to be made.  Such
notice  shall  specify the  effective  date (which must be a business day in the
State  of New  York)  and  amount  of  each  requested  Advance  subject  to the
limitations set forth herein and the interest rate choice applicable thereto. In
addition,  and  pursuant to this Section  2.02,  any such request for an Advance
shall be accompanied by the notices and documents  specified  herein.  Each such
notification   (a  "Notice  of  Advance")   shall  be  evidenced  by  a  written
confirmation  thereof by the  Borrower  in  substantially  the form of Exhibit B
hereto,  provided,  that if such  written  confirmation  differs in any material
respect from the action taken by the Bank, the records of the Bank shall control
absent manifest error.

     (2) Additional  Conditions.  In addition to the conditions herein specified


                                       3
<PAGE>

with respect to  Advances,  the Bank's  obligations  to make  Advances  shall be
subject to the fulfillment of the following conditions:

     (a) No Defaults.  No event shall have occurred which  constitutes or, which
with the giving of notice or the passage of time, or both,  would  constitute an
Event of Default hereunder.  The Bank shall not be obligated to make any advance
hereunder if a default shall have occurred  hereunder,  under the Revolving Line
of Credit Note or Modified and Restated  Revolving Credit Security  Agreement or
under any other monetary obligation of the Borrower to the Bank.

     (b) No Adverse Conditions.  Neither the condition, business or prospects of
the Borrower shall have been materially and/or adversely  affected in any way as
the result of force majeure, any legislative or regulatory change, revocation of
license or right to do business or otherwise.

     Section 2.03 The Note.

     (a) The Loan shall be evidenced by a  Consolidated  and Restated  Revolving
Line of Credit  [Promissory]  Note  dated the date  hereof in the amount of Five
Million and 00/100 ($5,000,000.00)  Dollars, made by the Borrower and payable to
the order of the Bank and having a final maturity of May 1, 2011.

     (b) The Bank shall,  and is hereby  irrevocably  authorized by the Borrower
to, enter on the schedule forming a part of the Note or otherwise in its records
appropriate notations evidencing the date and the amount of each Advance and the
date and amount of each payment of principal  made by the Borrower  with respect
thereto;  and in the absence of manifest error,  such notations shall constitute
conclusive  evidence thereof.  The Bank is hereby irrevocably  authorized by the
Borrower  to  attach to and make a part of the Note a  continuation  of any such
schedule  as and when  required.  No failure on the part of the Bank to make any
notation as provided in this  subsection (b) shall in any way affect any advance
or the rights or obligations of the Bank or the Borrower with respect thereto.

     THE  NOTE  SHALL  MATURE  ON MAY 1,  2011  WITH  ALL  SUMS  OF  OUTSTANDING
PRINCIPAL, ACCRUED INTEREST AND RELATED CHARGES DUE AND OWING ON SUCH DATE.

     Section  2.04.  Interest  Rates.  Changes in Interest  Rate and Payments of
Interest.

     (a) Each Advance,  whether a Libor Advance or Prime Advance as each term is
defined in the Note,  shall bear interest on the  outstanding  principal  amount
thereof pursuant to the terms and conditions set forth in the Note.

     (b) Such  interest  shall be payable by Borrower to the Bank in  accordance
with the terms and conditions set forth in the Note.

     (c) Interest  shall be  calculated  on the basis of a year of three hundred
sixty  (360)  days and  actual  number  of days  elapsed,  and  shall be paid in
immediately  available  funds  monthly in arrears on the first (1st) day of each
month at the offices of the Bank shown above.  Any principal or interest  amount


                                       4
<PAGE>

not paid  within ten (10) days of when due (at  maturity,  by  acceleration,  or
otherwise)  shall bear interest at a rate which shall be five percent (5%) above
the  Rate  which  would  otherwise  be  applicable  whether  or not the Bank has
declared a default (but in no event higher than the maximum legal interest rate)
and shall be payable  on demand.  Such  interest  rate shall be in effect  until
paid.

     Increases in the interest rate will result in higher payments; decreases in
the interest rate will result in lower payments.

     (d) The Loan and the Note  shall  mature  on May 1,  2011 with all sums due
hereunder and under the Note due and owing on that said date.

     (e) The monthly  payment  shall be applied first to the payment of interest
on the unpaid balance from the last date to which interest has been paid, to the
date of payment, with the remainder, if any, being applied against principal.

     Section  2.05.  Prepayments.  The Note may be  prepaid  in whole or in part
pursuant to the terms specified therein.

     Section 2.06.  Method of Payment.  All payments due hereunder shall be made
by  automatic  debit  from a  non-interest  bearing  account  maintained  by the
Borrower  for such  purpose  at the Bank in which the  Borrower  shall  maintain
balances  sufficient to pay each monthly  payment due to the Bank.  Each monthly
payment of interest  shall be  automatically  deducted  from Capital  One,  N.A.
account No.  [Intentionally  omitted] in connection  with this Agreement and the
Note on the due date  thereof (at times,  the "due date"),  and the  undersigned
agrees to maintain sufficient funds in said account to cover these payments. The
Borrower further agrees that should there be insufficient  funds in said account
on the monthly payment due date, and within three (3) business days  thereafter,
an overdraft charge will be incurred and the account will not be charged for the
monthly payment.  However,  if this occurs, the Borrower will remain responsible
for the interest  payment,  plus any late  charges,  and the Borrower will be in
default under this Note. In the event that the money  maintained in such account
is insufficient  for any payment due under this Agreement and the Note, the Bank
may charge any  account of the  Borrower  for any  payment due to the Bank under
this Agreement and the Note.

     Section 2.07. Use of Proceeds.  The proceeds of the Loan hereunder shall be
used by the  Borrower  for its  business  purposes.  Borrower  will  utilize any
advances hereunder or under the Note to capitalize its closing costs and for its
working capital only.  Throughout the term of the Loan, a borrowing  sublimit of
$500,000.00  shall  exist and such funds  shall be used  exclusively  to finance
capital equipment purchases with funds from the Bank, or any subsidiary thereof,
with a maximum term of 60 months (self-liquidating). Such equipment term loan(s)
under the  "sublimit"  shall bear  interest at a fixed  annual rate equal to two
hundred fifty (250) basis points above the weekly average yield on United States
Treasury  Securities,  adjusted to a constant maturity of five (5) years,  using
the most recent  figure made  available by the Federal  Reserve  Board as of the
funding  date of any such  equipment  finance  term  facility/loan  (or the last
business day prior thereto).  The principal sums  outstanding on such financings
(including  any term loans  presently  existing  with the Bank) shall reduce the
overall  availability of the Revolving Line of Credit contemplated hereby by the
sum or sums  outstanding on such other  facilities.  Further,  the Borrower will
not,  directly or  indirectly,  use any part of such proceeds for the purpose of


                                       5
<PAGE>

purchasing  or carrying any margin  stock within the meaning of  Regulation U of
the Board of Governors of the Federal  Reserve System or to extend credit to any
Person for the purpose of purchasing or carrying any such margin stock.

     Section  2.08.  Late Fee. The Borrower  shall pay to the Bank a late fee of
four (4%) percent of the amount of any payment which is not made within ten (10)
days of its  respective  due date,  or, which cannot be debited from its account
due to insufficient balance therein on the due date or within three (3) business
days thereafter.

     Section 2.09.  Unused Line Fee. The Borrower agrees to pay to the Bank from
the date hereof, on the first day of each calendar year quarter,  an unused line
fee at the annual rate per annum of 25/100 (0.25%) percent computed on the basis
of the actual  number of days elapsed over 360 days on the average  daily unused
amount of the Commitment  Amount. The said fee will be calculated on a quarterly
basis in arrears  and will be due and  payable by  Borrower  on the first day of
each calendar quarter during the term of this facility.

     Section 2.10. Cancellation.  The Revolving Line of Credit evidenced by this
Agreement and the Note may be cancelled by the Borrower at any time provided all
sums due  hereunder  and  under  the Note are paid in full by the  Borrower  and
further subject to the prepayment provisions set forth in the said Note.


                                   ARTICLE III
                              CONDITIONS PRECEDENT

     Section 3.01.  Conditions  Precedent to Initial Loan. The obligation of the
Bank to make the initial  Loan and all  advances  contemplated  hereunder to the
Borrower is subject to the Bank's receipt of the following, satisfactory in form
and substance to it and its counsel:

     (a)  evidence  of  all  Corporate  ("Corporate")  action  by  the  Borrower
consisting  of  certified  (as of the  date of  this  Agreement)  copies  of all
Corporate action taken by the Borrower,  including  Certificate of Incorporation
and all amendments thereto and Corporate resolutions  authorizing the execution,
delivery, and performance of the Loan Documents to which it is a party, and each
other document to be delivered pursuant to this Agreement, in form and substance
satisfactory to the Bank and its counsel; and

     (a) this Agreement, duly executed by the Borrower;

     (b) the Note, duly executed by the Borrower;

     (c) a  duly  executed  Modified  and  Restated  Revolving  Credit  Security
Agreement  of even date  herewith  (at times,  the  "Revolving  Credit  Security
Agreement" or "Modified and Restated  Revolving  Credit  Security  Agreement" or
"Security  Agreement")  executed and  delivered by the Borrower  granting to the
Bank a first position  security  interest in all assets of the Borrower,  except
real property and other property  already  subject to purchase  money  financing
lien(s), along with appertaining UCC-1 financing statements, and evidence of the
Bank's  priority  of lien  with  respect  thereto  showing  no  other  financing
statements or other liens;



                                       6
<PAGE>

     (d) certificate of good standing with respect to Borrower;

     (e) a duly executed Pledge  Agreement of even date herewith (at times,  the
"Pledge  Agreement") made by the Borrower in favor of the Bank,  granting to the
Bank a security  interest in and assignment and pledge of all monies,  deposits,
or other sums now or  hereafter  held by the Bank on  deposit,  in  safekeeping,
transit or otherwise,  at any time credited by or due from Bank to the Borrower,
or in which the Borrower shall have an interest; and

     (f) documentation  deemed sufficient by the Bank and its counsel,  in their
sole discretion,  verifying the continuation of the collateral Assignment to the
Bank of a portion of the proceeds of a life insurance  policy issued on the life
of Leonard A.  Rosenbaum,  President and CEO of the  Borrower,  in the amount of
Five Hundred  Thousand and 00/100  ($500,000.00)  Dollars  which such policy was
issued by Pruco Life  Insurance  Company  of New Jersey (a Stock  Company of the
Prudential  Insurance  Company  of  America),   under  policy  no.[intentionally
omitted]  (contract  date  October 14, 2006) and has a face value of Two Million
and 00/100 ($2,000,000.00) Dollars; and

     (g) evidence there has been no pending or threatened litigation against the
Borrower which would, in the Bank's judgment,  have a material adverse effect on
the Borrower's ability to perform the obligations hereunder; and

     (h) Opinion of Borrower's  Counsel in form satisfactory to the Bank and its
counsel; and

     (i)  payment by the  Borrower  of the fees and  expenses  of counsel to the
Bank; and

     (j) payment by the  Borrower to the Bank,  at or before  closing,  of a one
time facility fee in the amount of $15,000.00; and

     (k) such other certificate,  opinions, documents and instruments confirming
or otherwise relating to the transactions  contemplated hereby as may reasonably
be requested by the Bank; and

     (l) such other documents,  and completion of such other matters, as counsel
for the Bank may deem necessary or appropriate.

     Section 3.02.  Conditions Precedent to Subsequent Advances.  The obligation
of the Bank to make each  advance,  including  the initial  Advance,  is further
subject to the following conditions precedent:

     (a)  the  truth  and  correctness  of  the  representations  and  covenants
contained in Article IV hereof; and

     (b) there  shall have  occurred no Event of Default as set forth in Article
VIII hereof; and

     (c) timely  receipt by the Bank of the Notice of  Borrowing  as provided in
Section 2.02; and



                                       7
<PAGE>

     (d)  no  change  shall  have   occurred  in  any  law  or   regulation   or
interpretation  thereof that, in the opinion of counsel for the Bank, would make
it illegal or against the policy of any governmental agency or authority for the
Bank to make advances hereunder; and

     (e) the  representations  and  warranties  contained in Section VI shall be
true and accurate in all material  respects on and as of the date of such Notice
of Borrowing and on the effective date of the making, continuation or conversion
of the Loan and any  advances  hereunder  as though  made at and as of each such
date; and

     The  making of each  advance  shall be deemed  to be a  representation  and
warranty  by the  Borrower  on the date of the making of such  advance as to the
accuracy of the facts referred to in Article 3; and

     (f) evidence of no material  adverse  change to the financial  condition or
performance of the Borrower, or to the nature or value of the Collateral; and

     (g) satisfactory  evidence that the Bank has been named additional  insured
and loss payee with respect to the Collateral with respect to insurance policies
required by the Security Agreement; and

     (h) evidence of no pending or  threatened  litigation  against the Borrower
which  would,  in the Bank's  judgment,  have a material  adverse  effect on the
Borrower's ability to perform the obligations hereunder; and

     (i) such other certificate,  opinions, documents and instruments confirming
or otherwise relating to the transactions  contemplated hereby as may reasonably
be requested by the Bank; and

     (j) prior to the closing, Borrower shall open an operating account with the
Bank to  facilitate  the automatic  debit  provisions of this Loan and the Note.
Such account shall be maintained continuously throughout the term of the Loan.


                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Bank as follows:

     Section 4.01.  Corporate Existence and Standing.  Borrower is a corporation
duly formed,  and validly  existing under the laws of the State of New York; has
the corporate power and authority to own its assets and to transact  business in
which it is now engaged or proposed to be engaged;  and is duly  qualified  as a
foreign  corporation  and  in  good  standing  under  the  laws  of  each  other
jurisdiction in which failure to so qualify would have a material adverse effect
upon its business, operation, property or other condition.

     Section 4.02.  Corporate Power and Authority.  The execution,  delivery and
performance  by Borrower of the Loan  Documents has been duly  authorized by all
necessary Corporation action and do not and will not:



                                       8
<PAGE>

     (1) require any consent or approval of any third party; and

     (2) contravene the Borrower's Certificate of Incorporation, By-Laws; and

     (3)  violate  in any  material  respect  any  provision  of any law,  rule,
regulation  (including,  without  limitation,  Regulation  U  of  the  Board  of
Governors of the Federal Reserve System),  order,  writ,  judgment,  injunction,
decree,  determination or award presently in effect having applicability to such
corporation or LLC; and

     (4) result in a breach of or  constitute a default  under any  indenture or
loan or credit agreement or any other  agreement,  lease, or instrument to which
Borrower is a party or by which it or its properties may be bound or affected if
such default would have a material adverse affect on the business,  financial or
other  condition  of  Borrower  on the  ability of the  Borrower  to perform its
obligations hereunder; and

     (5) result in, or require,  the creation or  imposition of any lien upon or
with  respect  to any of the  properties  now  owned or  hereafter  acquired  by
Borrower other than the liens created by the Loan Documents; and

     (6) cause the Borrower to be in default in any material  respect  under any
such  law,  rule,  regulation,  order,  writ,  judgment,   injunction,   decree,
determination, or award or any such indenture, agreement, lease or instrument.

     Section 4.03. Legally Enforceable Agreement. Each of this Agreement and the
Revolving  Line of Credit  Note is,  and each of the other Loan  Documents  when
delivered under this Agreement will be, legal, valid, and binding obligations of
the Borrower  enforceable against the Borrower in accordance with its respective
terms.

     Section  4.04.  Other  Agreements.  The  Borrower  is  not a  party  to any
indenture,  loan,  or credit  agreement,  or to any lease or other  agreement or
instrument,  or subject to any restriction  which could have a material  adverse
effect on the ability of Borrower  to carry out its  obligations  under the Loan
Documents.   Borrower  is  not  in  default  in  any  material  respect  in  the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions  contained in any agreement or instrument material to its business to
which it is a party.

     Section  4.05.  Litigation.  There  is no  pending  or,  to the  Borrower's
knowledge,  threatened action or proceeding against or affecting Borrower or its
properties  before any court,  governmental  agency,  or  arbitrator  which,  if
adversely  determined,  would,  in  any  case  or in the  aggregate,  materially
adversely affect the financial condition, operations, properties, or business of
Borrower or the ability of  Borrower to perform its  obligations  under the Loan
Documents.

     Section 4.06. No Defaults on Outstanding  Judgments or Orders. The Borrower
has  satisfied  all judgments and the Borrower is not in default with respect to
any  judgment,  writ,  injunction,  decree,  rule,  or  regulation of any court,
arbitrator,  or federal,  state,  municipal,  or other  governmental  authority,
commission, board, bureau, agency or instrumentality, domestic or foreign having
jurisdiction over Borrower or its assets, which, if adversely determined,  would
in any  case or in the  aggregate  materially  adversely  affect  the  financial


                                       9
<PAGE>

condition,  operations,  properties  or  business  of Borrower or the ability of
Borrower to perform their obligations under the Loan Documents.

     Section 4.07.  Ownership and Liens.  Borrower has good and marketable title
to, or valid leasehold  interests in, all of its properties and assets, real and
personal,  and none of the  properties  and assets owned by Borrower and none of
their interests are subject to any lien, except as disclosed to the Bank herein.

     Section 4.08.  Financial  Statements.  All balance sheets,  profit and loss
statements and other financial  information  heretofore furnished to the Bank by
the Borrower are true,  correct and  complete and present  fairly the  financial
condition  of the  Borrower at the dates  thereof  and for the  periods  covered
thereby,  including  contingent  liabilities  of every kind,  and such financial
conditions  have not  materially  adversely  changed  since the date of the most
recently dated balance sheet of the Borrower heretofore furnished to the Bank.

     Section  4.09.  Operation of Business.  Borrower  possesses  all  licenses,
permits, franchises, patents, copyrights,  trademarks, and trade name, or rights
thereto,  necessary or desirable  to conduct its business  substantially  as now
conducted and as presently proposed to be conducted, and, the Borrower is not in
violation of any valid rights of others with respect to any of the foregoing.

     Section  4.10.  Taxes.  Borrower  has  filed or  caused to be filed all tax
returns (federal, state and local) required to be filed and have paid all taxes,
assessments,  and governmental  charges and levies thereon to be due,  including
interest and penalties,  are due and owing except those being  contested in good
faith by appropriate  proceedings  for which the Borrower has set aside adequate
reserves in conformity with GAAP on the books of the Borrower.

     Section  4.11.  Insurance.  The Borrower has in full force and effect fire,
liability and other forms of insurance  policies  which are valid,  outstanding,
and enforceable  policies,  as to which premiums have been paid  currently,  are
with reputable  insurers  believed by the Borrower to be  financially  sound and
are, to the  Borrower's  knowledge,  consistent  with the  practices  of similar
concerns  engaged  in  substantially   similar  operations  as  those  currently
conducted by the Borrower and in compliance  with the  requirements  of the Loan
Documents.  There  exists no state of facts,  and no event has  occurred,  which
might reasonably (i) form the basis for any claim against the Borrower not fully
covered by insurance for liability,  or (ii) result in any material  increase in
insurance  premiums.  Each policy or policies  shall name the Bank as lienholder
and shall remain continuously in effect throughout the term of the Loan.

     Section 4.12.  The Security  Documents.  The provisions of the Modified and
Restated Revolving Credit Security Agreement, when duly executed by the Borrower
and UCC-1  financing  statements  are filed with the  Secretary  of State of the
State of New York are effective to create in favor of the Bank, a legal,  valid,
perfected and enforceable first position security interest in all right,  title,
and interest of the Borrower in the Collateral  described thereon.  No person or
entity has on the date  hereof or will have  subsequent  to the date  hereof any
lien or security  interest in or to the Collateral  which is, or shall be prior,
paramount,  superior  or  equal to the  security  interest  of the  Bank  unless
otherwise  provided  herein  in a  separate  schedule  to be  attached  to  this
Agreement and  initialed by Borrower and Bank,  or as otherwise  consented to in
writing by Bank.





                                       10
<PAGE>

     In  accordance  with Article 9 of the Uniform  Commercial  Code and Revised
Article  9  thereof,  the  Borrower  hereby  authorizes  the  Bank to file  such
financing  statements  or  amendments  thereof as may be  necessary  in the form
provided in Article 9 of the Uniform  Commercial Code and Revised Article 9, and
Forms MV 900 with the  Department of Motor Vehicles of the State of New York, to
perfect the security  interests created herein and in the Security  Agreement in
the  collateral  described  herein and in the Security  Agreement.  The Borrower
agrees to pay all filing fees and all other costs and  expenses  incident to the
filing of such statements.

     Section  4.13.   Continuing   Representations.   The   representations  and
warranties  contained in Article IV of this  Agreement  and in any Loan Document
executed and delivered in connection  herewith shall be deemed to be made by the
Borrower  on and as of the date of the request for the  Revolving  Credit  loans
under this Agreement.

     Section 4.14. Full Disclosure.  Neither the financial statements nor any of
the Loan  Documents or any  certificate  or written  statement  furnished by the
Borrower to the Bank in connection  with the Loan Documents  contains any untrue
statement of a material  fact or omits to state any material  fact  necessary to
make the statements  contained  therein and herein not misleading as of the date
hereof.  There is no fact  known to the  Borrower  which the  Borrower  have not
disclosed  to the Bank in  writing  prior to the  date of this  Agreement,  with
respect to the transactions contemplated by the Loan Documents, which materially
and  adversely  affects  the  condition,  financial  or  otherwise,  results  of
operations, businesses, properties, assets or prospects of the Borrower.

     Section 4.15.  Solvency.  The Borrower is solvent, is able to pay its debts
as they become due and has capital  sufficient  to carry on its business and all
businesses in which it is about to engage,  and now own property  having a value
both at fair valuation and at present fair salable value greater than the amount
required to pay its debts.  The Borrower  will not be rendered  insolvent by the
execution and delivery of this  Agreement or any of the Loan Documents or by the
transactions contemplated hereunder or thereunder.

     Section 4.16. No Defaults.  No Event of Default or default  exists or would
exist after giving effect to the transactions contemplated by this Agreement and
the other Loan  Documents.  The Borrower is not and, after giving effect to such
transactions,  will not be, in default under any  indenture,  agreement or other
contractual provision.

     Section 4.17. Compliance with Laws, Etc. The Borrower is in compliance,  in
all material respects, with all applicable laws, rules, regulations and orders.

     Section 4.18. Shares. INTENTIONALLY OMITTED

     Section 4.19. Survival. All of the foregoing  representation and warranties
shall survive the making of the  Revolving  Credit and the  termination  of this
Agreement.



                                       11
<PAGE>
                                    ARTICLE V
                              AFFIRMATIVE COVENANTS

     So long  as the  Revolving  Line of  Credit  Note or any  other  obligation
hereunder  or  thereunder  shall  remain  unpaid  or the  Bank  shall  have  any
Commitment under this Agreement, Borrower will:

     Section 5.01. Maintenance of Existence. Preserve and maintain its corporate
existence and good standing in the State of New York with all rights, privileges
and  franchises  now  enjoyed,  and qualify and remain  qualified,  as a foreign
corporate in other jurisdictions in which the failure to so qualify would have a
material  adverse  effect  upon  its  business,  operation,  property  or  other
condition.

     Section 5.02.  Maintenance of Records.  Keep adequate  records and books of
account,  in  which  complete  entries  will  be made in  accordance  with  GAAP
consistently applied, reflecting all financial transactions of the Borrower.

     Section 5.03. Maintenance of Properties. Maintain, keep and preserve all of
its material  properties  (tangible and  intangible)  necessary or useful in the
proper  conduct of its business in good working  order and  condition,  ordinary
wear  and  tear  excepted,  and  make  all  reasonable  repairs,   replacements,
additions, betterments and improvements thereto.

     Section 5.04.  Taxes, Etc. Duly pay and discharge all taxes or other claims
which  might  result in a Lien upon any of its  properties  except to the extent
such  items are  being  appropriately  contested  in good  faith by  appropriate
proceedings and Borrower have maintained  adequate reserves,  in accordance with
GAAP with respect thereto.

     Section 5.05. Conduct of Business.  Continue to engage in a business of the
same general  type as conducted by it on the date of this  Agreement at the same
location.

     Section 5.06.  Maintenance  of Insurance.  With respect to its  properties,
assets  and  business,   maintain  and  keep  in  force,   insurance  reasonably
satisfactory  to  the  Bank  with  financially  sound  and  reputable  insurance
companies or associations in such amounts and covering such risks as are usually
carried by companies  engaged in the same or a similar  business  and  similarly
situated and operated similar properties,  assets or businesses, and as provided
in the Loan  Documents  insuring the Bank as  additional  insured and loss payee
with respect to the Collateral.

     Section 5.07.  Compliance with Laws.  Comply, in all material respects with
all applicable laws, rules, regulations, and orders, such compliance to include,
without  limitation,  paying  before  the  same  become  delinquent  all  taxes,
assessments,  and  governmental  charges  imposed upon it or upon its respective
properties  other  than  those  being  contested  in good  faith by  appropriate
proceedings,  for which the  Borrower has set aside  adequate  reserves or other
security acceptable to the Bank.

     Section 5.08. Right of Inspection.  At any reasonable time and from time to
time after notice to an officer of the Borrower, permit the Bank or any agent or
representative  thereof to examine  and make  copies of and  abstracts  from the
records and books of account of, and visit the  properties of the Borrower,  and



                                       12
<PAGE>

to  discuss  the  affairs,  finances,  and  accounts  of the  Borrower  with the
Borrower's accountants.

     Section 5.09. Reporting Requirements.  Furnish to the Bank, during the term
of the Loan:

     (1)  annually,  but not later  than one  hundred  five (105) days after its
fiscal year end,  audited  financial  statements for the  immediately  preceding
fiscal period.  Such financial  statements shall be prepared and certified by an
accounting  firm  reasonably  acceptable  to the Bank,  in its sole and absolute
discretion, and shall include the Statement of Financial Position,  Statement of
Activities and Statement of Cash Flow,  together with all appropriate  schedules
and footnotes, along with comparable prior year financial statements; and

     (2) SEC  10-K  reports  including  audited  consolidated  fiscal  financial
statements of the Borrower  prepared by a firm or certified  public  accountants
acceptable  to the Bank with an  unqualified  opinion,  within one hundred  five
(105) days of its fiscal year end; and

     (3) SEC 10-Q quarterly  financial  statements of the Borrower  within sixty
(60) days of each quarter end; and

     (4)  compliance  and  covenant  calculations  on a  quarterly  basis  to be
submitted with each of the afore-mentioned financial statements; and

     (5) such other financial information with respect to the Borrower as may be
requested by the Bank, from time to time.

     All financial data submitted  pursuant to this Agreement  shall be prepared
in accordance with GAAP consistently applied.

     (6) No Default Certificates.  Upon request of the Bank at any time and from
time to time, a certificate signed by an officer of the Borrower,  to the effect
that no  Event of  Default  hereunder  or under  any  other  agreement  to which
Borrower is a party or by which it is bound,  or by which any of its  properties
or assets may be affected,  and no event which, with the giving of notice of the
lapse of time, or both, would constitute such an Event of Default, has occurred;
and stating that  Borrower are in  compliance  with all terms and  conditions of
this Agreement and the Loan Documents.

     (7) Notice of Litigation.  Promptly after the commencement thereof,  notice
of all  actions,  suits,  and  proceedings  before  any  court  or  governmental
department,  commission, board, bureau, agency, or instrumentality,  domestic or
foreign,  affecting  Borrower which,  if determined  adversely to Borrower could
have a  material  adverse  effect on the  financial  condition,  properties,  or
operations of Borrower.

     (8) Notice of Defaults  and Events of Default.  As soon as possible  and in
any event within three (3) business days after the occurrence of each Default or
Event of Default,  a written notice setting forth the details of such Default or
Event of Default and the action  which is  proposed to be taken by the  Borrower
with respect thereto.



                                       13
<PAGE>

     (9) Quarterly  Compliance  Certificates.  At the end of each fiscal quarter
during the term of the Loan, a certificate signed by an officer of the Borrower,
to the effect  that all of the  Financial  Covenants  set forth in Section  5.13
below  are being  maintained  and that no Event of  Default  exists  under  such
section.

     (10) General Information.  Such other information respecting the conditions
or operations,  financial or otherwise, of Borrower as the Bank may from time to
time reasonably request.

The above  reporting  requirements  are not  mutually  exclusive  and will be in
addition to any and all other  requirements  and  obligations due and owing from
the Borrower to the Bank in the event of default.

     Section 5.10.  Subsidiaries.  Not create or permit to exist any  subsidiary
corporation.

     Section 5.11. Management. Not change the management of the Borrower.

     Section 5.12. Shares. intentionally omitted

     Section  5.13.  Financial  Covenants.   Maintain  the  following  financial
parameters at all times during this Agreement:

     (a) At all times  during the term of the Loan,  Borrower  shall  maintain a
minimum Debt Service  Coverage Ratio of 1.25:1.  For purposes  hereof,  the term
"Debt Service Coverage" shall mean earnings before interest, taxes, depreciation
and amortization  for the previous twelve month period,  divided by the interest
expense for the prior twelve (12) month period and aggregate  principal payments
of loans and  capitalized  leases  scheduled to be paid over the ensuing  twelve
month period,  exclusive of any balloon or maturity balance of any mortgage made
or extended  to the  Borrower  by the Bank and the GE Capital  mortgage  and the
Kidco Realty mortgage and exclusive of the principal balance due at the maturity
of this Loan, all of the  aforementioned to be determined by generally  accepted
accounting principles consistently applied; and

     (b) At all times  during the term of the Loan,  Borrower  shall  maintain a
Maximum  Leverage of 1.20:1.  For purposes hereof,  the term "Maximum  Leverage"
shall  mean the  ratio of  total  liabilities  of the  Borrower  divided  by its
tangible net worth at all times; and

     (c) At all times during the term of the Loan,  Borrower  shall maintain its
primary operating accounts with the Bank; and

     (d) Maintain adequate working capital for its operations; and

     (e) Subject to the provisions of Section 6.07 hereof,  not make any capital
expenditures or distributions,  whether to shareholders or otherwise,  except in
the ordinary course of business.




                                       14
<PAGE>

     Section  5.14.  Licenses.  Obtain,  renew,  and  maintain  all licenses and
permits necessary for operation of the Borrower's business.  Bank shall be given
prompt notice of any replacement licenses or permits.

                                   ARTICLE VI
                               NEGATIVE COVENANTS

     So long as the Revolving Line of Credit Note or any sums  thereunder or any
other obligation hereunder or thereunder shall remain unpaid,  Borrower will not
do any of the following without the written consent of the Bank first obtained:

     Section 6.01. Dissolution.  Wind-up or dissolve itself or sell, transfer or
lease  (other than  leases in the  ordinary  course of  business)  or  otherwise
dispose  of  all  or a  substantial  part  of its  assets.  Notwithstanding  the
foregoing, in the event of its dissolution or liquidation during the term of the
Loan,  Borrower's  obligation(s)  to the Bank hereunder  shall remain senior and
superior to any Certificates of Indebtedness of any of its members.

     Section 6.02. Indebtedness.

     (ii) Create, incur, assume or suffer to exist any mortgage,  lien, security
interest,  pledge or other encumbrance on any of its property or assets, whether
now or hereafter  owned or acquired  except as such borrowing may be done in its
normal business  operations and except for Permitted  Encumbrances  set forth on
the "Permitted  Encumbrances  Schedule"  annexed hereto and made a material part
hereof, without prior notification to, and written approval from, the Bank.

     Section  6.03.  Line of Credit.  Enter into or create,  incur or  otherwise
become the beneficiary of, or obligated under, any other line of credit facility
whether secured or unsecured.

     Section 6.04. Nature Of Business.  Materially change or alter the nature of
its  business  from the nature of the  business  engaged in by it on the Closing
Date.

     Section 6.05. Expenditures. Intentionally omitted.

     Section 6.06. Dividends. Throughout the term of the Loan, Borrower will not
pay out any cash dividends on its common stock.

     Section 6.07. Federal Reserve  Regulations.  Permit any Revolving Credit or
the proceeds of any  Revolving  Credit  under this  Agreement to be used for any
purpose which violates or is inconsistent  with the provisions of Regulations G,
T, U or X of the Board of Governors of the Federal Reserve System.

     Section  6.08.  Mergers or  Acquisitions.  Merge  with any other  entity or
acquire  any other  entity  for a cost in excess of Five  Hundred  Thousand  and
00/100 ($500,000.00) Dollars without the prior written consent of the Bank.



                                       15
<PAGE>
                                   ARTICLE VII
                                    SECURITY

     Section 7.01.  Collateral Security.  In order to secure the due payment and
performance  by the Borrower of all of the  Indebtedness  of the Borrower to the
Bank  hereunder  and under the  Revolving  Line of  Credit  Note,  and all other
instruments and documents executed and delivered in connection  herewith and all
other obligations of the Borrower to the Bank, whether now existing or hereafter
incurred,  the Borrower  shall prior to or  concurrently  with the execution and
delivery of this Agreement:

     (1) grant to the Bank a first position  security interest in the Collateral
(as such term is  defined  herein and in the  Modified  and  Restated  Revolving
Credit Security Agreement made by the Borrower in favor of the Bank of even date
herewith,  the  "Collateral")  by the  execution and delivery to the Bank of the
Modified and Restated  Revolving Credit Security Agreement or agreements in form
and substance  satisfactory to the Bank together with UCC financing  statements;
and

     (2) deliver to the Bank the Pledge  Agreement  required  hereby  granting a
security interest in and assignment and pledge of all monies, deposits, or other
sums now or hereafter held by the Bank on deposit,  in  safekeeping,  transit or
otherwise, at any time credited by or due from Bank to the Borrower, or in which
the Borrower shall have an interest as evidenced by the Pledge Agreement of even
date herewith made by the Borrower in favor of the Bank; and

     (3) deliver to the Bank the Pledge Agreement(s);

     (4) deliver to Bank a Modified  and  Restated  Collateral  Assignment  of a
portion of the proceeds of a life insurance policy issued on the life of Leonard
A. Rosenbaum,  President and CEO of the Borrower,  in the amount of Five Hundred
Thousand and 00/100 ($500,000.00)  Dollars which such policy was issued by Pruco
Life  Insurance  Company  of New  Jersey  (a  Stock  Company  of the  Prudential
Insurance  Company  of  America),   under  policy  no.  [intentionally  omitted]
(contract  date October 14, 2006) and has a face value of Two Million and 00/100
($2,000,000.00) Dollars;

     (5) execute and deliver or cause to be executed  and  delivered  such other
agreements,  instruments  and  documents as the Bank may  reasonably  require in
order to effectuate the purposes of this Section 7.01 hereof.

     Section 7.02. Further  Assurances.  At any time from time to time, upon the
request of the Bank,  the Borrower  shall  execute,  deliver and  acknowledge or
cause to be executed,  delivered  and  acknowledged  such further  documents and
instruments  and to do such  other  acts and  things as the Bank may  reasonably
request in order to fully effect the purposes of this  Agreement,  the Revolving
Line of Credit  Note,  the  Modified  and  Restated  Revolving  Credit  Security
Agreement or any other agreements,  instruments or documents  delivered pursuant
hereto or in connection herewith.

     Section 7.03.  Cross-Default  and  Cross-Collateral.  This Revolving Credit
facility  is  cross-defaulted  and  cross-collateralized  with  each  and  every
obligation of the Borrower due to the Bank or any successor  and/or  assignee or
parent or subsidiary thereof.



                                       16
<PAGE>

                                  ARTICLE VIII
                                EVENTS OF DEFAULT

     Section 8.01. Events of Default. If any of the following events ("Events of
Default") shall occur:

     (1) Borrower  fails to pay the  principal of, or interest on, the Revolving
Credit Loan or the Revolving Line of Credit Note or any advance  thereunder when
due, or failure of Borrower to have sufficient funds in its account(s) with Bank
for loan  payments to be debited on the due date  thereof,  or within  three (3)
business days thereafter, or if the Borrower fails to pay any amount of any fee,
or any other  amount due and payable  hereunder  or under the Loan  Documents or
otherwise due to the Bank, as and when due and payable;

     (2)  if  the  Borrower  fails  to  pay  when  due  any  other  part  of the
Indebtedness or any other amount payable in connection with the  Indebtedness or
any part thereof; and

     (3) any  representation  or warranty made or deemed made by or on behalf of
Borrower in this  Agreement  or which is  contained  in any written  instrument,
including any certificate,  documents, or financial or other statement furnished
by or on behalf of  Borrower  at any time under or in  connection  with any Loan
Documents  shall prove to have been false or misleading in any material  respect
on or as of the date made or deemed made;

     (4) Borrower shall fail to perform or observe any other term, covenant,  or
agreement  contained  in this  Agreement  or any loan  document to which it is a
party on its part to be performed or observed;

     (5) Borrower  shall fail to perform any term,  condition or covenant of the
Revolving  Line of Credit  Note,  the Modified  and  Restated  Revolving  Credit
Security  Agreement  and any other  Loan  Documents  of even date  herewith  and
executed in connection herewith, or any bond, note,  debenture,  loan agreement,
indenture,  guaranty, trust agreement, mortgage or other instrument or agreement
in connection with the borrowing of money or the obtaining of advances or credit
to  which  it is a  party  or by  which  it is  bound,  or by  which  any of its
properties or assets may be affected (a "Debt Instrument"), or that, as a result
of  any  such  failure  to  perform  (regardless  of  the  satisfaction  of  any
requirement for the giving of appropriate  notice thereof or the lapse of time),
the indebtedness  included therein or secured or covered thereby may be declared
due and payable  prior to the date on which such  indebtedness  would  otherwise
become due and payable;

     (6) any event or condition  referred to any Debt Instrument  shall occur or
fail to occur, so that, as a result thereof  (regardless of the  satisfaction of
any  requirement  for the giving of  appropriate  notice thereof or the lapse of
time),  the  Indebtedness  included therein or secured or covered thereby may be
declared  due and  payable  prior to the date on which such  Indebtedness  would
otherwise become due and payable;

     (7) any Indebtedness  included in any Debt Instrument or secured or covered
thereby is not paid when due, after giving effect to any applicable grace period
provided for in the documentation relating to such Indebtedness;



                                       17
<PAGE>

     (8) the  occurrence  of an Event of  Default  as defined in any of the Loan
Documents,  including,  without limitation,  the Modified and Restated Revolving
Credit Security Agreement;

     (9) an order for relief under the United States  Bankruptcy  Code as now or
hereafter in effect, shall be entered against Borrower; or Borrower shall become
insolvent,  generally  fail  to pay  its  debts  as  they  become  due,  make an
assignment  for the  benefit of  creditors,  file a petition in  bankruptcy,  be
adjudicated  insolvent  or  bankrupt,  petition or apply to any tribunal for the
appointment  of a receiver or any trustee  for it or a  substantial  part of its
assets,  or shall commence any proceeding under any bankruptcy,  reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute of
any  jurisdiction,  whether now or hereafter  in effect;  or if there shall have
been filed any such petition or application,  or any such proceeding  shall have
been commenced against Borrower, which remains undismissed for a period of sixty
(60) days or more; or Borrower by any act or omission shall indicate its consent
to, approval of or acquiescence in any such petition,  application or proceeding
or the  appointment  of a receiver of or any  trustee for it or any  substantial
part  of any of its  properties,  or  shall  suffer  any  such  receivership  or
trusteeship  to continue  undischarged  for a period of forty-five  (45) days or
more;

     (10) any judgment,  Federal,  State or municipal tax lien entered exceeding
$10,000.00  against  Borrower,  or any attachment,  levy or execution  exceeding
$10,000.00  against  any of their  respective  properties  for any amount  shall
remain unpaid, unstayed on appeal, undischarged,  unbonded and undismissed for a
period of sixty (60) days or more;

     (11) the Bank shall have determined,  in its reasonable  business judgment,
that one or more conditions  exist or events have occurred which has resulted in
a material adverse change in the business,  properties or financial condition of
Borrower;

     (12) dissolution,  whether  voluntary or involuntary,  of the Borrower or a
change in composition of the Borrower;

     (13) the  happening  of any  event  which,  in the  judgment  of the  Bank,
materially adversely affects: (i) the ability of the Borrower to repay the Note;
or (ii) the aggregate value of the collateral used to secure the Note;

     (14) for any reason any Loan Document ceases to be in full force and effect
or any lien or any  collateral  purported  to be  created  by any Loan  Document
ceases to be or is not a valid and  perfected  lien to the  extent  and with the
priority   contemplated  thereby  or  thereby,  and  no  substitute   collateral
acceptable to the Bank, in its sole and  exclusive  discretion,  is put in place
within thirty (30) days;

     (15)  formal  charges  under  Federal  or State law shall be filed  against
Borrower for which forfeiture is a potential penalty;

     (16) failure to provide any financial  information  on request or permit an
examination of books and records;



                                       18
<PAGE>

     (17) failure to pay any amount on this or any other  obligation owed to the
Bank by Borrower or any other related entity;

     (18) failure of the Borrower to utilize the Bank as its/their  primary bank
and to maintain all relevant accounts at the Bank during the term hereof;

     then, and in any such event, the Bank may, upon five (5) days prior written
notice to the Borrower,  declare the Revolving Line of Credit Note, all interest
thereon,  all other  amounts  payable  under this  Agreement  and the other Loan
Documents  to be forthwith  due and payable,  whereupon  the  Revolving  Line of
Credit Note, all such interest,  and all such amounts payable hereunder or under
the other Loan Documents shall become and be forthwith due and payable,  without
notice,  presentment,  demand,  protest,  or further  notice of any kind, all of
which are hereby expressly waived by the Borrower. Bank may exercise any and all
remedies available whether under this Agreement, by law, or otherwise.

     Notwithstanding  the foregoing,  upon the occurrence of an Event of Default
as set forth in (9) above, all interest thereon, all other amounts payable under
this Agreement or under the Loan Documents  shall  automatically  become due and
payable.

     The provisions of this Article VIII are in addition to any provision in any
loan  document.  In the event of any  conflict  between the  provisions  of this
Article  VIII  and any  provision  of any loan  document,  the  provisions  more
restrictive to Borrower shall apply.


                                   ARTICLE IX
                                  MISCELLANEOUS

     Section 9.01.  Entire  Agreement;  Amendments,  etc. This Agreement and the
other Loan Documents  constitute the entire  agreement  among the parties hereto
and  thereto as to the subject  matter  hereof and  thereof  and  supersede  any
previous  agreement,  oral or written,  as to such subject matter. No amendment,
modification,  termination,  or  waiver of any loan  document,  nor shall in any
event be  effective  unless the same shall be in writing and signed by the Bank,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

     Section 9.02. Notices,  etc. All notices and other communications  provided
for under this Agreement and under the other Loan Documents  shall be in writing
(including telefax communication) and mailed, telegraphed,  telefaxed or sent by
recognized  overnight  delivery service,  to the address set forth above, or, at
such other address as shall be  designated by such party in a written  notice to
the other party complying as to deliver with the terms of this Section. All such
notices  and  communications  shall,  if  telefaxed  or  delivered  by hand,  be
effective when received,  or if mailed,  three days after deposited in the mails
addressed as aforesaid;  provided, however that notices to the Bank shall not be
effective until received by the Bank.

     Section  9.03. No Waiver;  Remedies.  No failure on the part of the Bank to
exercise,  no delay in exercising  any right,  power,  or remedy under any right
shall operate as a waiver thereof.  The remedies  provided in the Loan Documents
are cumulative of each other and not exclusive of any remedies  provided by law.
No  modification  or  waiver  of any  provision  of  this  Agreement,  or of the



                                       19
<PAGE>

Revolving Line of Credit Note, nor consent to departure by the Borrower from any
provisions hereof or thereof,  shall be effective unless the same shall be given
in writing from the Bank and then such waiver or consent shall be effective only
in the specific  instance and for the specific purpose for which it is given. No
notice to the Borrower shall entitle the Borrower to any other or further notice
in other or similar  circumstances  unless  expressly  provided  for herein.  No
course of dealing between the Borrower and the Bank shall operate as a waiver of
any of the rights of the Bank under this Agreement.

     Section 9.04.  Successors and Assigns. This Agreement shall be binding upon
and inure to the  benefit  of the  Borrower  and the Bank and  their  respective
successors and assigns,  except that the Borrower may not assign or transfer any
rights under any loan document  without the prior  written  consent of the Bank.
The Bank reserves the right to sell  participations in or to sell and assign the
Revolving  Line of Credit Note and  Agreements  and all other Loan  Documents to
such Banks,  lending  institutions or other parties as it may choose without the
consent of Borrower.

     Section 9.05.  Costs,  Expenses,  and Taxes.  The Borrower agrees to pay on
demand all  reasonable  costs and expenses in connection  with the  preparation,
execution,  delivery,  filing,  recording, and administration of any of the Loan
Documents,  including, without limitation, the reasonable fees and out-of-pocket
expenses  of  counsel  for the Bank  and all  costs  and  expenses,  if any,  in
connection with the enforcement of any of the Loan Documents.  In addition,  the
Borrower  shall  pay any and all  stamp and  other  taxes  and fees  payable  or
determined to be payable in connection with the execution,  delivery, filing and
recording of any of the Loan Documents and other documents to be delivered under
any such Loan  Documents,  and shall save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or the
omission to pay such taxes and fees.

     Section 9.06. Regulatory Changes; Additional Fees. If any Regulatory Change
shall either (i) impose,  modify or deem applicable or result in the application
of, any reserve, special deposit, capital maintenance,  capital ratio or similar
requirement  against loans or loan  commitments  made by the Bank or against any
other extensions of credit or commitments to extend credit or other assets of or
any  deposits  or other  liabilities  taken or entered  into by the Bank or (ii)
impose on the Bank any other  condition  regarding  this Agreement or the Bank's
Commitment, and the result of any event referred to in clause (i) and (ii) above
shall be to increase the cost to the Bank of making or maintaining, or to impose
upon the Bank or increasing  any capital  requirement  applicable as a result of
the making or  maintenance  of, the Bank's  Commitment or the  obligation of the
Borrower hereunder to reduce the amounts receivable by the Bank hereunder (which
increase in cost or  increase in (or  imposition  of)  capital  requirements  or
reduction  in amounts  receivable  may be  determined  by the Bank's  reasonable
allocation  of the  aggregate  of such  cost  increases,  capital  increases  or
impositions  or reductions  in amounts  receivable  resulting  from such events)
then,  upon demand by the Bank, the Borrower shall within five (5) business days
after notice pay to the Bank from the time as specified by the Bank,  additional
fees which shall be sufficient to compensate the Bank for such  increased  costs
or increase in  (imposition  of) capital  requirements  or  reduction in amounts
receivable  by the Bank from the date of such change,  together with interest on
each such amount from the date  demanded  until  payment in full  thereof at the
rate provided in this Agreement.



                                       20
<PAGE>

Upon the  occurrence  of any event  referred to in clause (i) or (ii)  above,  a
certificate setting forth in reasonable detail the increased cost,  reduction in
amounts receivable or amounts necessary to compensate the Bank as a result of an
increase in (or imposition of) capital  requirements  shall be submitted by such
Bank to the  Borrower.  Determinations  by the Bank for purposes of this Section
9.06  of  the  effect  of any  Regulatory  Change  on its  costs  of  making  or
maintaining  loans hereunder or on amounts  receivable by it in respect of loans
hereunder,  and of the additional  amounts  required to compensate  such Bank in
respect of any additional  costs,  shall be deemed  presumptive  evidence of all
such amounts absent manifest error.

     Section  9.07.  Right  of  Setoff.  Upon  the  occurrence  and  during  the
continuance of any Event of Default,  the Bank is hereby  authorized at any time
and from time to time,  to set off and apply any and all  deposits  (general  or
special,  time or demand,  provisional  or final)  monies,  securities  or other
properties  of Borrower,  and the  proceeds  thereof,  now or hereafter  held or
received  by or in  transmit  to the  Bank  from or for  Borrower,  whether  for
safekeeping,  custody, pledge, transmission,  collection or otherwise, and other
indebtedness  at any time owing by the Bank to or for the credit or the  account
of the Borrower  against any and all of the  obligations  of the Borrower now or
hereafter  existing under this Agreement or the Revolving Line of Credit Note or
any other loan document, irrespective of whether or not the Bank shall have made
any demand  under this  Agreement or the  Revolving  Line of Credit Note or such
other loan  document  and  although  such  obligations  may be  unmatured.  This
provision  is in addition to and not in  limitation  of any right of the Bank by
statute or common law.

     Section 9.08. Choice of Law;  Construction.  The Loan Documents (other than
those  containing a contrary express choice of law provision) shall be construed
in accordance with the internal laws (and not the law of conflicts) of the State
of New  York.  If any  provision  of  the  Loan  Documents  shall  be or  become
unenforceable  or illegal  under any law, the other  provisions  shall remain in
full force and effect.

     Section 9.09. Consent to Jurisdiction.

     (1) The Borrower hereby irrevocably  submits to the exclusive  jurisdiction
of the New York  State  court  sitting in  Suffolk  County or the United  States
District  Court sitting in the Eastern  District of New York or in any action or
proceeding  arising out of or relating to any Loan  Documents  and the  Borrower
hereby  irrevocably  agrees  that  all  claims  in  respect  of such  action  or
proceeding may be heard and determined in any such court and irrevocably  waives
any objection it may now or hereafter have as to the venue of any such action or
proceeding  brought  in  such  a  court  or  the  fact  that  such  court  is an
inconvenient forum.

     (2) The Borrower irrevocably and unconditionally consents to the service of
process  in any such  action or  proceeding  in any of the  aforesaid  courts by
service effectuated in accordance with applicable law.

     Section 9.10.  WAIVER OF JURY TRIAL. TO THE EXTENT  PERMITTED BY APPLICABLE
LAW,  THE  BORROWER  HEREBY  WAIVES  TRIAL BY JURY IN ANY  ACTION OR  PROCEEDING
INVOLVING,  DIRECTLY  OR  INDIRECTLY,  ANY  MATTER  (WHETHER  SOUNDING  IN TORT,


                                       21
<PAGE>

CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,  RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

     Section 9.11.  Limited Role of Bank. The relationship  between the Borrower
and the Bank shall be solely that of Borrower and Bank,  respectively.  The Bank
shall  not have any  fiduciary  responsibilities  to the  Borrower  and no joint
venture  exists  between the  Borrower  and the Bank.  The Borrower and the Bank
hereby  severally  acknowledge  that there are no  representations,  warranties,
covenants,  undertakings  or  agreements  by the  parties  hereto as to the Loan
Documents, except as specifically provided herein and therein.

     Section  9.12.  Severability  of  Provisions.  Any  provision  of any  loan
document which is prohibited or unenforceable  in any jurisdiction  shall, as to
such  jurisdiction,  be  ineffective  to  the  extent  of  such  prohibition  or
unenforceability  without  invalidating  the  remaining  provisions of such loan
document or affecting the validity or  enforceability  of such  provision in any
other jurisdiction.

     Section 9.13.  Interest.  Anything in this Agreement or in the Modified and
Restated Revolving Line of Credit Note to the contrary notwithstanding, the Bank
shall not charge,  take or receive,  and the Borrower  shall not be obligated to
pay,  interest  in excess of the  maximum  rate from time to time  permitted  by
applicable law.

     Section 9.14.  Custodian.  Upon the occurrence of any Event of Default, the
Bank may at any time and from time to time,  employ  and  maintain  a  custodian
selected by the Bank, who shall have authority to enter upon the premises of the
Borrower for the purposes of protecting  the Bank's  interest in the  collateral
and who shall have  authority to take such steps as the Bank deems  necessary to
protect the collateral, at the cost of the Borrower.

     Section 9.15. Attorney's Fees. Borrower shall pay all costs and expenses of
the Bank in connection  with the enforcement of this Agreement or the collection
of any amounts due to Bank hereunder or under the Loan Documents,  including but
not  limited to the Bank's  attorney's  fees.  Borrower  shall pay such  amounts
regardless  of whether an action is commenced and whether or not in the court of
original jurisdiction, appellate court, bankruptcy court or otherwise.

     Section 9.16. Headings.  Article and Section headings in the Loan Documents
are included in such Loan Documents for convenience and reference only and shall
not constitute a part of the applicable Loan Documents for any other purpose.

     Section  9.17.  Release.  Borrower  acknowledges  that it has no  claims or
causes of action against the Bank and hereby  releases the Bank from any and all
claims or causes of action which may exist as of the date hereof.



                                       22
<PAGE>


     IN WITNESS  WHEREOF,  the parties have caused this Agreement to be executed
by their respective  officers  thereunto duly  authorized,  as of the date first
above written.


                                      CVD EQUIPMENT CORPORATION,
                                      a New York corporation
                                      Borrower


                                By:
                                      ---------------------------------------
                                      LEONARD A. ROSENBAUM,
                                      President and CEO


                                By:
                                      --------------------------------------
                                      GLEN CHARLES,
                                      Secretary and Chief Financial Officer


                                      CAPITAL ONE, N.A.,
                                      successor by merger to North Fork Bank


                                By:
                                      ----------------------------------------
                                      STEVEN E. RATNER,
                                      Senior Vice President


                                       23
<PAGE>


State of New York )
                  ) : ss.:
County of Suffolk )


     On April 16, 2008, before me, the undersigned,  personally appeared LEONARD
A. ROSENBAUM personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within  instrument
and  acknowledged  to me that he executed same in his capacity,  and that by his
signature in the instrument,  the individual, or the person upon behalf of which
the individual acted, executed the instrument.


                           -----------------------------
                           Notary Public


State of New York )
                  ) : ss.:
County of Suffolk )


     On April 16, 2008,  before me, the  undersigned,  personally  appeared GLEN
CHARLES  personally  known to me or proved  to me on the  basis of  satisfactory
evidence to be the individual whose name is subscribed to the within  instrument
and  acknowledged  to me that he executed same in his capacity,  and that by his
signature in the instrument,  the individual, or the person upon behalf of which
the individual acted, executed the instrument.


                           -----------------------------
                           Notary Public



State of New York )
                  ) : ss.:
County of Suffolk )


     On April 16, 2008, before me, the undersigned,  personally  appeared STEVEN
E. RATNER  personally  known to me or proved to me on the basis of  satisfactory
evidence to be the individual whose name is subscribed to the within  instrument
and  acknowledged  to me that he executed same in his capacity,  and that by his
signature in the instrument,  the individual, or the person upon behalf of which
the individual acted, executed the instrument.


                           -----------------------------
                           Notary Public


                                       24
<PAGE>


                         Permitted Encumbrances Schedule

Permitted  Encumbrances shall mean: (a) liens expressly  permitted and consented
to in writing by the Bank; (b) liens of local or state authorities for franchise
or other like taxes, provided that the aggregate amounts of such liens shall not
exceed  $10,000.00  in the  aggregate at any one time;  (c)  statutory  liens of
landlords and liens of carriers,  warehousemen,  bailees, mechanics, materialmen
and other like liens imposed by law,  created in the ordinary course of business
and for amounts  not yet due (or which are being  contested  in good  faith,  by
appropriate  proceedings  or other  appropriate  actions which are sufficient to
prevent  imminent  foreclosure  of such  liens and for which  the  Borrower  has
deposited  with the Bank an amount  sufficient to pay such amount in full in the
event the Borrower does not prevail) and with respect to which adequate reserves
or  other  appropriate  provisions  are  being  maintained  by the  Borrower  in
accordance  with GAAP;  (d) liens  granted the Bank by  Borrower;  (e) tax liens
which are not yet due and payable;  and (f) the security interests  evidenced by
the following UCC financing statements, to wit:

1)  Lien  of  North  Fork  Bank  evidenced  by UCC  financing  statement  number
[intentionally omitted] filed on May 28, 1997 with the New York State Department
of State; and

2) Lien of GE Capital Public Finance,  Inc. evidenced by UCC financing statement
number  [intentionally  omitted]  on March  11,  2002  with  the New York  State
Department of State; and

3) Lien of GE Capital Public Finance,  Inc. evidenced by UCC financing statement
number  [intentionally  omitted]  on March  11,  2002  with  the New York  State
Department of State; and

4) Lien of Town of Islip  Industrial  Development  Agency and GE Capital  Public
Finance,  Inc.  evidenced  by  UCC  financing  statement  number  [intentionally
omitted] on March 19, 2002 with the New York State Department of State; and

5) Lien of North Fork  Equipment  Leasing  evidenced by UCC financing  statement
number  [intentionally  omitted]  on  November  20, 2002 with the New York State
Department of State; and

6)  Lien  of  North  Fork  Bank  evidenced  by UCC  financing  statement  number
[intentionally  omitted]  filed  on March  27,  2007  with  the New  York  State
Department of State.

7)  Lien  of  North  Fork  Bank  evidenced  by UCC  financing  statement  number
[intentionally omitted] filed on June 7, 2007 with the New York State Department
of State.

8) Lien of North Fork Bank,  a division of Capital  One,  N.A.  evidenced by UCC
financing  statement number  [intentionally  omitted] filed on February 11, 2008
with the New York State Department of State.

9) Lien of Dell Financial  Services,  L.P. evidenced by UCC financing  statement
number  [intentionally  omitted] filed on March 12, 2008 with the New York State
Department of State.

10) Lien of Dell Financial  Services,  L.P. evidenced by UCC financing statement
number  [intentionally  omitted] filed on March 13, 2008 with the New York State
Department of State.



                                       25
<PAGE>


                                   Exhibit "B"

                               REQUEST FOR ADVANCE

To:       Capital One, N.A., successor by merger to North Fork Bank
          275 Broadhollow Road
          Melville, New York 11747
          Attn:    Steven Ratner, SVP or Gerard Waters, VP

Request for Advance  pursuant to  Consolidated  and Restated  Revolving  Line of
Credit Note ("Note") made by CVD EQUIPMENT  CORPORATION  ("Borrower") to Capital
One,  N.A.,  successor by merger to North Fork Bank  ("Lender")  dated April 16,
2008.

Pursuant to the Note, the Borrower  hereby  requests the Bank make an advance in
the  amount  of  __________________________  ($  )  Dollars  on  ______________,
crediting  Account No. _, which amount shall be  absolutely  due and owing under
the terms of the Note.

Interest Rate Option:
         [ ] Prime less 0.25% or [ ] LIBOR

If   LIBOR, the duration of the Interest Rate Period  applicable to this advance
     shall be: [ ] one month....or....[ ] two months....or....[ ] three months

If this is a renewal:
--------------------

 The renewal date is    -----------------------------------.

 The amount of the Loan to be renewed is ----------------($------------------).

 The duration of the Interest Period applicable to this renewal is:

         [ ] one month.....or.....[ ] two months.....or.....[ ] three months

                  OR

 Convert $----------------------- loan to Prime less 0.25%

In  connection  with this request for advance or renewal,  the  Borrower  hereby
certifies to the Bank that:
1)   The representations  and warranties  contained in the Note and the Modified
     and Restated  Revolving  Credit  Agreement dated April 16, 2008 between the
     Borrower and Lender ("RCLA") are true and accurate in all material respects
     on and as of the date hereof as though made on and as of such date;
2)   No Default or Event of  Default  as  defined  in the Note  and/or  RCLA has
     occurred and is continuing, or would result from such advance; and
3)   The Note and the RCLA,  inclusive of the amount of the requested advance or
     renewal,   are  valid  and  binding  obligations  of  the  Borrower,   each
     enforceable in accordance with its respective terms.

Dated: __________________

                                      By:
                                         --------------------------------------
                                               LEONARD A. ROSENBAUM,
                                                   President


                                       26
</TEXT>
</DOCUMENT>
