REVOLVING AND TERM CREDIT AND SECURITY AGREEMENT

between

AEROSONIC CORPORATION
AVIONICS SPECIALTIES, INC.

"Borrowers"

and

WACHOVIA BANK, NATIONAL ASSOCIATION

"Bank"

Dated:  February 24, 2004

004.125630.1004.416083.5

TABLE OF CONTENTS

Page

2.

The Loan.

2.1.

Revolving Loan Credit Facility

2.2.

Revolving Note

2.3.

Term Loan.

2.4.

Collections Account.

2.5.

Treasury Services

2.6.

Advances.

2.7.

Repayment of Loan.

2.8.

Overdue Amounts

2.9.

Calculation of Interest

2.10.

Sales Tax

2.11.

Fees

2.12.

Statement of Account

2.13.

Clean-up Requirement.

3.

Conditions Precedent to Borrowing

3.1.

Conditions Precedent to Initial Advance

3.2.

Conditions Precedent to Each Advance

4.

Representations and Warranties

4.1.

Valid Existence and Power

4.2.

Authority

4.3.

Financial Condition

4.4.

Litigation

4.5.

Agreements, Etc

4.6.

Authorizations

4.7.

Title

4.8.

Collateral

4.9.

Jurisdiction of Organization; Location

4.10.

Taxes

4.11.

Labor Law Matters

4.12.

Accounts

4.13.

Judgment Liens

4.14.

Subsidiaries

4.15.

Environmental

4.16.

ERISA

4.17.

Investment Company Act

4.18.

Names

4.19.

Insider

4.20.

Compliance with Covenants; No Default

4.21.

Full Disclosure

4.22.

Additional Representations

4.23.

Perfection Certificate

5.

Affirmative Covenants of Borrower

5.1.

Use of Loan Proceeds

5.2.

Maintenance of Business and Properties

5.3.

Insurance

5.4.

Notice of Default

5.5.

Inspections

5.6.

Financial Information

5.7.

Maintenance of Existence and Rights

5.8.

Payment of Taxes, Etc

5.9.

Subordination

5.10.

Compliance; Hazardous Materials

5.11.

Compliance with Assignment Laws

5.12.

Reports

5.13.

Further Assurances

5.14.

Covenants Regarding Collateral

6.

Negative Covenants of Borrower

6.1.

Debt

6.2.

Liens

6.3.

Loans and Other Investments

6.4.

Change in Business

6.5.

Accounts

6.6.

Transactions with Affiliates

6.7.

No Change in Name, Offices; Removal of Collateral

6.8.

No Sale, Leaseback

6.9.

Margin Stock

6.10.

Tangible Collateral

6.11.

Subsidiaries

6.12.

Change of Control

6.13.

Change of Management

6.14.

Liquidation, Mergers, Consolidations and Dispositions of Substantial Assets

6.15.

Change of Fiscal Year or Accounting Methods

7.

Other Covenants of Borrower

7.1.

Total Liabilities to Effective Tangible Net Worth Ratio

7.2.

Cash Flow Coverage Ratio

7.3.

Deposit Relationship

7.4.

Dividends

8.

Default.

8.1.

Events of Default

8.2.

Remedies

8.3.

Receiver

8.4.

Deposits; Insurance

9.

Security Agreement.

9.1.

Security Interest.

9.2.

Net Cash Position

9.3.

Financing Statements; Power of Attorney

9.4.

Entry

9.5.

Other Rights

9.6.

Accounts

9.7.

Waiver of Marshaling

9.8.

Control

10.

Miscellaneous.

10.1.

No Waiver, Remedies Cumulative

10.2.

Survival of Representations

10.3.

Indemnity By Borrower; Expenses

10.4.

Notices

10.5.

Governing Law

10.6.

Successors and Assigns

10.7.

Counterparts

10.8.

Usury

10.9.

Powers

10.10.

Approvals

10.11.

Definition of Day

10.12.

Participations

10.13.

Dealings with Multiple Borrowers.

10.14.

Waiver of Certain Defenses

10.15.

Integration

10.16.

Limitation on Liability; Waiver of Punitive Damages

10.17.

Waiver of Jury Trial

SCHEDULE OF EXHIBITS

004.416083.526

REVOLVING AND TERM CREDIT AND SECURITY AGREEMENT

THIS AGREEMENT (the "Agreement"), dated as of February 24, 2004 between
AEROSONIC CORPORATION, a Delaware corporation and AVIONICS SPECIALTIES, INC., a
Virginia corporation (collectively, jointly and severally, the "Borrower"), and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association ("Bank");

W I T N E S S E T H :

In consideration of the premises and of the mutual covenants herein contained
and to induce Bank to extend credit to Borrower, the parties agree as follows:

TABLE OF CONTENTS

 * 1.
   
 * Definitions
   
 * 2.
   
 * The Loan.
   
   * 2.1.
     
   * Revolving Loan Credit Facility
     
   * 2.2.
     
   * Revolving Note
     
   * 2.3.
     
   * Term Loan.
     
     * (a)
       
     * Subject to the terms and conditions contained herein and provided that no
       Default or Event of Default has occurred, the Bank shall lend to the
       Borrower on a term basis the amount of $211,500 (the “Equipment Loan”)
       and $3,000,000 (the “Mortgage Loan,” and together with the Equipment
       Loan, the “Term Loans”).   The Term Loans shall be evidenced by and
       payable in accordance with the terms of promissory notes in the face
       amount of $211,500 (the “Equipment Note”) and $3,000,000 (the “Mortgage
       Note,” and together with the Equipment Note, the “Term Notes”).   The
       Term Notes and Revolving Note are herein collectively called the
       “Notes.”)   Proceeds of the Equipment Loan shall be used to purchase the
       following equipment:   a new Mori Seiki SL-154SY (Serial No. 1922).
       
     * (b)
       
     * Bank agrees that, so long as no Default exists, it will release its
       security interest in the Virginia real property and fixtures that
       Borrower has provided as Collateral for the Loan if the following
       conditions have been satisfied in Bank’s sole and absolute discretion:
       
   * 0.1.
     
   * Collections Account.
     
     * (a)
       
     * Within a reasonable time following the funding of the Term Loans, the
       Borrower shall establish a lockbox under the control of Bank to which all
       Account Debtors shall forward payments on the Accounts.   Borrower shall
       pay all of Bank’s standard fees and charges in connection with such
       lockbox arrangement and Collections Account as such fees and charges may
       change from time to time.   Borrower shall notify Account Debtors on the
       Accounts to forward payments on the Accounts to the lockbox; provided,
       however, that Bank shall have the right to directly contact Account
       Debtors at any time to ensure that payments on the Accounts are directed
       to the lockbox.   All payment items received by Borrower on Accounts and
       sale of Inventory and other Collateral shall be held by Borrower in trust
       for Bank and not commingled with Borrower’s funds and shall be deposited
       promptly by Borrower to the Collections Account.   All such items shall
       be the exclusive property of Bank upon the earlier of   the receipt
       thereof by Bank or by Borrower.   Borrower hereby grants to Bank a
       security interest in and lien upon all items and balances held in the
       lockbox and the Collections Account as collateral for the Indebtedness.
       
     * (b)
       
     * Borrower hereby irrevocably appoints Bank (and any duly authorized Person
       designated by Bank) as Borrower’s attorney-in-fact to endorse Borrower’s
       name on any checks, drafts, money orders or other media of payment which
       come into Bank’s possession or control; this power being coupled with an
       interest is irrevocable so long as any of the Indebtedness remain
       outstanding.   Such endorsement by Bank under power of attorney shall,
       for all purposes, be deemed to have been made by Borrower (prior to any
       subsequent endorsement by Bank) in negotiation of the item.
       
     * (c)
       
     * For the purpose of calculating interest due under this Agreement, payment
       items received into the Collections Account shall be deemed applied by
       Bank on account of the Loan as collected by Bank, subject to chargebacks
       for uncollected payment items.   No payment item received by Bank shall
       constitute payment to Bank until such item is actually collected by Bank
       and credited to the Collections Account; provided, however, Bank shall
       have the right to charge back to the Collections Account (or any other
       account of Borrower maintained at Bank) any item which is returned for
       inability to collect, plus accrued interest during the period of Bank’s
       provisional credit for such item prior to receiving notice of dishonor.
       
   * 0.2.
     
   * Treasury Services
     
   * 0.3.
     
   * Advances.
     
     * (a)
       
     * Bank, in its discretion, may require from Borrower a signed written
       request for an Advance in form satisfactory to Bank, which request shall
       be delivered to Bank no later than 12:00 noon (local time in Tampa,
       Florida) on the date of the requested Advance, and shall set forth the
       calculation of the Borrowing Base and a reconciliation to the previous
       request or Borrowing Base Certificate, specify the date (which shall be a
       Business Day) and the amount of the proposed Advance and provide such
       other information as Bank may require.   Bank’s acceptance of such a
       request shall be indicated by its making the Advance requested.   Such an
       Advance shall be made available to Borrower in immediately available
       funds at Bank’s address referred to in Section .
       
     * (b)
       
     * Notwithstanding the foregoing, Bank may, in its sole and absolute
       discretion, make or permit to remain outstanding Advances under the
       Revolving Loan in excess of the original principal amount of the
       Revolving Note, and all such amounts shall  be part of the Indebtedness
       evidenced by the Revolving Note,  bear interest as provided herein,  be
       payable upon demand by Bank, and  be entitled to all rights and security
       as provided under the Loan Documents.
       
   * 0.4.
     
   * Repayment of Loan.
     
     * (a)
       
     * Interest on the Loan shall accrue and be payable as set forth in the
       Notes.   Each Loan shall mature, and the principal amount thereof and all
       accrued and unpaid interest, fees, expenses and other amounts payable
       under the Loan Documents shall be due and payable, as set forth in the
       Notes.
       
     * (b)
       
     * Bank may debit the Demand Deposit Account, the Collections Account and/or
       make Advances to Borrower (whether or not in excess of the lesser of the
       Maximum Revolving Loan Amount and the Borrowing Base) and apply such
       amounts to the payment of interest, fees, expenses and other amounts to
       which Bank may be entitled from time to time with respect to all
       Indebtedness and Bank is hereby irrevocably authorized to do so without
       the consent of Borrower.
       
     * (c)
       
     * Subject to the terms of any treasury services to which Borrower may
       subscribe, Borrower shall make each payment of principal of and interest
       on the Loan and fees hereunder not later than 12:00 noon (local time
       Tampa, Florida) on the date when due, without set off, counterclaim or
       other deduction, in immediately available funds to Bank at its address
       referred to in Section .   Whenever any payment of principal of, or
       interest on, the Loan or of fees shall be due on a day which is not a
       Business Day, the date for payment thereof shall be extended to the next
       succeeding Business Day.   If the date for any payment of principal is
       extended by operation of law or otherwise, interest thereon shall be
       payable for such extended time.
       
     * (d)
       
     * To the extent that the aggregate amount of all Advances under the
       Revolving Loan exceeds the Borrowing Base, the amount of such excess will
       be paid immediately to Bank upon Bank’s demand.
       
     * (e)
       
     * Any prepayment shall not affect Borrower's obligation to continue making
       payments under any swap agreement (as defined in 11 U.S.C. § 101), which
       shall remain in full force and effect notwithstanding such prepayment,
       subject to the terms of such swap agreement.
       
   * 0.5.
     
   * Overdue Amounts
     
   * 0.6.
     
   * Calculation of Interest
     
   * 0.7.
     
   * Sales Tax
     
   * 0.8.
     
   * Fees
     
   * 0.9.
     
   * Statement of Account
     
   * 0.10.
     
   * Clean-up Requirement.
     
 * 1.
   
 * Conditions Precedent to Borrowing
   
   * 1.1.
     
   * Conditions Precedent to Initial Advance
     
     * (a)
       
     * Loan Documents.   Borrower and each other party to any Loan Document, as
       applicable, shall have executed and delivered this Agreement, the Notes,
       and other required Loan Documents, all in form and substance satisfactory
       to Bank.
       
     * (b)
       
     * Supporting Documents.   Borrower shall cause to be delivered to Bank the
       following documents:
       
     * (a)
       
     * Insurance.   Borrower shall have delivered to Bank satisfactory evidence
       of insurance meeting the requirements of Section .
       
     * (b)
       
     * Perfection of Liens.   UCC-1 financing statements and, if applicable,
       certificates of title covering the Collateral executed by Borrower shall
       duly have been recorded or sent for filing in the manner and places
       required by law to establish, preserve, protect and perfect the interests
       and rights created or intended to be created by the Security Agreement;
       and all taxes, fees and other charges in connection with the execution,
       delivery and filing of the Security Agreement and the financing
       statements shall duly have been paid.
       
     * (c)
       
     * Subordinations.   Bank shall have received subordinations satisfactory to
       it from  all lessors that might have landlord’s Liens on any Collateral
       and   all Guarantors and Affiliates as required by Section .
       
     * (d)
       
     * Additional Documents.   Borrower shall have delivered to Bank all
       additional opinions, documents, certificates and other assurances that
       Bank or its counsel may require.
       
     * (e)
       
     * Payment of Fees.   Borrower shall have paid all fees, costs and expenses
       as required by the Loan Documents in connection with the Closing.
       
   * 0.1.
     
   * Conditions Precedent to Each Advance
     
     * (a)
       
     * Advance Request.   Borrower shall have delivered to Bank an Advance
       Request and other information, as required under Section , unless the
       procedures described in Section   are in effect.
       
     * (b)
       
     * No Default.   No Default shall have occurred and be continuing or could
       occur upon the making of the Advance in question and, if Borrower is
       required to deliver a written Advance Request, Borrower shall have
       delivered to Bank an officer’s certificate to such effect, which may be
       incorporated in the Advance Request.
       
     * (c)
       
     * Correctness of Representations.   All representations and warranties made
       by Borrower and any Guarantor herein or otherwise in writing in
       connection herewith shall be true and correct in all material respects
       with the same effect as though the representations and warranties had
       been made on and as of the proposed Advance Date, and, if Borrower is
       required to deliver a written Advance Request, Borrower shall have
       delivered to Bank an officer’s certificate to such effect, which may be
       incorporated in the Advance Request.
       
     * (d)
       
     * No Adverse Change.   There shall have been no change which could have a
       Material Adverse Effect on Borrower, any Subsidiary or any Guarantor
       since the date of the most recent financial statements of such Person
       delivered to Bank from time to time.
       
     * (e)
       
     * Limitations Not Exceeded.   The proposed Advance shall not cause the
       outstanding principal balance of the Revolving Loan to exceed the lesser
       of the Maximum Revolving Loan Amount and the Borrowing Base.   If
       Borrower is required to deliver a written Advance Request, Bank shall
       have received a current Accounts Receivable Report and a current
       Inventory Report (as required by Section ) sufficient in form and
       substance to calculate and verify the Borrowing Base.
       
     * (f)
       
     * No Termination.   Bank shall   have timely received all financial
       information from all Guarantors as required under the Loan Documents, and
         not have received notice from any Guarantor or any surety terminating
       or repudiating such Person’s guaranty of the Indebtedness incurred by
       Borrower.
       
     * (g)
       
     * Further Assurances.   Borrower shall have delivered such further
       documentation or assurances as Bank may reasonably require.
       
 * 1.
   
 * Representations and Warranties
   
   * 1.1.
     
   * Valid Existence and Power
     
   * 1.2.
     
   * Authority
     
   * 1.3.
     
   * Financial Condition
     
   * 1.4.
     
   * Litigation
     
   * 1.5.
     
   * Agreements, Etc
     
   * 1.6.
     
   * Authorizations
     
   * 1.7.
     
   * Title
     
   * 1.8.
     
   * Collateral
     
   * 1.9.
     
   * Jurisdiction of Organization; Location
     
   * 1.10.
     
   * Taxes
     
   * 1.11.
     
   * Labor Law Matters
     
   * 1.12.
     
   * Accounts
     
   * 1.13.
     
   * Judgment Liens
     
   * 1.14.
     
   * Subsidiaries
     
   * 1.15.
     
   * Environmental
     
   * 1.16.
     
   * ERISA
     
   * 1.17.
     
   * Investment Company Act
     
   * 1.18.
     
   * Names
     
   * 1.19.
     
   * Insider
     
   * 1.20.
     
   * Compliance with Covenants; No Default
     
   * 1.21.
     
   * Full Disclosure
     
   * 1.22.
     
   * Additional Representations
     
   * 1.23.
     
   * Perfection Certificate
     
 * 2.
   
 * Affirmative Covenants of Borrower
   
   * 2.1.
     
   * Use of Loan Proceeds
     
   * 2.2.
     
   * Maintenance of Business and Properties
     
   * 2.3.
     
   * Insurance
     
   * 2.4.
     
   * Notice of Default
     
   * 2.5.
     
   * Inspections
     
   * 2.6.
     
   * Financial Information
     
     * (a)
       
     * Periodic Borrowing Base Information.   Within fifteen (15) days of the
       end of each month (or more frequently if required by Bank), a completed
       Borrowing Base Certificate in the form attached hereto as Exhibit 5.6(a)
       (a "Borrowing Base Certificate").   Borrower shall attach the following
       to the Borrowing Base Certificate, which shall be certified by the chief
       financial officer or president of Borrower to be accurate and complete
       and in compliance with the terms of the Loan Documents:   a report
       listing all Accounts and all Eligible Accounts of Borrower as of the last
       Business Day of such month (an "Accounts Receivable Report") which shall
       be reconciled to the general ledger and include the amount and age of
       each Account, the name and mailing address of each Account Debtor, a
       detailing of all credits due such Account Debtor by Borrower stated in
       the number of days which have elapsed since the date each such credit was
       issued by Borrower, and such other information as Bank may require in
       order to verify the Eligible Accounts, all in reasonable detail and in
       form acceptable to Bank.   
       
     * (b)
       
     * Interim Statements.   Within forty-five (45) days after the end of each
       fiscal quarter, a consolidated and consolidating balance sheet of
       Borrower at the end of that period and a consolidated and consolidating
       income statement and statement of cash flows for that period (and for the
       portion of the fiscal year ending with such period), a division
       profitability statement, together with all supporting schedules, setting
       forth in comparative form the figures for the same period of the
       preceding fiscal year, and certified by the chief financial officer of
       Borrower as true and correct and fairly representing the financial
       condition of Borrower and that such statements are prepared in accordance
       with GAAP, except without footnotes and subject to normal year-end audit
       adjustments;
       
     * (c)
       
     * Annual Statements.   Within ninety (90) days after the end of each fiscal
       year, a detailed audited financial report of Borrower containing a
       consolidated and consolidating balance sheet at the end of that period
       and a consolidated and consolidating income statement and statement of
       cash flows for that period, setting forth in comparative form the figures
       for the preceding fiscal year, together with all supporting schedules and
       footnotes, and audited by independent certified public accountants
       acceptable to Bank.   Borrower shall obtain, if available, such written
       acknowledgments from Borrower’s independent certified public accountants
       as Bank may require permitting Bank to rely on such annual financial
       statements.   Any management letter, supplemental letter, or other
       document accompanying the report will also be provided to Bank.   In
       addition, promptly upon receipt, one copy of each written report
       submitted to Borrower by independent accountants for any other annual,
       quarterly or special audit will be provided to Bank;
       
     * (d)
       
     * No Default Certificates.   Together with each report required by
       Subsections   and , a compliance certificate in form satisfactory to Bank
       and a certificate of its president or chief financial officer that no
       Default   then exists or if a Default exists, the nature and duration
       thereof and Borrower’s intention with respect thereto, and in addition,
       shall cause Borrower’s independent auditors (if applicable) to submit to
       Bank, together with its audit report, a statement that, in the course of
       such audit, it discovered no circumstances which it believes would result
       in a Default or if it discovered any such circumstances, the nature and
       duration thereof;   
       
     * (e)
       
     * Auditor’s Management Letters.   Promptly upon receipt thereof, copies of
       each report submitted to Borrower by independent public accountants in
       connection with any annual, interim or special audit made by them of the
       books of Borrower including, without limitation, each report submitted to
       Borrower concerning its accounting practices and systems and any final
       comment letter submitted by such accountants to management in connection
       with the annual audit of Borrower;
       
     * (f)
       
     * Payables Report.   Within fifteen (15) days of the end of each month (or
       more frequently if required by Bank), a schedule of all accounts payable
       of Borrower by total setting forth for each such account the number of
       days which have elapsed since the original date of invoice and containing
       the name and address of each vendor, a reconciliation statement and such
       other detail requested by Bank; and
       
     * (g)
       
     * Other Information.   Such other information reasonably requested by Bank
       from time to time concerning the business, properties or financial
       condition of Borrower, Guarantor and their respective Subsidiaries.
       
   * 2.7.
     
   * Maintenance of Existence and Rights
     
   * 2.8.
     
   * Payment of Taxes, Etc
     
   * 2.9.
     
   * Subordination
     
   * 2.10.
     
   * Compliance; Hazardous Materials
     
   * 2.11.
     
   * Compliance with Assignment Laws
     
   * 2.12.
     
   * Reports
     
   * 2.13.
     
   * Further Assurances
     
   * 2.14.
     
   * Covenants Regarding Collateral
     
     * (a)
       
     * Borrower will use the Collateral only in the ordinary course of its
       business and will not permit the Collateral to be used in violation of
       any applicable law or policy of insurance;
       
     * (b)
       
     * Borrower, as agent for Bank, will defend the Collateral against all
       claims and demands of all Persons, except for Permitted Liens;
       
     * (c)
       
     * Borrower will, at Bank’s request, obtain and deliver to Bank such waivers
       as Bank may require waiving the landlord’s, mortgagee’s or other
       lienholder’s enforcement rights against the Collateral and assuring
       Bank’s access to the Collateral in exercise of its rights hereunder;
       
     * (d)
       
     * Borrower will promptly deliver to Bank all promissory notes, drafts,
       trade acceptances, chattel paper, Instruments or documents of title which
       are Collateral, appropriately endorsed to Bank’s order, and Borrower will
       not create or permit any Subsidiary to create any Electronic Chattel
       Paper without taking all steps deemed necessary by Bank to confer control
       of the Electronic Chattel Paper upon Bank in accordance with the Code;
       
     * (e)
       
     * Except for sales of Inventory in the ordinary course of business and
       disposal of obsolete Equipment consistent with Borrower’s historical
       practices, will not sell, assign, lease, transfer, pledge, hypothecate or
       otherwise dispose of or encumber any Collateral or any interest therein;
       
     * (f)
       
     * shall promptly notify Bank of any future patents, trademarks or
       copyrights owned by Borrower or any Subsidiary and any license agreements
       entered into by Borrower or any Subsidiary authorizing said Person to use
       any patents, trademarks or copyrights owned by third parties; and
       
     * (g)
       
     * shall give Bank at least thirty (30) days' prior written notice of any
       new trade or fictitious name.   Borrower's or any Subsidiary’s use of any
       trade or fictitious name shall be in compliance with all laws regarding
       the use of such names.
       
 * 3.
   
 * Negative Covenants of Borrower
   
   * 3.1.
     
   * Debt
     
   * 3.2.
     
   * Liens
     
   * 3.3.
     
   * Loans and Other Investments
     
   * 3.4.
     
   * Change in Business
     
   * 3.5.
     
   * Accounts
     
   * 3.6.
     
   * Transactions with Affiliates
     
   * 3.7.
     
   * No Change in Name, Offices; Removal of Collateral
     
   * 3.8.
     
   * No Sale, Leaseback
     
   * 3.9.
     
   * Margin Stock
     
   * 3.10.
     
   * Tangible Collateral
     
   * 3.11.
     
   * Subsidiaries
     
   * 3.12.
     
   * Change of Control
     
   * 3.13.
     
   * Change of Management
     
   * 3.14.
     
   * Liquidation, Mergers, Consolidations and Dispositions of Substantial Assets
     
   * 3.15.
     
   * Change of Fiscal Year or Accounting Methods
     
 * 4.
   
 * Other Covenants of Borrower
   
   * 4.1.
     
   * Total Liabilities to Effective Tangible Net Worth Ratio
     
   * 4.2.
     
   * Cash Flow Coverage Ratio
     
   * 4.3.
     
   * Deposit Relationship
     
   * 4.4.
     
   * Dividends
     
 * 5.
   
 * Default.
   
   * 5.1.
     
   * Events of Default
     
     * (a)
       
     * There shall occur any default by Borrower in the payment, when due, of
       any principal of or interest on any Note, any amounts due hereunder or
       any other Loan Document, or any other Indebtedness and such default
       continues for three (3) Business Days beyond the due date therefor; or
       
     * (b)
       
     * There shall occur any default by Borrower or any other party to any Loan
       Document (other than Bank) in the performance of any agreement, covenant
       or obligation contained in this Agreement or such Loan Document not
       provided for elsewhere in this Section   and provided, with respect to
       Sections , , , , , , , , ,   and   only, such default continues for
       thirty (30) days after written notice of such default is sent to Borrower
       by the Bank; or
       
     * (c)
       
     * Any representation or warranty made by Borrower or any other party to any
       Loan Document (other than Bank) herein or therein or in any certificate
       or report furnished in connection herewith or therewith shall prove to
       have been untrue or incorrect in any material respect when made; or
       
     * (d)
       
     * (i) Any other obligation now or hereafter owed by Borrower or any
       Subsidiary or Guarantor to Bank or any affiliate of Bank shall be in
       default and not cured within the grace period, if any, provided therein;
       or (ii) Borrower or any Subsidiary or Guarantor shall be in default under
       any obligation in excess of $100,000 owed to any other obligee, which
       default entitles the obligee to accelerate any such obligations or
       exercise other remedies with respect thereto; provided, however, that
       Bank will not unreasonably withhold its agreement that a default under
       any such other obligation not exceeding $300,000 shall not constitute an
       Event of Default hereunder for a period of time specified by Bank if
       Borrower is disputing such default in good faith, no action has been
       taken by such other obligee to exercise its remedies and the Bank
       determines in its discretion that such forbearance will not be to the
       disadvantage of the Bank; or
       
     * (e)
       
     * Borrower or any Subsidiary or Guarantor shall   voluntarily dissolve,
       liquidate or terminate operations or apply for or consent to the
       appointment of, or the taking of possession by, a receiver, custodian,
       trustee or liquidator of such Person or of all or of a substantial part
       of its assets,  admit in writing its inability, or be generally unable,
       to pay its debts as the debts become due,  make a general assignment for
       the benefit of its creditors,  commence a voluntary case under the
       federal Bankruptcy Code (as now or hereafter in effect),   file a
       petition seeking to take advantage of any other law relating to
       bankruptcy, insolvency, reorganization, winding-up, or composition or
       adjustment of debts, or (F) take any corporate action for the purpose of
       effecting any of the foregoing; or
       
     * (f)
       
     * An involuntary petition or complaint shall be filed against Borrower or
       any Subsidiary or any Guarantor seeking bankruptcy relief or
       reorganization or the appointment of a receiver, custodian, trustee,
       intervenor or liquidator of Borrower or any Subsidiary or any Guarantor,
       of all or substantially all of its assets, and such petition or complaint
       shall not have been dismissed within sixty (60) days of the filing
       thereof; or an order, order for relief, judgment or decree shall be
       entered by any court of competent jurisdiction or other competent
       authority approving or ordering any of the foregoing actions; or
       
     * (g)
       
     * (g) A judgment in excess of $100,000 shall be rendered against Borrower
       or any Subsidiary of Borrower that is not either (i) bonded off by
       Borrower within fifteen (15) days of the date such judgment is rendered
       or (ii) validly covered by insurance with a deductible of not more than
       $10,000; and such judgment is thereafter enforced by a levy of execution
       upon, or attachment, garnishment or other seizure of, any material
       portion of the Collateral or other assets of Borrower or any Subsidiary;
       
     * (h)
       
     * Borrower, any Subsidiary or any Guarantor shall fail to pay, on demand,
       any returned or dishonored draft, check, or other item which has been
       deposited to the Collections Account or the Demand Deposit Account or
       otherwise presented to Bank and for which Borrower has received
       provisional credit; or
       
     * (i)
       
     * Any Guarantor shall repudiate or revoke any Guaranty Agreement; or
       
     * (j)
       
     * Loss, theft, damage or destruction of any material portion of the
       tangible Collateral for which there is either no insurance coverage or
       for which, in the reasonable opinion of Bank, there is insufficient
       insurance coverage; or
       
     * (k)
       
     * There shall have occurred a Change of Control or a Change in Management,
       as defined in Section ; or
       
     * (l)
       
     * There shall occur any change in the condition (financial or otherwise) of
       Borrower and/or any Guarantor which, in the reasonable opinion of Bank,
       could have a Material Adverse Effect.
       
   * 5.2.
     
   * Remedies
     
     * (a)
       
     * Bank may declare any or all Indebtedness (other than Indebtedness under
       any swap agreements, as defined in 11 U.S.C. § 101, between Borrower and
       Bank or any affiliate of Bank, which shall be governed by the default and
       termination provisions of said swap agreements) to be immediately due and
       payable (if not earlier demanded), terminate its obligation to make
       Advances to Borrower, bring suit against Borrower to collect the
       Indebtedness, exercise any remedy available to Bank hereunder or at law
       and take any action or exercise any remedy provided herein or in any
       other Loan Document or under applicable law.   No remedy shall be
       exclusive of other remedies or impair the right of Bank to exercise any
       other remedies.
       
     * (b)
       
     * Without waiving any of its other rights hereunder or under any other Loan
       Document, Bank shall have all rights and remedies of a secured party
       under the Code (and the Uniform Commercial Code of any other applicable
       jurisdiction) and such other rights and remedies as may be available
       hereunder, under other applicable law or pursuant to contract.   If
       requested by Bank, Borrower will promptly assemble the Collateral and
       make it available to Bank at a place to be designated by Bank.   Borrower
       agrees that any notice by Bank of the sale or disposition of the
       Collateral for any other intended action hereunder, whether required by
       the Code or otherwise, shall constitute reasonable notice to Borrower if
       the notice is mailed to Borrower by regular or certified mail, postage
       prepaid, at least ten days before the action to be taken.   Borrower
       shall be liable for any deficiencies in the event the proceeds of the
       disposition of the Collateral do not satisfy the Indebtedness in full.
       
     * (c)
       
     * Bank may demand, collect and sue for all amounts owed pursuant to
       Accounts, General Intangibles, Chattel Paper, Instruments, Documents or
       for proceeds of any Collateral (either in Borrower’s name or Bank’s name
       at the latter’s option), with the right to enforce, compromise, settle or
       discharge any such amounts.
       
   * 5.3.
     
   * Receiver
     
   * 5.4.
     
   * Deposits; Insurance
     
 * 6.
   
 * Security Agreement.
   
   * 6.1.
     
   * Security Interest.
     
     * (a)
       
     * As security for the payment and performance of any and all Indebtedness
       and the performance of all obligations and covenants of Borrower to Bank
       and its affiliates, whether hereunder and under the other Loan Documents
       or otherwise, certain or contingent, now existing or hereafter arising,
       which are now, or may at any time or times hereafter be owing by Borrower
       to Bank or any of Bank's affiliates, Borrower hereby grants to Bank (for
       itself and its affiliates) a continuing security interest in and general
       lien upon and right of set-off against, all right, title and interest of
       Borrower in and to the Collateral, whether now owned or hereafter
       acquired by Borrower.
       
     * (b)
       
     * Except as herein or by applicable law otherwise expressly provided, Bank
       shall not be obligated to exercise any degree of care in connection with
       any Collateral in its possession, to take any steps necessary to preserve
       any rights in any of the Collateral or to preserve any rights therein
       against prior parties, and Borrower agrees to take such steps. In any
       case Bank shall be deemed to have exercised reasonable care if it shall
       have taken such steps for the care and preservation of the Collateral or
       rights therein as Borrower may have reasonably requested Bank to take and
       Bank’s omission to take any action not requested by Borrower shall not be
       deemed a failure to exercise reasonable care.   No segregation or
       specific allocation by Bank of specified items of Collateral against any
       liability of Borrower shall waive or affect any security interest in or
       Lien against other items of Collateral or any of Bank’s options, powers
       or rights under this Agreement or otherwise arising.
       
     * (c)
       
     * Upon an Event of Default, Bank may at any time and from time to time,
       with or without notice to Borrower,  transfer into the name of Bank or
       the name of Bank’s nominee any of the Collateral,  notify any Account
       Debtor or other obligor of any Collateral to make payment thereon direct
       to Bank of any amounts due or to become due thereon and  receive and
       after a Default direct the disposition of any proceeds of any Collateral.
       
   * 6.2.
     
   * Net Cash Position
     
   * 6.3.
     
   * Financing Statements; Power of Attorney
     
   * 6.4.
     
   * Entry
     
   * 6.5.
     
   * Other Rights
     
   * 6.6.
     
   * Accounts
     
   * 6.7.
     
   * Waiver of Marshaling
     
   * 6.8.
     
   * Control
     
 * 7.
   
 * Miscellaneous.
   
   * 7.1.
     
   * No Waiver, Remedies Cumulative
     
   * 7.2.
     
   * Survival of Representations
     
   * 7.3.
     
   * Indemnity By Borrower; Expenses
     
   * 7.4.
     
   * Notices
     
   * 7.5.
     
   * Governing Law
     
   * 7.6.
     
   * Successors and Assigns
     
   * 7.7.
     
   * Counterparts
     
   * 7.8.
     
   * Usury
     
   * 7.9.
     
   * Powers
     
   * 7.10.
     
   * Approvals
     
   * 7.11.
     
   * Definition of Day
     
   * 7.12.
     
   * Participations
     
   * 7.13.
     
   * Dealings with Multiple Borrowers.
     
     * (a)
       
     * If more than one Person is named as Borrower hereunder, all Indebtedness,
       representations, warranties, covenants and indemnities set forth in the
       Loan Documents to which such Person is a party shall be joint and
       several.   Bank shall have the right to deal with any Person purporting
       to be an officer of any Borrower with regard to all matters concerning
       the rights and obligations of Bank hereunder and pursuant to applicable
       law with regard to the transactions contemplated under the Loan
       Documents.   All actions or inactions of the principal officers of any
       Borrower with regard to the transactions contemplated under the Loan
       Documents shall be deemed with full authority and binding upon all
       Borrowers hereunder.   Each Borrower hereby appoints each other Borrower
       as its true and lawful attorney-in-fact, with full right and power, for
       purposes of exercising all rights of such Person hereunder and under
       applicable law with regard to the transactions contemplated under the
       Loan Documents.   The foregoing is a material inducement to the agreement
       of Bank to enter into the terms hereof and to consummate the transactions
       contemplated hereby.
       
     * (b)
       
     * The Borrowers acknowledge that funds are provided to, and used by, the
       various Borrowers as needed through intercompany transfers and that the
       Loan will benefit all of the Borrowers.   Each Borrower acknowledges that
       it will receive full and fair benefit from the joint extensions of credit
       by the Bank.   Each Borrower agrees that if its assets are called upon to
       satisfy a greater proportion of the Indebtedness than its proportionate
       benefit from such Indebtedness, it shall be subrogated to the rights of
       the Bank under the Loan Documents; provided that its rights against any
       other Borrower shall be subject and subordinate to and shall not be
       exercised until all Indebtedness has been paid in full.
       
   * 7.14.
     
   * Waiver of Certain Defenses
     
   * 7.15.
     
   * Integration
     
   * 7.16.
     
   * Limitation on Liability; Waiver of Punitive Damages
     
   * 7.17.
     
   * Waiver of Jury Trial
     

1.

Definitions

.  Capitalized terms that are not otherwise defined herein shall have the
meanings set forth in Exhibit  hereto.

2.

The Loan.

2.1.

Revolving Loan Credit Facility

.  Bank agrees, on the terms and conditions set forth in this Agreement, to make
Advances from time to time during the Revolving Credit Period in amounts such
that the aggregate principal amount of Advances at any one time outstanding will
not exceed the lesser of (i) the Maximum Revolving Loan Amount and (ii) the
Borrowing Base (the "Revolving Loan").  Notwithstanding the foregoing, the
aggregate amount of the Advances by Bank from time to time shall be subject to
any Reserves that Bank in its sole and absolute discretion may deem proper
and/or necessary under the Borrowing Base.  Within the foregoing limit, Borrower
may borrow, prepay and reborrow Advances at any time during the Revolving Credit
Period.

2.2.

Revolving Note

.  The Revolving Loan shall be evidenced by a promissory note in the face amount
of the Maximum Revolving Loan Amount (the "Revolving Note") and shall be payable
in accordance with the terms of the Revolving Note and this Agreement.

2.3.

Term Loan.

(a)

Subject to the terms and conditions contained herein and provided that no
Default or Event of Default has occurred, the Bank shall lend to the Borrower on
a term basis the amount of $211,500 (the “Equipment Loan”) and $3,000,000 (the
“Mortgage Loan,” and together with the Equipment Loan, the “Term Loans”).  The
Term Loans shall be evidenced by and payable in accordance with the terms of
promissory notes in the face amount of $211,500 (the “Equipment Note”) and
$3,000,000 (the “Mortgage Note,” and together with the Equipment Note, the “Term
Notes”).  The Term Notes and Revolving Note are herein collectively called the
“Notes.”)  Proceeds of the Equipment Loan shall be used to purchase the
following equipment:  a new Mori Seiki SL-154SY (Serial No. 1922).

(b)

Bank agrees that, so long as no Default exists, it will release its security
interest in the Virginia real property and fixtures that Borrower has provided
as Collateral for the Loan if the following conditions have been satisfied in
Bank’s sole and absolute discretion:

(i)

Bank has received the audited financial statements of the Borrower for the year
ended January 31, 2004 showing compliance with all financial covenants set forth
in Section  hereof;

(ii)

All litigation pending against the Borrower as of the date of this Agreement has
been settled and there is no additional pending or threatened litigation
relating to securities laws or any other matter which, if adversely determined,
would have a Material Adverse Effect on the financial condition or business of
Borrower or any Subsidiary;

(iii)

Borrower has submitted to Bank a plan of repayment for professional services by
the Borrower’s former accounting firm which Bank approves in writing, in its
sole and absolute discretion; and

(iv)

There has not been a change in the condition, financial or otherwise, or
prospects, of either Borrower which has had or would have a Material Adverse
Effect on either Borrower

0.1.

Collections Account.

(a)

Within a reasonable time following the funding of the Term Loans, the Borrower
shall establish a lockbox under the control of Bank to which all Account Debtors
shall forward payments on the Accounts.  Borrower shall pay all of Bank’s
standard fees and charges in connection with such lockbox arrangement and
Collections Account as such fees and charges may change from time to time.
 Borrower shall notify Account Debtors on the Accounts to forward payments on
the Accounts to the lockbox; provided, however, that Bank shall have the right
to directly contact Account Debtors at any time to ensure that payments on the
Accounts are directed to the lockbox.  All payment items received by Borrower on
Accounts and sale of Inventory and other Collateral shall be held by Borrower in
trust for Bank and not commingled with Borrower’s funds and shall be deposited
promptly by Borrower to the Collections Account.  All such items shall be the
exclusive property of Bank upon the earlier of  the receipt thereof by Bank or
by Borrower.  Borrower hereby grants to Bank a security interest in and lien
upon all items and balances held in the lockbox and the Collections Account as
collateral for the Indebtedness.

(b)

Borrower hereby irrevocably appoints Bank (and any duly authorized Person
designated by Bank) as Borrower’s attorney-in-fact to endorse Borrower’s name on
any checks, drafts, money orders or other media of payment which come into
Bank’s possession or control; this power being coupled with an interest is
irrevocable so long as any of the Indebtedness remain outstanding.  Such
endorsement by Bank under power of attorney shall, for all purposes, be deemed
to have been made by Borrower (prior to any subsequent endorsement by Bank) in
negotiation of the item.

(c)

For the purpose of calculating interest due under this Agreement, payment items
received into the Collections Account shall be deemed applied by Bank on account
of the Loan as collected by Bank, subject to chargebacks for uncollected payment
items.  No payment item received by Bank shall constitute payment to Bank until
such item is actually collected by Bank and credited to the Collections Account;
provided, however, Bank shall have the right to charge back to the Collections
Account (or any other account of Borrower maintained at Bank) any item which is
returned for inability to collect, plus accrued interest during the period of
Bank’s provisional credit for such item prior to receiving notice of dishonor.

0.2.

Treasury Services

.  If Borrower subscribes to Bank’s treasury services and such services are
applicable to the Loan, the terms of such services, as set forth in the Services
Agreement and the Commercial Deposit Account Agreement applicable to Borrower's
Deposit Accounts at Bank, shall control matters related to such services,
including but not limited to the manner in which funds are transferred between
the Demand Deposit Account and the Loan for credit or debit to the Loan and
termination of such services.

0.3.

Advances.

(a)

Bank, in its discretion, may require from Borrower a signed written request for
an Advance in form satisfactory to Bank, which request shall be delivered to
Bank no later than 12:00 noon (local time in Tampa, Florida) on the date of the
requested Advance, and shall set forth the calculation of the Borrowing Base and
a reconciliation to the previous request or Borrowing Base Certificate, specify
the date (which shall be a Business Day) and the amount of the proposed Advance
and provide such other information as Bank may require.  Bank’s acceptance of
such a request shall be indicated by its making the Advance requested.  Such an
Advance shall be made available to Borrower in immediately available funds at
Bank’s address referred to in Section .

(b)

Notwithstanding the foregoing, Bank may, in its sole and absolute discretion,
make or permit to remain outstanding Advances under the Revolving Loan in excess
of the original principal amount of the Revolving Note, and all such amounts
shall  be part of the Indebtedness evidenced by the Revolving Note,  bear
interest as provided herein,  be payable upon demand by Bank, and  be entitled
to all rights and security as provided under the Loan Documents.

0.4.

Repayment of Loan.

(a)

Interest on the Loan shall accrue and be payable as set forth in the Notes.
 Each Loan shall mature, and the principal amount thereof and all accrued and
unpaid interest, fees, expenses and other amounts payable under the Loan
Documents shall be due and payable, as set forth in the Notes.

(b)

Bank may debit the Demand Deposit Account, the Collections Account and/or make
Advances to Borrower (whether or not in excess of the lesser of the Maximum
Revolving Loan Amount and the Borrowing Base) and apply such amounts to the
payment of interest, fees, expenses and other amounts to which Bank may be
entitled from time to time with respect to all Indebtedness and Bank is hereby
irrevocably authorized to do so without the consent of Borrower.

(c)

Subject to the terms of any treasury services to which Borrower may subscribe,
Borrower shall make each payment of principal of and interest on the Loan and
fees hereunder not later than 12:00 noon (local time Tampa, Florida) on the date
when due, without set off, counterclaim or other deduction, in immediately
available funds to Bank at its address referred to in Section .  Whenever any
payment of principal of, or interest on, the Loan or of fees shall be due on a
day which is not a Business Day, the date for payment thereof shall be extended
to the next succeeding Business Day.  If the date for any payment of principal
is extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.

(d)

To the extent that the aggregate amount of all Advances under the Revolving Loan
exceeds the Borrowing Base, the amount of such excess will be paid immediately
to Bank upon Bank’s demand.

(e)

Any prepayment shall not affect Borrower's obligation to continue making
payments under any swap agreement (as defined in 11 U.S.C. § 101), which shall
remain in full force and effect notwithstanding such prepayment, subject to the
terms of such swap agreement.

0.5.

Overdue Amounts

.  Any payments not made as and when due shall bear interest from the date due
until such payment is paid at the Default Rate, in Bank’s discretion.

0.6.

Calculation of Interest

.  All interest under the Notes or hereunder shall be calculated on the basis of
the Actual/360 Computation, as defined in the Notes.

0.7.

Sales Tax

.  Borrower shall notify Bank if any Account includes any sales or other similar
tax and Bank may, but shall not be obligated to, remit any such taxes directly
to the taxing authority and make Advances or charge the Demand Deposit Account
therefor.  In no event shall Bank be liable for any such taxes.

0.8.

Fees

.  Borrower shall pay to Bank a non-refundable facility fee equal to .25% of the
sum of the Maximum Revolving Loan Amount and the amount of the Term Loans,
payable on the date of this Agreement, to the extent not previously paid.

0.9.

Statement of Account

.  If Bank provides Borrower with a statement of account on a periodic basis,
such statement will be presumed complete and accurate and will be definitive and
binding on Borrower, unless objected to with specificity by Borrower in writing
within forty-five (45) days after receipt.

0.10.

Clean-up Requirement.

.  The outstanding principal balance of the Revolving Loan shall be reduced to
$500,000 or less for at least forty-five consecutive days in every 12-month
period beginning on the date hereof.

1.

Conditions Precedent to Borrowing

.  Prior to any Advance, the following conditions shall have been satisfied, in
the sole opinion of Bank and its counsel or waived by Bank in writing:

1.1.

Conditions Precedent to Initial Advance

.  In addition to any other requirement set forth in this Agreement, Bank will
not make the initial Advance under the Loan unless and until the following
conditions shall have been satisfied:

(a)

Loan Documents.  Borrower and each other party to any Loan Document, as
applicable, shall have executed and delivered this Agreement, the Notes, and
other required Loan Documents, all in form and substance satisfactory to Bank.

(b)

Supporting Documents.  Borrower shall cause to be delivered to Bank the
following documents:

(i)

A copy of the governing instruments of Borrower and each Subsidiary, and a good
standing certificate of Borrower and each Subsidiary, certified by the
appropriate official of its state of incorporation and the State of Florida if
different;

(ii)

Incumbency certificate and certified resolutions of the board of directors (or
other appropriate governing body) of Borrower and each other Person executing
any Loan Documents, signed by the Secretary or another authorized officer of
Borrower or such other Person, authorizing the execution, delivery and
performance of the Loan Documents;

(iii)

The legal opinion of Borrower’s and any Guarantor’s legal counsel addressed to
Bank regarding such matters as Bank and its counsel may request;

(iv)

A satisfactory Borrowing Base Certificate duly completed by Borrower, together
with all supporting statements, schedules and reconciliations as required by
Bank and Borrower shall have at least One Million Dollars ($1,000,000.00) of
availability under the Revolving Loan;

(v)

Satisfactory evidence of payment of all fees due and reimbursement of all costs
incurred by Bank, and evidence of payment to other parties of all fees or costs
which Borrower is required under this Agreement to pay by the date of the
initial Advance;

(vi)

UCC-11 searches and other Lien searches showing no existing security interests
in or Liens on the Collateral other than Permitted Liens;

(vii)

Any lien waivers requested by Bank pursuant to Section  hereof; and

(viii)

A satisfactory Perfection Certificate duly completed by Borrower.

(a)

Insurance.  Borrower shall have delivered to Bank satisfactory evidence of
insurance meeting the requirements of Section .

(b)

Perfection of Liens.  UCC-1 financing statements and, if applicable,
certificates of title covering the Collateral executed by Borrower shall duly
have been recorded or sent for filing in the manner and places required by law
to establish, preserve, protect and perfect the interests and rights created or
intended to be created by the Security Agreement; and all taxes, fees and other
charges in connection with the execution, delivery and filing of the Security
Agreement and the financing statements shall duly have been paid.

(c)

Subordinations.  Bank shall have received subordinations satisfactory to it from
 all lessors that might have landlord’s Liens on any Collateral and  all
Guarantors and Affiliates as required by Section .

(d)

Additional Documents.  Borrower shall have delivered to Bank all additional
opinions, documents, certificates and other assurances that Bank or its counsel
may require.

(e)

Payment of Fees.  Borrower shall have paid all fees, costs and expenses as
required by the Loan Documents in connection with the Closing.

0.1.

Conditions Precedent to Each Advance

.  The following conditions, in addition to any other requirements set forth in
this Agreement, shall have been met or performed by the Advance Date with
respect to any Advance Request and each Advance Request (whether or not a
written Advance Request is required) shall be deemed to be a representation that
all such conditions have been satisfied:

(a)

Advance Request.  Borrower shall have delivered to Bank an Advance Request and
other information, as required under Section , unless the procedures described
in Section  are in effect.

(b)

No Default.  No Default shall have occurred and be continuing or could occur
upon the making of the Advance in question and, if Borrower is required to
deliver a written Advance Request, Borrower shall have delivered to Bank an
officer’s certificate to such effect, which may be incorporated in the Advance
Request.

(c)

Correctness of Representations.  All representations and warranties made by
Borrower and any Guarantor herein or otherwise in writing in connection herewith
shall be true and correct in all material respects with the same effect as
though the representations and warranties had been made on and as of the
proposed Advance Date, and, if Borrower is required to deliver a written Advance
Request, Borrower shall have delivered to Bank an officer’s certificate to such
effect, which may be incorporated in the Advance Request.

(d)

No Adverse Change.  There shall have been no change which could have a Material
Adverse Effect on Borrower, any Subsidiary or any Guarantor since the date of
the most recent financial statements of such Person delivered to Bank from time
to time.

(e)

Limitations Not Exceeded.  The proposed Advance shall not cause the outstanding
principal balance of the Revolving Loan to exceed the lesser of the Maximum
Revolving Loan Amount and the Borrowing Base.  If Borrower is required to
deliver a written Advance Request, Bank shall have received a current Accounts
Receivable Report and a current Inventory Report (as required by Section )
sufficient in form and substance to calculate and verify the Borrowing Base.

(f)

No Termination.  Bank shall  have timely received all financial information from
all Guarantors as required under the Loan Documents, and  not have received
notice from any Guarantor or any surety terminating or repudiating such Person’s
guaranty of the Indebtedness incurred by Borrower.

(g)

Further Assurances.  Borrower shall have delivered such further documentation or
assurances as Bank may reasonably require.

1.

Representations and Warranties

.  In order to induce Bank to enter into this Agreement and to make the Loan
provided for herein, each Borrower makes the following representations and
warranties, all of which shall survive the execution and delivery of the Loan
Documents.  Unless otherwise specified, such representations and warranties
shall be deemed made as of the date hereof and, except as previously disclosed
in writing to the Bank,  as of the Advance Date of any Advance by Bank to
Borrower:

1.1.

Valid Existence and Power

.  Each of Borrower and each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and is duly qualified or licensed to transact business in all
places where the failure to be so qualified would have a Material Adverse Effect
on it.  Each of Borrower and each other Person which is a party to any Loan
Document (other than Bank) has the power to make and perform the Loan Documents
executed by it and all such instruments will constitute the legal, valid and
binding obligations of such Person, enforceable in accordance with their
respective terms, subject only to bankruptcy and similar laws affecting
creditors’ rights generally.  Aerosonic Corporation and Avionics Specialties,
Inc. are organized under the laws of Delaware and Virginia, respectively, and
have not changed the jurisdiction of their organization within the five years
preceding the date hereof except as previously reported to Bank.

1.2.

Authority

.  The execution, delivery and performance thereof by Borrower and each other
Person (other than Bank) executing any Loan Document have been duly authorized
by all necessary action of such Person, and do not and will not violate any
provision of law or regulation, or any writ, order or decree of any court or
governmental or regulatory authority or agency or any provision of the governing
instruments of such Person, and do not and will not, with the passage of time or
the giving of notice, result in a breach of, or constitute a default or require
any consent under, or result in the creation of any Lien upon any property or
assets of such Person pursuant to, any law, regulation, instrument or agreement
to which any such Person is a party or by which any such Person or its
respective properties may be subject, bound or affected.

1.3.

Financial Condition

.  Other than as disclosed in financial statements delivered on or prior to the
date hereof to Bank, neither Borrower nor any Subsidiary nor (to the knowledge
of Borrower) any Guarantor has any direct or contingent obligations or
liabilities (including any guarantees or leases) or any material unrealized or
anticipated losses from any commitments of such Person except as described on
Exhibit  (if any).  All such financial statements have been prepared in
accordance with GAAP and fairly present the financial condition of Borrower,
Subsidiary or Guarantor, as the case may be, as of the date thereof.  Borrower
is not aware of any material adverse fact (other than facts which are generally
available to the public and not particular to Borrower, such as general economic
or industry trends) concerning the conditions or future prospects of Borrower or
any Subsidiary or any Guarantor which has not been fully disclosed to Bank,
including any adverse change in the operations or financial condition of such
Person since the date of the most recent financial statements delivered to Bank.
Borrower is Solvent, and after consummation of the transactions set forth in
this Agreement and the other Loan documents, Borrower will be Solvent.

1.4.

Litigation

.  Except as disclosed on Exhibit  (if any), there are no suits or proceedings
pending, or to the knowledge of Borrower threatened, before any court or by or
before any governmental or regulatory authority, commission, bureau or agency or
public regulatory body against or affecting Borrower, any Subsidiary or (to
Borrower’s knowledge) any Guarantor, or their assets, which if adversely
determined would have a Material Adverse Effect on the financial condition or
business of Borrower, such Subsidiary or such Guarantor.

1.5.

Agreements, Etc

.  Neither Borrower nor any Subsidiary is a party to any agreement or instrument
or subject to any court order, governmental decree or any charter or other
corporate restriction, materially and adversely affecting its business, assets,
operations or condition (financial or otherwise), nor is any such Person in
default in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions contained in any agreement or instrument to
which it is a party, or any law, regulation, decree, order or the like.

1.6.

Authorizations

.  All authorizations, consents, approvals and licenses required under
applicable law or regulation for the ownership or operation of the property
owned or operated by Borrower or any Subsidiary or for the conduct of any
business in which it is engaged have been duly issued and are in full force and
effect, and it is not in default, nor has any event occurred which with the
passage of time or the giving of notice, or both, would constitute a default,
under any of the terms or provisions of any part thereof, or under any order,
decree, ruling, regulation, closing agreement or other decision or instrument of
any governmental commission, bureau or other administrative agency or public
regulatory body having jurisdiction over such Person, which default would have a
Material Adverse Effect on such Person.  Except as noted herein, no approval,
consent or authorization of, or filing or registration with, any governmental
commission, bureau or other regulatory authority or agency is required with
respect to the execution, delivery or performance of any Loan Document.

1.7.

Title

.  Each of Borrower and each Subsidiary has good title to all of the assets
shown in its financial statements free and clear of all Liens, except Permitted
Liens.  Borrower alone has full ownership rights in all Collateral.

1.8.

Collateral

.  The security interests granted to Bank herein and pursuant to any other
Security Agreement (a) constitute and, as to subsequently acquired property
included in the Collateral covered by the Security Agreement, will constitute,
security interests under the Code entitled to all of the rights, benefits and
priorities provided by the Code and (b) are, and as to such subsequently
acquired Collateral will be, fully perfected, superior and prior to the rights
of all third persons, now existing or hereafter arising, subject only to
Permitted Liens.  All of the Collateral is intended for use solely in Borrower’s
business.

1.9.

Jurisdiction of Organization; Location

.  The jurisdiction in which Borrower is organized, existing and in good
standing, the chief executive office of Borrower where Borrower’s business
records are located, all of Borrower’s other places of business and any other
places where any Collateral is kept, are all correctly and completed indicated
on Exhibit . The Collateral is located and shall at all times be kept and
maintained only at Borrower’s location or locations as described on Exhibit
 herein.  No such Collateral is attached or affixed to any real property so as
to be classified as a fixture unless Bank has otherwise agreed in writing.
 Borrower has not changed its legal status or the jurisdiction in which it is
organized or moved its chief executive office within the five (5) years
preceding the date hereof.

1.10.

Taxes

.  Borrower and each Subsidiary have filed all federal and state income and
other tax returns which are required to be filed, and subject to offset for
refunds owed, have remitted or otherwise satisfied its obligation to pay all
taxes as shown on said returns and all taxes, including withholding, FICA and ad
valorem taxes, shown on all assessments received by it to the extent that such
taxes have become due.  Neither Borrower nor any Subsidiary is subject to any
federal, state or local tax Liens nor has such Person received any notice of
deficiency or other official notice to pay any taxes.  Borrower and each
Subsidiary have paid all sales and excise taxes payable by it.  

1.11.

Labor Law Matters

.  No goods or services have been or will be produced by Borrower or any
Subsidiary in violation of any applicable labor laws or regulations or any
collective bargaining agreement or other labor agreements or in violation of any
minimum wage, wage-and-hour or other similar laws or regulations.

1.12.

Accounts

.  Each Account, Instrument, Chattel Paper and other writing constituting any
portion of the Collateral  is genuine and enforceable in accordance with its
terms except for such limits thereon arising from bankruptcy and similar laws
relating to creditors’ rights;  is not subject to any deduction or discount
(other than as stated in the invoice and disclosed to Bank), defense, set off,
claim or counterclaim of a material nature against Borrower except as to which
Borrower has notified Bank in writing;  is not subject to any other
circumstances that would impair the validity, enforceability or amount of such
Collateral except as to which Borrower has notified Bank in writing;  arises
from a bona fide sale of goods or delivery of services in the ordinary course
and in accordance with the terms and conditions of any applicable purchase
order, contract or agreement;  is free of all Liens other than Permitted Liens;
and  is for a liquidated amount maturing as stated in the invoice therefor.
 Each Account included in any Advance Request, Borrowing Base Certificate,
report or other document as an Eligible Account meets all the requirements of an
Eligible Account set forth herein.

1.13.

Judgment Liens

.  Neither Borrower nor any Subsidiary, nor any of their assets, are subject to
any unpaid judgments (whether or not stayed) or any judgment liens in any
jurisdiction.

1.14.

Subsidiaries

.  If Borrower has any Subsidiaries, they are listed on Exhibit .

1.15.

Environmental

.  Except as disclosed on Exhibit , neither Borrower, nor to Borrower’s best
knowledge any other previous owner or operator of any real property currently
owned or operated by Borrower, has generated, stored or disposed of any
Regulated Material on any portion of such property, or transferred any Regulated
Material from such property to any other location in violation of any applicable
Environmental Laws.  Except as disclosed on Exhibit , no Regulated Material has
been generated, stored or disposed of on any portion of the real property
currently owned or operated by Borrower by any other Person, or is now located
on such property.  Except as disclosed on Exhibit , Borrower is in full
compliance with all applicable Environmental Laws and Borrower has not been
notified of any action, suit, proceeding or investigation which calls into
question compliance by Borrower with any Environmental Laws or which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Regulated Material.

1.16.

ERISA

.  As soon as Borrower has filed the annual reports required to be filed
pursuant to Section 104 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), with respect to its profit-sharing and other employee
benefit plans for the plan years ended December 31, 2002 and 2003, Borrower will
provide to Bank true and complete copies of (i) such annual reports; and (ii) a
summary of each employee benefit plan or other plan maintained for employees of
Borrower or any Subsidiary and covered by Title IV of ERISA (a "Plan").  No
Termination Event (as hereinafter defined) with respect to any Plan has occurred
and is continuing.  For the purposes of this Agreement, a "Termination Event"
shall mean a "reportable event" as defined in Section 4043(b) of ERISA, or the
filing of a notice of intent to terminate under Section 4041 of ERISA.  Neither
Borrower nor any Subsidiary has any unfunded liability with respect to any such
Plan.

1.17.

Investment Company Act

.  Neither Borrower nor any Subsidiary is an "investment company" as defined in
the Investment Company Act of 1940, as amended.

1.18.

Names

.  Borrower currently conducts all business only under its legal name as set
forth above in the introductory section of this Agreement.  Except as disclosed
on Exhibit , during the preceding five (5) years Borrower has not  been known as
or used any other corporate, fictitious or trade name,  been the surviving
entity of a merger or consolidation or (iii) acquired all or substantially all
of the assets of any Person.

1.19.

Insider

.  Borrower is not, and no Person having "control" (as that term is defined in
12 U.S.C. §  375(b)(5) or in regulations promulgated pursuant thereto) of
Borrower is, an "executive officer," "director," or "principal shareholder" (as
those terms are defined in 12 U.S.C. § 375(b) or in regulations promulgated
pursuant thereto) of Bank, of a bank holding company of which Bank is a
subsidiary, or of any subsidiary of a bank holding company of which Bank is a
subsidiary.

1.20.

Compliance with Covenants; No Default

.  Borrower is, and upon funding of the Loan will be, in compliance with all of
the covenants hereof.  No Default has occurred, and the execution, delivery and
performance of the Loan Documents and the funding of the Loan will not cause a
Default.

1.21.

Full Disclosure

.  There is no material fact which is known by Borrower that Borrower has not
disclosed to Bank which could have a Material Adverse Effect.  No Loan Document,
nor any agreement, document, certificate or statement delivered by Borrower to
Bank, contains any untrue statement of a material fact or omits to state any
material fact which is known by Borrower necessary to keep the other statements
from being misleading.

1.22.

Additional Representations

.  Any additional representations or warranties set forth on Exhibit  hereto are
true and correct in all material respects.

1.23.

Perfection Certificate

.  All representations, warranties and statements made by Borrower in the
Perfection Certificate executed and delivered by Borrower to Bank in connection
with the Loan are true and correct as of the date hereof.

2.

Affirmative Covenants of Borrower

.  Each Borrower covenants and agrees that from the date hereof and until
payment in full of the Indebtedness and the formal termination of this
Agreement, such Borrower and each Subsidiary:

2.1.

Use of Loan Proceeds

.  Shall use the proceeds of the Loan only for (i) working capital to be used in
the operation of Borrower’s business, (ii) the restructure or consolidation of
existing Indebtedness and long term debt instruments, and (iii) to pay fees and
costs associated with the Loan.  Borrower shall furnish Bank all evidence that
it may reasonably require with respect to such use.

2.2.

Maintenance of Business and Properties

.  Shall at all times maintain, preserve and protect all Collateral and all the
remainder of its material property used or useful in the conduct of its
business, and keep the same in good repair, working order and condition, and
from time to time make, or cause to be made, all material needful and proper
repairs, renewals, replacements, betterments and improvements thereto so that
the business carried on in connection therewith may be conducted properly and in
accordance with standards generally accepted in businesses of a similar type and
size at all times, and maintain and keep in full force and effect all licenses
and permits necessary to the proper conduct of its business.

2.3.

Insurance

.  Shall maintain such liability insurance, workers’ compensation insurance,
business interruption insurance and casualty insurance as may be required by
law, customary and usual for prudent businesses in its industry or as may be
reasonably required by Bank and shall insure and keep insured all Collateral and
other properties in good and responsible insurance companies satisfactory to
Bank.  All hazard insurance covering Collateral shall be in amounts and shall
contain co-insurance and deductible provisions approved by Bank, shall name and
directly insure Bank as secured party and loss payee under a long-form New York
standard loss payee clause acceptable to Bank, or its equivalent, and shall not
be terminable except upon thirty (30) days’ written notice to Bank.  Borrower
shall furnish to Bank copies of all such policies.

2.4.

Notice of Default

.  Shall provide to Bank immediate notice of  the occurrence of a Default and
what action (if any) Borrower is taking to correct the same,  any material
litigation or material changes in existing litigation or any judgment against it
or its assets,  any material damage or loss to property,  any notice from taxing
authorities as to claimed deficiencies or any tax lien or any notice relating to
alleged ERISA violations,  any Reportable Event, as defined in ERISA,  any
rejection, return, offset, dispute, loss or other circumstance having a Material
Adverse Effect on any Collateral,  the cancellation or termination of, or any
default under, any material agreement to which Borrower is a party or by which
any of its properties are bound, or any acceleration of the maturity of any Debt
of Borrower; and  any loss or threatened loss of material licenses or permits.

2.5.

Inspections

.  Shall permit inspections of the Collateral and the records of such Person
pertaining thereto and verification of the Accounts, at such times and in such
manner as may be reasonably required by Bank and shall further permit such
inspections, reviews and field examinations of its other records and its
properties (with such reasonable frequency and at such reasonable times as Bank
may desire but no more frequently than twice per year unless an Event of Default
shall have occured) by Bank as Bank may deem necessary or desirable from time to
time.  The cost of such field examinations, reviews, verifications and
inspections shall be borne by Borrower.

2.6.

Financial Information

.  Shall maintain books and records in accordance with  GAAP and shall furnish
to Bank the following periodic financial information:

(a)

Periodic Borrowing Base Information.  Within fifteen (15) days of the end of
each month (or more frequently if required by Bank), a completed Borrowing Base
Certificate in the form attached hereto as Exhibit 5.6(a) (a "Borrowing Base
Certificate").  Borrower shall attach the following to the Borrowing Base
Certificate, which shall be certified by the chief financial officer or
president of Borrower to be accurate and complete and in compliance with the
terms of the Loan Documents:  a report listing all Accounts and all Eligible
Accounts of Borrower as of the last Business Day of such month (an "Accounts
Receivable Report") which shall be reconciled to the general ledger and include
the amount and age of each Account, the name and mailing address of each Account
Debtor, a detailing of all credits due such Account Debtor by Borrower stated in
the number of days which have elapsed since the date each such credit was issued
by Borrower, and such other information as Bank may require in order to verify
the Eligible Accounts, all in reasonable detail and in form acceptable to Bank.
 

(b)

Interim Statements.  Within forty-five (45) days after the end of each fiscal
quarter, a consolidated and consolidating balance sheet of Borrower at the end
of that period and a consolidated and consolidating income statement and
statement of cash flows for that period (and for the portion of the fiscal year
ending with such period), a division profitability statement, together with all
supporting schedules, setting forth in comparative form the figures for the same
period of the preceding fiscal year, and certified by the chief financial
officer of Borrower as true and correct and fairly representing the financial
condition of Borrower and that such statements are prepared in accordance with
GAAP, except without footnotes and subject to normal year-end audit adjustments;

(c)

Annual Statements.  Within ninety (90) days after the end of each fiscal year, a
detailed audited financial report of Borrower containing a consolidated and
consolidating balance sheet at the end of that period and a consolidated and
consolidating income statement and statement of cash flows for that period,
setting forth in comparative form the figures for the preceding fiscal year,
together with all supporting schedules and footnotes, and audited by independent
certified public accountants acceptable to Bank.  Borrower shall obtain, if
available, such written acknowledgments from Borrower’s independent certified
public accountants as Bank may require permitting Bank to rely on such annual
financial statements.  Any management letter, supplemental letter, or other
document accompanying the report will also be provided to Bank.  In addition,
promptly upon receipt, one copy of each written report submitted to Borrower by
independent accountants for any other annual, quarterly or special audit will be
provided to Bank;

(d)

No Default Certificates.  Together with each report required by Subsections  and
, a compliance certificate in form satisfactory to Bank and a certificate of its
president or chief financial officer that no Default  then exists or if a
Default exists, the nature and duration thereof and Borrower’s intention with
respect thereto, and in addition, shall cause Borrower’s independent auditors
(if applicable) to submit to Bank, together with its audit report, a statement
that, in the course of such audit, it discovered no circumstances which it
believes would result in a Default or if it discovered any such circumstances,
the nature and duration thereof;  

(e)

Auditor’s Management Letters.  Promptly upon receipt thereof, copies of each
report submitted to Borrower by independent public accountants in connection
with any annual, interim or special audit made by them of the books of Borrower
including, without limitation, each report submitted to Borrower concerning its
accounting practices and systems and any final comment letter submitted by such
accountants to management in connection with the annual audit of Borrower;

(f)

Payables Report.  Within fifteen (15) days of the end of each month (or more
frequently if required by Bank), a schedule of all accounts payable of Borrower
by total setting forth for each such account the number of days which have
elapsed since the original date of invoice and containing the name and address
of each vendor, a reconciliation statement and such other detail requested by
Bank; and

(g)

Other Information.  Such other information reasonably requested by Bank from
time to time concerning the business, properties or financial condition of
Borrower, Guarantor and their respective Subsidiaries.

2.7.

Maintenance of Existence and Rights

.  Shall preserve and maintain its corporate existence, authorities to transact
business, rights and franchises, trade names, patents, trademarks and permits
necessary to the conduct of its business.

2.8.

Payment of Taxes, Etc

.  Shall pay before delinquent all of its debts and taxes, except that Bank
shall not unreasonably withhold its consent to nonpayment of taxes being
actively contested in accordance with law (provided that Bank may require
bonding or other assurances).

2.9.

Subordination

.  To the extent permitted by law, shall cause all debt and other obligations
now or hereafter owed to any Guarantor or Affiliate to be subordinated in right
of payment and security to the Indebtedness in accordance with subordination
agreements satisfactory to Bank.

2.10.

Compliance; Hazardous Materials

.  Shall strictly comply with all laws, regulations, ordinances and other legal
requirements, specifically including, without limitation, ERISA, all securities
laws and all laws relating to hazardous materials and the environment.  Unless
approved in writing by Bank, neither Borrower nor any Subsidiary shall engage in
the storage, manufacture, disposition, processing, handling, use or
transportation of any hazardous or toxic materials, whether or not in compliance
with applicable laws and regulations.

2.11.

Compliance with Assignment Laws

.  Shall if required by Bank comply with the Federal Assignment of Claims Act
and any other applicable law relating to assignment of government contracts.

2.12.

Reports

.  Shall provide Bank with a copy of all reports filed with any governmental or
regulatory authority, commission, bureau or agency or public regulatory body.

2.13.

Further Assurances

.  Shall take such further action and provide to Bank such further assurances as
may be reasonably requested to ensure compliance with the intent of this
Agreement and the other Loan Documents.

2.14.

Covenants Regarding Collateral

.  Borrower makes the following covenants with Bank regarding the Collateral for
itself and each Subsidiary, Borrower and each Subsidiary:

(a)

Borrower will use the Collateral only in the ordinary course of its business and
will not permit the Collateral to be used in violation of any applicable law or
policy of insurance;

(b)

Borrower, as agent for Bank, will defend the Collateral against all claims and
demands of all Persons, except for Permitted Liens;

(c)

Borrower will, at Bank’s request, obtain and deliver to Bank such waivers as
Bank may require waiving the landlord’s, mortgagee’s or other lienholder’s
enforcement rights against the Collateral and assuring Bank’s access to the
Collateral in exercise of its rights hereunder;

(d)

Borrower will promptly deliver to Bank all promissory notes, drafts, trade
acceptances, chattel paper, Instruments or documents of title which are
Collateral, appropriately endorsed to Bank’s order, and Borrower will not create
or permit any Subsidiary to create any Electronic Chattel Paper without taking
all steps deemed necessary by Bank to confer control of the Electronic Chattel
Paper upon Bank in accordance with the Code;

(e)

Except for sales of Inventory in the ordinary course of business and disposal of
obsolete Equipment consistent with Borrower’s historical practices, will not
sell, assign, lease, transfer, pledge, hypothecate or otherwise dispose of or
encumber any Collateral or any interest therein;

(f)

shall promptly notify Bank of any future patents, trademarks or copyrights owned
by Borrower or any Subsidiary and any license agreements entered into by
Borrower or any Subsidiary authorizing said Person to use any patents,
trademarks or copyrights owned by third parties; and

(g)

shall give Bank at least thirty (30) days' prior written notice of any new trade
or fictitious name.  Borrower's or any Subsidiary’s use of any trade or
fictitious name shall be in compliance with all laws regarding the use of such
names.

3.

Negative Covenants of Borrower

.  Each Borrower covenants and agrees that from the date hereof and until
payment in full of the Indebtedness and the formal termination of this
Agreement, such Borrower and each Subsidiary, on a consolidated basis:

3.1.

Debt

.  Shall not directly or indirectly create, assume, become liable for or permit
to exist any Debt, including any guaranties or other contingent obligations,
except Permitted Debt.

3.2.

Liens

.  Shall not create or permit any Liens on any of its property except Permitted
Liens.

3.3.

Loans and Other Investments

.  Shall not make or permit to exist any advances or loans to, or guarantee or
become contingently liable, directly or indirectly, in connection with the
obligations, leases, stock or dividends of, or own, purchase or make any
commitment to purchase any stock, bonds, notes, debentures or other securities
of, or any interest in, or make any capital contributions to (all of which are
sometimes collectively referred to herein as "Investments") any Person except
for  purchases of direct obligations of the federal government,  deposits in
commercial banks having a tier 1 capital ratio of not less than six percent
(6%); provided, however, that such investment shall not be in an amount in
excess of 10% of such commercial bank’s unimpaired capital and surplus,
 commercial paper of any U.S. corporation having the highest ratings then given
by the Moody’s Investors Services, Inc. or Standard & Poor’s Corporation,
 existing investments in Subsidiaries, Guarantors, and investments in any
Subsidiary formed pursuant to a Permitted Corporate Restructure  endorsement of
negotiable instruments for collection in the ordinary course of business, and
 advances to employees for business travel and other expenses incurred in the
ordinary course of business.

3.4.

Change in Business

.  Shall not enter into any business which is substantially different from the
business in which it is presently engaged.

3.5.

Accounts

.   Shall not sell, assign or discount any of its Accounts, Chattel Paper or any
promissory notes held by it other than the discount of such notes in the
ordinary course of business for collection; and  shall notify Bank promptly in
writing of any discount, offset or other deductions not shown on the face of an
Account invoice and any dispute over an Account, and any information relating to
an adverse change in any Account Debtor’s financial condition or ability to pay
its obligations.

3.6.

Transactions with Affiliates

.  Shall not directly or indirectly purchase, acquire or lease any property
from, or sell, transfer or lease any property to, pay any management fees to or
otherwise deal with, in the ordinary course of business or otherwise, any
Affiliate (other than a Subsidiary); provided, however, that any acts or
transactions prohibited by this Section may be performed or engaged in after
written notice to Bank if upon terms not less favorable to Borrower or such
Subsidiary than if no such relationship existed.

3.7.

No Change in Name, Offices; Removal of Collateral

.  Shall not, unless it shall have given thirty (30) days’ advance written
notice thereof to Bank, (a) change its name or the location of its chief
executive office or other office where books or records are kept, or change the
jurisdiction in which the Borrower is organized, or (b) permit any Inventory or
other tangible Collateral to be located at any location other than as specified
in Section .

3.8.

No Sale, Leaseback

.  Shall not enter into any sale-and-leaseback or similar transaction.

3.9.

Margin Stock

.  Shall not use any proceeds of the Loan to purchase or carry any margin stock
(within the meaning of Regulation U of the Board of Governors of Federal Reserve
System) or extend credit to others for the purpose of purchasing or carrying any
margin stock.

3.10.

Tangible Collateral

.  Shall not, except as otherwise provided herein, allow any Inventory or other
tangible Collateral to be commingled with, or become an accession to or part of,
any property of any other Person so long as such property is Collateral; nor
allow any tangible Collateral to become a Fixture unless Bank shall have given
its prior written authorization.

3.11.

Subsidiaries

.  Shall not acquire, form or dispose of any Subsidiaries except in connection
with a Permitted Corporate Restructure or permit any Subsidiary to issue capital
stock except to its parent.

3.12.

Change of Control

.  Shall not permit a Change of Control to occur.  

3.13.

Change of Management

.  Shall not permit a change in the Persons holding the offices of President or
Chief Financial Officer of Borrower as of the date hereof; provided, no such
change in management shall be deemed to have occurred if Borrower replaces such
officer with a Person satisfactory to Bank in its reasonable discretion within a
reasonable time period after the Bank’s consent.  

3.14.

Liquidation, Mergers, Consolidations and Dispositions of Substantial Assets

.  Shall not dissolve or liquidate, or become a party to any merger or
consolidation, or acquire by purchase, lease or otherwise, all or a substantial
part (more than 10% in the aggregate during the term hereof) of the assets of
any Person, or sell, transfer, lease or otherwise dispose of all or a
substantial part (more than 10% in the aggregate during the term hereof) of its
property or assets, except for (a) the sale of Inventory in the ordinary course
of business, or (b) the disposal of obsolete Equipment in the manner consistent
with Borrower’s past practices and (c) a Permitted Corporate Restructure, or
sell or dispose of any equity ownership interests in any Subsidiary.

3.15.

Change of Fiscal Year or Accounting Methods

.  Shall not change its fiscal year or its accounting principles without the
written consent of Bank.

4.

Other Covenants of Borrower

.  Each Borrower covenants and agrees that from the date hereof and until
payment in full of the Indebtedness and the formal termination of this
Agreement, Borrower and each Subsidiary shall comply with the following
additional covenants:

4.1.

Total Liabilities to Effective Tangible Net Worth Ratio

.  Borrower shall on a consolidated basis, at all times, beginning with fiscal
year ended January 31, 2004, maintain a ratio of Total Liabilities, including
fully subordinated debt, divided by Effective Tangible Net Worth of not more
than 1.30 to 1.00.  For purposes of this computation, "Total Liabilities" shall
mean all liabilities of Borrower, including capitalized leases and all reserves
for deferred taxes and other deferred sums appearing on the liabilities side of
a balance sheet of Borrower, in accordance with GAAP applied on a consistent
basis.  "Effective Tangible Net Worth" shall mean the  total assets of Borrower
minus Total Liabilities.  For purposes of this calculation, the aggregate amount
of any intangible assets of Borrower including, without limitation, goodwill,
franchises, obligations owed by Affiliates, licenses, patents, trademarks, trade
names, copyrights, service marks, and brand names, shall be subtracted from
total assets.

4.2.

Cash Flow Coverage Ratio

.  Borrower shall on a consolidated basis, measured at the end of each quarter
for the preceding four quarters, beginning with fiscal year ended January 31,
2004, maintain a Cash Flow Coverage Ratio of 1.25 to 1.00.  “Cash Flow Coverage
Ratio” shall mean the sum of earnings before interest, taxes, depreciation and
amortization, minus all dividends, withdrawals and non-cash income, e.g. imputed
interest, divided by the sum of interest expense plus current maturities of
long-term Debt, including capital lease and synthetic lease obligations.

4.3.

Deposit Relationship

.  Borrower shall maintain its primary depository accounts and cash management
account with Bank.

4.4.

Dividends

.  In no event shall Borrower declare or pay a dividend if there shall exist a
Default or a condition which, upon the giving of notice or lapse of time or
both, would become a Default under the Loan Documents.

5.

Default.

5.1.

Events of Default

.  Each of the following with respect to any Borrower shall constitute an Event
of Default:

(a)

There shall occur any default by Borrower in the payment, when due, of any
principal of or interest on any Note, any amounts due hereunder or any other
Loan Document, or any other Indebtedness and such default continues for three
(3) Business Days beyond the due date therefor; or

(b)

There shall occur any default by Borrower or any other party to any Loan
Document (other than Bank) in the performance of any agreement, covenant or
obligation contained in this Agreement or such Loan Document not provided for
elsewhere in this Section  and provided, with respect to Sections , , , , , , ,
, ,  and  only, such default continues for thirty (30) days after written notice
of such default is sent to Borrower by the Bank; or

(c)

Any representation or warranty made by Borrower or any other party to any Loan
Document (other than Bank) herein or therein or in any certificate or report
furnished in connection herewith or therewith shall prove to have been untrue or
incorrect in any material respect when made; or

(d)

(i) Any other obligation now or hereafter owed by Borrower or any Subsidiary or
Guarantor to Bank or any affiliate of Bank shall be in default and not cured
within the grace period, if any, provided therein; or (ii) Borrower or any
Subsidiary or Guarantor shall be in default under any obligation in excess of
$100,000 owed to any other obligee, which default entitles the obligee to
accelerate any such obligations or exercise other remedies with respect thereto;
provided, however, that Bank will not unreasonably withhold its agreement that a
default under any such other obligation not exceeding $300,000 shall not
constitute an Event of Default hereunder for a period of time specified by Bank
if Borrower is disputing such default in good faith, no action has been taken by
such other obligee to exercise its remedies and the Bank determines in its
discretion that such forbearance will not be to the disadvantage of the Bank; or

(e)

Borrower or any Subsidiary or Guarantor shall  voluntarily dissolve, liquidate
or terminate operations or apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of such
Person or of all or of a substantial part of its assets,  admit in writing its
inability, or be generally unable, to pay its debts as the debts become due,
 make a general assignment for the benefit of its creditors,  commence a
voluntary case under the federal Bankruptcy Code (as now or hereafter in
effect),  file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, or (F) take any corporate action for the purpose of effecting any of
the foregoing; or

(f)

An involuntary petition or complaint shall be filed against Borrower or any
Subsidiary or any Guarantor seeking bankruptcy relief or reorganization or the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
Borrower or any Subsidiary or any Guarantor, of all or substantially all of its
assets, and such petition or complaint shall not have been dismissed within
sixty (60) days of the filing thereof; or an order, order for relief, judgment
or decree shall be entered by any court of competent jurisdiction or other
competent authority approving or ordering any of the foregoing actions; or

(g)

(g) A judgment in excess of $100,000 shall be rendered against Borrower or any
Subsidiary of Borrower that is not either (i) bonded off by Borrower within
fifteen (15) days of the date such judgment is rendered or (ii) validly covered
by insurance with a deductible of not more than $10,000; and such judgment is
thereafter enforced by a levy of execution upon, or attachment, garnishment or
other seizure of, any material portion of the Collateral or other assets of
Borrower or any Subsidiary;

(h)

Borrower, any Subsidiary or any Guarantor shall fail to pay, on demand, any
returned or dishonored draft, check, or other item which has been deposited to
the Collections Account or the Demand Deposit Account or otherwise presented to
Bank and for which Borrower has received provisional credit; or

(i)

Any Guarantor shall repudiate or revoke any Guaranty Agreement; or

(j)

Loss, theft, damage or destruction of any material portion of the tangible
Collateral for which there is either no insurance coverage or for which, in the
reasonable opinion of Bank, there is insufficient insurance coverage; or

(k)

There shall have occurred a Change of Control or a Change in Management, as
defined in Section ; or

(l)

There shall occur any change in the condition (financial or otherwise) of
Borrower and/or any Guarantor which, in the reasonable opinion of Bank, could
have a Material Adverse Effect.

5.2.

Remedies

.  If any Default shall occur, Bank may, without notice to Borrower, at its
option, withhold further Advances to Borrower.  If an Event of Default shall
have occurred and be continuing, Bank may at its option take any or all of the
following actions:

(a)

Bank may declare any or all Indebtedness (other than Indebtedness under any swap
agreements, as defined in 11 U.S.C. § 101, between Borrower and Bank or any
affiliate of Bank, which shall be governed by the default and termination
provisions of said swap agreements) to be immediately due and payable (if not
earlier demanded), terminate its obligation to make Advances to Borrower, bring
suit against Borrower to collect the Indebtedness, exercise any remedy available
to Bank hereunder or at law and take any action or exercise any remedy provided
herein or in any other Loan Document or under applicable law.  No remedy shall
be exclusive of other remedies or impair the right of Bank to exercise any other
remedies.

(b)

Without waiving any of its other rights hereunder or under any other Loan
Document, Bank shall have all rights and remedies of a secured party under the
Code (and the Uniform Commercial Code of any other applicable jurisdiction) and
such other rights and remedies as may be available hereunder, under other
applicable law or pursuant to contract.  If requested by Bank, Borrower will
promptly assemble the Collateral and make it available to Bank at a place to be
designated by Bank.  Borrower agrees that any notice by Bank of the sale or
disposition of the Collateral for any other intended action hereunder, whether
required by the Code or otherwise, shall constitute reasonable notice to
Borrower if the notice is mailed to Borrower by regular or certified mail,
postage prepaid, at least ten days before the action to be taken.  Borrower
shall be liable for any deficiencies in the event the proceeds of the
disposition of the Collateral do not satisfy the Indebtedness in full.

(c)

Bank may demand, collect and sue for all amounts owed pursuant to Accounts,
General Intangibles, Chattel Paper, Instruments, Documents or for proceeds of
any Collateral (either in Borrower’s name or Bank’s name at the latter’s
option), with the right to enforce, compromise, settle or discharge any such
amounts.

5.3.

Receiver

.  In addition to any other remedy available to it, Bank shall have the absolute
right, upon the occurrence of an Event of Default, to seek and obtain the
appointment of a receiver to take possession of and operate and/or dispose of
the business and assets of Borrower and any costs and expenses incurred by Bank
in connection with such receivership shall bear interest at the Default Rate, at
Bank’s option, and shall be secured by all Collateral.

5.4.

Deposits; Insurance

.  After the occurrence of an Event of Default, Borrower authorizes Bank to
collect and apply against the Indebtedness when due any cash or deposit accounts
in its possession, and any refund of insurance premiums or any insurance
proceeds payable on account of the loss or damage to any of the Collateral and
irrevocably appoints Bank as its attorney-in-fact to endorse any check or draft
or take other action necessary to obtain such funds.

6.

Security Agreement.

6.1.

Security Interest.

(a)

As security for the payment and performance of any and all Indebtedness and the
performance of all obligations and covenants of Borrower to Bank and its
affiliates, whether hereunder and under the other Loan Documents or otherwise,
certain or contingent, now existing or hereafter arising, which are now, or may
at any time or times hereafter be owing by Borrower to Bank or any of Bank's
affiliates, Borrower hereby grants to Bank (for itself and its affiliates) a
continuing security interest in and general lien upon and right of set-off
against, all right, title and interest of Borrower in and to the Collateral,
whether now owned or hereafter acquired by Borrower.

(b)

Except as herein or by applicable law otherwise expressly provided, Bank shall
not be obligated to exercise any degree of care in connection with any
Collateral in its possession, to take any steps necessary to preserve any rights
in any of the Collateral or to preserve any rights therein against prior
parties, and Borrower agrees to take such steps. In any case Bank shall be
deemed to have exercised reasonable care if it shall have taken such steps for
the care and preservation of the Collateral or rights therein as Borrower may
have reasonably requested Bank to take and Bank’s omission to take any action
not requested by Borrower shall not be deemed a failure to exercise reasonable
care.  No segregation or specific allocation by Bank of specified items of
Collateral against any liability of Borrower shall waive or affect any security
interest in or Lien against other items of Collateral or any of Bank’s options,
powers or rights under this Agreement or otherwise arising.

(c)

Upon an Event of Default, Bank may at any time and from time to time, with or
without notice to Borrower,  transfer into the name of Bank or the name of
Bank’s nominee any of the Collateral,  notify any Account Debtor or other
obligor of any Collateral to make payment thereon direct to Bank of any amounts
due or to become due thereon and  receive and after a Default direct the
disposition of any proceeds of any Collateral.

6.2.

Net Cash Position

.  If Borrower subscribes to treasury services applicable to the Loan, Net Cash
Position shall be determined in accordance with the Services Agreement.  If
Borrower does not subscribe to treasury services applicable to the Loan or if
such treasury services are terminated, Net Cash Position shall be determined by
Bank based on daily collected balances in Borrower’s Demand Deposit Account or
Collections Account, as applicable, in accordance with the terms hereof and
customary banking practice for asset-based credits.

6.3.

Financing Statements; Power of Attorney

.   Borrower authorizes Bank at Borrower’s expense to file any financing
statements and/or amendments thereto relating to the Collateral (without
Borrower’s signature thereon) which Bank deems appropriate that (a) indicate the
Collateral (i) as "all assets" of Borrower or words of similar effect, if
appropriate, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Code, or (ii) by specific
Collateral category, and (b) provide any other information required by Part 5 of
Article 9 of the Code for the sufficiency or filing office acceptance of any
financing statement or amendment, Borrower irrevocably appoints Bank as its
attorney-in-fact to execute any such financing statements and/or control
agreements in Borrower’s name and to perform all other acts, at Borrower's
expense, which Bank deems appropriate to perfect and to continue perfection of
the security interest of Bank.  Borrower hereby appoints Bank as Borrower’s
attorney-in-fact to endorse, present and collect on behalf of Borrower and in
Borrower’s name any draft, checks or other documents necessary or desirable to
collect any amounts which Borrower may be owed following an Event of Default.
 Bank is hereby granted a license or other right to use, without charge,
Borrower’s labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral, and Borrower’s rights under all licenses and all
franchise agreements shall inure to Bank’s benefit.  The proceeds realized from
 the sale or other disposition of any Collateral may be applied first to the
reasonable costs, expenses and attorneys’ fees and expenses incurred by Bank for
collection and for acquisition, completion, protection, removal, storage, sale
and delivering of the Collateral; secondly, to interest due upon any of the
Indebtedness; and thirdly, to the principal amount of the Indebtedness.  If any
deficiency shall arise, Borrower shall remain jointly and severally liable to
Bank therefor.

6.4.

Entry

.  Borrower hereby irrevocably consents to Bank or its agents in entering upon
any premises with reasonable prior notice to Borrower during normal business
hoursfor the purposes of either  inspecting the Collateral or  following an
Event of Default, taking possession of the Collateral and Borrower hereby waives
its right to assert against Bank or its agents any claim based upon trespass or
any similar cause of action for entering upon any premises where the Collateral
may be located.

6.5.

Other Rights

.  Borrower authorizes Bank without affecting Borrower’s obligations hereunder
or under any other Loan Document from time to time  to take from any party and
hold additional Collateral or guaranties for the payment of the Indebtedness or
any part thereof, and to exchange, enforce or release such collateral or
guaranty of payment of the Indebtedness or any part thereof and to release or
substitute any endorser or guarantor or any party who has given any security
interest in any collateral as security for the payment of the Indebtedness or
any part thereof or any party in any way obligated to pay the Indebtedness or
any part thereof; and  upon the occurrence of any Event of Default to direct the
manner of the disposition of the Collateral and the enforcement of any
endorsements, guaranties, letters of credit or other security relating to the
Indebtedness or any part thereof as Bank in its sole discretion may determine.

6.6.

Accounts

.  Before or after any Event of Default, Bank may notify any Account Debtor of
Bank’s security interest and may direct such Account Debtor to make payment
directly to Bank for application against the Indebtedness.  Any such payments
received by or on behalf of Borrower at any time, whether before or after
default, shall be the property of Bank, shall be held in trust for Bank and not
commingled with any other assets of any Person (except to the extent they may be
commingled with other assets of Borrower in an account with Bank) and shall be
immediately delivered to Bank in the form received.  Bank shall have the right
to apply any proceeds of Collateral to such of the Indebtedness as it may
determine.

6.7.

Waiver of Marshaling

.  Borrower hereby waives any right it may have to require marshaling of its
assets.

6.8.

Control

.  Borrower will cooperate with Bank in obtaining control of, or control
agreements with respect to, Collateral for which control or a control agreement
is required for perfection of the Bank’s security interest under the Code.

7.

Miscellaneous.

7.1.

No Waiver, Remedies Cumulative

.  No failure on the part of Bank to exercise, and no delay in exercising, any
right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.  The remedies herein provided are cumulative and are in addition to any
other remedies provided by law, any Loan Document or otherwise.

7.2.

Survival of Representations

.  All representations and warranties made herein shall survive the making of
the Loan hereunder and the delivery of the Note, and shall continue in full
force and effect so long as any Indebtedness is outstanding, there exists any
commitment by Bank to Borrower, and until this Agreement is formally terminated
in writing.

7.3.

Indemnity By Borrower; Expenses

.  In addition to all other Indebtedness, Borrower agrees to defend, protect,
indemnify and hold harmless Bank and its Affiliates and all of their respective
officers, directors, employees, attorneys, consultants and agents from and
against any and all losses, damages, liabilities, obligations, penalties, fees,
costs and expenses (including, without limitation, attorneys’ and paralegals’
fees, costs and expenses) incurred by such indemnitees, whether prior to or from
and after the date hereof, as a result of or arising from or relating to  the
due diligence effort (including, without limitation, public record search,
recording fees, examinations and investigations of the properties of Borrower
and Borrower’s operations), negotiation, preparation, execution and/or
performance of any of the Loan Documents or of any document executed in
connection with the transactions contemplated thereby and the perfection of
Bank’s Liens in the Collateral, maintenance of the Loan by Bank, and any and all
amendments, modifications, and supplements of any of the Loan Documents or
restructuring of the Indebtedness,  any suit, investigation, action or
proceeding by any Person (other than Borrower), whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any Person under any
statute, regulation or common law principle, arising from or in connection with
Bank’s furnishing of funds to Borrower under this Agreement,  Bank’s
preservation, administration and enforcement of its rights under the Loan
Documents and applicable law, including the reasonable fees and disbursements of
counsel for Bank in connection therewith, whether suit be brought or not and
whether incurred at trial or on appeal, and all costs of repossession, storage,
disposition, protection and collection of Collateral,  periodic field exams,
audits and appraisals performed by Bank; and/or  any matter relating to the
financing transactions contemplated by the Loan Documents or by any document
execution in connection with the transactions contemplated thereby, other than,
in each case, for such loss, damage, liability, obligation, penalty, fee, cost
or expense arising from such indemnitee’s gross negligence or willful
misconduct.  If Borrower should fail to pay any tax or other amount required by
this Agreement to be paid or which may be reasonably necessary to protect or
preserve any Collateral or Borrower’s or Bank’s interests therein, Bank may make
such payment and the amount thereof shall be payable on demand, shall bear
interest at the Default Rate from the date of demand until paid and shall be
deemed to be Indebtedness entitled to the benefit and security of the Loan
Documents.  In addition, Borrower agrees to pay and save Bank harmless against
any liability for payment of any state documentary stamp taxes, intangible taxes
or similar taxes (including interest or penalties, if any) which may now or
hereafter be determined to be payable in respect to the execution, delivery or
recording of any Loan Document or the making of any Advance, whether originally
thought to be due or not, and regardless of any mistake of fact or law on the
part of Bank or Borrower with respect to the applicability of such tax.
 Borrower’s obligation for indemnification for all of the foregoing losses,
damages, liabilities, obligations, penalties, fees, costs and expenses of Bank
shall be part of the Indebtedness, secured by the Collateral, chargeable against
Borrower’s loan account, and shall survive termination of this Agreement.

7.4.

Notices

.  Any notice or other communication hereunder under the Note to any party
hereto or thereto shall be by hand delivery, overnight delivery via nationally
recognized overnight delivery service, facsimile with receipt confirmed,
telegram, telex or registered or certified United States mail and unless
otherwise provided herein shall be deemed to have been given or made when
delivered, telegraphed, telexed, faxed or three (3) Business Days after having
been deposited in the United States mail, postage prepaid, addressed to the
party at its address specified below (or at any other address that the party may
hereafter specify to the other parties in writing):

Bank:

Wachovia Bank, National Association

10 South Jefferson Street,  VA7391

Roanoke, Virginia 24011

Borrower:

Aerosonic Corporation

1212 North Hercules Avenue

Clearwater, Florida 33765

Attn:  Gary Colbert, Chief Financial Officer

7.5.

Governing Law

.  This Agreement and the Loan Documents shall be deemed contracts made under
the laws of the State of the Jurisdiction and shall be governed by and construed
in accordance with the laws of said state (excluding its conflict of laws
provisions if such provisions would require application of the laws of another
jurisdiction) except insofar as the laws of another jurisdiction may, by reason
of mandatory provisions of law, govern the perfection, priority and enforcement
of security interests in the Collateral.

7.6.

Successors and Assigns

.  This Agreement shall be binding upon and shall inure to the benefit of
Borrower and Bank, and their respective successors and assigns; provided, that
Borrower may not assign any of its rights hereunder without the prior written
consent of Bank, and any such assignment made without such consent will be void.

7.7.

Counterparts

.  This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and all of which when taken together shall
constitute but one and the same instrument.

7.8.

Usury

.  Regardless of any other provision of this Agreement, the Note or in any other
Loan Document, if for any reason the effective interest should exceed the
maximum lawful interest, the effective interest shall be deemed reduced to, and
shall be, such maximum lawful interest, and  the amount which would be excessive
interest shall be deemed applied to the reduction of the principal balance of
the Note and not to the payment of interest, and  if the loan evidenced by the
Note has been or is thereby paid in full, the excess shall be returned to the
party paying same, such application to the principal balance of the Note or the
refunding of excess to be a complete settlement and acquittance thereof.

7.9.

Powers

.  All powers of attorney granted to Bank are coupled with an interest and are
irrevocable.

7.10.

Approvals

.  If this Agreement calls for the approval or consent of Bank, such approval or
consent may be given or withheld in the discretion of Bank unless otherwise
specified herein.

7.11.

Definition of Day

.  Unless otherwise specified herein, all references to “days” in this Agreement
shall mean calendar days.  

7.12.

Participations

.  Bank shall have the right to enter into one or more participation with other
lenders with respect to the Indebtedness.  Upon prior notice to Borrower of such
participation, Borrower shall thereafter furnish to such participant any
information furnished by Borrower to Bank pursuant to the terms of the Loan
Documents.  Nothing in this Agreement or any other Loan Document shall prohibit
Bank from pledging or assigning this Agreement and Bank’s rights under any of
the other Loan Documents, including collateral therefor, to any Federal Reserve
Bank in accordance with applicable law.

7.13.

Dealings with Multiple Borrowers.

(a)

If more than one Person is named as Borrower hereunder, all Indebtedness,
representations, warranties, covenants and indemnities set forth in the Loan
Documents to which such Person is a party shall be joint and several.  Bank
shall have the right to deal with any Person purporting to be an officer of any
Borrower with regard to all matters concerning the rights and obligations of
Bank hereunder and pursuant to applicable law with regard to the transactions
contemplated under the Loan Documents.  All actions or inactions of the
principal officers of any Borrower with regard to the transactions contemplated
under the Loan Documents shall be deemed with full authority and binding upon
all Borrowers hereunder.  Each Borrower hereby appoints each other Borrower as
its true and lawful attorney-in-fact, with full right and power, for purposes of
exercising all rights of such Person hereunder and under applicable law with
regard to the transactions contemplated under the Loan Documents.  The foregoing
is a material inducement to the agreement of Bank to enter into the terms hereof
and to consummate the transactions contemplated hereby.

(b)

The Borrowers acknowledge that funds are provided to, and used by, the various
Borrowers as needed through intercompany transfers and that the Loan will
benefit all of the Borrowers.  Each Borrower acknowledges that it will receive
full and fair benefit from the joint extensions of credit by the Bank.  Each
Borrower agrees that if its assets are called upon to satisfy a greater
proportion of the Indebtedness than its proportionate benefit from such
Indebtedness, it shall be subrogated to the rights of the Bank under the Loan
Documents; provided that its rights against any other Borrower shall be subject
and subordinate to and shall not be exercised until all Indebtedness has been
paid in full.

7.14.

Waiver of Certain Defenses

.  To the fullest extent permitted by applicable law, upon the occurrence of any
Event of Default, neither Borrower nor anyone claiming by or under Borrower will
claim or seek to take advantage of any law requiring Bank to attempt to realize
upon any Collateral or collateral of any surety or guarantor, or any
appraisement, evaluation, stay, extension, homestead, redemption or exemption
laws now or hereafter in force in order to prevent or hinder the enforcement of
this Agreement.  Borrower, for itself and all who may at any time claim through
or under Borrower, hereby expressly waives to the fullest extent permitted by
law the benefit of all such laws.  All rights of Bank and all obligations of
Borrower hereunder shall be absolute and unconditional irrespective of  any
change in the time, manner or place of payment of, or any other term of, all or
any of the Indebtedness, or any other amendment or waiver of or any consent to
any departure from any provision of the Loan Documents,  any exchange, release
or non-perfection of any other collateral given as security for the
Indebtedness, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Indebtedness, or  any other circumstance
which might otherwise constitute a defense available to, or a discharge of,
Borrower or any third party, other than payment and performance in full of the
Indebtedness.

7.15.

Integration

.  This Agreement and the other Loan Documents constitute the sole agreement of
the parties with respect to the subject matter hereof and thereof and supersede
all oral negotiations and prior writings with respect to the subject matter
hereof and thereof.

7.16.

Limitation on Liability; Waiver of Punitive Damages

.  EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT
IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY
BETWEEN OR AMONG THEM (A "DISPUTE") THAT MAY ARISE OUT OF OR BE IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR
DOCUMENT BETWEEN OR AMONG THEM OR THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED
HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE
LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2)
PUNITIVE OR EXEMPLARY DAMAGES.   EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE
IN THE FUTURE IN CONNECTION WITH ANY DISPUTE, WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.

7.17.

Waiver of Jury Trial

.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER BY EXECUTION
HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH
THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO.  THIS PROVISION
IS A MATERIAL INDUCEMENT TO BANK TO ENTER INTO AND ACCEPT THIS AGREEMENT. EACH
OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY
PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED
IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN
CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR
MODIFIED BY, THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

WACHOVIA BANK, NATIONAL ASSOCIATION

By:

_______________

Marie Kendall

Its Vice President

AEROSONIC CORPORATION

By:

David Baldini

Its President

AVIONICS SPECIALTIES, INC.

By:

David Baldini

Its President

004.416083.5

SCHEDULE OF EXHIBITS

(If any exhibit is omitted, the information called for therein
shall be considered "None" or "Not Applicable")

Exhibit

Section Reference

Title

 ("Definitions")

Definitions

1.1A

1.1 ("Collateral")

Additional Collateral

1.1B

1.1 ("Eligible Accounts")

Ineligible Accounts

1.1C

1.1 ("Permitted Debt")

Permitted Debt

1.1D

1.1  ("Permitted Liens")

Permitted Liens

3.1(b)(viii) ("Supporting Documents")

Perfection Certificate

 ("Financial Condition")

Contingent Liabilities

 ("Litigation")

Litigation

 ("Location")

Offices of Borrower

 ("Subsidiaries")

List of Subsidiaries

 ("Environmental")

Environmental Disclosures

 ("Names")

Names; Mergers; Acquisitions

 ("Additional Representations")

Additional Representations

5.6(a)

5.6(a) (“Periodic Borrowing Base Information”)

Borrowing Base Certificate

 ("Other Provisions")

Additional Terms

004.416083.5

EXHIBIT 1

Definitions

1.1

Defined Terms:

"Accession" has the meaning set forth in the Code.

"Account" has the meaning set forth in the Code, together with any guaranties,
letters of credit, Letter-of-Credit Right, and other security therefor,
including Supporting Obligations.

"Account Debtor" means a Person who is obligated under any Account, Chattel
Paper, General Intangible or Instrument.

"Advance" means an advance of proceeds of the Loan to Borrower pursuant to this
Agreement.

"Advance Date" means the date on which an Advance is made.

"Advance Request" means the written request for an Advance under the Loan as
identified in Subsection  hereof and shall also include presentments triggering
an automatic Advance under the Services Agreement.

"Affiliate" of a Person means  any Person directly or indirectly owning 10% or
more of the voting stock or rights of such named Person or of which the named
Person owns 10% or more of such voting stock or rights;   any Person
controlling, controlled by or under common control with such named Person;  any
officer, director or employee of such named Person or any Affiliate of the named
Person; and  any family member of the named Person or any Affiliate of such
named Person.

"Borrowing Base" means at any time 80% of the total amount of Eligible Accounts,
minus any Reserves.

"Borrowing Base Certificate" has the meaning set forth in Subsection .

"Business Day" means a weekday on which commercial banks are open for business
in Tampa, Florida.

“Change of Control” means that (i) any Person or group of Persons within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended
(the “Act”), other than (a) with respect to the capital stock of Borrower held
by J. Mervyn Nabors and his successors and heirs, or (b) any Borrower, its
Subsidiaries or any savings, pension or other benefit plan for the benefit of
employees of any Borrower or its respective Subsidiaries, who theretofore
beneficially owned less than 15% of the voting stock of such Borrower then
outstanding and acquires beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Act) of 15% of
more of the outstanding voting stock of any Borrower; or (ii) during any twelve
consecutive calendar months, individuals who at the beginning of such
twelve-month period were directors of any Borrower shall cease to constitute a
majority of the board of directors of such Borrower.

"Chattel Paper" has the meaning set forth in the Code, including Electronic
Chattel Paper, together with any guaranties, letters of credit, Letter-of-Credit
Right, and other security therefor, including Supporting Obligations.

"Code" means the Uniform Commercial Code presently and hereafter enacted  in
 the Jurisdiction.  Any term used in this Agreement and in any financing
statement filed in connection herewith which is defined in the Code and not
otherwise defined in this Agreement or in any other Loan Document has the
meaning given to the term in the Code.

"Collateral" means all personal property of Borrower, wherever located and
whether now owned by Borrower or hereafter acquired, including, but not limited
to:   all Inventory;  all General Intangibles except for patents;  all Accounts;
 all Chattel Paper;  all Instruments and Documents and any other instrument or
intangible representing payment for goods or services;  all Equipment;  all
Investment Property other than capital stock of the Borrower or any Subsidiary;
 all Deposit Accounts and funds on deposit therein, including, but not limited
to, the Demand Deposit Account, the Collections Account or funds otherwise on
deposit with or under the control of Bank or its agents or correspondents;  all
Fixtures; and  all parts, replacements, substitutions, profits, products,
Accessions and cash and non-cash proceeds and Supporting Obligations of any of
the foregoing (including insurance proceeds payable by reason of loss or damage
thereto) in any form and wherever located.  Collateral shall include all written
or electronically recorded books and records relating to any such Collateral and
other rights relating thereto.

"Collections Account" means the controlled disbursement account maintained by
Borrower at Bank to which collections, deposits and other payments on or with
respect to Collateral may be made pursuant to the terms hereof, to which only
Bank shall have access.

"Debt" means all liabilities of a Person as determined under GAAP and all
obligations which such Person has guaranteed or endorsed or is otherwise
secondarily or jointly liable for, and shall include, without limitation  all
obligations for borrowed money or purchased assets,  obligations secured by
assets whether or not any personal liability exists,  the capitalized amount of
any capital or finance lease obligations,  the unfunded portion of pension or
benefit plans or other similar liabilities,  obligations as a general partner,
 contingent obligations pursuant to guaranties, endorsements, letters of credit
and other secondary liabilities,  obligations for deposits, and  obligations
under swap agreements, as defined in 11 U.S.C. § 101.

"Default Rate" means the highest lawful rate of interest per annum specified in
any Note to apply after a default under such Note or, if no such rate is
specified, a rate equal to the lesser of (a) the Prime Rate plus three percent
(3%) per annum and (b) the highest rate of interest allowed by law.

"Demand Deposit Account" means Account Number 2000016904538 with Bank, the DDA
Account as defined in the Services Agreement and any other depository account of
the Borrower designated from time to time for auto-debit.

“Deposit Account” has the meaning set forth in the Code.

"Dispute" has the meaning set forth in Section .

"Eligible Accounts" means all Accounts evidenced by an invoice (valued at the
face amount of such invoice, less maximum discounts, credits and allowances
which may be taken by Account Debtors on such Accounts, and net of any sales
tax, finance charges or late payment charges or included in the invoiced amount)
created or acquired by Borrower arising from the sale of Inventory and/or the
provision of certain services in Borrower’s ordinary course of business (as
approved by Bank in advance) in which Bank has a first priority, perfected
security interest (subject only to Permitted Liens), but excluding  Accounts
outstanding for longer than ninety (90) days from the date of original invoice;
 all Accounts owed by an Account Debtor if more than thirty percent (30%) of the
Accounts owed by such Account Debtor to Borrower are deemed ineligible
hereunder;  Accounts owing from any Affiliate of Borrower;  Accounts owed by a
creditor of Borrower to the extent of the amount of the indebtedness of Borrower
to such creditor;  Accounts which are in dispute or subject to any counterclaim,
contra-account or offset;  Accounts owing by any Account Debtor which is not
Solvent;  Accounts arising from a sale on a bill-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment or similar basis or which is
subject to repurchase, return, rejection, repossession, loss or damage;
 Accounts owed by an Account Debtor located outside of the continental United
States of America, unless in Bank’s sole and absolute discretion, such Account
is supported by a letter of credit or credit insurance assigned to Bank and
which is issued by a financial institution and in an amount which is acceptable
to Bank in its sole and absolute discretion;  Accounts owed by the United States
of America or other governmental or quasi-governmental unit, agency or
subdivision other than Accounts with the federal government or its agencies for
Inventory that has been shipped and invoiced and for which Borrower has complied
with the Federal Assignment of Claims Act, unless Bank, in its sole and absolute
discretion, waives such requirement in writing  Accounts as to which the goods
giving rise to the Account have not been delivered to and accepted by the
Account Debtor or the service giving rise to the Account has not been completely
performed or which do not represent a final sale;  Accounts for which the total
amounts owed thereunder by an Account Debtor (together with its Affiliates)
exceeds a credit limit established by Bank in its sole and absolute discretion
(to the extent of such excess);  Accounts evidenced by a note or other
Instrument or Chattel Paper or reduced to judgment;  Accounts for which the
total of all Accounts from an Account Debtor (together with the Affiliates of
the Account Debtor) exceed twenty percent (20%) of the total Accounts of
Borrower (to the extent of such excess); provided, however, that Accounts with
the federal government or its agencies for Inventory that has been shipped and
invoiced and for which Borrower has complied with the Federal Assignment of
Claims Act, unless Bank, in its sole and absolute discretion, waives such
requirement in writing, are not subject to this limitation;  Accounts which, by
contract, subrogation, mechanics’ lien laws or otherwise, are subject to claims
by Borrower’s creditors or other third parties or which are owed by Account
Debtors as to whom any creditor of Borrower (including any bonding company) has
lien or retainage rights;  Accounts of the type described in Exhibit B (if any)
and any and all other Accounts the validity, collectibility, or amount of which
is determined in good faith by Borrower or Bank to be doubtful;  Accounts owed
by an Account Debtor which is located in a jurisdiction where Borrower is
required to qualify to transact business or to file reports, unless Borrower has
so qualified or filed;  Accounts owed by an Account Debtor who disputes the
liability therefor;  Accounts owed by an Account Debtor that shall be the
subject of any proceeding of the type described in Sections  or ; and  any other
Account which Bank otherwise in its sole and absolute discretion deems to be
ineligible.  For purposes of determining the eligibility of Accounts owing from
any Account Debtor, the gross amount of Accounts which exceed the aging
limitations set forth above shall not be reduced by any credit due such Account
Debtor by Borrower which is outstanding for longer than ninety (90) days from
the date of original invoice.  No Account shall be an Eligible Account if any
representation, warranty or covenant herein relating thereto shall be untrue,
misleading or in default.  Bank may determine, on a daily basis, whether any
Account constitutes an Eligible Account, and if an Eligible Account subsequently
becomes ineligible its ineligibility shall be immediate.

"Environmental Laws" means, collectively the following acts and laws, as
amended:  the Comprehensive Environmental Response, Compensation and Liability
Act of 1980; the Superfund Amendments and Reauthorization Act of 1986; the
Resource Conservation and Recovery Act; the Toxic Substances Act; the Clean
Water Act; the Clean Air Act; the Oil Pollution and Hazardous Substances Control
Act of 1978; and any other "Superfund" or "Superlien" law or any other federal,
state or local statute, law, ordinance, code, rule, regulation, order or decree
relating to, or imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material, as now or at any
time hereafter in effect.

"Equipment" has the meaning set forth in the Code.

"Event of Default" means any event specified as such in Section  hereof ("Events
of Default"), provided that there shall have been satisfied any requirement in
connection with such event for the giving of notice or the lapse of time, or
both; "Default"  or "default" means any of such events, whether or not any such
requirement for the giving of notice or the lapse of time or the happening of
any further condition, event or act shall have been satisfied.

"Fixtures" has the meaning set forth in the Code.

"GAAP" means generally accepted accounting principles as in effect in the United
States from time to time.

"General Intangibles" has the meaning set forth in the Code, together with any
guaranties, letters of credit, Letter-of-Credit Right and other security
therefor, including Supporting Obligations.

"Guarantor" means any Person now or hereafter guaranteeing, endorsing or
otherwise becoming liable for any Indebtedness.

"Guaranty Agreement" means any guaranty instrument now or hereafter executed and
delivered by any Guarantor to Bank, as it may be modified.

"Indebtedness" means all obligations now or hereafter owed to Bank or any
affiliate of Bank, by Borrower, whether related or unrelated to the Loan,
including, without limitation, amounts owed or to be owed under the terms of the
Loan Documents, or arising out of the transactions described therein, including,
without limitation, the Loan, sums advanced to pay overdrafts on any account
maintained by Borrower with Bank, reimbursement obligations for outstanding
letters of credit or bankers acceptances issued for the account of Borrower or
its Subsidiaries, amounts paid by Bank under letters of credit or drafts
accepted by Bank for the account of Borrower or its Subsidiaries, together with
all interest accruing thereon, all existing and future obligations under any
swap agreements as defined in 11 U.S.C. § 101 between Bank or any affiliate of
Bank and Borrower whenever executed, all fees, all costs of collection,
attorneys’ fees and expenses of or advances by Bank which Bank pays or incurs in
discharge of obligations of Borrower or to inspect, repossess, protect,
preserve, store or dispose of any Collateral, whether such amounts are now due
or hereafter become due, direct or indirect and whether such amounts due are
from time to time reduced or entirely extinguished and thereafter re-incurred.

"Instrument" has the meaning set forth in the Code.

"Inventory" has the meaning set forth in the Code.

"Item" means any "item" as defined in Section 4-104 of the Code, and shall also
mean and include checks, drafts, money orders or other media of payment.

"Jurisdiction" means the State of Florida.

"Letter-of-Credit Right" has the meaning set forth in the Code.

"Lien" means any mortgage, pledge, statutory lien or other lien arising by
operation of law, security interest, trust arrangement, security deed, financing
lease, collateral assignment or other encumbrance, conditional sale or title
retention agreement, or any other interest in property designed to secure the
repayment of Indebtedness, whether arising by agreement or under any statute or
law or otherwise.

"Loan" means the Revolving Loan credit facility identified in Section  hereof
and the Term Loans.

"Loan Documents" means this Agreement, any other Security Agreement, any Note,
any Guaranty Agreement, the Advance Requests, Borrowing Base Certificates, UCC-1
financing statements, and all other documents and instruments now or hereafter
evidencing, describing, guaranteeing or securing the Indebtedness contemplated
hereby or delivered in connection herewith, as they may be modified, amended,
extended, renewed or substituted from time to time, but does not include swap
agreements (as defined in 11 U.S.C. § 101).

"Material Adverse Effect" means any  material adverse effect upon the validity,
performance or enforceability of any of the Loan Documents or any of the
transactions contemplated hereby or thereby,  material adverse effect upon the
properties, business, prospects or condition (financial or otherwise) of
Borrower and/or any other Person obligated under any of the Loan Documents, or
 material adverse effect upon the ability of Borrower or any other Person to
fulfill any obligation under any of the Loan Documents.

"Maximum Revolving Loan Amount" means $2,500,000.

"Net Cash Position" shall have the meaning set forth in the Services Agreement.

"Note" shall have the meaning set forth in Sections  and  and any other
promissory note now or hereafter evidencing any Indebtedness, and all
modifications, extensions and renewals thereof.

"Perfection Certificate" means a certificate executed by the chief executive
officer and chief legal officer of Borrower, substantially in the form of
Exhibit  hereto.

“Permitted Corporate Restructure”  means a corporate restructuring undertaken by
a Borrower after the date hereof, wherein such Borrower transfers all or a
portion of its assets to a newly formed Subsidiary and converts Borrower’s
status to a holding company, with the prior written consent of Bank; provided,
however, that Bank shall have been granted or continue to have, as applicable, a
first priority security interest, subject to Permitted Liens, in the assets
transferred pursuant to such Permitted Corporate Restructure.

"Permitted Debt" means (a) the Indebtedness; and (b) any other Debt listed on
Exhibit C hereto (if any) and any extensions, renewals, replacements,
modifications and refundings of any such Debt; provided, however, that the
principal amount of such Debt may not be increased from the amount shown as
outstanding on such exhibit without the prior consent of Bank.

"Permitted Liens" means  Liens securing the Indebtedness;  Liens for taxes and
other statutory Liens, landlord’s Liens and similar Liens arising out of
operation of law (provided they are subordinate to Bank’s Liens on the
Collateral) so long as the obligations secured thereby are not past due or are
being contested and the proceedings contesting such obligations have the effect
of preventing the forfeiture or sale of the property subject to such Lien;
  Liens described on Exhibit D hereto (if any), provided, however, that no debt
not now secured by such Liens shall become secured by such Liens hereafter and
such Liens shall not encumber any other assets.

"Person" means any natural person, corporation, unincorporated organization,
trust, joint-stock company, joint venture, association, company, limited or
general partnership, any government or any agency or political subdivision of
any government, or any other entity or organization.

"Regulated Materials" means any hazardous, toxic or dangerous waste, substance
or material, the generation, handling, storage, disposal, treatment or emission
of which is subject to any Environmental Law.

"Reserves" means such amounts as may be required by Bank at any time and from
time to time in Bank’s sole and absolute discretion without prior notice to
Borrower, to reserve against Borrower’s obligations to Bank or its affiliates or
any other obligations by Borrower, whether direct or contingent.

"Revolving Credit Period" means the period from and including the date of this
Agreement to but not including the Termination Date.

"Security Agreement" means this Agreement as it relates to a security interest
in the Collateral, and any other mortgage instrument, security agreement or
similar instrument now or hereafter executed by Borrower or other Person
granting Bank a security interest in any Collateral to secure the Indebtedness.

"Services Agreement" means any Sweep Plus Loan & Investment Services Description
between Bank and Borrower, and any modifications thereto.

"Solvent" means, as to any Person, that such Person has capital sufficient to
carry on its business and transactions in which it is currently engaged and all
business and transactions in which it is about to engage, is able to pay its
debts as they mature, and has assets having a fair valuation greater than its
liabilities, at fair valuation.

"Subsidiary" means any corporation, partnership or other entity in which
Borrower, directly or indirectly, owns more than fifty percent (50%) of the
stock, capital or income interests, or other beneficial interests, or which is
effectively controlled by such Person.

"Supporting Obligation" has the meaning set forth in the Code.

"Termination Date" means June 30, 2005 or such later date as specified in
writing by Bank, in its sole and absolute discretion.

1.2

Financial Terms.  

All financial terms used herein shall have the meanings assigned to them under
GAAP unless another meaning shall be specified.

004.416083.5

EXHIBIT B

Additional Ineligible Accounts

004.416083.5

EXHIBIT C

Permitted Debt

The following shall be additional Permitted Debt:

1.

Debt payable to suppliers and other trade creditors in the ordinary course of
business on ordinary and customary trade terms and which is not past due.

2.

Debt between Borrowers or Debt of any Subsidiary to Borrower or another
Subsidiary.

3.

Other Debt not exceeding $250,000 in aggregate principal amount at any time
outstanding for Borrower and all Subsidiaries, incurred to purchase Equipment,
provided that the amount of such Debt shall not at any time exceed the purchase
price of the Equipment purchased,.

4.

Endorsement of checks for collection in the ordinary course of business.

004.416083.5

EXHIBIT D

Permitted Liens

The following shall be additional Permitted Liens:

5.

Deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance, social security and similar laws.

6.

Attachment, judgment and other similar non-tax Liens arising in connection with
court proceedings but only if and for so long as (a) the execution or
enforcement of such Liens is and continues to be effectively stayed and bonded
on appeal, (b) the validity and/or amount of the claims secured thereby are
being actively contested in good faith by appropriate legal proceedings and
(c) such Liens do not, in the aggregate, materially detract from the value of
the assets of the Person whose assets are subject to such Lien or materially
impair the use thereof in the operation of such Person’s business.

7.

Liens securing Permitted Debt incurred solely for the purpose of financing the
acquisition of Equipment, provided that such Lien does not secure more than the
purchase price of such Equipment and does not encumber property other than the
purchased property.

8.

Liens on the Title Commitment that are acceptable to Bank

004.416083.5

EXHIBIT 3.1

PERFECTION CERTIFICATE

I, David A. Baldini, the chief executive officer of AEROSONIC CORPORATION, a
Delaware corporation (the "Company"), hereby certify with reference to the
Security Agreement dated as of February 24, 2004 between the Company and
WACHOVIA BANK, NATIONAL ASSOCIATION (the "Bank") (terms defined therein being
used herein as therein defined), to Bank as follows:

I.

Names.

A.

The exact corporate name of the Company as it appears in its certificate of
incorporation is as follows:

AEROSONIC CORPORATION

B.

Set forth below is each other corporate name the Company has had since its
organization, together with the date of the relevant change:

NOT APPLICABLE

C.

The following is a list of all other names (including trade names or similar
appellations) used by the Company or any of its divisions or other business
units at any time during the past five years:

AVIONICS SPECIALTIES, INC.

D.

Except as set forth in Schedule 1 to this Certificate, the Company has not
changed its identity or corporate structure or the jurisdiction of its
organization in any way within the past five years.

E.

Borrower is organized under the laws of DELAWARE.

II.

Current Locations.

A.

The chief executive office of the Company is located at the following address:

Street Address

 

County

 

State

1212 North Hercules Avenue

 

Pinellas

 

Florida

B.

The following are all the places of business of the Company not identified
above:

Street Address

 

County

 

State

3367 Earlysville Road

 

Albemarle

 

Virginia

2605 South Custer

 

Sedgwick

 

Kansas

C.

The following are all the locations where the Company maintains any books or
records relating to any Accounts:

Street Address

 

County

 

State

1212 North Hercules

 

Pinellas

 

Florida

3367 Earlysville Road

 

Earlysville

 

Virginia

D.

The following are all the locations not identified above where the Company
maintains any Inventory, Equipment, Instruments, documents of title, warehouse
receipts or other tangible Collateral:

Street Address

 

County

 

State

 

Collateral
Description

 

Does Collateral Include Fixtures?

            

NONE

      

E.

The following are the names and addresses of all Persons other than the Company
which have possession of any of the Company’s Inventory, Equipment, Instruments,
documents of title, warehouse receipts or other tangible Collateral:

Name

 

Street
Address

 

County

 

State

 

Collateral
Description

Cessna

 

One Cessna Blvd

 

Sedgwick

 

KS

 

Inventory

Bell Helicopter

 

Calgary

 

Alberta

 

Canada

 

Inventory

F.

004.416083.5

G.

The following are all locations where the Company maintains any of the
following:

1.

wellheads or mineheads with respect to which the Company has an interest in
unextracted minerals or the like (including oil and gas);

2.

timber to be cut; or

3.

equipment used in farming operations, farm products, grain or crops growing or
to be growing.

Name

 

Street
Address

 

County

 

State

 

Collateral
Description

            

NONE

      

A.

The following are the names and jurisdictions of incorporation of each company
with respect to which the Company holds uncertificated securities:

NONE

B.

WAIVED BY THE BANK

II.

Prior Locations.

A.

Set forth below is the information required by subparagraphs A, B and C of
Paragraph II with respect to each location or place of business maintained by
the Company at any time during the past five years:

NONE

B.

Set forth below is the information required by subparagraphs D, E and F of
Paragraph II with respect to each location or bailee where or with whom
Collateral has been lodged at any time during the past four months:

Limited amounts of consigned inventory for temporary field replacement of
instrumentation resides with two customers

III.

Unusual Transactions

.  Except as set forth in Schedule 1 to this Certificate, all Accounts have been
originated by the Company and all Inventory and Equipment has been acquired by
the Company in the ordinary course of its business from a dealer in goods of
that type.

IV.

Existing Liens

.  As of the date hereof, unless otherwise disclosed to Bank in writing and
listed on Schedule 5 hereto, there are no (i) UCC financing statements naming
the Company as debtor or seller and covering any of the Collateral, (ii) notices
of the filing of any federal tax lien (filed pursuant to section 6323 of the
Code) or any lien of the PBGC (filed pursuant to Section 4068 of ERISA) covering
any of the Collateral or (iii) judgment liens filed against the Company, except
as set forth in Exhibit 1.1D to the Revolving Credit and Security Agreement (the
"Agreement").

V.

Patents, Trademarks and Copyrights

WAIVED BY THE BANK

VI.

Material Contracts

.  The contracts and agreements specified in Schedule 7 hereto are identified as
"Assigned Agreements" under the Agreement:

NONE

004.416083.5

IN WITNESS WHEREOF, I have hereunto set my hand this 24th of February, 2004.

David Baldini

004.416083.5

SCHEDULE 1
To
Perfection Certificate

CHANGES OF NAME, IDENTITY OR CORPORATE STRUCTURE;
UNUSUAL TRANSACTIONS

   

004.416083.5

004.416083.5