EXHIBIT 10.10

                             REVOLVING CREDIT NOTE


                                                     Detroit, Michigan
$16,000,000                                         September 25, 2001

     On or before the Revolving Credit Maturity Date FOR VALUE RECEIVED,
SMTEK International, Inc., a Delaware corporation, (herein called "Company")
promises to pay to the order of COMERICA BANK, a Michigan banking corporation
(herein called "Bank") at its Main Office at 500 Woodward Avenue, Detroit,
Michigan, in lawful money of the United States of America the indebtedness or
so much of the sum of Sixteen Million Dollars ($16,000,000) as may from time
to time have been advanced and then be outstanding hereunder pursuant to the
Credit Agreement dated as of September 25, 2001, made by and between Company
and Bank (as the same may be amended or modified from time to time, herein
called "Agreement"), together with interest thereon as hereinafter set
forth.

     Each of the Advances hereunder shall bear interest at the Applicable
Interest Rate from time to time applicable thereto under the Agreement or as
otherwise determined thereunder, and interest shall be computed, assessed and
payable as set forth in the Agreement.

     This Note is a note under which advances, repayments and readvances may
be made from time to time, subject to the terms and conditions of the
Agreement. This Note evidences borrowing under, is subject to, is secured in
accordance with, and may be matured under, the terms of the Agreement, to
which reference is hereby made. As additional security for this Note, Company
grants Bank a lien on all property and assets including deposits and other
credits of the Company, at any time in possession or control of or owing by
Bank for any purpose.

     Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon. Any transferees of, or endorser, guarantor or surety paying
this Note in full shall succeed to all rights of Bank, and Bank shall be
under no further responsibility for the exercise thereof or the loan
evidenced hereby. Nothing herein shall limit any right granted Bank by other
instrument or by law.

     All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.

                                 SMTEK INTERNATIONAL, INC.

                                 By: /s/ Kirk A. Waldron
                                 Its: Chief Financial Officer/Tresurer

<PAGE>

SMTEK INTERNATIONAL, INC. CREDIT AGREEMENT DATED AS OF SEPTEMBER 25, 2001
COMERICA BANK

                             CREDIT AGREEMENT

     THIS CREDIT AGREEMENT, made as of the 25th day of September, 2001, by
and between SMTEK INTERNATIONAL, a Delaware corporation, of Thousand Oaks,
California (herein called "Company") and COMERICA BANK, a Michigan banking
corporation, of Detroit, Michigan (herein called "Bank").

RECITALS:

A. Company desires to obtain certain credit facilities from Bank.

B. Bank is willing to extend such credit to Company on the terms and
   conditions herein set forth.

     NOW, THEREFORE, Bank and Company agree as follows:

     WITNESSETH:

1. DEFINITIONS

     For the purposes of this Agreement the following terms will have the
following meanings:

     "Account" shall have the meaning assigned to it in the Michigan Uniform
Commercial Code on the date of this Agreement.

     "Account Debtor" shall mean the party who is obligated on or under any
Account.

     "Adjusted Tangible Net Worth" shall mean as of any date of
determination, Tangible Net Worth as of such date plus the outstanding
principal amount of the Subordinated Debt as of such date.

     "Advance" shall mean a borrowing requested by Company and made by Bank
under Section 2 of this Agreement, including any refunding or conversions of
such borrowings pursuant to Section 4.A.3 hereof, and shall include a
Eurodollar-based Advance and a Prime-based Advance.

     "Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and executive officers of such Person), controlled by, or under
direct or indirect common control with such Person. A Person shall be deemed
to control a corporation for the purposes of this definition if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether throughthe ownership of voting
securities, by contract or otherwise.

     "Alternate Base Rate" shall mean for any day a rate per annum (rounded
upwards, if necessary, to the next higher 1/16 of 1%) equal to the Federal
Funds Effective Rate in effect on such day plus one
percent (1%).

     "Applicable Eurodollar Margin" shall mean one and three quarters percent
(1-3/4%).

     "Applicable Interest Rate" shall mean the Eurodollar-based Rate or the
Prime-based Rate, as selected by Company from time to time subject to the
terms and conditions of this Agreement.

     "Applicable L/C Commission Rate" shall mean one and three quarters
percent (1 3/4%) per annum.

     "Availability" shall mean as of any date of determination the aggregate
amount by which the Borrowing Base as of such date exceeds the outstanding
principal amount of the Advances plus the Letter
of Credit Reserve.

     "Base Adjusted Tangible Net Worth" shall initially mean $11,220,000.
Beginning September 30, 2001 and on the last day of each fiscal quarter
thereafter, Base Adjusted Tangible Net Worth shall increase by fifty percent
(50%) of Net Income for the fiscal quarter then ending. If Net Income is less
than zero for any fiscal quarter, it shall be deemed to be zero for the
purposes of this calculation.

     "Borrowing Base" shall mean as of any date of determination, the sum of
(a) eighty five percent (85%) of Eligible Accounts plus (b) the lesser of (i)
forty percent (40%) of Eligible Inventory and (ii) $4,000,000.

     "Business Day" shall mean any day on which commercial banks are open for
domestic and international business (including dealings in foreign exchange)
in Detroit, Los Angeles, London and New York.

     "Capital Expenditure" shall mean, without duplication, any payment made
directly or indirectly for the purpose of acquiring or constructing fixed
assets, real property or equipment which in accordance with GAAP would be
added as a debit to the fixed asset account of Company, including, without
limitation, amounts paid or payable under any conditional sale or other title
retention agreement or under any lease or other periodic payment arrangement
which is of such a nature that payment obligations of Company or a
Subsidiary, as applicable, thereunder would be required by GAAP to be
capitalized and shown as liabilities on the balance sheet of Company and its
consolidated Subsidiaries.

     "Capital Lease" shall mean any lease of any property (whether real,
personal or mixed) by Company or any Subsidiary as lessee which, in
conformity with GAAP, is, or is required to be accounted for as a capital
lease on the balance sheet of Company and its consolidated Subsidiaries,
together with any renewals of such leases (or entry into new leases) on
substantially similar terms.

     "Consolidated" or "Consolidating" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more
Persons of the amounts signified by such term for all such Persons determined
on a consolidated or combined, as applicable, basis in accordance with GAAP.
Unless otherwise specified herein, references to Consolidated financial
statements or data of Company includes consolidation with its Subsidiaries in
accordance with GAAP.

     "Debentures" or "2008 Debentures" shall mean the 8 1/2% Convertible
Subordinated Debentures issued by Data-Design Laboratories, Inc. (Company 's
predecessor), due 2008, with principal outstanding as of September 25, 2001:
$1,580,000.

     "Debt Service Coverage Ratio" shall mean as of any date of
determination, a ratio, the numerator of which is net income of Company and
its Domestic Subsidiaries for the four preceding fiscal quarters ending on
such date of determination plus, to the extent deducted in determining such
net income, depreciation and amortization for such period and the denominator
of which is current maturities of longterm debt (including Capital Leases) of
Company and its consolidated Subsidiaries as of such date of determination,
as determined in accordance with GAAP.

     "Domestic Subsidiary" shall mean a Subsidiary of Company which is not a
Foreign Subsidiary.

     "EBITDA" shall mean as of any date of determination, Net Income for the
four preceding fiscal quarters ending or such date of determination plus, to
the extent deducted in determining Net Income, (i) depreciation and
amortization expense for such period, (ii) interest expense for such period
and (iii) income taxes for such period, all as determined in accordance with
GAAP.

     "Eligible Account" shall mean an Account (but shall not include interest
and service charges) arising in the ordinary course of SMI 's, Technetics '
or Jolt 's business which meets each of the following requirements:

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

     (b) it is not owing by an Account Debtor (as defined in the UCC) who has
failed to pay twenty five percent (25 %) or more of the aggregate amount of
its Accounts owing to Company within ninety (90) days after the date of the
respective invoices or other writings evidencing such Accounts;

     (c) it arises from the sale or lease of goods and such goods have been
shipped or delivered to the Account Debtor under such Account; or it arises
from services rendered and such services have been performed;

     (d) it is evidenced by an invoice, dated not later than the date of
shipment or performance, rendered to such Account Debtor or some other
evidence of billing acceptable to Bank;

     (e) it is not evidenced by any note or other negotiable instrument or by
any chattel paper;

     (f) it is a valid, legally enforceable obligation of the Account Debtor
thereunder, and is not subject to any offset, counterclaim or other defense
on the part of such Account Debtor or to any claim on the part of such
Account Debtor denying liability thereunder in whole
or in part;

     (g) it is not subject to any sale of accounts, any rights of offset,
assignment, lien or security interest whatsoever other than to Bank;
provided, however, if an Account is subject to an offset and Bank has
received a waiver letter from the Account Debtor in form and substance
acceptable to Bank in its sole discretion, then such Account shall, if it
meets all other requirements, be an Eligible Account;

     h) it is not owing by a subsidiary or affiliate of Company or any of its
Subsidiaries, nor by an Account Debtor which (i) does not maintain its chief
executive office in the United States of America, (ii) is not organized under
the laws of the United States of America, or any state thereof (unless the
Account is covered by FCIA insurance or a letter of credit issued by a bank
which is acceptable to Bank in the exercise of its sole discretion), or (iii)
is the government of any foreign country or sovereign state, or of any state,
province, municipality or other instrumentality thereof;

     (i) it is not an account owing by the United States of America or any
state or political subdivision thereof, or by any department, agency, public
body corporate or other instrumentality of any of the foregoing, unless all
necessary steps are taken to comply with the Federal Assignment of Claims Act
of 1940, as amended, or with any comparable state law, if applicable, and all
other necessary steps are taken to perfect Bank 's security interest in such
account;

     (j) it is not owing by an Account Debtor for which Company or any
Subsidiary has received a notice of (i) the death of the Account Debtor or
any partner of the Account Debtor, (ii) the dissolution, liquidation,
termination of existence, insolvency or business failure of the Account
Debtor, (iii) the appointment of a receiver for any part of the property of
the Account Debtor, or (iv) an assignment for the benefit of creditors, the
filing of a petition in bankruptcy, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against the Account Debtor;

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

     (l) it is not owing by any Account Debtor whose obligations Bank (in its
sole reasonable discretion) shall have notified Company are not deemed to
constitute Eligible Accounts. An Account which is at any time an Eligible
Account, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be an Eligible Account.

     "Eligible Inventory" shall be valued at the lesser of cost or present
market value in accordance with GAAP, on a first in/first out basis, and
shall mean all of SMI 's and Tech 's Inventory which is in good and
merchantable condition, is not obsolete or discontinued, and which would
properly be classified as "raw materials" or "finished goods inventory" under
GAAP, excluding (a) Company 's work in process, consigned goods and inventory
located outside the United States of America, (b) inventory covered by or
subject to a seller 's right to repurchase, or any consensual or
nonconsensual lien or security interest (including without limitation
purchase money security interests) other than in favor of Bank, whether
senior or junior to Bank 's security interest, and (c) Inventory that Bank
(in its sole reasonable discretion) after having notified Company, excludes.
Inventory which is at any time Eligible Inventory, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be
Eligible Inventory.

     "Environmental Laws" shall mean all federal, state and local laws
including statutes, regulations, ordinances, codes, rules, and other
governmental restrictions and requirements, relating to environmental
pollution, contamination or other impairment of the environment or any
hazardous or toxic substances of any nature. These Environmental Laws shall
include but not be limited to the Federal Solid Waste Disposal Act, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, and the
Federal Superfund Amendments and Reauthorization Act of 1986.

     "Equipment Loans" shall mean the loans requested by Company and made by
Bank pursuant to the provisions of Section 3.

     "Equipment Drawdown Period" shall mean the period beginning on the date
of execution of this Agreement and ending September 23, 2002.

     "Equipment Note Maturity Date" shall mean with respect to each Equipment
Note the date which is five (5) years after the date of funding of such Note.

     "Equipment Notes" shall mean the Notes described in Section 3 hereof
made by Company to Bank in the form annexed to this Agreement as Exhibit "A".

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code.

     "Eurodollar-based Advance" shall mean an Advance which bears interest at
the Eurodollar-based Rate.

     "Eurodollar-based Rate" shall mean a per annum interest rate which is
the Applicable Eurodollar Margin plus the quotient of:

     (a) the per annum interest rate at which Bank 's Eurodollar Lending
Office offers deposits to prime banks in the eurodollar market in an amount
comparable to the relevant Eurodollarbased Advance or relevant principal
portion of any term loan and for a period equal to the relevant Interest
Period at approximately the time Company requests such Advance on the first
day of such Interest Period; divided by

     (b) a percentage equal to 100% minus the maximum rate on such date at
which Bank is required to maintain reserves on "Euro-currency Liabilities" as
defined in and pursuant to Regulation D of the Board of Governors of the
Federal Reserve System or, if such regulation or definition is modified, and
as long as Bank is required to maintain reserves against a category of
liabilities which includes eurodollar deposits or includes a category of
assets which includes eurodollar loans, the rate at which such reserves are
required to be maintained on such category; all as conclusively determined by
Bank, such sum to be rounded upward, if necessary, to the nearest whole
multiple of 1/16th of 1%.

     "Eurodollar Lending Office" shall mean Bank 's office located at Grand
Cayman, British West Indies or such other branch of Bank, domestic or
foreign, as it may hereafter designate as its Eurodollar
Lending Office by notice to Company.

     "Event of Default" shall mean any of the Events of Default specified in
Section 11 hereof.

     "Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day
on such transactions received by Bank from three Federal funds brokers of
recognized standing selected by it.

     "Foreign Subsidiary" shall mean a Subsidiary of Company that is
organized under the laws of a country (or political subdivision thereof)
other than the United States of America.

     "GAAP" shall mean, as of any applicable date of determination, generally
accepted accounting principles consistently applied, as in effect on the date
of this Agreement.

     "Guarantors" shall mean SMI, Jolt, Tech and each Domestic Subsidiary of
Company formed or acquired after the date of this Agreement.

     "Guaranty" shall mean the Guaranty by the Guarantors of the obligations
and liabilities of Company to Bank in the form attached hereto as Exhibit
"G".

     "Indebtedness" shall mean all loans, advances, indebtedness, obligations
and liabilities of Company to Bank under this Agreement, together with all
other indebtedness, obligations and liabilities whatsoever of Company to Bank
arising under or in connection with this Agreement, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising.

     "Interest Period" shall mean a period of one (1), two (2) or three (3)
months as selected by Company pursuant to the provisions of this Agreement
commencing on the day a Eurodollar-based Advance is made, or on the effective
date of an election of the Eurodollar-based Rate made under Section 4.A.1 or
Section 4.B.1.

     "Inventory" shall have the meaning assigned to it in the Michigan
Uniform Commercial Code on the date of this Agreement.

     "Jolt" shall mean Jolt Technology, Inc., a Delaware corporation.

     "Letter of Credit" shall have the meaning set forth in Section 2.6.

     "Letter of Credit Reserve" shall mean as of any date of determination,
an amount equal to the aggregate principal amount of all issued and undrawn
Letters of Credit issued by Bank for the account of Company under and
pursuant to this Agreement and the amount of all draws under Letters of
Credit paid by Bank and not reimbursed by Company.

     "Loan Documents" shall mean collectively, this Agreement, any Notes, the
Security Agreements, the Subordination Agreement and any other instruments or
agreements executed at any time pursuant to or in connection with any such
documents.

     "Net Income" shall mean the net income (or loss) of Company and its
consolidated Subsidiaries for any period determined in accordance with GAAP.

     "Net Worth" shall mean as of any date of determination the stockholders
' equity of Company and its consolidated Subsidiaries as of  such date as
determined in accordance with GAAP.

     "Note" shall mean the Revolving Credit Note and each Equipment Note, as
the case may be, as any may be amended or modified from time to time, and
"Notes" shall refer to each of them.

     "Notice of Term Rate" shall mean a Notice of Term Rate issued by Company
under this Agreement in the form annexed to this Agreement as Exhibit "B".

     "Permitted Foreign Acquisitions" means any acquisition by any wholly-
owned Foreign Subsidiary of Company of (a) all or substantially all of the
operating assets of any person or entity, or (b) all or substantially all of
the ownership interests of any entity which is organized under the laws of a
jurisdiction outside of the U.S.; provided, however, that all of the
following conditions are satisfied:

     (i) The assets, entity or line of business which is acquired is in a
substantially similar line of business as that of the Foreign Subsidiaries as
their businesses are conducted on the date of this Agreement.

     (ii) After giving effect to the acquisition there is no Event of Default
under any of the covenants set forth in Section 8 or Section 9 and the
requirements of Section 2.3(e) shall have been satisfied;

     (iii) The acquisition is consummated in compliance with applicable law.

     (iv) There is no Event of Default, nor any act, condition or event which
with the giving of notice or the passage of time or both would constitute an
Event of Default, and no such Event of Default or
potential Event of Default would result after giving effect to the
acquisition.

     (v) In the case of any operating assets which are acquired, such assets
are located outside of the U.S., and in the case of any entity which is
acquired, such entity is organized under the laws of a jurisdiction outside
of the U.S.

     (vi) Company gives Bank at least thirty (30) days (or, in the case of
the acquisition of Century, twenty (20) days) prior notice of the
acquisition.

     (vii) Company shall furnish Bank with copies of such documents and
information pertaining to the acquisition as Bank may require.

     "Permitted Liens" shall mean with respect to any Person:

     (a) liens for taxes not yet due and payable or which are being contested
in good faith by appropriate proceedings diligently pursued, provided that
provision for the payment of all such taxes has been made on the books of
such Person as may be required by generally accepted accounting principles,
consistently applied;

     (b) mechanics ', materialmen 's, banker 's, carriers ', warehousemen 's
and similar liens and encumbrances arising in the ordinary course of business
and securing obligations of such Person that are not overdue for a period of
more than 60 days or are being contested in good faith by appropriate
proceedings diligently pursued, provided that in the case of any such contest
(i) any proceedings commenced for the enforcement of such liens and
encumbrances shall have been duly suspended; and (ii) such provision for the
payment of such liens and encumbrances has been made on the books of such
Person as may be required by generally accepted accounting principles,
consistently applied;

     (c) liens arising in connection with worker 's compensation,
unemployment insurance, old age pensions and social security benefits and
similar statutory obligations which are not overdue or are being contested in
good faith by appropriate proceedings diligently pursued, provided that in
the case of any such contest (i) any proceedings commenced for the
enforcement of such liens shall have been duly suspended; and (ii) such
provision for the payment of such liens has been made on the books of such
Person as may be required by generally accepted accounting principles,
consistently applied;

     (d)(i) liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with progress
payments or advance payments due under contracts with the United States
government or any agency thereof entered into in the ordinary course of
business and (ii) liens incurred or deposits made in the ordinary course of
business to secure the performance of statutory obligations, bids, leases,
fee and expense arrangements with trustees and fiscal agents and other
similar obligations (exclusive of obligations incurred in connection with the
borrowing of money, any lease-purchase arrangements or the payment of the
deferred purchase price of property), provided that full provision for the
payment of all such obligations set forth in clauses (i) and (ii) has been
made on the books of such Person as may be required by generally accepted
accounting principles, consistently applied; and

     (e) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which do not materially interfere with the business of such
Person.

     "Permitted U.S. Acquisitions" means any acquisition by Company or any
wholly-owned Domestic Subsidiary of Borrower of (a) all or substantially all
of the operating assets of any person or entity or (b) all or substantially
all of the ownership interests of any; provided, however, that all of the
following conditions are satisfied:

     (i) The assets, entity or line of business which is acquired is in a
substantially similar line of business as that of Company or any of its
Domestic Subsidiaries as their businesses are conducted on the date of this
Agreement.

     (ii) After giving effect to the acquisition there is no Event of Default
under any of the covenants set forth in Section 8 or Section 9 and the
requirements of Section 2.3(e) shall have been satisfied.

     (iii) The acquisition is consummated in compliance with applicable law.

     (iv) There is no Event of Default, nor any act, condition or event which
with the giving of notice or the passage of time or both would constitute an
Event of Default, and no such Event of Default or potential Event of Default
would result after giving effect to the acquisition.

     (v) Any operating assets which are acquired are located in the U.S., and
any entity which is acquired is organized under the laws of a jurisdiction
within the U.S. and with all of its assets located in the U.S.; provided,
however, the ownership by the acquired entity of stock of a foreign
corporation will not disqualify an otherwise qualifying Permitted U.S.
Acquisition, if the assets of the foreign corporation constitute less than
25% of the assets of the acquired entity.

     (vi) Company gives Bank at least thirty (30) days prior written notice
of the acquisition.

     (vii) In the case of any entity which is acquired, such entity shall
provide Bank with a guaranty in accordance with Section 8.17 herein, security
for its guaranty in accordance with Section 8.17 herein, and such related
documents, instruments and agreements as may be required by Bank hereunder.

     (viii) Company shall furnish Bank with copies of such documents and
information pertaining to the acquisition as Bank may require.

     (ix) Neither Company nor any Subsidiary shall issue any note, assume any
liabilities or otherwise incur any indebtedness in connection with the
acquisition.

     "Person" or "person" shall mean any individual, corporation,
partnership, joint venture, limited liability company, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency, or other entity.

     "Prime Rate" shall mean the per annum interest rate established by Bank
as its prime rate for its borrowers as such rate may vary from time to time,
which rate is not necessarily the lowest rate on loans made by Bank at any
such time.

     "Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.

     "Prime-based Rate" shall mean for any day a per annum interest rate
which is the greater of (i) the Prime Rate or (ii) the Alternate Base Rate.

     "Request for Advance" shall mean a Request for Advance issued by Company
under this Agreement in the form annexed to this Agreement as Exhibit "C".

     "Revolving Credit Maturity Date" shall mean September 25, 2003.

     "Revolving Credit Note" shall mean the Note described in Section 2.1
hereof made by Company to Bank in the form annexed to this Agreement as
Exhibit "D".

     "Security Agreements" shall mean the Security Agreements in the form and
content of Exhibit "E" to this Agreement pursuant to which Company and each
Domestic Subsidiary grants to Bank a first priority security interest in all
accounts, chattel paper, documents, equipment, fixtures, general intangibles,
goods, instruments and inventory, wherever located and whether now owned or
hereafter acquired, together with all replacements thereof, substitutions
therefor, accessions thereto and all proceeds and products of all the
foregoing.

     "SMI" shall mean Smtek, Inc., a California corporation.

     "Subordinated Debt" shall mean the Debentures and all other indebtedness
of Company which is subordinated to the obligations and liabilities of
Company to Bank pursuant to a written subordination agreement in form and
substance satisfactory to Bank.

     "Subsidiary" shall mean a corporation or other entity of which more than
fifty percent (50%) of the outstanding voting stock or equivalent equity
interests are owned by Company, either direct or indirectly, through one or
more intermediaries.

     "Tangible Net Worth" shall mean as of any date Net Worth less the
Intangible Assets of the Company and its consolidated Subsidiaries, all
determined as of such date. For purposes of this Agreement, "Intangible
Assets" means the amount (to the extent reflected in determining such Net
Worth) of (i) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of assets of a going concern business
made within twelve months after the acquisition of such business) in the book
value of any asset owned by Company and its consolidated Subsidiaries, (ii)
loans or advances to employees or Affiliates, (iii) all investments in
unconsolidated Subsidiaries of the Company and all equity investments in
Persons which are not Subsidiaries of Company and (iv) all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, organization or
developmental expenses and other intangible assets.

     "Technetics" shall mean Technetics, Inc., a California corporation.

     "Total Debt" shall mean all liabilities of Company and its Consolidated
Subsidiaries except for Subordinated Debt.

     "UCC" means Act No. 174 of the Michigan Public Acts of 1962, as amended,
revised or replaced from time to time, including without limit as amended by
Act No. 348 of the Michigan Public Acts of 2000. Notwithstanding the
foregoing, the parties intend that the terms used herein which are defined in
the UCC have, at all times, the broadest and most inclusive meanings
possible. Accordingly, if the UCC shall in the future be amended or held by a
court to define any term used herein more broadly or inclusively than the UCC
in effect on the date of this Agreement, then such term, as used herein,
shall be given broadened meaning. If the UCC shall in the future be amended
or held by a court to define any term used herein more narrowly, or less
inclusively, than the UCC in effect on the date of this Agreement, such
amendment or holding shall be disregarded in defining terms used in this
Agreement.

2. THE INDEBTEDNESS: Revolving Credit

     2.1 Bank agrees to make Advances to Company at any time and from time to
time from the date hereof until the Revolving Credit Maturity Date, not to
exceed Sixteen Million Dollars ($16,000,000) in aggregate principal amount at
any one time outstanding. All of the Advances under this Section 2 shall be
evidenced by the Revolving Credit Note under which Advances, repayments and
readvances may be made, subject to the terms and conditions of this
Agreement.

     2.2 The Revolving Credit Note shall mature on the Revolving Credit
Maturity Date and each Advance from time to time outstanding thereunder shall
bear interest at its Applicable Interest Rate. The amount and date of each
Advance, its Applicable Interest Rate, its Interest Period, if applicable,
and the amount and date of any repayment shall be noted on Bank 's records,
which records will be conclusive evidence thereof absent manifest error.

     2.3 Company may request an Advance under this Section 2 upon the
delivery to Bank of a Request for Advance executed by an authorized officer
of Company, subject to compliance with the requirements of Section 9.16 and
the following:

     (a) each such Request for Advance shall set forth the information
required on the Request for Advance form annexed hereto as Exhibit "C";

     (b) each such Request for Advance shall be delivered to Bank by 11:00
a.m. on the proposed date of Advance; provided, however, at the option of
Bank, in lieu of written Requests for Advances, Company may utilize Bank 's
"Sweep to Loan" automated system for obtaining Prime-based Advances. Each
time an Advance is made using the "Sweep to Loan" system, it shall constitute
a certificate by Company of the matters set forth in the Request for Advance
form as of such date. If Company no longer uses the  "Sweep to Loan" system,
then thereafter, the regular procedures set forth herein shall apply;

     (c) the principal amount of such Advance, plus the amount of any
outstanding indebtedness to be then combined therewith having the same
Applicable Interest Rate and Interest Period, if any, shall be in the case of
a Eurodollar-based Advance at least $150,000 or any larger amount in $50,000
increments;

     (d) the principal amount of such Advance, plus the sum of the amount of
all other outstanding Advances under this Section 2, the Letter of Credit
Reserve shall not exceed the formula set forth in Section 2.5 below;

     (e) if the proceeds of the Advance are to be used to fund a Permitted
U.S. Acquisition or a Permitted Foreign Acquisition, (i) the amount of the
requested Advance plus the amount of all other Advances the proceeds which
were used to fund Permitted U.S. Acquisitions and Permitted Foreign
Acquisitions shall not exceed Five Million Dollars ($5,000,000) and (ii)
after giving effect to the Advance and the consummation of the Permitted U.S.
Acquisition or Permitted Foreign Acquisition, as applicable, Availability
must be at least One Million Dollars ($1,000,000);

     (f) a Request for Advance, once delivered to Bank, shall not be
revocable by Company.

     Bank may, at its option, lend under this Section 2 upon the telephone
request of an authorized officer of Company and, in the event Bank makes any
such advance upon a telephone request, the requesting officer shall, if so
requested by Bank, mail to Bank, on the same day as such telephone request, a
Request for Advance in the form attached as Exhibit "C". Company hereby
authorizes Bank to disburse Advances under this Section 2 pursuant to the
telephone instructions of any person purporting to be an authorized officer
of Company and Company shall bear all risk of loss resulting from
disbursements made upon any telephone request. Each telephone request for an
Advance shall constitute a certification of the matters set forth in the
Request for Advance form as of the date of such requested Advance.

     2.4 Company may prepay all or part of the outstanding balance of the
Prime-based Advance(s) under the Revolving Credit Note at any time. Upon one
(1) Business Day prior notice to Bank, Company may prepay all or part of any
Eurodollar-based Advance, provided that the amount of any such partial
prepayment shall be at least $50,000 and the unpaid portion of such Advance
which is refunded or converted under Section 4.A.3 shall be subject to the
limitations of Section 2.3(c) hereof. Any prepayment of a Prime-based
Advance, or a Eurodollar-based Advance on the last day of the Interest Period
therefor, made in accordance with this Section shall be without premium,
penalty or prejudice to Company 's right to reborrow under the terms of this
Agreement. Any other prepayment shall be subject to the provisions of Section
5.1 hereof.

     2.5 The aggregate principal amount at any one time outstanding under the
Revolving Credit Note plus the Letter of Credit Reserve shall never exceed
the Borrowing Base. Company shall immediately make all payments necessary to
comply with this provision. Any such payments shall be applied first to
outstanding Prime-based Advances and the remainder, if any, to outstanding
Eurodollar-based Advances.

     2.6 In addition to Advances under the Revolving Credit Note to be
provided to Company by Bank under and pursuant to Section 2.1 of this
Agreement, Bank further agrees to issue, or commit to issue, from time to
time, standby and commercial letters of credit for the account of Company
(herein individually called a "Letter of Credit" and collectively "Letters of
Credit") in; provided, however that the sum of the aggregate amount of
Advances outstanding under the Revolving Credit Note plus the Letter of
Credit Reserve shall not exceed Sixteen Million Dollars ($16,000,000) at any
one time; and provided further that no Letter of Credit shall, by its terms,
have an expiration date which extends beyond the fifth (5th) Business Day
before the Revolving Credit Maturity Date or one (1) year after issuance,
whichever first occurs and no trade/commercial Letters of Credit shall by its
terms, have an expiration date which extends beyond one hundred eighty (180)
days after issuance or the fifth (5th) Business Day before the Revolving
Credit Maturity Date, whichever first occurs. In addition to the terms and
conditions of this Agreement, the issuance of any Letters of Credit shall
also be subject to payments of Bank 's customary issuance fees and to the
terms and conditions of any letter of credit applications and agreements
executed and delivered by Company to Bank with respect thereto. Company shall
pay to Bank annually in advance a per annum fee equal to the Applicable L/C
Commission Rate of the amount of each standby Letter of Credit and one and
three-quarters percent (1_%) of the amount of each commercial letter of
credit.

     2.7 Company agrees to pay to Bank a commitment fee on the average daily
balance of the unused portion of the revolving credit commitment at the rate
of one eighth of one percent (c%) per annum, computed on the actual number of
days elapsed using a year of 360 days. The commitment fee shall be payable
quarterly in arrears on the first day of each October, January April and July
(commencing October 1, 2001) and on the Revolving Credit Maturity Date. For
purposes of calculating the commitment fee, outstanding Letters of Credit
shall be considered usage of the commitment.

     2.8 Company may, upon at least five (5) Business Days ' prior written
notice to Bank, permanently reduce the revolving credit commitment in whole
at any time, or in part from time to time, without premium or penalty,
provided that: (i) each partial reduction of the revolving credit commitment
shall be in an aggregate amount equal to at least One Million Dollars
($1,000,000); (ii) each reduction shall be accompanied by the payment of the
commitment fee, if any, accrued to the date of such reduction attributable to
the amount of such reduction; (iii) Company shall prepay in accordance with
the terms hereof the amount, if any, by which the aggregate unpaid principal
amount of Advances, plus the aggregate amount of outstanding Letters of
Credit, exceeds the amount of the revolving credit commitment, taking into
account the aforesaid reductions thereof, together with accrued but unpaid
interest on the principal amount of such prepaid Advances to the date of
prepayment; (iv) if the termination or reduction of the revolving credit
commitment requires the prepayment of a Eurodollar-based Advance, the
termination or reduction may be made only on the last Business Day of the
then current Interest Period applicable to such Advance and (v) no reduction
shall reduce the amount of the revolving credit commitment to an amount which
is less than the sum of the aggregate undrawn amount of any Letters of Credit
outstanding at such time. Reductions of the revolving credit commitment will
not be available for reinstatement by or readvance to the Company and shall
be permanent and irrevocable. When requesting a Letter of Credit, Company
shall identify the Guarantor which is a party to the transaction supported
thereby. Bank may require the Guarantor which is a party to the transaction
supported by a Letter of Credit to be a co-applicant for such Letter of
Credit.

     2.9 Proceeds of Advances under the Revolving Credit Note shall be used
solely for working capital purposes of the Guarantors and to repay existing
indebtedness owed to Wells Fargo Bank, National Association. When requesting
an advance under the revolving credit, Company shall identify the Guarantor
to which the proceeds thereof will be advanced by Company.

3 THE INDEBTEDNESS: Equipment Credit

     3.1 Bank agrees to make loans to Company at any time and from time to
time during the Equipment Drawdown Period, not to exceed Three Million Six
Hundred Thousand Dollars ($3,600,000) in aggregate principal amount. Each of
the loans under this Section 3 shall be evidenced by an Equipment Note. There
shall be no readvances of the Equipment Loans.

     3.2 Each Equipment Note shall mature on its applicable Equipment Note
Maturity Date and each loan from time to time outstanding thereunder shall
bear interest at its Applicable Interest Rate. The amount and date of each
loan under each Equipment Note, its Applicable Interest Rate, its Interest
Period, if applicable, and the amount and date of any repayment shall be
noted on Bank 's records, which records will be conclusive evidence thereof
absent manifest error. The principal outstanding under each Equipment Note
shall be repaid in monthly installments each equal to one sixtieth (1/60th)
of the original principal amount of such Equipment Note. Such principal
installments shall be due commencing on the first day of the first month
after an Equipment Note is funded and on the first day of each month
thereafter. Interest shall accrue and be payable as set forth in Section 4.B.

     3.3 Company may request a loan under this Section 3 upon the delivery to
Bank of a Request for Advance executed by an authorized officer of Company,
subject to the following:

     (a) each such Request for Advance shall set forth the information
required on the Request for Advance form annexed hereto as Exhibit "C";

     (b) each such Request for Advance shall be delivered to Bank by 1:00
p.m. on the fifth (5th) Business Day before the proposed date of the loan;

     (c) the principal amount of such loan, plus the amount of any
outstanding indebtedness to be then combined therewith having the same
Applicable Interest Rate and Interest Period, if any, shall be in the case of
a Eurodollar-based Advance at least $150,000 or any larger amount in $50,000
increments;

     (d) the principal amount of such loan, shall not exceed the formula set
forth in Section 3.5 below;

     (e) a Request for Advance, once delivered to Bank, shall not be
revocable by Company. Bank may, at its option, lend under this Section 3 upon
the telephone request of an authorized officer of Company and, in the event
Bank makes any such advance upon a telephone request, the requesting officer
shall, if so requested by Bank, mail to Bank, on the same day as such
telephone request, a Request for Advance in the form attached as Exhibit "C".
Company hereby authorizes Bank to disburse loans under this Section 3
pursuant to the telephone instructions of any person purporting to be an
authorized officer of Company and Company shall bear all risk of loss
resulting from disbursements made upon any telephone request. Each telephone
request for a loan shall constitute a certification of the matters set forth
in the Request for Advance form as of the date of such requested loan.

     3.4 Company may prepay all or part of the outstanding balance of an
Equipment Note bearing interest at the Prime-based Rate at any time. Upon one
(1) Business Day prior notice to Bank, Company may prepay all or part of any
portion of an Equipment Note bearing interest at the Eurodollar-based Rate,
provided that the amount of any such partial prepayment shall be at least
$250,000 and the unpaid portion of such loan which is refunded or converted
under Section 4.B.3 shall be subject to the limitations of Section 3.3
hereof. Any prepayment shall be subject to the provisions of Section 5.1
hereof.

     3.5 The principal amount of each loan under an Equipment Note shall not
exceed eighty percent (80%) of the invoice cost (excluding installation and
delivery expense, import fees and other soft costs) of new machinery and
equipment purchased by Company with the proceeds of such loan or eighty
percent (80%) of the forced sale value of used machinery and equipment
determined based on an appraisal by an appraiser acceptable to Bank. Loans
under an Equipment Note shall be used solely to fund the purchase price of
new or used machinery and equipment to be used in the conduct of the business
of a Domestic Subsidiary of Company and the machinery and equipment must be
acceptable to Bank in the exercise of its sole discretion.

     3.6 Each request for loan under an Equipment Note shall be in an amount
not less than $50,000.

4.A. INTEREST, INTEREST PERIODS, CONVERSIONS, PREPAYMENTS.

     4.A.1 Interest. The Revolving Credit Note and the Advances thereunder
shall bear interest from the date thereof on the unpaid principal balance
thereof from time to time outstanding, at a rate per annum equal to the
Prime-based Rate or the Eurodollar-based Rate, as the Company may elect
subject to the provisions of this Agreement. With respect to Prime-based
Advances, interest shall be payable monthly on the first Business Day of each
month, commencing on the first Business Day following the month during which
such Advance is made, and at maturity. With respect to Eurodollar-based
Advances, interest shall be payable on the last day of each Interest Period
applicable thereto. Notwithstanding the foregoing, from and after the
occurrence of any Event of Default and solely during the continuation
thereof, the Advances shall bear interest, payable on demand, at a rate per
annum equal to: (i) in the case of Prime-based Advances, three percent (3%)
above the Prime-based Rate; and (ii) in the case of a Eurodollar-based
Advance, three percent (3%) above the rate which would otherwise be
applicable under this Section 4.A.1 until the end of the then current
Interest Period, at which time such Advance shall bear interest at the rate
provided for in clause (i) of this Section 4.A.1. Interest on all Advances
shall be calculated on the basis of a 360 day year for the actual number of
days elapsed. The interest rate with respect to any Prime-based Advance shall
change on the effective date of any change in the Prime-based Rate.

     4.A.2 Interest Periods. Each Interest Period for a Eurodollar-based
Advance shall commence on the date such Eurodollar-based Advance is made or
is converted from an Advance of another type pursuant to Section 4.A.3 hereof
or on the last day of the immediately preceding Interest Period for such
Eurodollar-based Advance, and shall end on the date one, two or three months
thereafter, as the Company may elect as set forth below, subject to the
following:

     (i) no Interest Period shall extend beyond the Revolving Credit Maturity
Date; and

     (ii) any Interest Period which would otherwise end on a day which is not
a Business Day shall be extended to the next succeeding Business Day unless
the next succeeding Business Day falls in another calendar month, in which
case, such Interest Period shall end on the immediately preceding Business
Day and when an Interest Period begins on a day which has no numerically
corresponding day in the calendar month during which such Interest Period is
to end, it shall end on the last Business Day of such calendar month.

The Company shall elect the initial Interest Period applicable to a
Eurodollar-based Advance by its Request for Advance given to the Bank
pursuant to Section 2.3 or by its notice of conversion given to the Bank
pursuant to Section 4.A.3, as the case may be. Provided that no Event of
Default shall have occurred and be continuing, the Company may elect to
continue an Advance as a Eurodollar-based Advance by giving irrevocable
written, telephonic or telegraphic notice thereof to the Bank, before 11:00
a.m. on the last day of the then current Interest Period applicable to such
Eurodollar-based Advance, specifying the duration of the succeeding Interest
Period therefor. If the Bank does not receive timely notice of the election
and the Interest Period elected by the Company, the Company shall be deemed
to have elected to convert such Eurodollar-based Advance to a Prime-based
Advance at the end of the then current Interest Period.

     4.A.3 Conversion of Advances. Provided that no Event of Default shall
have occurred and be continuing, the Company may, on any Business Day,
convert any outstanding Advance into an Advance of another type in the same
aggregate principal amount, provided that any conversion of a Eurodollar-
based Advance shall be made only on the last Business Day of the then current
Interest Period applicable to such Advance. If the Company desires to convert
an Advance, it shall give the Bank written, telephonic or telegraphic notice,
specifying the date of such conversion, the Advances to be converted, the
type of Advance elected and, if the conversion is into a Eurodollar-based
Advance, the duration of the first Interest Period therefor, which notice
shall be given not later than 11:00 a.m. on the applicable date of
conversion.

4.B. INTEREST, INTEREST PERIODS, CONVERSIONS, PREPAYMENTS.

     4.B.1 Interest. (a) The Equipment Notes and the loans thereunder shall
bear interest from the date thereof on the unpaid principal balance thereof
from time to time outstanding, at a rate per annum equal to the Prime-based
Rate or the Eurodollar-based Rate as the Company may elect subject to the
provisions of this Agreement. In the case of any portion of an Equipment Note
with respect to which the Applicable Interest Rate is the Prime-based Rate,
interest shall be payable monthly on the first Business Day of each month and
at maturity (whether by acceleration or otherwise). In the case of any
portion of an Equipment Note with respect to which the Applicable Interest
Rate is the Eurodollar-based Rate, interest shall be payable on the last day
of each Interest Period applicable thereto. Notwithstanding the foregoing,
from and after the occurrence of an Event of Default and during the
continuation thereof, the principal outstanding under the Equipment Notes
shall bear interest payable on demand, at a rate per annum equal to: (i) in
the case of a portion of an Amortizing Note with respect to which the
Applicable Interest Rate is the Primebased Rate, three percent (3%) above the
rate which would otherwise be applicable under this Section 4.B.1 and (ii) in
the case of a portion of an Equipment Note with respect to which the
Applicable Interest Rate is the Eurodollar-based Rate, three percent (3%)
above the rate which would otherwise be applicable under this Section 4.B.1
until the end of the then current Interest Period, and thereafter at the rate
provided for in clause (i) of this Section 4.B.1. Interest shall be
calculated on the basis of a 360 day year for the actual number of days
elapsed. The interest rate applicable to any portion of an Amortizing Note
with respect to which the Applicable Interest Rate is the Prime-based Rate
shall change on the effective date of any change in the Prime-based Rate.

     (b) On the date each Equipment Loan, Company shall designate the initial
Applicable Interest Rate with respect to such loan.

     4.B.2 Interest Periods. Each Interest Period for a portion of an
Equipment Note with respect to which the Applicable Interest Rate is the
Eurodollar-based Rate shall commence on the date such rate is selected
pursuant to Section 4.B.3 hereof or on the last day of the immediately
preceding Interest Period, as the case may be, and shall end on the date one,
two or three months thereafter as the Company may elect as set forth below,
subject to the following:

     (i) no Interest Period with respect to an Equipment Note shall extend
beyond the applicable maturity date applicable to such Note;

     (ii) any Interest Period which would otherwise end on a day which is not
a Business Day shall be extended to the next succeeding Business Day unless
the next succeeding Business Day falls in another calendar month, in which
case, such Interest Period shall end on the immediately preceding Business
Day and when an Interest Period begins on a day which has no numerically
corresponding day in the calendar month during which such Interest Period is
to end, it shall end on the last Business Day of such calendar month; and

     (iii) no Interest Period with respect to a portion of a Equipment Loan
shall end past a date on which an installment of principal is due with
respect to such loan. The Company shall elect the initial Interest Period
applicable to an Equipment Loan with respect to which the Applicable Interest
Rate is the Eurodollar-based Rate by its Notice of Term Rate given to the
Bank pursuant to Section 4.B.1 and subsequent Interest Periods by its Notice
of Term Rate given to the Bank pursuant to Section 4.B.3, as the case may be.
Provided that no Event of Default shall have occurred and be continuing, the
Company may elect to continue a portion of an Equipment Loan with respect to
which the Applicable Interest Rate is the Eurodollar-based Rate by giving
irrevocable written notice thereof to the Bank by its Notice of Term Rate,
not later than 11:00 a.m. on the last day of the then current Interest Period
applicable to such portion of an Equipment Loan, as applicable, specifying
the duration of the succeeding Interest Period therefor. If the Bank does not
receive timely notice of the election and the Interest Period elected by the
Company, the Company shall be deemed to have elected to convert such
Applicable Interest Rate to the Prime-based Rate at the end of the then
current Interest Period.

     4.B.3 Conversion of Loans. Provided that no Event of Default shall have
occurred and be continuing, the Company may, on any Business Day, convert the
Applicable Interest Rate with respect to a portion of an Equipment Loan, as
applicable to another Applicable Interest Rate, provided that any conversion
while the Applicable Interest Rate is the Eurodollar-based Rate shall be made
only on the last Business Day of the then current Interest Period. If the
Company desires to convert an Applicable Interest Rate, it shall give the
Bank irrevocable written notice thereof not later than 11:00 a.m. (Detroit
time) on the effective date of any such change specifying the date of such
conversion, the Applicable Interest Rate elected and, if the conversion is
into the Eurodollar-based Rate, the duration of the first Interest Period
therefor.

     4.B.4 Prepayments. (a) At its option and upon one (1) Business Day 's
prior written, telephonic or telegraphic notice to the Bank, the Company may
prepay any portion of an Equipment Loan in whole at any time or in part from
time to time, with accrued interest on the principal being prepaid to the
date of such prepayment, provided that: (i) in the case of a portion of an
Equipment Loan bearing interest at the Prime-based Rate each partial
prepayment shall be in an amount not less than $50,000 or an integral
multiple thereof; (ii) in the case of a portion of an Equipment Loan bearing
interest at the Eurodollar-based Rate, each partial prepayment shall be in an
amount not less than $50,000. Any prepayment of a portion of an Equipment
Loan as to which the Applicable Interest Rate is the Prime-based Rate, or a
Term Loan as to which the Applicable Interest Rate is the Eurodollar-based
Rate, on the last day of the applicable Interest Period shall be without
premium or penalty. Any other prepayment shall be subject to the provisions
of Section 5.1.

     (b) Each partial prepayment of an Equipment Loan or the principal
outstanding under the applicable Equipment Note shall be applied to the
principal payments due thereunder in the inverse
order of their maturities.

5. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION.

     5.1 If Company makes any payment of principal with respect to any
Eurodollar-based Advance or the principal under an Equipment Loan with
respect to which the Eurodollar-based Rate is the Applicable Interest Rate on
any day other than the last day of the Interest Period applicable thereto
(whether voluntarily, by acceleration, or otherwise), or if Company fails to
borrow any Eurodollar-based Advance after notice has been given by Company to
Bank in accordance with the terms hereof requesting such Advance, or if
Company fails to make any payment of principal or interest when due in
respect of a Eurodollar-based Advance or the principal under Loan with
respect to which the Eurodollar-based Rate is the Applicable Interest Rate,
Company shall reimburse Bank on demand for any resulting loss, cost or
expense incurred by Bank as a result thereof, including, without limitation,
any such loss, cost or expense incurred in obtaining, liquidating, employing
or redeploying deposits from third parties, whether or not Bank shall have
funded or committed to fund such Advance. Such amount payable by Company to
Bank may include, without limitation, an amount equal to the excess, if any,
of (a) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, refunded or converted, for the period from the
date of such prepayment or of such failure to borrow, refund or convert,
through the last day of the relevant Interest Period, at the applicable rate
of interest for said Advance(s) or principal under an Equipment Loan provided
under this Agreement, over (b) the amount of interest (as reasonably
determined by Bank) which would have accrued to Bank on such amount by
placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. Calculation of any amounts payable to Bank
under this paragraph shall be made as though Bank shall have actually funded
or committed to fund the relevant Eurodollar-based Advance or an Equipment
Loan through the purchase of an underlying deposit in an amount equal to the
amount of such Advance and having a maturity comparable to the relevant
Interest Period; provided, however, that Bank may fund any Eurodollar-based
Advance or an Equipment Loan in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of
amounts payable under this paragraph. Upon the written request of Company,
Bank shall deliver to Company a certificate setting forth the basis for
determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest error.

     5.2 For any Interest Period for which the Applicable Interest Rate is
the Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending
Office which maintains books separate from those of the rest of Bank, Bank
shall have the option of maintaining and carrying the relevant Advance or
Term Loan on the books of such Eurodollar Lending Office.

     5.3 If with respect to any Interest Period Bank reasonably determines
that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in Eurodollars in the applicable amounts are not
being offered to the Bank for such Interest Period, then Bank shall forthwith
give notice thereof to the Company. Thereafter, until Bank notifies Company
that such circumstances no longer exist, the obligation of Bank to make
Eurodollar-based Advances, and the right of Company to convert an Advance to
or refund an Advance as a Eurodollar-based Advance and the right of Company
to elect the Eurodollar-based Rate for the Term Loans shall be suspended.

     5.4 If, after the date hereof, the introduction or implementation of, or
any change in, any applicable law, rule or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by
Bank (or its Eurodollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, shall make it
unlawful or impossible for the Bank (or its Eurodollar Lending Office) to
honor its obligations hereunder to make or maintain any Advance or the
indebtedness under the Equipment Loans with interest at the Eurodollar-based
Rate, Bank shall forthwith give notice thereof to Company. Thereafter (a) the
obligations of Bank to make Eurodollar-based Advances and the right of
Company to convert an Advance or refund an Advance as a Eurodollar-based
Advance and to elect the Eurodollar-based Rate for the Equipment Loans shall
be suspended and thereafter Company may select as Applicable Interest Rates
only those which remain available, and (b) if Bank may not lawfully continue
to maintain an Advance or an Equipment Loan, as the case may be, to the end
of the then current Interest Period applicable thereto, the Prime-based Rate
shall be the Applicable Interest Rate for the remainder of such Interest
Period.

     5.5 If the adoption or implementation after the date hereof, or any
change after the date hereof in, any applicable law, rule or regulation of
any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not
having the force of law) made by any such authority, central bank or
comparable agency after the date hereof:

     (a) shall subject Bank (or its Eurodollar Lending Office) to any tax,
duty or other charge with respect to any Advance or any Note or shall change
the basis of taxation of payments to Bank (or its Eurodollar Lending Office)
of the principal of or interest on any Advance or any Note or any other
amounts due under this Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of Bank or its Eurodollar Lending
Office imposed by any jurisdiction in which Bank is organized or engaged in
business); or

     (b) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by Bank (or its
Eurodollar Lending Office) or shall impose on Bank (or its Eurodollar Lending
Office) or the foreign exchange and interbank markets any other condition
affecting any Advance or any Note; and the result of any of the foregoing is
to increase the costs to Bank of maintaining any part of the indebtedness
hereunder or to reduce the amount of any sum received or receivable by Bank
under this Agreement or under the Notes, by an amount deemed by the Bank to
be material, then Bank shall promptly notify Company of such fact and demand
compensation therefor and, within fifteen days after demand by Bank, Company
agrees to pay to Bank such additional amount or amounts as will compensate
Bank for such increased cost or reduction. Bank will promptly notify Company
of any event of which it has knowledge which will entitle Bank to
compensation pursuant to this Section. A certificate of Bank setting forth
the basis for determining such additional amount or amounts necessary to
compensate Bank shall be conclusively presumed to be correct save for
manifest error. Bank agrees that, as promptly as practical after it becomes
aware of the occurrence of any event or the existence of a condition that
will cause Bank to be entitled to compensation under this Section, it will,
to the extent not inconsistent with Bank 's internal policies, use reasonable
efforts to make, fund or maintain any affected Eurodollar-based Advance
through another lending office of Bank if as a result thereof the additional
monies which would otherwise be required to be paid in respect of such
Eurodollar-based Advance would be materially reduced and if, as determined by
Bank, in its reasonable discretion, the making, funding or maintaining of
such Eurodollarbased Advance through such other lending office would not
materially adversely affect such Advance or Bank. Company shall pay all
reasonable expenses incurred by Bank in utilizing another lending office
pursuant to this Section.

     5.6 In the event that at any time after the date of this Agreement any
change in law such as described in Section 5.5, hereof, shall, in the
reasonable opinion of Bank require that the credit provided under Section 2
or 3 of this Agreement be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
Bank or any corporation controlling Bank and such change has or would have
the effect of reducing the rate of return on Bank 's or Bank 's parent 's
capital or assets as a consequence of the Bank 's obligations hereunder to a
level below that which Bank or Bank 's parent would have achieved but for
such change, then Bank shall notify Company and demand compensation therefor
and, within fifteen days after demand by Bank, Company agrees to pay to Bank
such additional amount or amounts as will compensate Bank for such reduction.
Bank will promptly notify Company of any event of which it has knowledge
which will entitle Bank to compensation pursuant to this Section. A
certificate of Bank setting forth the basis for determining such additional
amount or amounts necessary to compensate Bank shall be conclusively presumed
to be correct save for manifest error.

     5.7 A late installment charge equal to five percent (5%) of each late
installment under any Note may be charged on any installment payment not
received by Bank within ten (10) calendar days after the installment due date
but acceptance of this charge shall not waive any default or Event of Default
under this Agreement.

6. CONDITIONS

     6.1 Company agrees to furnish Bank prior to the initial borrowing under
this Agreement, in form and substance to be satisfactory to Bank, with (i)
certified copies of resolutions of the Directors of Company and its Domestic
Subsidiaries evidencing approval of the borrowings and transactions
contemplated hereunder; (ii) a certificate of good standing from the state of
Company 's incorporation and from the state(s) in which is required to be
qualified to do business; (iii) an opinion of Company 's legal counsel; and
(iv) such other documents and instruments as Bank may reasonably require.

     6.2 As security for all indebtedness of Company to Bank hereunder,
Company agrees to furnish, execute and deliver to Bank, or cause to be
furnished, executed and delivered to Bank, prior to or simultaneously with
the initial borrowing hereunder, in form to be satisfactory to Bank and
supported by appropriate resolution in certified form authorizing same, the
following:

     (a) The Security Agreements;

     (b) The Guaranty;

     (c) Financing Statements required or requested by Bank to perfect all
security interests to be conferred upon Bank under this Agreement and to
accord Bank a perfected first priority security position under the Uniform
Commercial Code (subject only to the encumbrances permitted hereunder);

     (d) Such other documents or agreements of security and appropriate
assurances of validity and perfected first priority of lien or security
interest as Bank may reasonably request at any time.

     6.3 Prior to the initial advance, Company shall have satisfied the
requirements of the commitment letter dated September 6, 2001.

7. REPRESENTATIONS AND WARRANTIES

     Company represents and warrants and such representations and warranties
shall be deemed to be continuing representations and warranties during the
entire life of this Agreement:

     7.1 Company is a corporation duly organized and existing in good
standing under the laws of the State of Delaware; Company and each of its
Subsidiaries is in good standing in each jurisdiction in which it is required
to be qualified to do business, except where the failure to be so qualified
would not have a material adverse effect on the financial condition of
Company and its Subsidiaries or their ability to carry on their business;
execution, delivery and performance of this Agreement and other documents and
instruments required under this Agreement, and the issuance of the Notes by
Company are within its powers, have been duly authorized, are not in
contravention of law or the terms of Company 's Certificate of Incorporation
or Bylaws, and do not require the consent or approval of any governmental
body, agency or authority; and this Agreement and other documents and
instruments required under this Agreement and Notes, when issued and
delivered, will be valid and binding on the Company in accordance with their
terms.

     7.2 The execution, delivery and performance of this Agreement and any
other documents and instruments required under this Agreement, and the
issuance of the Notes by Company are not in contravention of the unwaived
terms of any indenture, agreement or undertaking to which Company is a party
or by which it is bound.

     7.3 No litigation or other proceeding before any court or administrative
agency is pending, or to the knowledge of the officers of Company is
threatened against Company or any of its Subsidiaries, the outcome of which
would reasonably be expected to materially impair Company 's or any
Subsidiary 's financial condition or the ability of Company or any Subsidiary
to carry on its business.

     7.4 There are no security interests in, liens, mortgages, or other
encumbrances on any of Company 's or any Subsidiary 's assets, except to Bank
or as otherwise permitted by this Agreement.

     7.5 Neither Company nor any Subsidiary maintains or contributes to any
employee pension benefit plan subject to title IV of the "Employee Retirement
Income Security Act of 1974" (herein called "ERISA"), except those set forth
in attached Schedule 7.5. There was no unfunded past service liability of any
pension plan maintained by the Company as of December 31, 1999 , and there is
no accumulated funding deficiency within the meaning of ERISA, or any
existing material liability with respect to any pension plan owed to the
Pension Benefit Guaranty Corporation ("PBGC") or any successor thereto,
except any funding deficiency for which an application to the PBGC for waiver
is pending or for which a waiver has been granted by the PBGC.

     7.6 The financial statements of the Company dated June 30, 2001,
previously furnished to Bank, fairly present in all material respects the
financial condition of the Company and its Subsidiaries as of such date,
since said date there has been no material adverse change in the financial
condition of the Company or it Subsidiaries; to the best of the knowledge of
Company 's officers, Company and its Subsidiaries do not have any material
contingent obligations (including any liability for taxes) not disclosed by
or reserved against in said balance sheet, and at the present time there are
no material unrealized or anticipated losses from any present commitment of
Company or any of its Subsidiaries.

     7.7 To the best knowledge of Company, the financial projections
previously furnished by Company to Bank were as of the date thereof and are
as of the date of execution of this Agreement reasonable in all material
respects taking into account all facts and information known or reasonably
available to Company.

     7.8 All tax returns and tax reports of Company and its consolidated
Subsidiaries required by law to have been filed have been duly filed or
extensions obtained, and all taxes, assessments and other governmental
charges or levies (other than those presently payable without penalty and
those currently being contested in good faith for which adequate reserves
have been established) upon Company and its consolidated Subsidiaries (or any
of its or their properties) which are due and payable and for which the
failure to pay would materially adversely affect its business or the value of
its property or assets have been paid. The charges, accruals and reserves on
the books of Company in respect of the Federal income tax for all periods are
adequate in the opinion of Company.

     7.9 There are no subsidiaries of Company, except for Technetics, Inc.,
Jolt Technology, Inc., Smtek, Inc. and DDL Europe, Ltd. (d/b/a Smtek Europe).

     7.10 Except as set forth in Schedule 7.10:

     (a) Company and each of its Subsidiaries, in the conduct of its
business, is in compliance in all material respects with all federal, state
or local laws, statutes, ordinances and regulations applicable to any of
them, the enforcement of which, if such Person were not in compliance, would
reasonably be expected to materially adversely affect its business or the
value of its property or assets. Company and its Subsidiaries have all
approvals, authorizations, consents, licenses, orders and other permits of
all governmental agencies and authorities, whether federal, state or local,
required to permit the operation of their business as presently conducted,
except such approvals, authorizations, consents, licenses, orders and other
permits with respect to which the failure to have would not reasonably be
expected to materially adversely affect their business or the value of their
property or assets (taken as a whole).

     (b) Neither Company nor any Subsidiary is a party to any litigation or
administrative proceeding, nor so far as is known by Company is any
litigation or administrative proceeding threatened against Company or any
Subsidiary, the outcome of which would reasonably be expected to have a
material adverse effect on the Company or any Subsidiary which in either case
(i) asserts or alleges that Company or any Subsidiary violated Environmental
Laws, (ii) asserts or alleges that Company or any Subsidiary is required to
clean up, remove, or take remedial or other response action due to the
disposal, depositing, discharge, leaking or other release of any hazardous
substances or materials, (iii) asserts or alleges that Company or any
Subsidiary is required to pay all or a portion of the cost of any past,
present, or future cleanup, removal or remedial or other response action
which arises out of or is related to the disposal, depositing, discharge,
leaking or other release of any hazardous substances or materials by Company
or any Subsidiary.

     (c) Neither Company nor any Subsidiary is subject to any judgment,
decree, order or citation related to or arising out of applicable
Environmental Laws which would reasonably be expected to materially adversely
affect its business or the value of its property or assets and to the best
knowledge of the Company, neither Company nor any Subsidiary has been named
or listed as a potentially responsible party by any governmental body or
agency in a matter arising under any applicable Environmental Laws which
would reasonably be expected to materially adversely affect its business or
the value of its property or assets.

     (d) To the best of Company 's knowledge, Company and its Subsidiaries
have all permits, licenses and approvals required under applicable
Environmental Laws, the failure of which to have would have a material
adverse effect on the operation of their business as presently conducted and
as proposed to be conducted.

     7.11 Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Company is not engaged
principally, or as one of its important activities, directly or indirectly,
in the business of extending credit for the purpose of purchasing or carrying
margin stock, and none of the proceeds of any of the loans hereunder will be
used, directly or indirectly, for any purpose which would violate the
provisions of Regulation U or X of the Board of Governors of the Federal
Reserve System. Terms for which meanings are provided in Regulation U of the
Board of Governors of the Federal Reserve System or any regulations
substituted therefor, as from time to time in effect, are used in this
paragraph with such meanings.

     7.12 Company and its Subsidiaries have good and valid title to the
property pledged, mortgaged or otherwise encumbered or to be encumbered by
them under the Security Agreements.

8. AFFIRMATIVE COVENANTS

     Company covenants and agrees that it will, so long as Bank may make any
advance under this Agreement and thereafter so long as any indebtedness
remains outstanding under this Agreement:

     8.1 Furnish Bank:

     (a) within ninety (90) days after and as of the end of each fiscal year
of Company and its consolidated Subsidiaries, a detailed consolidated and
consolidating audit report of Company certified to by independent certified
public accountants satisfactory to Bank;

     (b) within forty five (45) days after and as of the end of each fiscal
quarter, (i) consolidated and consolidating balance sheets, statements of
profit and loss and a statement of changes in cash flow of Company and its
consolidated Subsidiaries certified by an authorized officer of Company as
being correct and accurate to the best of his knowledge and (ii) a
consolidated balance sheet, statement of profit and loss and a statement of
changes in cash flow of Company and its Domestic Subsidiaries certified by an
authorized officer of Company as being correct and accurate to the best of
his knowledge;

     (c) within fifteen (15) days after and as of the end of each month,
including the last month of each fiscal year, (i) the monthly aging of
Accounts (and a schedule identifying each ineligible Account), and any such
schedule shall be accompanied, if so requested by Bank, by a true and correct
copy of the invoices evidencing Eligible Accounts, and by evidence of
shipment or performance, (ii) a monthly aging of Company 's accounts payable,
(iii) an inventory report in form satisfactory to Bank and (iv) a borrowing
base report, each in form acceptable to Bank; provided, however, at all times
when Availability is less than $2,000,000, borrowing base reports shall be
due weekly on Wednesday of each week as of Friday of the preceding week;

     (d) within thirty (30) days prior to the first day of each fiscal year
of Company, financial projections for the Company and its consolidated
Subsidiaries in form satisfactory to Bank;

     (e) promptly after filing, a copy of each 10-K, 8-K and 10-Q report
filed by Company with the Securities and Exchange Commission;

     (f) such information as required by the terms and conditions of any
security agreements referred to in this Agreement;

     (g) promptly, and in form to be satisfactory to Bank, such other
information as Bank may reasonably request from time to time.

     8.2 Pay and discharge, and cause its Subsidiaries to pay and discharge,
all taxes and other governmental charges, and all contractual obligations
calling for the payment of money, before the same shall become overdue,
unless and to the extent only that such payment is being contested in good
faith.

     8.3 Maintain, and cause its Subsidiaries to maintain, insurance coverage
on their physical assets and against other business risks in such amounts and
of such types as are customarily carried by companies similar in size and
nature, and in the event of acquisition of additional property, real or
personal, or of incurrence of additional risks of any nature, increase such
insurance coverage in such manner and to such extent as prudent business
judgment and present practice would dictate; and in the case of all policies
covering property mortgaged or pledged to Bank or property in which Bank
shall have a security interest of any kind whatsoever, other than those
policies protecting against casualty liabilities to strangers, all such
insurance policies shall provide that the loss payable thereunder shall be
payable to Company and Bank (as mortgagee) as their respective interests may
appear, all said policies or copies thereof, including all endorsements
thereon and those required hereunder, to be deposited with Bank.

     8.4 Permit Bank, through its authorized attorneys, accountants and
representatives, to examine Company 's and each Subsidiary 's books,
accounts, records, ledgers and assets of every kind and description at all
reasonable times upon oral or written request of Bank, which shall include
but shall not be limited to collateral audits of Company conducted by Bank,
at Company 's own cost and expense.

     8.5 Promptly notify Bank immediately after becoming aware of any
condition or event which constitutes or with the running of time and/or the
giving of notice would constitute an Event of Default under this Agreement,
and promptly inform Bank of the existence or occurrence of any condition or
event (other than conditions having an effect on the economy in general)
which could have a material adverse effect upon Company 's or any Subsidiary
's financial condition.

     8.6 Maintain, and cause its Subsidiaries to maintain, in good standing
all licenses required by the State of California or any agency thereof, or
other governmental authority that may be necessary or required for Company
and its Subsidiaries to carry on its general business objects and purposes.

     8.7 Comply, and cause its Subsidiaries to comply, with all material
requirements imposed by ERISA as presently in effect or hereafter
promulgated, including but not limited to, the minimum funding requirements
of any Pension Plan.

     8.8 Promptly notify Bank after the occurrence thereof in writing of any
of the following events:

     (a) the termination of a Pension Plan pursuant to Subtitle C of Title IV
of ERISA or otherwise;

     (b) the appointment of a trustee by a United States District Court to
administer a Pension Plan;

     (c) the commencement by the Pension Benefit Guaranty Corporation, or any
successor thereto of any proceeding to terminate a Pension Plan;

     (d) the failure of a Pension Plan to satisfy the minimum funding
requirements for any plan year as established in Section 412 of the Internal
Revenue Code of 1954, as amended or any similar provision under the Internal
Revenue Code of 1986, as amended;

     (e) the withdrawal of Company or any Subsidiary from a Pension Plan; or

     (f) a reportable event, within the meaning of Title IV of ERISA.

     8.9 Furnish Bank, upon Bank 's request, in form satisfactory to Bank
with pledges, assignments, mortgages, lien instruments or other security
instruments covering any or all of Company 's and each Domestic Subsidiary 's
real and personal property, of every nature and description, whether now owed
or hereafter acquired, to the extent that Bank may in its sole reasonable
discretion require.

     8.10 Furnish to the Bank concurrently with the delivery of each of the
financial statements required by Section 8.1(a) and (b), a statement prepared
and certified by the chief financial officer of Company (or in such officer
's absence, a responsible senior officer of Company) (a) setting forth all
computations necessary to show compliance by Company with the financial
covenants contained in Sections 8.11 through 8.15 hereof, (b) stating that as
of the date thereof, no condition or event which constitutes an event of
default hereunder or which with the running of time and/or the giving of
notice would constitute an event of default hereunder has occurred and is
continuing, or if any such event or condition has occurred and is continuing
or exists, specifying in detail the nature and period of existence thereof
and any action with respect thereto taken or contemplated to be taken by
Company and (c) stating that the signer has personally reviewed this
Agreement and that such certificate is based on an examination sufficient to
assure that such certificate is accurate.

     8.11 Maintain as of the end of each fiscal quarter of Company an
Adjusted Tangible Net Worth of not less than the Base Adjusted Tangible Net
Worth.

     8.12 Maintain as of the end of each fiscal quarter of Company a ratio of
Total Debt to Adjusted Tangible Net Worth of not more than 3.0 to 1.0.

     8.13 Maintain as of the end of each fiscal quarter a Debt Service
Coverage Ratio of not less than the following amounts during the periods set
forth below:

Closing through June 29, 2002 . . . . . . . . . . . . . . . . . . 1.2 to 1.0
June 30, 2002 and thereafter . . . . . . . . . . . . . . . . . . 1.25 to 1.0

     8.14 Maintain for each fiscal year of Company a Net Income of not less
than $750,000.

     8.15 Not allow any year-to-date loss during any fiscal year to exceed
$500,000.

     8.16 Maintain all cash collection and general disbursement accounts with
Bank.

     8.17 Cause each person that is or becomes a Domestic Subsidiary of the
Company from time to time to execute and deliver a secured Guaranty to the
Bank, together with such other documentation as Bank may reasonable require.

     8.18 Use the proceeds of any payment received by Company from a
Guarantor on account of an advance which had been made by Company to such
Guarantor and which had been funded by Bank under the revolving credit, to
repay outstanding Advances.

9. NEGATIVE COVENANTS

     Company covenants and agrees that, so long as Bank may make any Advances
under this Agreement and thereafter so long as any Indebtedness remains
outstanding under this Agreement, it will not, and will cause its
Subsidiaries not to, without the prior written consent of Bank:

     9.1 Purchase, acquire or redeem any of its stock or make any material
change in its capital structure.

     9.2 Enter into any merger or consolidation or sell, lease, transfer, or
dispose of all, substantially all, or any part of its assets, except (a)
sales of inventory in the ordinary course of its business, (b) sales of
interests in Foreign Subsidiaries which are permitted under Section 9.14, (c)
the merger of any wholly owned Domestic Subsidiary into another wholly owned
Domestic Subsidiary of Company, (d) the merger of a Foreign Subsidiary into
another Foreign Subsidiary and (e) the merger of any wholly owned Subsidiary
of Company into Company (with Company as the survivor).

     9.3 Guarantee, endorse, or otherwise become secondarily liable for or
upon the obligations of others, except (a) by endorsement for deposit in the
ordinary course of business, (b) guaranties in favor of Bank, and (c) Company
's unsecured guaranty of Smtek Europe 's $3,400,000 (2,500,000 pound
sterling) operating line of credit.

     9.4 Purchase or otherwise acquire or become obligated for the purchase
of all or substantially all of the assets or business interests of any
person, firm or corporation or any shares of stock of any corporation,
trusteeship or association or in any other manner effectuate or attempt to
effectuate an expansion of present business by acquisition, except for
Permitted U.S. Acquisitions and Permitted Foreign Acquisitions.

     9.5 Affirmatively pledge or mortgage any of its assets, whether now
owned or hereafter acquired, or create, suffer or permit to exist any lien,
security interest in, or encumbrance thereon, except:

     (a) to Bank;

     (b) the Permitted Liens;

     (c) liens described in attached Schedule 9.5;

     (d) liens and security interests upon fixed assets acquired by Company
after the date of this Agreement (including by virtue of a Capital Lease)
provided that (i) any such lien or security interest is created solely for
the purpose of securing indebtedness representing, or incurred to finance,
the cost of the item of property subject thereto; (ii) the principal amount
of the indebtedness secured by such lien does not exceed 100% of the fair
value of the property at the time it was acquired, (iii) the lien or security
interest does not cover any property other than such item of property, and
(iv) the indebtedness secured is permitted under Section 9.13(d); and

     (e) security interests in assets of a Foreign Subsidiary which secure
borrowings by such Subsidiary from a lender other than Bank or Company as
long as such borrowings are permitted under Section 9.13.

     9.6 Sell, assign, transfer or confer a security interest in any account,
contract, note, trade acceptance or other receivable, except to Bank.

     9.7 Materially alter the character of its business from that conducted
as of the date of this Agreement.

     9.8 Declare or pay any dividends or make any other distribution upon its
stock except (i) dividends payable in the stock of Company, and (ii)
dividends by a Subsidiary to Company.

     9.9 Make any Capital Expenditure during any fiscal year if after giving
effect thereto the aggregate amount of all Capital Expenditures made by
Company and its Subsidiaries during such fiscal year would exceed $4,000,000;
provided that the limitation for the fiscal year ending June 30, 2002 shall
be $6,000,000.

     9.10 Enter into any transaction or series of transactions with any
Affiliate other than on terms and conditions as favorable to Company as would
be obtainable in a comparable arms-length transaction with a Person other
than an Affiliate.

     9.11 Make or allow to remain outstanding any investment (whether such
investment shall be of the character of investment in shares of stock,
evidence of indebtedness or other securities or otherwise) in, or any loans
or advances or extensions of credit to, any person, firm, corporation or
other entity or association, except:

     (a) investments of surplus cash in cash equivalents;

     (b) sales on open account and in the ordinary course of business;

     (c) deposits made in the ordinary course of business in order to obtain
goods or services;

     (d) other loans, advances and investments not exceeding $150,000 in the
aggregate at any time outstanding;

     (e) loans, advances and investments by Company in Domestic Subsidiaries
and loans and advances by a Subsidiary to Company; and

     (f) existing investments in Foreign Subsidiaries as set forth in
attached Schedule 9.11.

     9.12 Enter into or become subject to any agreement (other than this
Agreement) (i) prohibiting the creation or assumption of any lien or
encumbrance upon the properties or assets of Company or (ii) requiring an
obligation to become secured (or further secured) if another obligation is
secured or further secured.

     9.13 Become or remain obligated for any indebtedness for borrowed money,
or for any indebtedness incurred in connection with the acquisition of any
property, real or personal, tangible or intangible, except:

     (a) indebtedness to Bank;

     (b) current unsecured trade payables and accrued liabilities arising in
the ordinary course of Company 's or a Subsidiary 's business (including,
without limitation, obligations under operating leases);

     (c) existing indebtedness described in attached Schedule 9.13;

     (d) purchase money indebtedness incurred in connection with the
acquisition of fixed assets in an aggregate amount not exceeding $2,500,000
incurred during any single fiscal year of Company;

     (e) the Subordinated Debt;

     (f) borrowings by any Foreign Subsidiary from Company in the ordinary
course of business hereafter, so long as outstanding borrowings by Foreign
Subsidiaries from Company at not time exceed $100,000.00 in the aggregate for
all such borrowings by Foreign Subsidiaries combined, and

     (g) borrowings by any Foreign Subsidiary from any lender other than
Company or Bank in the
ordinary course of business hereafter.

     9.14 Sell, pledge, encumber or otherwise transfer any interest in any
Subsidiary except for (a) such mergers as may be permitted by Section 9.2
above, and (b) the sale by Company or any Foreign Subsidiary of all or any
portion of its interest in any Foreign Subsidiary so long as (1) such sale is
on commercially reasonable terms and for fair consideration, and (2) Company
gives Bank at least ten (10) days prior written notice thereof.

     9.15 Become a general partner in any partnership or a joint venturer in
any joint venture; provided, however, that any Foreign Subsidiary may become
a general partner in any foreign partnership or a joint venturer in any
foreign joint venture so long as Company gives Bank at least ten (10) days
prior written notice thereof.

     9.16. Permit outstanding advances by Company to a Guarantor which are
funded by Bank under the revolving credit, when combined with outstanding
Letters of Credit issued by Bank to support that Guarantor 's transactions
and any other credit extended by Bank hereunder to support that Guarantor 's
transactions which Bank has informed Company is to be combined with such
advances and Letters of Credit for purposes of this Section 9.16, to exceed
the amount of borrowings which would available under the Borrowing Base if
only that Guarantor 's Eligible Accounts and Eligible Inventory were included
in the Borrowing Base. Company will keep complete and accurate records of all
advances by Borrower to each Guarantor which are funded with the proceeds of
Advances by Bank to Company under the revolving credit and of all repayments
thereof, and Company will furnish Bank upon request with statements showing
the outstanding principal balance of all such advances to each Guarantor.

     9.17 Make any voluntary payment on or voluntary redemption of any
Debenture (including without limitation any "Security" as defined therein),
nor modify or amend any Debenture in any material respect.

10. ENVIRONMENTAL PROVISIONS

    10.1 Company shall comply, and shall cause its Subsidiaries to comply,
with all applicable Environmental Laws except for such non-compliance which
would reasonably not be expected to materially adversely affect its business
or the value of its property or assets.

    10.2 Company shall provide to Bank, promptly upon receipt, copies of any
correspondence, notice, pleading, citation, indictment, complaint, order,
decree, or other document from any source asserting or alleging a
circumstance or condition which requires or may require a financial
contribution by Company or any Subsidiary to a cleanup, removal, remedial
action, or other response by or on the part of Company or any Subsidiary
under applicable Environmental Laws or which seeks damages or civil, criminal
or punitive penalties from Company for an alleged violation of Environmental
Laws, where such contribution, response or damages would reasonably be
expected to materially adversely affect its business or the value of its
property or assets.

    10.3 Company shall promptly notify Bank in writing as soon as Company
becomes aware of the occurrence or existence of any condition or circumstance
which makes the environmental warranties contained in this Agreement
incomplete or inaccurate in any material respect as of any date.

    10.4 In the event of any condition or circumstance that makes any
environmental warranty, representation and/or agreement incomplete or
inaccurate in any material respect as of any date, Company shall, at the
reasonable request of Bank, at its sole expense, retain an environmental
consultant, reasonably acceptable to Bank, to conduct a thorough and complete
investigation regarding the changed condition and/or circumstance. A copy of
the environmental consultant 's report will be promptly delivered to both
Bank and Company upon completion.

    10.5 At any time Company, directly or indirectly through any
environmental consultant or other representative, determines to undertake an
environmental audit, assessment or investigation relating to any fact, event
or condition which would reasonably be expected to materially adversely
affect its business or the value of its property or assets, Company shall
promptly provide Bank with written notice of the initiation of the
environmental audit, fully describing the purpose and intended scope of the
environmental audit. Upon receipt, Company will promptly provide to Bank
copies of all final findings and conclusions of any such environmental
investigation.

    10.6 Company hereby indemnifies, saves and holds Bank and any of its
past, present and future officers, directors, shareholders, employees,
representatives and consultants harmless from any and all loss, damages,
suits, penalties, costs, liabilities and expenses (including but not limited
to reasonable investigation, environmental audit(s), and legal expenses)
arising out of any claim, loss or damage to any property, injuries to or
death of persons, contamination of or adverse affects on the environment,
caused by or in any way related to the violation of any applicable
Environmental Laws by Company or its officers, directors, shareholders,
employees, consultants and/or representatives; provided, however, that the
foregoing indemnification shall not be applicable when arising solely from
events or conditions occurring while the Bank is in sole possession (subject
to the rights of any creditors of Company) of such property. In no event
shall Company be liable hereunder for any loss, damages, suits, penalties,
costs, liabilities or expenses arising from any act of gross negligence of
Bank, or its agents or employees. It is expressly understood and agreed that
the indemnifications granted herein are intended to protect Bank, its past,
present and future officers, directors, shareholders, employees, consultants
and representatives from any claims that may arise by reason of the security
interest, liens and/or mortgages granted to Bank, or under any other document
or agreement given to secure repayment of any indebtedness from Company,
whether or not such claims arise before or after Bank has foreclosed upon
and/or otherwise become the owner of any such property. All obligations of
indemnity as provided hereunder shall be secured by the collateral documents.
It is expressly agreed and understood that the provisions hereof shall and
are intended to be continuing and shall survive the repayment of any
indebtedness from Company to Bank.

    10.7 Company shall maintain, and shall cause its Subsidiary to maintain,
all permits, licenses and approvals required under applicable Environmental
Laws except such permits, licenses and approvals the failure of which to have
would reasonably not be expected to materially adversely affect its business
or the value of its property or assets.

11. EVENTS OF DEFAULT

    11.1 Upon occurrence of any of the following events of default:

     (a) non-payment of any installment of the principal of the Notes when
due or any reimbursement obligation with respect to any Letter of Credit when
due;

     (b) non-payment of any interest on the Notes when due in accordance with
the terms thereof, or upon non-payment of any other outstanding Indebtedness
when due in accordance with the terms thereof;

     (c) default in the observance or performance of any of the conditions,
covenants or agreements of Company set forth in Section 8 or set forth in
Section 9;

     (d) default in observance or performance of any of the other conditions,
covenants or agreements of Company herein set forth, and continuance thereof
for thirty (30) days after written notice to Company by Bank;

     (e) any material representation or warranty made by Company or any other
Person herein or in any instrument submitted pursuant hereto proves untrue in
any material respect when made or deemed made;

     (f) default in the observance or performance of any of the conditions,
covenants or agreements of Company or any other Person set forth in any
collateral document which may be given to secure the indebtedness hereunder
or in any other collateral document related to or connected with this
Agreement or the indebtedness hereunder and continuance for ten (10) days;

     (g) default in the payment of any other obligation of Company, any
Subsidiary or any Guarantor for borrowed money in an aggregate amount in
excess of Fifty Thousand Dollars ($50,000), or in the observance or
performance of any conditions, covenants or agreements related or given with
respect to any obligations for borrowed money in an aggregate amount in
excess of Fifty Thousand Dollars ($50,000) sufficient to permit the holder
thereof to accelerate the maturity of such obligation;

     (h) judgments for the payment of money in excess of the sum of One
Hundred Thousand Dollars ($100,000) in the aggregate shall be rendered
against Company, any Subsidiary or any Guarantor and such judgments shall
remain unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a
period of thirty (30) consecutive days from the date of its entry and such
judgment is not covered by insurance from a solvent insurer who is defending
such action without reservation of rights;

     (i) the occurrence of any "reportable event", as defined in the Employee
Retirement Income Security Act of 1974 and any amendments thereto, which is
determined to constitute grounds for termination by the Pension Benefit
Guaranty Corporation of any employee pension benefit plan maintained by or on
behalf of Company or any Subsidiary for the benefit of any of its employees
or for the appointment by the appropriate United States District Court of a
trustee to administer such plan and is reasonably likely that the occurrence
of such event would result in a material adverse effect on Company, and such
reportable event is not corrected and such determination is not revoked
within thirty (30) days after notice thereof has been given to the plan
administrator or Company; or the institution of proceedings by the Pension
Benefit Guaranty Corporation to terminate any such employee benefit pension
plan or to appoint a trustee to administer such plan; or the appointment of a
trustee by the appropriate United States District Court to administer any
such employee benefit pension plan;

     (j) if Gregory Horton no longer is the President of Company or no longer
is actively involved in the day-to-day business of Company or if Thomas M.
Wheeler or entities controlled by him no longer own at least 30% of the
outstanding stock of Company having voting power or if at any time any person
or group of affiliated Persons owns a greater percentage of the outstanding
stock of Company than is owned at such time by Thomas M. Wheeler and the
entities controlled by him;

     (k) if any Guaranty or any subordination agreement relating to
Subordinated Debt is revoked;

     (l) if Bank shall deem itself to be insecure (subject to the provisions
of Section 1-208 of the UCC);

     (m) there shall exist or occur an event or condition which obligates or
requires Company to make any payment on or redemption of the 2008 Debenture
(including without limitation any "Security" as defined therein), other than
the semiannual interest payments scheduled for February 1 and August 1 of
each year, the principal payment scheduled on August 1, 2008 and the annual
mandatory redemptions scheduled for August 1 of each year thereunder. It is
acknowledged that the events which would constitute an Event of Default under
this subparagraph (m) include, without limitation, the occurrence of any
event which would obligate Borrower to make a "Repurchase Offer" or an
"Offer" as defined in the 2008 Debenture of the occurrence of any event which
results in the acceleration of any of the "Securities" or which would entitle
some or all of the holders hereof to accelerate all or a portion of the
"Securities"; then, or at any time thereafter, unless such default is
remedied, Bank may give notice to Company declaring all outstanding
indebtedness hereunder and under the Notes to be due and payable, whereupon
all indebtedness then outstanding hereunder and under the Notes and any
Letters of Credit shall immediately become due and payable without further
notice and demand, and Bank shall not be obligated to make further Advances,
any Equipment Loan, or issue any Letter of Credit hereunder.

    11.2 If a creditors ' committee shall have been appointed for the
business of Company or any Subsidiary in connection with any bankruptcy or
insolvency; or if Company or any Subsidiary shall have made a general
assignment for the benefit of creditors or shall have been adjudicated
bankrupt, or shall have filed a voluntary petition in bankruptcy or for
reorganization or to effect a plan or arrangement with creditors; or shall
file an answer to a creditor 's petition or other petition filed against it,
admitting the material allegations thereof for an adjudication in bankruptcy
or for reorganization; or shall have applied for or permitted the appointment
of a receiver, or trustee or custodian for any of its property or assets; or
such receiver, trustee or custodian shall have been appointed for any of its
property or assets (otherwise than upon application or consent of Company or
any Subsidiary, as applicable), and such receiver, trustee or custodian so
appointed shall not have been discharged within sixty (60) days after the
date of his appointment or if an order shall be entered and shall not be
dismissed or stayed within sixty (60) days from its entry, approving any
petition for reorganization of Company or any Subsidiary, then the Notes and
all indebtedness then outstanding hereunder and under any Letters of Credit
shall automatically become immediately due and payable and Bank shall not be
obligated to make further Advances, any Equipment Loans or issue any Letters
of Credit under this Agreement.

    11.3 Upon the occurrence and during the continuance of an Event of
Default, unless all of the Indebtedness is then immediately fully paid, Bank
shall have and may exercise any one or more of the rights and remedies for
which provision is made for a secured party under the UCC, under the Security
Agreements or under any other document contemplated hereby or for which
provision is provided by law or in equity, including, without limitation, the
right to take possession and sell, lease or otherwise dispose of any or all
of the collateral and to set off against the Indebtedness any amount owing by
Bank to Company and/or any property of Company in possession of Bank. Company
agrees, upon request of Bank, to assemble the collateral and make it
available to Bank at any place designated by Bank which is reasonably
convenient to Bank and Company.

    11.4 All of the Indebtedness shall constitute one loan secured by Bank 's
security interest in the collateral and by all other security interests,
mortgages, liens, claims, and encumbrances now and from time to time
hereafter granted from Company to Bank. Upon the occurrence and during the
continuance of an Event of Default which is not cured within the cure period,
if any, provided hereunder, Bank may in its sole discretion apply the
collateral to any portion of the Indebtedness. The proceeds of any sale or
other disposition of the Collateral authorized by this Agreement shall be
applied by Bank, first upon all expenses authorized by the Michigan Uniform
Commercial Code (or other applicable law) or otherwise in connection with the
sale and all reasonable attorneys ' fees and legal expenses incurred by Bank;
the balance of the proceeds of such sale or other disposition shall be
applied in the payment of the Indebtedness, first to interest, then to
principal, then to other Indebtedness and the surplus, if any, shall be paid
over to Company or to such other Person or Persons as may be entitled thereto
under applicable law. Company shall remain liable for any deficiency, which
Company shall pay to Bank immediately upon demand.

    11.5 The remedies provided for herein are cumulative to the remedies for
collection of the Indebtedness as provided by law, in equity or by any
mortgage, security agreement or other document contemplated hereby. Nothing
herein contained is intended, nor shall it be construed, to preclude Bank
from pursuing any other remedy for the recovery of any other sum to which
Bank may be or become entitled for the breach of this Agreement by Company.

11.6 Upon the occurrence and during the continuance of any Event of Default,
Company shall immediately upon demand by Bank deposit with Bank cash
collateral in the amount equal to the maximum amount available to be drawn at
any time under any Letter of Credit then outstanding.

12. MISCELLANEOUS

    12.1 This Agreement shall be binding upon and shall inure to the benefit
of Company and Bank and their respective successors and assigns, except that
the credit provided for under this Agreement and no part thereof and no
obligation of Bank hereunder shall be assignable or otherwise transferable by
Company.

    12.2 Company shall pay all closing costs and expenses, including, by way
of description and not limitation, reasonable attorney fees, lien search
fees, appraisal fees and title policy fees incurred by Bank in connection
with the commitment, consummation and closing of this Agreement. All of said
amounts required to be paid by Company may, at Bank 's option, be charged by
Bank as an advance against the proceeds of the Notes. All costs, including
reasonable attorney fees incurred by Bank in protecting or enforcing any of
its or any of the Bank 's rights against Company or any collateral or in
defending Bank from any claims or liabilities by any party or otherwise
incurred by Bank in connection with an event of default or the enforcement of
this Agreement or the related documents, including by way of description and
not limitation, such charges in any court or bankruptcy proceedings or
arising out of any claim or action by any person against Bank which would not
have been asserted were it not for Bank 's relationship with Company
hereunder, shall also be paid by Company.

    12.3 Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP.

    12.4 No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall
any single or partial exercise thereof preclude any further exercise thereof,
or the exercise of any other power, right or privilege. The rights of Bank
and Company under this Agreement are cumulative and not exclusive of any
right or remedies which Bank or Company, as applicable, would otherwise have.

     12.5 Except as expressly provided otherwise in this Agreement, all
notices and other communications provided to any party hereto under this
Agreement shall be in writing and shall be given by personal delivery, by
mail, by reputable overnight courier, by telex or by facsimile and addressed
or delivered to it at its address set forth below or at such other address as
may be designated by such party in a notice to the other parties that
complies as to delivery with the terms of this Section 12.5. Any notice, if
personally delivered or if mailed and properly addressed with postage prepaid
and sent by registered or certified mail, shall be deemed given when
received; any notice, if given to a reputable overnight courier and properly
addressed, shall be deemed given two (2) Business Days after the date on
which it was sent, unless it is actually received sooner by the named
addressee; and any notice, if transmitted by telex or facsimile, shall be
deemed given when received (answerback confirmed in the case of telexes and
receipt confirmed by Bank in the case of telecopies from Company to Bank and
receipt confirmed by Company in the case of telecopies from Bank to Company).
Bank may, but shall not be required to, take any action on the basis of any
notice given to it by telephone, but Company shall promptly confirm such
notice in writing or by telex or facsimile, and such notice will not be
deemed to have been received until such confirmation is deemed received in
accordance with the provisions of this Section set forth above. If such
telephonic notice conflicts with any such confirmation, the terms of such
telephonic notice shall control.

     To Company:
     2151 Anchor Court
     Thousand Oaks, California 91320
     Attention: Kirk A. Waldron
     Fax No.(805) 376-9015

     To Bank:
     One Detroit Center
     500 Woodward Avenue
     Detroit, Michigan 48226
     Attention: Comerica Business Credit/Group Manager
     Fax No. (313) 222-9297

    12.6 This Agreement and the Notes have been delivered at Detroit,
Michigan, and shall be governed by and construed and enforced in accordance
with the laws of the State of Michigan. Whenever possible each provision of
this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

    12.7 No amendments or waiver of any provisions of this Agreement nor
consent to any departure by Company therefrom shall in any event be effective
unless the same shall be in writing and signed by the Bank, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment, waiver or consent
with respect to any provision of this Agreement shall affect any other
provision of this Agreement.

    12.8 All sums payable by Company to Bank under this Agreement or the
other documents contemplated hereby shall be paid directly to Bank at its
principal office set forth in Section 12.5 hereof in immediately available
United States funds, without set off, deduction or counterclaim. In its sole
discretion, Bank may charge any and all deposit or other accounts (including
without limit an account evidenced by a certificate of deposit) of Company
with Bank for all or a part of any Indebtedness then due; provided, however,
that this authorization shall not affect Company 's obligation to pay, when
due, any Indebtedness whether or not account balances are sufficient to pay
amounts due.

    12.9 Any payment of the Indebtedness made by mail will be deemed tendered
and received only upon actual receipt by Bank at the address designated for
such payment, whether or not Bank has authorized payment by mail or any other
manner, and shall not be deemed to have been made in a timely manner unless
received on the date due for such payment, time being of the essence. Company
expressly assumes all risks of loss or liability resulting from non-delivery
or delay of delivery of any item of payment transmitted by mail or in any
other manner. Acceptance by Bank of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an
Event of Default, and at any time thereafter and until the entire amount then
due has been paid, Bank shall be entitled to exercise any and all rights
conferred upon it herein upon the occurrence of an Event of Default. Upon the
occurrence and during the continuance of an Event of Default, Company waives
the right to direct the application of any and all payments at any time or
times hereafter received by Bank from or on behalf of Company. Upon the
occurrence and during the continuance of an Event of Default, Company agrees
that Bank shall have the continuing exclusive right to apply and to reapply
any and all payments received at any time or times hereafter against the
Indebtedness in such manner as Bank may deem advisable, notwithstanding any
entry by Bank upon any of its books and records. Company expressly agrees
that to the extent that Bank receives any payment or benefit and such payment
or benefit, or any part thereof, is subsequently invalidated, declared to be
fraudulent or preferential, set aside or is required to be repaid to a
trustee, receiver, or any other party under any bankruptcy act, state or
federal law, common law or equitable cause, then to the extent of such
payment or benefit, the Indebtedness or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if such payment or
benefit had not been made and, further, any such repayment by Bank, to the
extent that Bank did not directly receive a corresponding cash payment, shall
be added to and be additional Indebtedness payable upon demand by Bank.

    12.10 In the event Company 's obligation to pay interest on the principal
balance of the Notes is or becomes in excess of the maximum interest rate
which Company is permitted by law to contract or agree to pay, giving due
consideration to the execution date of this Agreement, then, in that event,
the rate of interest applicable shall be deemed to be immediately reduced to
such maximum rate and all previous payments in excess of such maximum rate
shall be deemed to have been payments in reduction of principal and not of
interest.

    12.11 COMPANY AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

    12.12 This Agreement shall become effective upon the execution hereof by
Bank and Company.

WITNESS the due execution hereof as of the day and year first above written.

COMERICA BANK                          SMTEK INTERNATIONAL, INC.
By:                                    By: /s/ Kirk A. Waldron
Its: Vice President                    Its: Chief Financial Officer/Treasurer

<PAGE>
                                 EXHIBIT "A"
                                EQUIPMENT NOTE

                                                           Detroit, Michigan
$                                                                     , 2001
 --------------------                                     ------------

     FOR VALUE RECEIVED, SMTEK International, Inc., a Delaware corporation
(herein called "Company") promises to pay to the order of COMERICA BANK, a
Michigan banking corporation (herein called "Bank"), at its Main Office at
500 Woodward Avenue, Detroit, Michigan, the principal sum of and 00/100
Dollars ($___________) in lawful money of the United States of America
payable in monthly principal installments each in the amount of Dollars
($__________), commencing on ___________, 200___, and on a like day of each
month thereafter until the Equipment Credit Maturity Date, when the entire
unpaid balance of principal and interest thereon shall be due and payable,
together with interest thereon as hereinafter set forth.

     The principal balance from time to time outstanding hereunder shall bear
interest at the Applicable Interest Rate from time to time applicable thereto
under the Agreement (as defined below) or as otherwise determined thereunder,
and interest shall be computed, assessed and payable as set forth in the
Agreement.

     This Note evidences borrowing under, is subject to, is secured in
accordance with, may be prepaid in accordance with, and may be matured under
the terms of the Credit Agreement dated as of September 25, 2001 by and
between Company and Bank (as the same may be amended or modified from time to
time, "Agreement") to which reference is hereby made. As additional security
for this Note, Company grants Bank a lien on all property and assets,
including deposits and other credits, of the Company, at any time in
possession or control of or owing by Bank for any purpose.

     Company hereby waives presentment for payment, demand, protest and
notice of protest and notice of dishonor and nonpayment of this Note and
agrees that no obligation hereunder shall be discharged by reason of any
extension, indulgence, or forbearance granted by any holder of this Note to
any party now or hereafter liable hereon. Any transferees of, or endorser,
guarantor or surety paying this Note in full shall succeed to all rights of
Bank, and Bank shall be under no further responsibility for the exercise
thereof or the loan evidenced hereby. Nothing herein shall limit any right
granted by other instrument or by law.

     All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.

                                       SMTEK INTERNATIONAL, INC.
                                       By:
                                       Its:

<PAGE>
                                  EXHIBIT "B"
                              NOTICE OF TERM RATE

     With reference to the Equipment Note dated , 200___ in the original
principal amount of $ delivered by the Company to the Bank under the Credit
Agreement dated as of September 25, 2001 by and between Company and the Bank
(as the same may be amended or modified from time to time, "Agreement") and
pursuant to the Agreement, the Company hereby elects as the Applicable
Interest Rate for such Note the ____(1) Rate. Such Applicable Interest Rate
shall be effected on , ___________, and the Interest Period applicable
thereto, if any, shall be _____.(2)

     All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.

     Dated this_________ day of , ________.

                                        SMTEK INTERNATIONAL, INC.
                                        By:
                                        Its:

(1) Insert, as applicable, "Eurodollar-based", or "Prime-based".
(2) Insert, as applicable, "one month", "two months" or "three months".

<PAGE>

                                  EXHIBIT "C"
                              REQUEST FOR ADVANCE

     Pursuant to the Credit Agreement dated as of September 25, 2001, (herein
called "Agreement"), the undersigned hereby requests COMERICA BANK to make
a(an) ______(1) Advance to the undersigned on , , in the amount of DOLLARS,
($ ) under [the Revolving Credit Note dated September 25, 2001] [an Equipment
Note], issued by the undersigned to said Bank (herein called "Note"). The
Interest Period for the requested Advance, if applicable, shall be _____(2).
The last day of the Interest Period for the amounts being converted or
refunded hereunder, if applicable, is , . The undersigned certifies that no
event has occurred or condition exists which constitutes, or with the passage
of time and/or giving of notice would constitute, a default under the
Agreement or the Note, and none will exist upon the making of the Advance
requested hereunder.

     The undersigned further certifies that upon advancing the sum requested
hereunder, the aggregate principal amount outstanding under the Note will not
exceed the face amount thereof or any advance formula applicable to Advances
under such Note. If the amount advanced to the undersigned under the Note
shall at any time exceed the face amount thereof or any Advance formula
applicable to Advances under such Note, the undersigned will pay such excess
amount on demand.

     [The proceeds of the Advance in the amount of $_______ will be used to
fund a Permitted U.S. Acquisition.]

     The undersigned hereby authorizes said Bank to disburse the proceeds of
this Request for Advance by crediting the account of the undersigned with
Bank separately designated by the undersigned or as the undersigned may
otherwise direct, unless this Request for Advance is being submitted for a
conversion or refunding, in which case it shall refund or convert that
portion stated above of the existing outstandings under the Note.

Dated this ______ day of _____, ______.

                                           SMTEK INTERNATIONAL, INC.
                                           By:
                                           Its:

(1) Insert, as applicable, "Eurodollar-based", or "Prime-based".
(2) For a Eurodollar-based Advance insert, as applicable, "one month", "two
months" or "three months".

<PAGE>
                                 EXHIBIT "D"
                            REVOLVING CREDIT NOTE

                                                        Detroit, Michigan
$16,000,000                                            September 25, 2001

     On or before the Revolving Credit Maturity Date FOR VALUE RECEIVED,
SMTEK International, Inc., a Delaware corporation, (herein called "Company")
promises to pay to the order of COMERICA BANK, a Michigan banking corporation
(herein called "Bank") at its Main Office at 500 Woodward Avenue, Detroit,
Michigan, in lawful money of the United States of America the indebtedness or
so much of the sum of Sixteen Million Dollars ($16,000,000) as may from time
to time have been advanced and then be outstanding hereunder pursuant to the
Credit Agreement dated as of September 25, 2001, made by and between Company
and Bank (as the same may be amended or modified from time to time, herein
called "Agreement"), together with interest thereon as hereinafter set forth.

     Each of the Advances hereunder shall bear interest at the Applicable
Interest Rate from time to time applicable thereto under the Agreement or as
otherwise determined thereunder, and interest shall be computed, assessed and
payable as set forth in the Agreement.

     This Note is a note under which advances, repayments and readvances may
be made from time to time, subject to the terms and conditions of the
Agreement. This Note evidences borrowing under, is subject to, is secured in
accordance with, and may be matured under, the terms of the Agreement, to
which reference is hereby made. As additional security for this Note, Company
grants Bank a lien on all property and assets including deposits and other
credits of the Company, at any time in possession or control of or owing by
Bank for any purpose.

     Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon. Any transferees of, or endorser, guarantor or surety paying
this Note in full shall succeed to all rights of Bank, and Bank shall be
under no further responsibility for the exercise thereof or the loan
evidenced hereby. Nothing herein shall limit any right granted Bank by other
instrument or by law.

     All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.

                                   SMTEK INTERNATIONAL, INC.
                                   By:
                                   Its:

<PAGE>

SECURITY AGREEMENT
(All Assets)

As of September 25, 2001, for value received, the undersigned ("Debtor")
grants to Comerica Bank, a Michigan banking corporation ("Bank"), whose
address is 39200 Six Mile Road, Livonia, Michigan 48152 , Attention:
Commercial Loan Documentation, Mail Code 7578, a continuing security interest
and lien (any pledge, assignment, security interest or other lien arising
hereunder is sometimes referred to herein as a "security interest") in the
Collateral (as defined below) to secure payment when due, whether by stated
maturity, demand, acceleration or otherwise, of all existing and future
indebtedness ("Indebtedness") to the Bank of Smtek International, Inc.
("Borrower") and/or Debtor. Indebtedness includes without limit any and all
obligations or liabilities of the Borrower and/or Debtor to the Bank, whether
absolute or contingent, direct or indirect, voluntary or involuntary,
liquidated or unliquidated, joint or several, known or unknown; any and all
obligations or liabilities for which the Borrower and/or Debtor would
otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other
law, or for any other reason; any and all amendments, modifications, renewals
and/or extensions of any of the above; all costs incurred by Bank in
establishing, determining, continuing, or defending the validity or priority
of its security interest, or in pursuing its rights and remedies under this
Agreement or under any other agreement between Bank and Borrower and/or
Debtor or in connection with any proceeding involving Bank as a result of any
financial accommodation to Borrower and/or Debtor; and all other costs of
collecting Indebtedness, including without limit attorney fees. Debtor agrees
to pay Bank all such costs incurred by the Bank, immediately upon demand, and
until paid all costs shall bear interest at the highest per annum rate
applicable to any of the Indebtedness, but not in excess of the maximum rate
permitted by law. Any reference in this Agreement to attorney fees shall be
deemed a reference to reasonable fees, costs, and expenses of both in-house
and outside counsel and paralegals, whether or not a suit or action is
instituted, and to court costs if a suit or action is instituted, and whether
attorney fees or court costs are incurred at the trial court level, on
appeal, in a bankruptcy, administrative or probate proceeding or otherwise.
Debtor further covenants, agrees and represents as follows:

1. COLLATERAL shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:

     (a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts; general intangibles; chattel paper
(including without limit electronic chattel paper and tangible chattel
paper); contract rights; deposit accounts; documents; instruments; rights to
payment evidenced by chattel paper, documents or instruments; health care
insurance receivables; commercial tort claims; letters of credit; letter of
credit rights; supporting obligations; and rights to payment for money or
funds advanced or sold),

     (b) all Inventory,

     (c) all Equipment and Fixtures,

     (d) all Software (for purposes of this Agreement, "Software" consists of
all (i) computer programs and supporting information provided in connection
with a transaction relating to the program, and (ii) computer programs
embedded in goods and any supporting information provided in connection with
a transaction relating to the program whether or not the program is
associated with the goods in such a manner that it customarily is considered
part of the goods, and whether or not, by becoming the owner of the goods, a
person acquires a right to use the program in connection with the goods, and
whether or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),

     (e) specific items listed below and/or on attached Schedule A, if any,
is/are also included in Collateral:



     (f) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property (except
real property which is not a fixture) which are now or later in possession or
control of Bank, or as to which Bank now or later controls possession by
documents or otherwise, and

     (g) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of any
kind (including but not limited to stock splits, stock rights, voting and
preferential rights), products, and proceeds of or pertaining to the above
including, without limit, cash or other property which were proceeds and are
recovered by a bankruptcy trustee or otherwise as a preferential transfer by
Debtor.

In the definition of Collateral, a reference to a type of collateral shall
not be limited by a separate reference to a more specific or narrower type of
that collateral.

2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and
agrees as follows:

2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor shall,
at the request of Bank, mark its records and the Collateral to clearly
indicate the security interest of Bank under this Agreement.

2.2 At the time any Collateral becomes, or is represented to be, subject to a
security interest in favor of Bank, Debtor shall be deemed to have warranted
that (a) Debtor is the lawful owner of the Collateral and has the right and
authority to subject it to a security interest granted to Bank; (b) none of
the Collateral is subject to any security interest other than that in favor
of Bank and Permitted Liens (as defined below); (c) there are no financing
statements on file, other than in favor of Bank and those filed with respect
to Permitted Liens; (d) no person, other than Bank, has possession or control
(as defined in the Uniform Commercial Code) of any Collateral of such nature
that perfection of a security interest may be accomplished by control; and
(e) Debtor acquired its rights in the Collateral in the ordinary course of
its business.

2.3 Debtor will keep the Collateral free at all times from all claims, liens,
security interests and encumbrances other than those in favor of Bank and
liens and security interests permitted under the terms of the Credit
Agreement dated as of September ___, 2001 between Borrower and Bank
("Permitted Liens"). Debtor will not, without the prior written consent of
Bank, sell, transfer or lease, or permit to be sold, transferred or leased,
any or all of the Collateral, except for Inventory in the ordinary course of
its business and will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the Collateral and may
enter upon all premises where the Collateral is kept or might be located.

2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an exclusive,
perfected and first security interest of Bank in the Collateral (subject to
Permitted Liens). Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether realty or
personalty, to secure payment of the Indebtedness, and Debtor is not relying
upon assets in which the Bank may have a lien or security interest for
payment of the Indebtedness.

2.5 Debtor will pay within the time that they can be paid without interest or
penalty all taxes, assessments and similar charges which at any time are or
may become a lien, charge, or encumbrance upon any Collateral, except to the
extent contested in good faith and, if reasonably required by Bank, bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these taxes,
assessments, or other charges in the time provided above, Bank has the option
(but not the obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at the
highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause ordinary wear and tear
excepted. Debtor has and will maintain at all times (a) with respect to the
Collateral, insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and other
insurance as may be required by law or reasonably required by Bank, all of
which insurance shall be in amount, form and content, and written by
companies as may be satisfactory to Bank, containing a lender's loss payable
endorsement acceptable to Bank. Debtor will deliver to Bank immediately upon
demand evidence satisfactory to Bank that the required insurance has been
procured. If Debtor fails to maintain satisfactory insurance, Bank has the
option (but not the obligation) to do so and Debtor agrees to repay all
amounts so expended by Bank immediately upon demand, together with interest
at the highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.7 On each occasion on which Debtor evidences to Bank the account balances
on and the nature and extent of the Accounts Receivable which are included in
a borrowing base report as an eligible account, Debtor shall be deemed to
have warranted that except as otherwise indicated (a) each of those Accounts
Receivable is valid and enforceable without performance by Debtor of any act;
(b) each of those account balances are in fact owing, (c) there are no
setoffs, recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable, (d) as to any Accounts Receivable
represented by a note, trade acceptance, draft or other instrument or by any
chattel paper or document, the same have been endorsed and/or delivered by
Debtor to Bank, (e) Debtor has not received with respect to any Account
Receivable, any notice of the death of the related account debtor, nor of the
dissolution, liquidation, termination of existence, insolvency, business
failure, appointment of a receiver for, assignment for the benefit of
creditors by, or filing of a petition in bankruptcy by or against, the
account debtor, and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the account
debtor is not an affiliate of Debtor, the United States of America or any
department, agency or instrumentality of it, or a citizen or resident of any
jurisdiction outside of the United States. Debtor will do all acts and will
execute all writings requested by Bank to perform, enforce performance of,
and collect all Accounts Receivable. Debtor shall neither make nor permit any
modification, compromise or substitution for any Account Receivable without
the prior written consent of Bank except for modifications and compromises
made in the ordinary course of business in a manner consistent with past
practice and to the extent made prior to the occurrence of an Event of
Default. Debtor shall, at Bank's request, arrange for verification of
Accounts Receivable directly with account debtors or by other methods
acceptable to Bank.

2.8 Debtor at all times shall be in compliance in all material respects with
all applicable laws, including without limit any laws, ordinances,
directives, orders, statutes, or regulations an object of which is to
regulate or improve health, safety, or the environment ("Environmental
Laws").

2.9 If Bank, acting in its sole discretion, redelivers Collateral to Debtor
or Debtor's designee for the purpose of (a) the ultimate sale or exchange
thereof; or (b) presentation, collection, renewal, or registration of
transfer thereof; or (c) loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange; such redelivery shall be in trust for the
benefit of Bank and shall not constitute a release of Bank's security
interest in it or in the proceeds or products of it unless Bank specifically
so agrees in writing. If Debtor requests any such redelivery, Debtor will
deliver with such request a duly executed financing statement in form and
substance satisfactory to Bank. Any proceeds of Collateral coming into
Debtor's possession as a result of any such redelivery shall be held in trust
for Bank and immediately delivered to Bank for application on the
Indebtedness. Bank may (in its sole discretion) deliver any or all of the
Collateral to Debtor, and such delivery by Bank shall discharge Bank from all
liability or responsibility for such Collateral. Bank, at its option, may
require delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.

2.10 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its nominees; (b)
receive or collect by legal proceedings or otherwise all dividends, interest,
principal payments and other sums and all other distributions at any time
payable or receivable on account of the Collateral, and hold the same as
Collateral, or apply the same to the Indebtedness, the manner and
distribution of the application to be in the sole discretion of Bank; (c)
enter into any extension, subordination, reorganization, deposit, merger or
consolidation agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and accept
other property in exchange for the Collateral and hold or apply the property
or money so received pursuant to this Agreement; and (d) take such actions in
its own name or in Debtor's name as Bank, in its sole discretion, deems
necessary or appropriate to establish exclusive control (as defined in the
Uniform Commercial Code) over any Collateral of such nature that perfection
of Bank's security interest may be accomplished by control.

2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then
shall have with respect to Collateral so delivered all the rights and powers
of Bank under this Agreement,
and after that Bank shall be fully discharged from all liability and
responsibility with respect to Collateral
so delivered.

2.12 [Intentionally Left Blank].

2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and against
any and all claims, damages, fines, expenses, liabilities or causes of action
of whatever kind, including without limit consultant fees, legal expenses,
and attorney fees, suffered by any of them as a direct or indirect result of
any actual or asserted violation of any law by Debtor or any of its
employees, agents, affiliates, officers, directors or other persons under its
direction or control, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including without
limit Environmental Laws.

3. COLLECTION OF PROCEEDS.

3.1 Debtor agrees to collect and enforce payment of all Collateral until Bank
shall direct Debtor to the contrary (which direction may only be given
following the occurrence of an Event of Default). Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement of all
Collateral and to hold in trust for Bank all payments received in connection
with Collateral and from the sale, lease or other disposition of any
Collateral, all rights by way of suretyship or guaranty and all rights in the
nature of a lien or security interest which Debtor now or later has regarding
Collateral. Immediately upon and after such notice, Debtor agrees to (a)
endorse to Bank and immediately deliver to Bank all payments received on
Collateral or from the sale, lease or other disposition of any Collateral or
arising from any other rights or interests of Debtor in the Collateral, in
the form received by Debtor without commingling with any other funds, and (b)
immediately deliver to Bank all property in Debtor's possession or later
coming into Debtor's possession through enforcement of Debtor's rights or
interests in the Collateral. Debtor irrevocably authorizes Bank or any Bank
employee or agent to endorse the name of Debtor upon any checks or other
items which are received in payment for any Collateral, and to do any and all
things necessary in order to reduce these items to money. Bank shall have no
duty as to the collection or protection of Collateral or the proceeds of it,
nor as to the preservation of any related rights, beyond the use of
reasonable care in the custody and preservation of Collateral in the
possession of Bank. Debtor agrees to take all steps necessary to preserve
rights against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or other
disposition of any Collateral.

3.2 Debtor agrees that immediately upon Bank's request (which notice may only
be given following the occurrence of an Event of Default) the Indebtedness
shall be on a "remittance basis" as follows: Debtor shall at its sole expense
establish and maintain (and Bank, at Bank's option may establish and maintain
at Debtor's expense): (a) an United States Post Office lock box (the "Lock
Box"), to which Bank shall have exclusive access and control. Debtor
expressly authorizes Bank, from time to time, to remove contents from the
Lock Box, for disposition in accordance with this Agreement. Debtor agrees to
notify all account debtors and other parties obligated to Debtor that all
payments made to Debtor (other than payments by electronic funds transfer)
shall be remitted, for the credit of Debtor, to the Lock Box, and Debtor
shall include a like statement on all invoices; and (b) a non-interest
bearing deposit account with Bank which shall be titled as designated by Bank
(the "Cash Collateral Account") to which Bank shall have exclusive access and
control. Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at
Bank's request, shall include a like statement on all invoices. Debtor shall
execute all documents and authorizations as required by Bank to establish and
maintain the Lock Box and the Cash Collateral Account.

3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of Debtor to
Bank on account of partial or full payment of, or with respect to, any
Collateral shall, at Bank's option, (a) be applied to the payment of the
Indebtedness, whether then due or not, in such order or at such time of
application as Bank may determine in its sole discretion, or, (b) be
deposited to the Cash Collateral Account. Debtor agrees that Bank shall not
be liable for any loss or damage which Debtor may suffer as a result of
Bank's processing of items or its exercise of any other rights or remedies
under this Agreement, including without limitation indirect, special or
consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and against
all such third party claims, demands or actions, and all related expenses or
liabilities, including, without limitation, attorney fees, except for claims
arising solely as a result of Bank's gross negligence or willful misconduct.

4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.

4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:

     (a) Any failure to pay the Indebtedness or any other indebtedness when
due, or such portion of it as may be due, by acceleration or otherwise; or

     (b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or commitment
between Borrower, Debtor, or any guarantor of any of the Indebtedness
("Guarantor") and Bank and continuance beyond any applicable period of cure;
or

     (c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of Borrower,
Debtor, or any Guarantor shall be, or shall prove to have been, false or
materially misleading when made, given, or furnished; or

     (d) Any material loss, theft, substantial damage or destruction to or of
any Collateral which is not covered by insurance, or the issuance or filing
of any attachment, levy, garnishment or the commencement of any similar
proceeding in connection with any Collateral; or

     (e) Bank in good faith deems the margin of Collateral insufficient or
itself insecure (subject to the provisions of Section 1-208 of the Uniform
Commercial Code) or shall in good faith fear deterioration, removal, or waste
of Collateral; or

     (f) A default shall occur under any instrument, agreement or other
document evidencing, securing or otherwise relating to any of the
Indebtedness and continue beyond any applicable period of cure.

4.2 Upon the occurrence of any Event of Default, Bank may at its discretion
and without prior notice to Debtor declare any or all of the Indebtedness to
be immediately due and payable, and shall have and may exercise any one or
more of the following rights and remedies:

     (a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions of the
Uniform Commercial Code and other applicable law;

     (b) Institute legal proceedings to foreclose upon the lien and security
interest granted by this Agreement, to recover judgment for all amounts then
due and owing as Indebtedness, and to collect the same out of any Collateral
or the proceeds of any sale of it;

     (c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all Collateral;
and/or

     (d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and take
possession of all or any of it and/or render it unusable; and without being
responsible for loss or damage to such Collateral, hold, operate, sell,
lease, or dispose of all or any Collateral at one or more public or private
sales, leasings or other disposition, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all notice of sale,
lease or other disposition, and advertisement, and other notice or demand,
any right or equity of redemption, and any obligation of a prospective
purchaser or lessee to inquire as to the power and authority of Bank to sell,
lease, or otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise be required
by, or available to Debtor under, applicable law are expressly waived by
Debtor to the fullest extent permitted. At any sale pursuant to this Section
4.2, whether under the power of sale, by virtue of judicial proceedings or
otherwise, it shall not be necessary for Bank or a public officer under order
of a court to have present physical or constructive possession of Collateral
to be sold. The recitals contained in any conveyances and receipts made and
given by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by applicable law,
conclusively establish the truth and accuracy of the matters stated
(including, without limit, as to the amounts of the principal of and interest
on the Indebtedness, the accrual and nonpayment of it and advertisement and
conduct of the sale); and all prerequisites to the sale shall be presumed to
have been satisfied and performed. Upon any sale of any Collateral, the
receipt of the officer making the sale under judicial proceedings or of Bank
shall be sufficient discharge to the purchaser for the purchase money, and
the purchaser shall not be obligated to see to the application of the money.
Any sale of any Collateral under this Agreement shall be a perpetual bar
against Debtor with respect to that Collateral. At any sale or other
disposition of Collateral pursuant to this Section 4.2, Bank disclaims all
warranties which would otherwise be given under the Uniform Commercial Code,
including without limit a disclaimer of any warranty relating to title,
possession, quiet enjoyment or the like, and Bank may communicate these
disclaimers to a purchaser at such disposition. This disclaimer of warranties
will not render the sale commercially unreasonable.

4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct payment of
it to Bank. Bank may, itself, upon the occurrence of any Event of Default so
notify and direct any account debtor or obligor. At the request of Bank,
whether or not an Event of Default shall have occurred, Debtor shall
immediately take such actions as Bank shall request to establish exclusive
control (as defined in the Uniform Commercial Code) by Bank over any
Collateral which is of such a nature that perfection of a security interest
may be accomplished by control.

4.4 The proceeds of any sale or other disposition of Collateral authorized by
this Agreement shall be applied by Bank first upon all expenses authorized by
the Uniform Commercial Code and all reasonable attorney fees and legal
expenses incurred by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to remaining Indebtedness and the surplus,
if any, shall be paid over to Debtor or to such other person(s) as may be
entitled to it under applicable law. Debtor shall remain liable for any
deficiency, which it shall pay to Bank immediately upon demand. Debtor agrees
that Bank shall be under no obligation to accept any noncash proceeds in
connection with any sale or disposition of Collateral unless failure to do so
would be commercially unreasonable. If Bank agrees in its sole discretion to
accept noncash proceeds (unless the failure to do so would be commercially
unreasonable), Bank may ascribe any commercially reasonable value to such
proceeds. Without limiting the foregoing, Bank may apply any commercially
reasonable discount factor in determining the present value of proceeds to be
received in the future or may elect to apply proceeds to be received in the
future only as and when such proceeds are actually received in cash by Bank.

4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum to which
Bank may be entitled for the breach of this Agreement by Debtor. Nothing in
this Agreement shall reduce or release in any way any rights or security
interests of Bank contained in any existing agreement between Borrower,
Debtor, or any Guarantor and Bank.

     4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of Bank. No
waiver of any default or forbearance on the part of Bank in enforcing any of
its rights under this Agreement shall operate as a waiver of any other
default or of the same default on a future occasion or of any rights.

4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest and which, except as to subclause
(ii) below, may only be exercised following the occurrence of an Event of
Default) the true and lawful attorney of Debtor (with full power of
substitution) in the name, place and stead of, and at the expense of, Debtor
and (b) authorizes Bank or any agent of Bank, in its own name, at Debtor's
expense, to do any of the following, as Bank, in its sole discretion, deems
appropriate:

     (i) to demand, receive, sue for, and give receipts or acquittances for
any moneys due or to become due on any Collateral (including without limit to
draft against Collateral) and to endorse any item representing any payment on
or proceeds of the Collateral;

     (ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or desirable by Bank
to evidence, perfect, or continue the security interests granted in this
Agreement; and

     (iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.

4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to Bank at
any place designated by Bank which is reasonably convenient to Bank and
Debtor.

4.9 The following shall be the basis for any finder of fact's determination
of the value of any Collateral which is the subject matter of a disposition
giving rise to a calculation of any surplus or deficiency under Section 9.615
(f) of the Uniform Commercial Code (as in effect on or after July 1, 2001):
(a) the Collateral which is the subject matter of the disposition shall be
valued in an "as is" condition as of the date of the disposition, without any
assumption or expectation that such Collateral will be repaired or improved
in any manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for cash
promptly (but no later than 30 days) following the disposition; (c) all
reasonable closing costs customarily borne by the seller in commercial sales
transactions relating to property similar to such Collateral shall be
deducted including, without limitation, brokerage commissions, tax
prorations, attorneys' fees, whether inside or outside counsel is used, and
marketing costs; (d) the value of the Collateral which is the subject matter
of the disposition shall be further discounted to account for any estimated
holding costs associated with maintaining such Collateral pending sale (to
the extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion testimony
given or considered in connection with a determination of the value of such
Collateral must be given by persons having at least 5 years experience in
appraising property similar to the Collateral and who have conducted and
prepared a complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of any such Collateral
shall be a factor in determining the amount of proceeds which would have been
realized in a disposition to a transferee other than a secured party, a
person related to a secured party or a secondary obligor under Section 9-
615(f).

5. MISCELLANEOUS.

5.1 Until Bank is advised in writing by Debtor to the contrary, all notices,
requests and demands required under this Agreement or by law shall be given
to, or made upon, Debtor at the first address indicated in Section 5.15
below.

5.2 Debtor will give Bank not less than 30 days prior written notice of all
contemplated changes in Debtor's name, location, chief executive office,
principal place of business, and/or location of any Collateral, but the
giving of this notice shall not cure any Event of Default caused by this
change.

5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.

5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and any
related obligations, including without limit this Agreement. In connection
with the above, but without limiting its ability to make other disclosures to
the full extent allowable, Bank may disclose all documents and information
which Bank now or later has relating to Debtor, the Indebtedness or this
Agreement, however obtained to any assignee or participant who agrees to hold
such information confidential in the same manner as the Bank. Debtor further
agrees that Bank may provide information relating to this Agreement or
relating to Debtor to the Bank's parent, affiliates, subsidiaries, and
service providers.

5.5 In addition to Bank's other rights, any indebtedness owing from Bank to
Debtor can be set off and applied by Bank on any Indebtedness at any time(s)
after maturity and without notice or demand notice to anyone. Any such action
shall not constitute an acceptance of collateral in discharge of the
Indebtedness.

5.6 Debtor, to the extent not expressly prohibited by applicable law, waives
any right to require the Bank to: (a) proceed against any person or property;
(b) give notice of the terms, time and place of any public or private sale of
personal property security held from Borrower or any other person, or
otherwise comply with the provisions of Sections 9-611 or 9-621 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's power.
Debtor waives notice of acceptance of this Agreement and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of default,
notice of intent to accelerate or demand payment of any Indebtedness, any and
all other notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Indebtedness, and agree(s) that the Bank may,
once or any number of times, modify the terms of any Indebtedness,
compromise, extend, increase, accelerate, renew or forbear to enforce payment
of any or all Indebtedness, or permit Borrower to incur additional
Indebtedness, all without notice to Debtor and without affecting in any
manner the unconditional obligation of Debtor under this Agreement. Debtor
unconditionally and irrevocably waives each and every defense and setoff of
any nature which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this Agreement,
and acknowledges that such waiver is by this reference incorporated into each
security agreement, collateral assignment, pledge and/or other document from
Debtor now or later securing the Indebtedness, and acknowledges that as of
the date of this Agreement no such defense or setoff exists.

5.7 [Intentionally Left Blank].

5.8 In the event that applicable law shall obligate Bank to give prior notice
to Debtor of any action to be taken under this Agreement, Debtor agrees that
a written notice given to Debtor at least ten days before the date of the act
shall be reasonable notice of the act and, specifically, reasonable
notification of the time and place of any public sale or of the time after
which any private sale, lease, or other disposition is to be made, unless a
shorter notice period is reasonable under the circumstances. A notice shall
be deemed to be given under this Agreement when delivered to Debtor or when
placed in an envelope addressed to Debtor and deposited, with postage
prepaid, in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an overnight
courier. The mailing shall be by overnight courier, certified, or first class
mail.

5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of this
Agreement shall automatically continue or be reinstated in the event that any
payment received or credit given by Bank in respect of the Indebtedness is
returned, disgorged, or rescinded under any applicable law, including,
without limitation, bankruptcy or insolvency laws, in which case this
Agreement, shall be enforceable against Debtor as if the returned, disgorged,
or rescinded payment or credit had not been received or given by Bank, and
whether or not Bank relied upon this payment or credit or changed its
position as a consequence of it. In the event of continuation or
reinstatement of this Agreement, Debtor agrees upon demand by Bank to execute
and deliver to Bank those documents which Bank determines are appropriate to
further evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of Debtor to do so shall not affect in
any way the reinstatement or continuation.

5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns and to
any other holder who derives from Bank title to or an interest in the
Indebtedness or any portion of it, and shall bind Debtor and the heirs, legal
representatives, successors, and assigns of Debtor. Nothing in this Section
5.10 is deemed a consent by Bank to any assignment by Debtor.

5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given to or
conferred upon Bank are made or given jointly and severally.

5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform Commercial
Code, as those meanings may be amended, revised or replaced from time to
time. "Uniform Commercial Code" means Act No. 174 of the Michigan Public Acts
of 1962, as amended, revised or replaced from time to time, including without
limit as amended by Act No. 348 of the Michigan Public Acts of 2000.
Notwithstanding the foregoing, the parties intend that the terms used herein
which are defined in the Uniform Commercial Code have, at all times, the
broadest and most inclusive meanings possible. Accordingly, if the Uniform
Commercial Code shall in the future be amended or held by a court to define
any term used herein more broadly or inclusively than the Uniform Commercial
Code in effect on the date of this Agreement, then such term, as used herein,
shall be given such broadened meaning. If the Uniform Commercial Code shall
in the future be amended or held by a court to define any term used herein
more narrowly, or less inclusively, than the Uniform Commercial Code in
effect on the date of this Agreement, such amendment or holding shall be
disregarded in defining terms used in this Agreement.

5.13 No single or partial exercise, or delay in the exercise, of any right or
power under this Agreement, shall preclude other or further exercise of the
rights and powers under this Agreement. The unenforceability of any provision
of this Agreement shall not affect the enforceability of the remainder of
this Agreement. This Agreement constitutes the entire agreement of Debtor and
Bank with respect to the subject matter of this Agreement. No amendment or
modification of this Agreement shall be effective unless the same shall be in
writing and signed by Debtor and an authorized officer of Bank. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Michigan, without regard to conflict of laws principles.

5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and conditions of
that Indebtedness nor shall anything contained in this Agreement prevent Bank
from making demand, without notice and with or without reason, for immediate
payment of any or all of that Indebtedness at any time(s), whether or not an
Event of Default has occurred.

5.15 Debtor represents and warrants that Debtor's exact name is the name set
forth in this Agreement. Debtor further represents and warrants the following
and agrees that Debtor is, and at all times shall be, located in the
following place [mark applicable provision]:

 Debtor is an individual, and Debtor is located (as determined pursuant to
the Uniform Commercial Code) at Debtor's principal residence which is (street
address, state and county or parish):
 .
X Debtor is a registered organization which is organized under the laws of
one of the states comprising the United States (e.g. corporation, limited
partnership, registered limited liability partnership or limited liability
company), and Debtor is located (as determined pursuant to the Uniform
Commercial Code) in the state under the laws of which it was organized, which
is Deleware.

 Debtor is a domestic organization which is not a registered organization
under the laws of the United States or any state thereof (e.g. general
partnership, joint venture, trust, estate or association), and Debtor is
located (as determined pursuant to the Uniform Commercial Code) at its sole
place of business or, if it has more than one place of business, at its chief
executive office, which is (street address, state and county or parish): .

 Debtor is a registered organization organized under the laws of the United
States, and Debtor is located in the state that United States law designates
as its location or, if United States law authorizes the Debtor to designate
the state for its location, the state designated by Debtor, or if neither of
the foregoing are applicable, at the District of Columbia. Debtor is located
(as determined pursuant to the Uniform Commercial Code) at (street address,
state and county or parish): .

 Debtor is a foreign individual or foreign organization or a branch or agency
of a bank that is not organized under the laws of the United States or a
state thereof. Debtor is located (as determined pursuant to the Uniform
Commercial Code) at: _______________________.

     If Collateral is located at other than the address specified above, such
Collateral is located and shall be maintained at

     See attached Schedule of Collateral Locations

     STREET ADDRESS
     CITY STATE ZIP CODE COUNTY

     Collateral shall be maintained only at the locations identified in this
Section 5.15.

5.16 A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement under the Uniform Commercial Code and may
be filed by Bank in any filing office.

5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.

6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

7. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*None, if left blank)
Debtor:

                               SMTEK INTERNATIONAL, INC.
                               By: /s/ Kirk A. Waldron
                               SIGNATURE OF KIRK A. WALDRON
                               Its: Treasurer
                               TITLE (If applicable)


<PAGE>

SECURITY AGREEMENT
(All Assets)

As of September 25, 2001, for value received, the undersigned ("Debtor")
grants to Comerica Bank, a Michigan banking corporation ("Bank"), whose
address is 39200 Six Mile Road, Livonia, Michigan 48152 , Attention:
Commercial Loan Documentation, Mail Code 7578, a continuing security interest
and lien (any pledge, assignment, security interest or other lien arising
hereunder is sometimes referred to herein as a "security interest") in the
Collateral (as defined below) to secure payment when due, whether by stated
maturity, demand, acceleration or otherwise, of all existing and future
indebtedness ("Indebtedness") to the Bank of Smtek International, Inc.
("Borrower") and/or Debtor. Indebtedness includes without limit any and all
obligations or liabilities of the Borrower and/or Debtor to the Bank, whether
absolute or contingent, direct or indirect, voluntary or involuntary,
liquidated or unliquidated, joint or several, known or unknown; any and all
obligations or liabilities for which the Borrower and/or Debtor would
otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other
law, or for any other reason; any and all amendments, modifications, renewals
and/or extensions of any of the above; all costs incurred by Bank in
establishing, determining, continuing, or defending the validity or priority
of its security interest, or in pursuing its rights and remedies under this
Agreement or under any other agreement between Bank and Borrower and/or
Debtor or in connection with any proceeding involving Bank as a result of any
financial accommodation to Borrower and/or Debtor; and all other costs of
collecting Indebtedness, including without limit attorney fees. Debtor agrees
to pay Bank all such costs incurred by the Bank, immediately upon demand, and
until paid all costs shall bear interest at the highest per annum rate
applicable to any of the Indebtedness, but not in excess of the maximum rate
permitted by law. Any reference in this Agreement to attorney fees shall be
deemed a reference to reasonable fees, costs, and expenses of both in-house
and outside counsel and paralegals, whether or not a suit or action is
instituted, and to court costs if a suit or action is instituted, and whether
attorney fees or court costs are incurred at the trial court level, on
appeal, in a bankruptcy, administrative or probate proceeding or otherwise.
Debtor further covenants, agrees and represents as follows:

1. COLLATERAL shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:

     (a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts; general intangibles; chattel paper
(including without limit electronic chattel paper and tangible chattel
paper); contract rights; deposit accounts; documents; instruments; rights to
payment evidenced by chattel paper, documents or instruments; health care
insurance receivables; commercial tort claims; letters of credit; letter of
credit rights; supporting obligations; and rights to payment for money or
funds advanced or sold),

     (b) all Inventory,

     (c) all Equipment and Fixtures,

     (d) all Software (for purposes of this Agreement, "Software" consists of
all (i) computer programs and supporting information provided in connection
with a transaction relating to the program, and (ii) computer programs
embedded in goods and any supporting information provided in connection with
a transaction relating to the program whether or not the program is
associated with the goods in such a manner that it customarily is considered
part of the goods, and whether or not, by becoming the owner of the goods, a
person acquires a right to use the program in connection with the goods, and
whether or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),

     (e) specific items listed below and/or on attached Schedule A, if any,
is/are also included in Collateral:



     (f) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property (except
real property which is not a fixture) which are now or later in possession or
control of Bank, or as to which Bank now or later controls possession by
documents or otherwise, and

     (g) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of any
kind (including but not limited to stock splits, stock rights, voting and
preferential rights), products, and proceeds of or pertaining to the above
including, without limit, cash or other property which were proceeds and are
recovered by a bankruptcy trustee or otherwise as a preferential transfer by
Debtor.

In the definition of Collateral, a reference to a type of collateral shall
not be limited by a separate reference to a more specific or narrower type of
that collateral.

2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and
agrees as follows:

2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor shall,
at the request of Bank, mark its records and the Collateral to clearly
indicate the security interest of Bank under this Agreement.

2.2 At the time any Collateral becomes, or is represented to be, subject to a
security interest in favor of Bank, Debtor shall be deemed to have warranted
that (a) Debtor is the lawful owner of the Collateral and has the right and
authority to subject it to a security interest granted to Bank; (b) none of
the Collateral is subject to any security interest other than that in favor
of Bank and Permitted Liens (as defined below); (c) there are no financing
statements on file, other than in favor of Bank and those filed with respect
to Permitted Liens; (d) no person, other than Bank, has possession or control
(as defined in the Uniform Commercial Code) of any Collateral of such nature
that perfection of a security interest may be accomplished by control; and
(e) Debtor acquired its rights in the Collateral in the ordinary course of
its business.

2.3 Debtor will keep the Collateral free at all times from all claims, liens,
security interests and encumbrances other than those in favor of Bank and
liens and security interests permitted under the terms of the Credit
Agreement dated as of September ___, 2001 between Borrower and Bank
("Permitted Liens"). Debtor will not, without the prior written consent of
Bank, sell, transfer or lease, or permit to be sold, transferred or leased,
any or all of the Collateral, except for Inventory in the ordinary course of
its business and will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the Collateral and may
enter upon all premises where the Collateral is kept or might be located.

2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an exclusive,
perfected and first security interest of Bank in the Collateral (subject to
Permitted Liens). Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether realty or
personalty, to secure payment of the Indebtedness, and Debtor is not relying
upon assets in which the Bank may have a lien or security interest for
payment of the Indebtedness.

2.5 Debtor will pay within the time that they can be paid without interest or
penalty all taxes, assessments and similar charges which at any time are or
may become a lien, charge, or encumbrance upon any Collateral, except to the
extent contested in good faith and, if reasonably required by Bank, bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these taxes,
assessments, or other charges in the time provided above, Bank has the option
(but not the obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at the
highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause ordinary wear and tear
excepted. Debtor has and will maintain at all times (a) with respect to the
Collateral, insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and other
insurance as may be required by law or reasonably required by Bank, all of
which insurance shall be in amount, form and content, and written by
companies as may be satisfactory to Bank, containing a lender's loss payable
endorsement acceptable to Bank. Debtor will deliver to Bank immediately upon
demand evidence satisfactory to Bank that the required insurance has been
procured. If Debtor fails to maintain satisfactory insurance, Bank has the
option (but not the obligation) to do so and Debtor agrees to repay all
amounts so expended by Bank immediately upon demand, together with interest
at the highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.7 On each occasion on which Debtor evidences to Bank the account balances
on and the nature and extent of the Accounts Receivable which are included in
a borrowing base report as an eligible account, Debtor shall be deemed to
have warranted that except as otherwise indicated (a) each of those Accounts
Receivable is valid and enforceable without performance by Debtor of any act;
(b) each of those account balances are in fact owing, (c) there are no
setoffs, recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable, (d) as to any Accounts Receivable
represented by a note, trade acceptance, draft or other instrument or by any
chattel paper or document, the same have been endorsed and/or delivered by
Debtor to Bank, (e) Debtor has not received with respect to any Account
Receivable, any notice of the death of the related account debtor, nor of the
dissolution, liquidation, termination of existence, insolvency, business
failure, appointment of a receiver for, assignment for the benefit of
creditors by, or filing of a petition in bankruptcy by or against, the
account debtor, and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the account
debtor is not an affiliate of Debtor, the United States of America or any
department, agency or instrumentality of it, or a citizen or resident of any
jurisdiction outside of the United States. Debtor will do all acts and will
execute all writings requested by Bank to perform, enforce performance of,
and collect all Accounts Receivable. Debtor shall neither make nor permit any
modification, compromise or substitution for any Account Receivable without
the prior written consent of Bank except for modifications and compromises
made in the ordinary course of business in a manner consistent with past
practice and to the extent made prior to the occurrence of an Event of
Default. Debtor shall, at Bank's request, arrange for verification of
Accounts Receivable directly with account debtors or by other methods
acceptable to Bank.

2.8 Debtor at all times shall be in compliance in all material respects with
all applicable laws, including without limit any laws, ordinances,
directives, orders, statutes, or regulations an object of which is to
regulate or improve health, safety, or the environment ("Environmental
Laws").

2.9 If Bank, acting in its sole discretion, redelivers Collateral to Debtor
or Debtor's designee for the purpose of (a) the ultimate sale or exchange
thereof; or (b) presentation, collection, renewal, or registration of
transfer thereof; or (c) loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange; such redelivery shall be in trust for the
benefit of Bank and shall not constitute a release of Bank's security
interest in it or in the proceeds or products of it unless Bank specifically
so agrees in writing. If Debtor requests any such redelivery, Debtor will
deliver with such request a duly executed financing statement in form and
substance satisfactory to Bank. Any proceeds of Collateral coming into
Debtor's possession as a result of any such redelivery shall be held in trust
for Bank and immediately delivered to Bank for application on the
Indebtedness. Bank may (in its sole discretion) deliver any or all of the
Collateral to Debtor, and such delivery by Bank shall discharge Bank from all
liability or responsibility for such Collateral. Bank, at its option, may
require delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.

2.10 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its nominees; (b)
receive or collect by legal proceedings or otherwise all dividends, interest,
principal payments and other sums and all other distributions at any time
payable or receivable on account of the Collateral, and hold the same as
Collateral, or apply the same to the Indebtedness, the manner and
distribution of the application to be in the sole discretion of Bank; (c)
enter into any extension, subordination, reorganization, deposit, merger or
consolidation agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and accept
other property in exchange for the Collateral and hold or apply the property
or money so received pursuant to this Agreement; and (d) take such actions in
its own name or in Debtor's name as Bank, in its sole discretion, deems
necessary or appropriate to establish exclusive control (as defined in the
Uniform Commercial Code) over any Collateral of such nature that perfection
of Bank's security interest may be accomplished by control.

2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then
shall have with respect to Collateral so delivered all the rights and powers
of Bank under this Agreement,
and after that Bank shall be fully discharged from all liability and
responsibility with respect to Collateral
so delivered.

2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial condition of
Borrower and is not relying on any information furnished by Bank. Debtor
assumes full responsibility for obtaining any further information concerning
the Borrower's financial condition, the status of the Indebtedness or any
other matter which the undersigned may deem necessary or appropriate now or
later. Debtor waives any duty on the part of Bank, and agrees that Debtor is
not relying upon nor expecting Bank to disclose to Debtor any fact now or
later known by Bank, whether relating to the operations or condition of
Borrower, the existence, liabilities or financial condition of any guarantor
of the Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may have
upon Debtor's risk or Debtor's rights against Borrower. Debtor knowingly
accepts the full range of risk encompassed in this Agreement, which risk
includes without limit the possibility that Borrower may incur Indebtedness
to Bank after the financial condition of Borrower, or Borrower's ability to
pay debts as they mature, has deteriorated.

2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and against
any and all claims, damages, fines, expenses, liabilities or causes of action
of whatever kind, including without limit consultant fees, legal expenses,
and attorney fees, suffered by any of them as a direct or indirect result of
any actual or asserted violation of any law by Debtor or any of its
employees, agents, affiliates, officers, directors or other persons under its
direction or control, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including without
limit Environmental Laws.

3. COLLECTION OF PROCEEDS.

3.1 Debtor agrees to collect and enforce payment of all Collateral until Bank
shall direct Debtor to the contrary (which direction may only be given
following the occurrence of an Event of Default). Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement of all
Collateral and to hold in trust for Bank all payments received in connection
with Collateral and from the sale, lease or other disposition of any
Collateral, all rights by way of suretyship or guaranty and all rights in the
nature of a lien or security interest which Debtor now or later has regarding
Collateral. Immediately upon and after such notice, Debtor agrees to (a)
endorse to Bank and immediately deliver to Bank all payments received on
Collateral or from the sale, lease or other disposition of any Collateral or
arising from any other rights or interests of Debtor in the Collateral, in
the form received by Debtor without commingling with any other funds, and (b)
immediately deliver to Bank all property in Debtor's possession or later
coming into Debtor's possession through enforcement of Debtor's rights or
interests in the Collateral. Debtor irrevocably authorizes Bank or any Bank
employee or agent to endorse the name of Debtor upon any checks or other
items which are received in payment for any Collateral, and to do any and all
things necessary in order to reduce these items to money. Bank shall have no
duty as to the collection or protection of Collateral or the proceeds of it,
nor as to the preservation of any related rights, beyond the use of
reasonable care in the custody and preservation of Collateral in the
possession of Bank. Debtor agrees to take all steps necessary to preserve
rights against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or other
disposition of any Collateral.

3.2 Debtor agrees that immediately upon Bank's request (which notice may only
be given following the occurrence of an Event of Default) the Indebtedness
shall be on a "remittance basis" as follows: Debtor shall at its sole expense
establish and maintain (and Bank, at Bank's option may establish and maintain
at Debtor's expense): (a) an United States Post Office lock box (the "Lock
Box"), to which Bank shall have exclusive access and control. Debtor
expressly authorizes Bank, from time to time, to remove contents from the
Lock Box, for disposition in accordance with this Agreement. Debtor agrees to
notify all account debtors and other parties obligated to Debtor that all
payments made to Debtor (other than payments by electronic funds transfer)
shall be remitted, for the credit of Debtor, to the Lock Box, and Debtor
shall include a like statement on all invoices; and (b) a non-interest
bearing deposit account with Bank which shall be titled as designated by Bank
(the "Cash Collateral Account") to which Bank shall have exclusive access and
control. Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at
Bank's request, shall include a like statement on all invoices. Debtor shall
execute all documents and authorizations as required by Bank to establish and
maintain the Lock Box and the Cash Collateral Account.

3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of Debtor to
Bank on account of partial or full payment of, or with respect to, any
Collateral shall, at Bank's option, (a) be applied to the payment of the
Indebtedness, whether then due or not, in such order or at such time of
application as Bank may determine in its sole discretion, or, (b) be
deposited to the Cash Collateral Account. Debtor agrees that Bank shall not
be liable for any loss or damage which Debtor may suffer as a result of
Bank's processing of items or its exercise of any other rights or remedies
under this Agreement, including without limitation indirect, special or
consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and against
all such third party claims, demands or actions, and all related expenses or
liabilities, including, without limitation, attorney fees, except for claims
arising solely as a result of Bank's gross negligence or willful misconduct.

4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.

4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:

     (a) Any failure to pay the Indebtedness or any other indebtedness when
due, or such portion of it as may be due, by acceleration or otherwise; or

     (b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or commitment
between Borrower, Debtor, or any guarantor of any of the Indebtedness
("Guarantor") and Bank and continuance beyond any applicable period of cure;
or

     (c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of Borrower,
Debtor, or any Guarantor shall be, or shall prove to have been, false or
materially misleading when made, given, or furnished; or

     (d) Any material loss, theft, substantial damage or destruction to or of
any Collateral which is not covered by insurance, or the issuance or filing
of any attachment, levy, garnishment or the commencement of any similar
proceeding in connection with any Collateral; or

     (e) Bank in good faith deems the margin of Collateral insufficient or
itself insecure (subject to the provisions of Section 1-208 of the Uniform
Commercial Code) or shall in good faith fear deterioration, removal, or waste
of Collateral; or

     (f) A default shall occur under any instrument, agreement or other
document evidencing, securing or otherwise relating to any of the
Indebtedness and continue beyond any applicable period of cure.

4.2 Upon the occurrence of any Event of Default, Bank may at its discretion
and without prior notice to Debtor declare any or all of the Indebtedness to
be immediately due and payable, and shall have and may exercise any one or
more of the following rights and remedies:

     (a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions of the
Uniform Commercial Code and other applicable law;

     (b) Institute legal proceedings to foreclose upon the lien and security
interest granted by this Agreement, to recover judgment for all amounts then
due and owing as Indebtedness, and to collect the same out of any Collateral
or the proceeds of any sale of it;

     (c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all Collateral;
and/or

     (d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and take
possession of all or any of it and/or render it unusable; and without being
responsible for loss or damage to such Collateral, hold, operate, sell,
lease, or dispose of all or any Collateral at one or more public or private
sales, leasings or other disposition, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all notice of sale,
lease or other disposition, and advertisement, and other notice or demand,
any right or equity of redemption, and any obligation of a prospective
purchaser or lessee to inquire as to the power and authority of Bank to sell,
lease, or otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise be required
by, or available to Debtor under, applicable law are expressly waived by
Debtor to the fullest extent permitted. At any sale pursuant to this Section
4.2, whether under the power of sale, by virtue of judicial proceedings or
otherwise, it shall not be necessary for Bank or a public officer under order
of a court to have present physical or constructive possession of Collateral
to be sold. The recitals contained in any conveyances and receipts made and
given by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by applicable law,
conclusively establish the truth and accuracy of the matters stated
(including, without limit, as to the amounts of the principal of and interest
on the Indebtedness, the accrual and nonpayment of it and advertisement and
conduct of the sale); and all prerequisites to the sale shall be presumed to
have been satisfied and performed. Upon any sale of any Collateral, the
receipt of the officer making the sale under judicial proceedings or of Bank
shall be sufficient discharge to the purchaser for the purchase money, and
the purchaser shall not be obligated to see to the application of the money.
Any sale of any Collateral under this Agreement shall be a perpetual bar
against Debtor with respect to that Collateral. At any sale or other
disposition of Collateral pursuant to this Section 4.2, Bank disclaims all
warranties which would otherwise be given under the Uniform Commercial Code,
including without limit a disclaimer of any warranty relating to title,
possession, quiet enjoyment or the like, and Bank may communicate these
disclaimers to a purchaser at such disposition. This disclaimer of warranties
will not render the sale commercially unreasonable.

4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct payment of
it to Bank. Bank may, itself, upon the occurrence of any Event of Default so
notify and direct any account debtor or obligor. At the request of Bank,
whether or not an Event of Default shall have occurred, Debtor shall
immediately take such actions as Bank shall request to establish exclusive
control (as defined in the Uniform Commercial Code) by Bank over any
Collateral which is of such a nature that perfection of a security interest
may be accomplished by control.

4.4 The proceeds of any sale or other disposition of Collateral authorized by
this Agreement shall be applied by Bank first upon all expenses authorized by
the Uniform Commercial Code and all reasonable attorney fees and legal
expenses incurred by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to remaining Indebtedness and the surplus,
if any, shall be paid over to Debtor or to such other person(s) as may be
entitled to it under applicable law. Debtor shall remain liable for any
deficiency, which it shall pay to Bank immediately upon demand. Debtor agrees
that Bank shall be under no obligation to accept any noncash proceeds in
connection with any sale or disposition of Collateral unless failure to do so
would be commercially unreasonable. If Bank agrees in its sole discretion to
accept noncash proceeds (unless the failure to do so would be commercially
unreasonable), Bank may ascribe any commercially reasonable value to such
proceeds. Without limiting the foregoing, Bank may apply any commercially
reasonable discount factor in determining the present value of proceeds to be
received in the future or may elect to apply proceeds to be received in the
future only as and when such proceeds are actually received in cash by Bank.

4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum to which
Bank may be entitled for the breach of this Agreement by Debtor. Nothing in
this Agreement shall reduce or release in any way any rights or security
interests of Bank contained in any existing agreement between Borrower,
Debtor, or any Guarantor and Bank.

     4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of Bank. No
waiver of any default or forbearance on the part of Bank in enforcing any of
its rights under this Agreement shall operate as a waiver of any other
default or of the same default on a future occasion or of any rights.

4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest and which, except as to subclause
(ii) below, may only be exercised following the occurrence of an Event of
Default) the true and lawful attorney of Debtor (with full power of
substitution) in the name, place and stead of, and at the expense of, Debtor
and (b) authorizes Bank or any agent of Bank, in its own name, at Debtor's
expense, to do any of the following, as Bank, in its sole discretion, deems
appropriate:

     (i) to demand, receive, sue for, and give receipts or acquittances for
any moneys due or to become due on any Collateral (including without limit to
draft against Collateral) and to endorse any item representing any payment on
or proceeds of the Collateral;

     (ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or desirable by Bank
to evidence, perfect, or continue the security interests granted in this
Agreement; and

     (iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.

4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to Bank at
any place designated by Bank which is reasonably convenient to Bank and
Debtor.

4.9 The following shall be the basis for any finder of fact's determination
of the value of any Collateral which is the subject matter of a disposition
giving rise to a calculation of any surplus or deficiency under Section 9.615
(f) of the Uniform Commercial Code (as in effect on or after July 1, 2001):
(a) the Collateral which is the subject matter of the disposition shall be
valued in an "as is" condition as of the date of the disposition, without any
assumption or expectation that such Collateral will be repaired or improved
in any manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for cash
promptly (but no later than 30 days) following the disposition; (c) all
reasonable closing costs customarily borne by the seller in commercial sales
transactions relating to property similar to such Collateral shall be
deducted including, without limitation, brokerage commissions, tax
prorations, attorneys' fees, whether inside or outside counsel is used, and
marketing costs; (d) the value of the Collateral which is the subject matter
of the disposition shall be further discounted to account for any estimated
holding costs associated with maintaining such Collateral pending sale (to
the extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion testimony
given or considered in connection with a determination of the value of such
Collateral must be given by persons having at least 5 years experience in
appraising property similar to the Collateral and who have conducted and
prepared a complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of any such Collateral
shall be a factor in determining the amount of proceeds which would have been
realized in a disposition to a transferee other than a secured party, a
person related to a secured party or a secondary obligor under Section 9-
615(f).

5. MISCELLANEOUS.

5.1 Until Bank is advised in writing by Debtor to the contrary, all notices,
requests and demands required under this Agreement or by law shall be given
to, or made upon, Debtor at the first address indicated in Section 5.15
below.

5.2 Debtor will give Bank not less than 30 days prior written notice of all
contemplated changes in Debtor's name, location, chief executive office,
principal place of business, and/or location of any Collateral, but the
giving of this notice shall not cure any Event of Default caused by this
change.

5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.

5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and any
related obligations, including without limit this Agreement. In connection
with the above, but without limiting its ability to make other disclosures to
the full extent allowable, Bank may disclose all documents and information
which Bank now or later has relating to Debtor, the Indebtedness or this
Agreement, however obtained to any assignee or participant who agrees to hold
such information confidential in the same manner as the Bank. Debtor further
agrees that Bank may provide information relating to this Agreement or
relating to Debtor to the Bank's parent, affiliates, subsidiaries, and
service providers.

5.5 In addition to Bank's other rights, any indebtedness owing from Bank to
Debtor can be set off and applied by Bank on any Indebtedness at any time(s)
after maturity and without notice or demand notice to anyone. Any such action
shall not constitute an acceptance of collateral in discharge of the
Indebtedness.

5.6 Debtor, to the extent not expressly prohibited by applicable law, waives
any right to require the Bank to: (a) proceed against any person or property;
(b) give notice of the terms, time and place of any public or private sale of
personal property security held from Borrower or any other person, or
otherwise comply with the provisions of Sections 9-611 or 9-621 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's power.
Debtor waives notice of acceptance of this Agreement and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of default,
notice of intent to accelerate or demand payment of any Indebtedness, any and
all other notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Indebtedness, and agree(s) that the Bank may,
once or any number of times, modify the terms of any Indebtedness,
compromise, extend, increase, accelerate, renew or forbear to enforce payment
of any or all Indebtedness, or permit Borrower to incur additional
Indebtedness, all without notice to Debtor and without affecting in any
manner the unconditional obligation of Debtor under this Agreement. Debtor
unconditionally and irrevocably waives each and every defense and setoff of
any nature which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this Agreement,
and acknowledges that such waiver is by this reference incorporated into each
security agreement, collateral assignment, pledge and/or other document from
Debtor now or later securing the Indebtedness, and acknowledges that as of
the date of this Agreement no such defense or setoff exists.

5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid or the
value of any Collateral given by Debtor pursuant to this Agreement.

5.8 In the event that applicable law shall obligate Bank to give prior notice
to Debtor of any action to be taken under this Agreement, Debtor agrees that
a written notice given to Debtor at least ten days before the date of the act
shall be reasonable notice of the act and, specifically, reasonable
notification of the time and place of any public sale or of the time after
which any private sale, lease, or other disposition is to be made, unless a
shorter notice period is reasonable under the circumstances. A notice shall
be deemed to be given under this Agreement when delivered to Debtor or when
placed in an envelope addressed to Debtor and deposited, with postage
prepaid, in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an overnight
courier. The mailing shall be by overnight courier, certified, or first class
mail.

5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of this
Agreement shall automatically continue or be reinstated in the event that any
payment received or credit given by Bank in respect of the Indebtedness is
returned, disgorged, or rescinded under any applicable law, including,
without limitation, bankruptcy or insolvency laws, in which case this
Agreement, shall be enforceable against Debtor as if the returned, disgorged,
or rescinded payment or credit had not been received or given by Bank, and
whether or not Bank relied upon this payment or credit or changed its
position as a consequence of it. In the event of continuation or
reinstatement of this Agreement, Debtor agrees upon demand by Bank to execute
and deliver to Bank those documents which Bank determines are appropriate to
further evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of Debtor to do so shall not affect in
any way the reinstatement or continuation.

5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns and to
any other holder who derives from Bank title to or an interest in the
Indebtedness or any portion of it, and shall bind Debtor and the heirs, legal
representatives, successors, and assigns of Debtor. Nothing in this Section
5.10 is deemed a consent by Bank to any assignment by Debtor.

5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given to or
conferred upon Bank are made or given jointly and severally.

5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform Commercial
Code, as those meanings may be amended, revised or replaced from time to
time. "Uniform Commercial Code" means Act No. 174 of the Michigan Public Acts
of 1962, as amended, revised or replaced from time to time, including without
limit as amended by Act No. 348 of the Michigan Public Acts of 2000.
Notwithstanding the foregoing, the parties intend that the terms used herein
which are defined in the Uniform Commercial Code have, at all times, the
broadest and most inclusive meanings possible. Accordingly, if the Uniform
Commercial Code shall in the future be amended or held by a court to define
any term used herein more broadly or inclusively than the Uniform Commercial
Code in effect on the date of this Agreement, then such term, as used herein,
shall be given such broadened meaning. If the Uniform Commercial Code shall
in the future be amended or held by a court to define any term used herein
more narrowly, or less inclusively, than the Uniform Commercial Code in
effect on the date of this Agreement, such amendment or holding shall be
disregarded in defining terms used in this Agreement.

5.13 No single or partial exercise, or delay in the exercise, of any right or
power under this Agreement, shall preclude other or further exercise of the
rights and powers under this Agreement. The unenforceability of any provision
of this Agreement shall not affect the enforceability of the remainder of
this Agreement. This Agreement constitutes the entire agreement of Debtor and
Bank with respect to the subject matter of this Agreement. No amendment or
modification of this Agreement shall be effective unless the same shall be in
writing and signed by Debtor and an authorized officer of Bank. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Michigan, without regard to conflict of laws principles.

5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and conditions of
that Indebtedness nor shall anything contained in this Agreement prevent Bank
from making demand, without notice and with or without reason, for immediate
payment of any or all of that Indebtedness at any time(s), whether or not an
Event of Default has occurred.

5.15 Debtor represents and warrants that Debtor's exact name is the name set
forth in this Agreement. Debtor further represents and warrants the following
and agrees that Debtor is, and at all times shall be, located in the
following place [mark applicable provision]:

 Debtor is an individual, and Debtor is located (as determined pursuant to
the Uniform Commercial Code) at Debtor's principal residence which is (street
address, state and county or parish):
 .
X Debtor is a registered organization which is organized under the laws of
one of the states comprising the United States (e.g. corporation, limited
partnership, registered limited liability partnership or limited liability
company), and Debtor is located (as determined pursuant to the Uniform
Commercial Code) in the state under the laws of which it was organized, which
is (state address, state and county or parish):  2151 Anchor Ct., Thousand
Oaks, California 91320.

 Debtor is a domestic organization which is not a registered organization
under the laws of the United States or any state thereof (e.g. general
partnership, joint venture, trust, estate or association), and Debtor is
located (as determined pursuant to the Uniform Commercial Code) at its sole
place of business or, if it has more than one place of business, at its chief
executive office, which is (street address, state and county or parish): .

 Debtor is a registered organization organized under the laws of the United
States, and Debtor is located in the state that United States law designates
as its location or, if United States law authorizes the Debtor to designate
the state for its location, the state designated by Debtor, or if neither of
the foregoing are applicable, at the District of Columbia. Debtor is located
(as determined pursuant to the Uniform Commercial Code) at (street address,
state and county or parish): .

 Debtor is a foreign individual or foreign organization or a branch or agency
of a bank that is not organized under the laws of the United States or a
state thereof. Debtor is located (as determined pursuant to the Uniform
Commercial Code) at: _______________________.

     If Collateral is located at other than the address specified above, such
Collateral is located and shall be maintained at

     See attached Schedule of Collateral Locations

     STREET ADDRESS
     CITY STATE ZIP CODE COUNTY

     Collateral shall be maintained only at the locations identified in this
Section 5.15.

5.16 A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement under the Uniform Commercial Code and may
be filed by Bank in any filing office.

5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.

6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

7. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*None, if left blank)
Debtor:

                               SMTEK, INC.
                               By: /s/ Kirk A. Waldron
                               SIGNATURE OF KIRK A. WALDRON
                               Its: Treasurer
                               TITLE (If applicable)


<PAGE>

SECURITY AGREEMENT
(All Assets)

As of September 25, 2001, for value received, the undersigned ("Debtor")
grants to Comerica Bank, a Michigan banking corporation ("Bank"), whose
address is 39200 Six Mile Road, Livonia, Michigan 48152 , Attention:
Commercial Loan Documentation, Mail Code 7578, a continuing security interest
and lien (any pledge, assignment, security interest or other lien arising
hereunder is sometimes referred to herein as a "security interest") in the
Collateral (as defined below) to secure payment when due, whether by stated
maturity, demand, acceleration or otherwise, of all existing and future
indebtedness ("Indebtedness") to the Bank of Smtek International, Inc.
("Borrower") and/or Debtor. Indebtedness includes without limit any and all
obligations or liabilities of the Borrower and/or Debtor to the Bank, whether
absolute or contingent, direct or indirect, voluntary or involuntary,
liquidated or unliquidated, joint or several, known or unknown; any and all
obligations or liabilities for which the Borrower and/or Debtor would
otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other
law, or for any other reason; any and all amendments, modifications, renewals
and/or extensions of any of the above; all costs incurred by Bank in
establishing, determining, continuing, or defending the validity or priority
of its security interest, or in pursuing its rights and remedies under this
Agreement or under any other agreement between Bank and Borrower and/or
Debtor or in connection with any proceeding involving Bank as a result of any
financial accommodation to Borrower and/or Debtor; and all other costs of
collecting Indebtedness, including without limit attorney fees. Debtor agrees
to pay Bank all such costs incurred by the Bank, immediately upon demand, and
until paid all costs shall bear interest at the highest per annum rate
applicable to any of the Indebtedness, but not in excess of the maximum rate
permitted by law. Any reference in this Agreement to attorney fees shall be
deemed a reference to reasonable fees, costs, and expenses of both in-house
and outside counsel and paralegals, whether or not a suit or action is
instituted, and to court costs if a suit or action is instituted, and whether
attorney fees or court costs are incurred at the trial court level, on
appeal, in a bankruptcy, administrative or probate proceeding or otherwise.
Debtor further covenants, agrees and represents as follows:

1. COLLATERAL shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:

     (a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts; general intangibles; chattel paper
(including without limit electronic chattel paper and tangible chattel
paper); contract rights; deposit accounts; documents; instruments; rights to
payment evidenced by chattel paper, documents or instruments; health care
insurance receivables; commercial tort claims; letters of credit; letter of
credit rights; supporting obligations; and rights to payment for money or
funds advanced or sold),

     (b) all Inventory,

     (c) all Equipment and Fixtures,

     (d) all Software (for purposes of this Agreement, "Software" consists of
all (i) computer programs and supporting information provided in connection
with a transaction relating to the program, and (ii) computer programs
embedded in goods and any supporting information provided in connection with
a transaction relating to the program whether or not the program is
associated with the goods in such a manner that it customarily is considered
part of the goods, and whether or not, by becoming the owner of the goods, a
person acquires a right to use the program in connection with the goods, and
whether or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),

     (e) specific items listed below and/or on attached Schedule A, if any,
is/are also included in Collateral:



     (f) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property (except
real property which is not a fixture) which are now or later in possession or
control of Bank, or as to which Bank now or later controls possession by
documents or otherwise, and

     (g) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of any
kind (including but not limited to stock splits, stock rights, voting and
preferential rights), products, and proceeds of or pertaining to the above
including, without limit, cash or other property which were proceeds and are
recovered by a bankruptcy trustee or otherwise as a preferential transfer by
Debtor.

In the definition of Collateral, a reference to a type of collateral shall
not be limited by a separate reference to a more specific or narrower type of
that collateral.

2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and
agrees as follows:

2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor shall,
at the request of Bank, mark its records and the Collateral to clearly
indicate the security interest of Bank under this Agreement.

2.2 At the time any Collateral becomes, or is represented to be, subject to a
security interest in favor of Bank, Debtor shall be deemed to have warranted
that (a) Debtor is the lawful owner of the Collateral and has the right and
authority to subject it to a security interest granted to Bank; (b) none of
the Collateral is subject to any security interest other than that in favor
of Bank and Permitted Liens (as defined below); (c) there are no financing
statements on file, other than in favor of Bank and those filed with respect
to Permitted Liens; (d) no person, other than Bank, has possession or control
(as defined in the Uniform Commercial Code) of any Collateral of such nature
that perfection of a security interest may be accomplished by control; and
(e) Debtor acquired its rights in the Collateral in the ordinary course of
its business.

2.3 Debtor will keep the Collateral free at all times from all claims, liens,
security interests and encumbrances other than those in favor of Bank and
liens and security interests permitted under the terms of the Credit
Agreement dated as of September ___, 2001 between Borrower and Bank
("Permitted Liens"). Debtor will not, without the prior written consent of
Bank, sell, transfer or lease, or permit to be sold, transferred or leased,
any or all of the Collateral, except for Inventory in the ordinary course of
its business and will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the Collateral and may
enter upon all premises where the Collateral is kept or might be located.

2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an exclusive,
perfected and first security interest of Bank in the Collateral (subject to
Permitted Liens). Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether realty or
personalty, to secure payment of the Indebtedness, and Debtor is not relying
upon assets in which the Bank may have a lien or security interest for
payment of the Indebtedness.

2.5 Debtor will pay within the time that they can be paid without interest or
penalty all taxes, assessments and similar charges which at any time are or
may become a lien, charge, or encumbrance upon any Collateral, except to the
extent contested in good faith and, if reasonably required by Bank, bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these taxes,
assessments, or other charges in the time provided above, Bank has the option
(but not the obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at the
highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause ordinary wear and tear
excepted. Debtor has and will maintain at all times (a) with respect to the
Collateral, insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and other
insurance as may be required by law or reasonably required by Bank, all of
which insurance shall be in amount, form and content, and written by
companies as may be satisfactory to Bank, containing a lender's loss payable
endorsement acceptable to Bank. Debtor will deliver to Bank immediately upon
demand evidence satisfactory to Bank that the required insurance has been
procured. If Debtor fails to maintain satisfactory insurance, Bank has the
option (but not the obligation) to do so and Debtor agrees to repay all
amounts so expended by Bank immediately upon demand, together with interest
at the highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.7 On each occasion on which Debtor evidences to Bank the account balances
on and the nature and extent of the Accounts Receivable which are included in
a borrowing base report as an eligible account, Debtor shall be deemed to
have warranted that except as otherwise indicated (a) each of those Accounts
Receivable is valid and enforceable without performance by Debtor of any act;
(b) each of those account balances are in fact owing, (c) there are no
setoffs, recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable, (d) as to any Accounts Receivable
represented by a note, trade acceptance, draft or other instrument or by any
chattel paper or document, the same have been endorsed and/or delivered by
Debtor to Bank, (e) Debtor has not received with respect to any Account
Receivable, any notice of the death of the related account debtor, nor of the
dissolution, liquidation, termination of existence, insolvency, business
failure, appointment of a receiver for, assignment for the benefit of
creditors by, or filing of a petition in bankruptcy by or against, the
account debtor, and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the account
debtor is not an affiliate of Debtor, the United States of America or any
department, agency or instrumentality of it, or a citizen or resident of any
jurisdiction outside of the United States. Debtor will do all acts and will
execute all writings requested by Bank to perform, enforce performance of,
and collect all Accounts Receivable. Debtor shall neither make nor permit any
modification, compromise or substitution for any Account Receivable without
the prior written consent of Bank except for modifications and compromises
made in the ordinary course of business in a manner consistent with past
practice and to the extent made prior to the occurrence of an Event of
Default. Debtor shall, at Bank's request, arrange for verification of
Accounts Receivable directly with account debtors or by other methods
acceptable to Bank.

2.8 Debtor at all times shall be in compliance in all material respects with
all applicable laws, including without limit any laws, ordinances,
directives, orders, statutes, or regulations an object of which is to
regulate or improve health, safety, or the environment ("Environmental
Laws").

2.9 If Bank, acting in its sole discretion, redelivers Collateral to Debtor
or Debtor's designee for the purpose of (a) the ultimate sale or exchange
thereof; or (b) presentation, collection, renewal, or registration of
transfer thereof; or (c) loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange; such redelivery shall be in trust for the
benefit of Bank and shall not constitute a release of Bank's security
interest in it or in the proceeds or products of it unless Bank specifically
so agrees in writing. If Debtor requests any such redelivery, Debtor will
deliver with such request a duly executed financing statement in form and
substance satisfactory to Bank. Any proceeds of Collateral coming into
Debtor's possession as a result of any such redelivery shall be held in trust
for Bank and immediately delivered to Bank for application on the
Indebtedness. Bank may (in its sole discretion) deliver any or all of the
Collateral to Debtor, and such delivery by Bank shall discharge Bank from all
liability or responsibility for such Collateral. Bank, at its option, may
require delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.

2.10 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its nominees; (b)
receive or collect by legal proceedings or otherwise all dividends, interest,
principal payments and other sums and all other distributions at any time
payable or receivable on account of the Collateral, and hold the same as
Collateral, or apply the same to the Indebtedness, the manner and
distribution of the application to be in the sole discretion of Bank; (c)
enter into any extension, subordination, reorganization, deposit, merger or
consolidation agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and accept
other property in exchange for the Collateral and hold or apply the property
or money so received pursuant to this Agreement; and (d) take such actions in
its own name or in Debtor's name as Bank, in its sole discretion, deems
necessary or appropriate to establish exclusive control (as defined in the
Uniform Commercial Code) over any Collateral of such nature that perfection
of Bank's security interest may be accomplished by control.

2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then
shall have with respect to Collateral so delivered all the rights and powers
of Bank under this Agreement,
and after that Bank shall be fully discharged from all liability and
responsibility with respect to Collateral
so delivered.

2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial condition of
Borrower and is not relying on any information furnished by Bank. Debtor
assumes full responsibility for obtaining any further information concerning
the Borrower's financial condition, the status of the Indebtedness or any
other matter which the undersigned may deem necessary or appropriate now or
later. Debtor waives any duty on the part of Bank, and agrees that Debtor is
not relying upon nor expecting Bank to disclose to Debtor any fact now or
later known by Bank, whether relating to the operations or condition of
Borrower, the existence, liabilities or financial condition of any guarantor
of the Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may have
upon Debtor's risk or Debtor's rights against Borrower. Debtor knowingly
accepts the full range of risk encompassed in this Agreement, which risk
includes without limit the possibility that Borrower may incur Indebtedness
to Bank after the financial condition of Borrower, or Borrower's ability to
pay debts as they mature, has deteriorated.

2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and against
any and all claims, damages, fines, expenses, liabilities or causes of action
of whatever kind, including without limit consultant fees, legal expenses,
and attorney fees, suffered by any of them as a direct or indirect result of
any actual or asserted violation of any law by Debtor or any of its
employees, agents, affiliates, officers, directors or other persons under its
direction or control, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including without
limit Environmental Laws.

3. COLLECTION OF PROCEEDS.

3.1 Debtor agrees to collect and enforce payment of all Collateral until Bank
shall direct Debtor to the contrary (which direction may only be given
following the occurrence of an Event of Default). Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement of all
Collateral and to hold in trust for Bank all payments received in connection
with Collateral and from the sale, lease or other disposition of any
Collateral, all rights by way of suretyship or guaranty and all rights in the
nature of a lien or security interest which Debtor now or later has regarding
Collateral. Immediately upon and after such notice, Debtor agrees to (a)
endorse to Bank and immediately deliver to Bank all payments received on
Collateral or from the sale, lease or other disposition of any Collateral or
arising from any other rights or interests of Debtor in the Collateral, in
the form received by Debtor without commingling with any other funds, and (b)
immediately deliver to Bank all property in Debtor's possession or later
coming into Debtor's possession through enforcement of Debtor's rights or
interests in the Collateral. Debtor irrevocably authorizes Bank or any Bank
employee or agent to endorse the name of Debtor upon any checks or other
items which are received in payment for any Collateral, and to do any and all
things necessary in order to reduce these items to money. Bank shall have no
duty as to the collection or protection of Collateral or the proceeds of it,
nor as to the preservation of any related rights, beyond the use of
reasonable care in the custody and preservation of Collateral in the
possession of Bank. Debtor agrees to take all steps necessary to preserve
rights against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or other
disposition of any Collateral.

3.2 Debtor agrees that immediately upon Bank's request (which notice may only
be given following the occurrence of an Event of Default) the Indebtedness
shall be on a "remittance basis" as follows: Debtor shall at its sole expense
establish and maintain (and Bank, at Bank's option may establish and maintain
at Debtor's expense): (a) an United States Post Office lock box (the "Lock
Box"), to which Bank shall have exclusive access and control. Debtor
expressly authorizes Bank, from time to time, to remove contents from the
Lock Box, for disposition in accordance with this Agreement. Debtor agrees to
notify all account debtors and other parties obligated to Debtor that all
payments made to Debtor (other than payments by electronic funds transfer)
shall be remitted, for the credit of Debtor, to the Lock Box, and Debtor
shall include a like statement on all invoices; and (b) a non-interest
bearing deposit account with Bank which shall be titled as designated by Bank
(the "Cash Collateral Account") to which Bank shall have exclusive access and
control. Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at
Bank's request, shall include a like statement on all invoices. Debtor shall
execute all documents and authorizations as required by Bank to establish and
maintain the Lock Box and the Cash Collateral Account.

3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of Debtor to
Bank on account of partial or full payment of, or with respect to, any
Collateral shall, at Bank's option, (a) be applied to the payment of the
Indebtedness, whether then due or not, in such order or at such time of
application as Bank may determine in its sole discretion, or, (b) be
deposited to the Cash Collateral Account. Debtor agrees that Bank shall not
be liable for any loss or damage which Debtor may suffer as a result of
Bank's processing of items or its exercise of any other rights or remedies
under this Agreement, including without limitation indirect, special or
consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and against
all such third party claims, demands or actions, and all related expenses or
liabilities, including, without limitation, attorney fees, except for claims
arising solely as a result of Bank's gross negligence or willful misconduct.

4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.

4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:

     (a) Any failure to pay the Indebtedness or any other indebtedness when
due, or such portion of it as may be due, by acceleration or otherwise; or

     (b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or commitment
between Borrower, Debtor, or any guarantor of any of the Indebtedness
("Guarantor") and Bank and continuance beyond any applicable period of cure;
or

     (c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of Borrower,
Debtor, or any Guarantor shall be, or shall prove to have been, false or
materially misleading when made, given, or furnished; or

     (d) Any material loss, theft, substantial damage or destruction to or of
any Collateral which is not covered by insurance, or the issuance or filing
of any attachment, levy, garnishment or the commencement of any similar
proceeding in connection with any Collateral; or

     (e) Bank in good faith deems the margin of Collateral insufficient or
itself insecure (subject to the provisions of Section 1-208 of the Uniform
Commercial Code) or shall in good faith fear deterioration, removal, or waste
of Collateral; or

     (f) A default shall occur under any instrument, agreement or other
document evidencing, securing or otherwise relating to any of the
Indebtedness and continue beyond any applicable period of cure.

4.2 Upon the occurrence of any Event of Default, Bank may at its discretion
and without prior notice to Debtor declare any or all of the Indebtedness to
be immediately due and payable, and shall have and may exercise any one or
more of the following rights and remedies:

     (a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions of the
Uniform Commercial Code and other applicable law;

     (b) Institute legal proceedings to foreclose upon the lien and security
interest granted by this Agreement, to recover judgment for all amounts then
due and owing as Indebtedness, and to collect the same out of any Collateral
or the proceeds of any sale of it;

     (c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all Collateral;
and/or

     (d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and take
possession of all or any of it and/or render it unusable; and without being
responsible for loss or damage to such Collateral, hold, operate, sell,
lease, or dispose of all or any Collateral at one or more public or private
sales, leasings or other disposition, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all notice of sale,
lease or other disposition, and advertisement, and other notice or demand,
any right or equity of redemption, and any obligation of a prospective
purchaser or lessee to inquire as to the power and authority of Bank to sell,
lease, or otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise be required
by, or available to Debtor under, applicable law are expressly waived by
Debtor to the fullest extent permitted. At any sale pursuant to this Section
4.2, whether under the power of sale, by virtue of judicial proceedings or
otherwise, it shall not be necessary for Bank or a public officer under order
of a court to have present physical or constructive possession of Collateral
to be sold. The recitals contained in any conveyances and receipts made and
given by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by applicable law,
conclusively establish the truth and accuracy of the matters stated
(including, without limit, as to the amounts of the principal of and interest
on the Indebtedness, the accrual and nonpayment of it and advertisement and
conduct of the sale); and all prerequisites to the sale shall be presumed to
have been satisfied and performed. Upon any sale of any Collateral, the
receipt of the officer making the sale under judicial proceedings or of Bank
shall be sufficient discharge to the purchaser for the purchase money, and
the purchaser shall not be obligated to see to the application of the money.
Any sale of any Collateral under this Agreement shall be a perpetual bar
against Debtor with respect to that Collateral. At any sale or other
disposition of Collateral pursuant to this Section 4.2, Bank disclaims all
warranties which would otherwise be given under the Uniform Commercial Code,
including without limit a disclaimer of any warranty relating to title,
possession, quiet enjoyment or the like, and Bank may communicate these
disclaimers to a purchaser at such disposition. This disclaimer of warranties
will not render the sale commercially unreasonable.

4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct payment of
it to Bank. Bank may, itself, upon the occurrence of any Event of Default so
notify and direct any account debtor or obligor. At the request of Bank,
whether or not an Event of Default shall have occurred, Debtor shall
immediately take such actions as Bank shall request to establish exclusive
control (as defined in the Uniform Commercial Code) by Bank over any
Collateral which is of such a nature that perfection of a security interest
may be accomplished by control.

4.4 The proceeds of any sale or other disposition of Collateral authorized by
this Agreement shall be applied by Bank first upon all expenses authorized by
the Uniform Commercial Code and all reasonable attorney fees and legal
expenses incurred by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to remaining Indebtedness and the surplus,
if any, shall be paid over to Debtor or to such other person(s) as may be
entitled to it under applicable law. Debtor shall remain liable for any
deficiency, which it shall pay to Bank immediately upon demand. Debtor agrees
that Bank shall be under no obligation to accept any noncash proceeds in
connection with any sale or disposition of Collateral unless failure to do so
would be commercially unreasonable. If Bank agrees in its sole discretion to
accept noncash proceeds (unless the failure to do so would be commercially
unreasonable), Bank may ascribe any commercially reasonable value to such
proceeds. Without limiting the foregoing, Bank may apply any commercially
reasonable discount factor in determining the present value of proceeds to be
received in the future or may elect to apply proceeds to be received in the
future only as and when such proceeds are actually received in cash by Bank.

4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum to which
Bank may be entitled for the breach of this Agreement by Debtor. Nothing in
this Agreement shall reduce or release in any way any rights or security
interests of Bank contained in any existing agreement between Borrower,
Debtor, or any Guarantor and Bank.

     4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of Bank. No
waiver of any default or forbearance on the part of Bank in enforcing any of
its rights under this Agreement shall operate as a waiver of any other
default or of the same default on a future occasion or of any rights.

4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest and which, except as to subclause
(ii) below, may only be exercised following the occurrence of an Event of
Default) the true and lawful attorney of Debtor (with full power of
substitution) in the name, place and stead of, and at the expense of, Debtor
and (b) authorizes Bank or any agent of Bank, in its own name, at Debtor's
expense, to do any of the following, as Bank, in its sole discretion, deems
appropriate:

     (i) to demand, receive, sue for, and give receipts or acquittances for
any moneys due or to become due on any Collateral (including without limit to
draft against Collateral) and to endorse any item representing any payment on
or proceeds of the Collateral;

     (ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or desirable by Bank
to evidence, perfect, or continue the security interests granted in this
Agreement; and

     (iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.

4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to Bank at
any place designated by Bank which is reasonably convenient to Bank and
Debtor.

4.9 The following shall be the basis for any finder of fact's determination
of the value of any Collateral which is the subject matter of a disposition
giving rise to a calculation of any surplus or deficiency under Section 9.615
(f) of the Uniform Commercial Code (as in effect on or after July 1, 2001):
(a) the Collateral which is the subject matter of the disposition shall be
valued in an "as is" condition as of the date of the disposition, without any
assumption or expectation that such Collateral will be repaired or improved
in any manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for cash
promptly (but no later than 30 days) following the disposition; (c) all
reasonable closing costs customarily borne by the seller in commercial sales
transactions relating to property similar to such Collateral shall be
deducted including, without limitation, brokerage commissions, tax
prorations, attorneys' fees, whether inside or outside counsel is used, and
marketing costs; (d) the value of the Collateral which is the subject matter
of the disposition shall be further discounted to account for any estimated
holding costs associated with maintaining such Collateral pending sale (to
the extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion testimony
given or considered in connection with a determination of the value of such
Collateral must be given by persons having at least 5 years experience in
appraising property similar to the Collateral and who have conducted and
prepared a complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of any such Collateral
shall be a factor in determining the amount of proceeds which would have been
realized in a disposition to a transferee other than a secured party, a
person related to a secured party or a secondary obligor under Section 9-
615(f).

5. MISCELLANEOUS.

5.1 Until Bank is advised in writing by Debtor to the contrary, all notices,
requests and demands required under this Agreement or by law shall be given
to, or made upon, Debtor at the first address indicated in Section 5.15
below.

5.2 Debtor will give Bank not less than 30 days prior written notice of all
contemplated changes in Debtor's name, location, chief executive office,
principal place of business, and/or location of any Collateral, but the
giving of this notice shall not cure any Event of Default caused by this
change.

5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.

5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and any
related obligations, including without limit this Agreement. In connection
with the above, but without limiting its ability to make other disclosures to
the full extent allowable, Bank may disclose all documents and information
which Bank now or later has relating to Debtor, the Indebtedness or this
Agreement, however obtained to any assignee or participant who agrees to hold
such information confidential in the same manner as the Bank. Debtor further
agrees that Bank may provide information relating to this Agreement or
relating to Debtor to the Bank's parent, affiliates, subsidiaries, and
service providers.

5.5 In addition to Bank's other rights, any indebtedness owing from Bank to
Debtor can be set off and applied by Bank on any Indebtedness at any time(s)
after maturity and without notice or demand notice to anyone. Any such action
shall not constitute an acceptance of collateral in discharge of the
Indebtedness.

5.6 Debtor, to the extent not expressly prohibited by applicable law, waives
any right to require the Bank to: (a) proceed against any person or property;
(b) give notice of the terms, time and place of any public or private sale of
personal property security held from Borrower or any other person, or
otherwise comply with the provisions of Sections 9-611 or 9-621 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's power.
Debtor waives notice of acceptance of this Agreement and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of default,
notice of intent to accelerate or demand payment of any Indebtedness, any and
all other notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Indebtedness, and agree(s) that the Bank may,
once or any number of times, modify the terms of any Indebtedness,
compromise, extend, increase, accelerate, renew or forbear to enforce payment
of any or all Indebtedness, or permit Borrower to incur additional
Indebtedness, all without notice to Debtor and without affecting in any
manner the unconditional obligation of Debtor under this Agreement. Debtor
unconditionally and irrevocably waives each and every defense and setoff of
any nature which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this Agreement,
and acknowledges that such waiver is by this reference incorporated into each
security agreement, collateral assignment, pledge and/or other document from
Debtor now or later securing the Indebtedness, and acknowledges that as of
the date of this Agreement no such defense or setoff exists.

5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid or the
value of any Collateral given by Debtor pursuant to this Agreement.

5.8 In the event that applicable law shall obligate Bank to give prior notice
to Debtor of any action to be taken under this Agreement, Debtor agrees that
a written notice given to Debtor at least ten days before the date of the act
shall be reasonable notice of the act and, specifically, reasonable
notification of the time and place of any public sale or of the time after
which any private sale, lease, or other disposition is to be made, unless a
shorter notice period is reasonable under the circumstances. A notice shall
be deemed to be given under this Agreement when delivered to Debtor or when
placed in an envelope addressed to Debtor and deposited, with postage
prepaid, in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an overnight
courier. The mailing shall be by overnight courier, certified, or first class
mail.

5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of this
Agreement shall automatically continue or be reinstated in the event that any
payment received or credit given by Bank in respect of the Indebtedness is
returned, disgorged, or rescinded under any applicable law, including,
without limitation, bankruptcy or insolvency laws, in which case this
Agreement, shall be enforceable against Debtor as if the returned, disgorged,
or rescinded payment or credit had not been received or given by Bank, and
whether or not Bank relied upon this payment or credit or changed its
position as a consequence of it. In the event of continuation or
reinstatement of this Agreement, Debtor agrees upon demand by Bank to execute
and deliver to Bank those documents which Bank determines are appropriate to
further evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of Debtor to do so shall not affect in
any way the reinstatement or continuation.

5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns and to
any other holder who derives from Bank title to or an interest in the
Indebtedness or any portion of it, and shall bind Debtor and the heirs, legal
representatives, successors, and assigns of Debtor. Nothing in this Section
5.10 is deemed a consent by Bank to any assignment by Debtor.

5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given to or
conferred upon Bank are made or given jointly and severally.

5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform Commercial
Code, as those meanings may be amended, revised or replaced from time to
time. "Uniform Commercial Code" means Act No. 174 of the Michigan Public Acts
of 1962, as amended, revised or replaced from time to time, including without
limit as amended by Act No. 348 of the Michigan Public Acts of 2000.
Notwithstanding the foregoing, the parties intend that the terms used herein
which are defined in the Uniform Commercial Code have, at all times, the
broadest and most inclusive meanings possible. Accordingly, if the Uniform
Commercial Code shall in the future be amended or held by a court to define
any term used herein more broadly or inclusively than the Uniform Commercial
Code in effect on the date of this Agreement, then such term, as used herein,
shall be given such broadened meaning. If the Uniform Commercial Code shall
in the future be amended or held by a court to define any term used herein
more narrowly, or less inclusively, than the Uniform Commercial Code in
effect on the date of this Agreement, such amendment or holding shall be
disregarded in defining terms used in this Agreement.

5.13 No single or partial exercise, or delay in the exercise, of any right or
power under this Agreement, shall preclude other or further exercise of the
rights and powers under this Agreement. The unenforceability of any provision
of this Agreement shall not affect the enforceability of the remainder of
this Agreement. This Agreement constitutes the entire agreement of Debtor and
Bank with respect to the subject matter of this Agreement. No amendment or
modification of this Agreement shall be effective unless the same shall be in
writing and signed by Debtor and an authorized officer of Bank. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Michigan, without regard to conflict of laws principles.

5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and conditions of
that Indebtedness nor shall anything contained in this Agreement prevent Bank
from making demand, without notice and with or without reason, for immediate
payment of any or all of that Indebtedness at any time(s), whether or not an
Event of Default has occurred.

5.15 Debtor represents and warrants that Debtor's exact name is the name set
forth in this Agreement. Debtor further represents and warrants the following
and agrees that Debtor is, and at all times shall be, located in the
following place [mark applicable provision]:

 Debtor is an individual, and Debtor is located (as determined pursuant to
the Uniform Commercial Code) at Debtor's principal residence which is (street
address, state and county or parish):
 .
X Debtor is a registered organization which is organized under the laws of
one of the states comprising the United States (e.g. corporation, limited
partnership, registered limited liability partnership or limited liability
company), and Debtor is located (as determined pursuant to the Uniform
Commercial Code) in the state under the laws of which it was organized, which
is (state address, state and county or parish):  2151 Anchor Ct., Thousand
Oaks, California 91320.

 Debtor is a domestic organization which is not a registered organization
under the laws of the United States or any state thereof (e.g. general
partnership, joint venture, trust, estate or association), and Debtor is
located (as determined pursuant to the Uniform Commercial Code) at its sole
place of business or, if it has more than one place of business, at its chief
executive office, which is (street address, state and county or parish): .

 Debtor is a registered organization organized under the laws of the United
States, and Debtor is located in the state that United States law designates
as its location or, if United States law authorizes the Debtor to designate
the state for its location, the state designated by Debtor, or if neither of
the foregoing are applicable, at the District of Columbia. Debtor is located
(as determined pursuant to the Uniform Commercial Code) at (street address,
state and county or parish): .

 Debtor is a foreign individual or foreign organization or a branch or agency
of a bank that is not organized under the laws of the United States or a
state thereof. Debtor is located (as determined pursuant to the Uniform
Commercial Code) at: _______________________.

     If Collateral is located at other than the address specified above, such
Collateral is located and shall be maintained at

     See attached Schedule of Collateral Locations

     STREET ADDRESS
     CITY STATE ZIP CODE COUNTY

     Collateral shall be maintained only at the locations identified in this
Section 5.15.

5.16 A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement under the Uniform Commercial Code and may
be filed by Bank in any filing office.

5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.

6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

7. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*None, if left blank)
Debtor:

                               TECHNETICS, INC.
                               By: /s/ Kirk A. Waldron
                               SIGNATURE OF KIRK A. WALDRON
                               Its: Treasurer
                               TITLE (If applicable)


<PAGE>

SECURITY AGREEMENT
(All Assets)

As of September 25, 2001, for value received, the undersigned ("Debtor")
grants to Comerica Bank, a Michigan banking corporation ("Bank"), whose
address is 39200 Six Mile Road, Livonia, Michigan 48152 , Attention:
Commercial Loan Documentation, Mail Code 7578, a continuing security interest
and lien (any pledge, assignment, security interest or other lien arising
hereunder is sometimes referred to herein as a "security interest") in the
Collateral (as defined below) to secure payment when due, whether by stated
maturity, demand, acceleration or otherwise, of all existing and future
indebtedness ("Indebtedness") to the Bank of Smtek International, Inc.
("Borrower") and/or Debtor. Indebtedness includes without limit any and all
obligations or liabilities of the Borrower and/or Debtor to the Bank, whether
absolute or contingent, direct or indirect, voluntary or involuntary,
liquidated or unliquidated, joint or several, known or unknown; any and all
obligations or liabilities for which the Borrower and/or Debtor would
otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other
law, or for any other reason; any and all amendments, modifications, renewals
and/or extensions of any of the above; all costs incurred by Bank in
establishing, determining, continuing, or defending the validity or priority
of its security interest, or in pursuing its rights and remedies under this
Agreement or under any other agreement between Bank and Borrower and/or
Debtor or in connection with any proceeding involving Bank as a result of any
financial accommodation to Borrower and/or Debtor; and all other costs of
collecting Indebtedness, including without limit attorney fees. Debtor agrees
to pay Bank all such costs incurred by the Bank, immediately upon demand, and
until paid all costs shall bear interest at the highest per annum rate
applicable to any of the Indebtedness, but not in excess of the maximum rate
permitted by law. Any reference in this Agreement to attorney fees shall be
deemed a reference to reasonable fees, costs, and expenses of both in-house
and outside counsel and paralegals, whether or not a suit or action is
instituted, and to court costs if a suit or action is instituted, and whether
attorney fees or court costs are incurred at the trial court level, on
appeal, in a bankruptcy, administrative or probate proceeding or otherwise.
Debtor further covenants, agrees and represents as follows:

1. COLLATERAL shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:

     (a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts; general intangibles; chattel paper
(including without limit electronic chattel paper and tangible chattel
paper); contract rights; deposit accounts; documents; instruments; rights to
payment evidenced by chattel paper, documents or instruments; health care
insurance receivables; commercial tort claims; letters of credit; letter of
credit rights; supporting obligations; and rights to payment for money or
funds advanced or sold),

     (b) all Inventory,

     (c) all Equipment and Fixtures,

     (d) all Software (for purposes of this Agreement, "Software" consists of
all (i) computer programs and supporting information provided in connection
with a transaction relating to the program, and (ii) computer programs
embedded in goods and any supporting information provided in connection with
a transaction relating to the program whether or not the program is
associated with the goods in such a manner that it customarily is considered
part of the goods, and whether or not, by becoming the owner of the goods, a
person acquires a right to use the program in connection with the goods, and
whether or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),

     (e) specific items listed below and/or on attached Schedule A, if any,
is/are also included in Collateral:



     (f) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property (except
real property which is not a fixture) which are now or later in possession or
control of Bank, or as to which Bank now or later controls possession by
documents or otherwise, and

     (g) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of any
kind (including but not limited to stock splits, stock rights, voting and
preferential rights), products, and proceeds of or pertaining to the above
including, without limit, cash or other property which were proceeds and are
recovered by a bankruptcy trustee or otherwise as a preferential transfer by
Debtor.

In the definition of Collateral, a reference to a type of collateral shall
not be limited by a separate reference to a more specific or narrower type of
that collateral.

2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and
agrees as follows:

2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor shall,
at the request of Bank, mark its records and the Collateral to clearly
indicate the security interest of Bank under this Agreement.

2.2 At the time any Collateral becomes, or is represented to be, subject to a
security interest in favor of Bank, Debtor shall be deemed to have warranted
that (a) Debtor is the lawful owner of the Collateral and has the right and
authority to subject it to a security interest granted to Bank; (b) none of
the Collateral is subject to any security interest other than that in favor
of Bank and Permitted Liens (as defined below); (c) there are no financing
statements on file, other than in favor of Bank and those filed with respect
to Permitted Liens; (d) no person, other than Bank, has possession or control
(as defined in the Uniform Commercial Code) of any Collateral of such nature
that perfection of a security interest may be accomplished by control; and
(e) Debtor acquired its rights in the Collateral in the ordinary course of
its business.

2.3 Debtor will keep the Collateral free at all times from all claims, liens,
security interests and encumbrances other than those in favor of Bank and
liens and security interests permitted under the terms of the Credit
Agreement dated as of September ___, 2001 between Borrower and Bank
("Permitted Liens"). Debtor will not, without the prior written consent of
Bank, sell, transfer or lease, or permit to be sold, transferred or leased,
any or all of the Collateral, except for Inventory in the ordinary course of
its business and will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the Collateral and may
enter upon all premises where the Collateral is kept or might be located.

2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an exclusive,
perfected and first security interest of Bank in the Collateral (subject to
Permitted Liens). Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether realty or
personalty, to secure payment of the Indebtedness, and Debtor is not relying
upon assets in which the Bank may have a lien or security interest for
payment of the Indebtedness.

2.5 Debtor will pay within the time that they can be paid without interest or
penalty all taxes, assessments and similar charges which at any time are or
may become a lien, charge, or encumbrance upon any Collateral, except to the
extent contested in good faith and, if reasonably required by Bank, bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these taxes,
assessments, or other charges in the time provided above, Bank has the option
(but not the obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at the
highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause ordinary wear and tear
excepted. Debtor has and will maintain at all times (a) with respect to the
Collateral, insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and other
insurance as may be required by law or reasonably required by Bank, all of
which insurance shall be in amount, form and content, and written by
companies as may be satisfactory to Bank, containing a lender's loss payable
endorsement acceptable to Bank. Debtor will deliver to Bank immediately upon
demand evidence satisfactory to Bank that the required insurance has been
procured. If Debtor fails to maintain satisfactory insurance, Bank has the
option (but not the obligation) to do so and Debtor agrees to repay all
amounts so expended by Bank immediately upon demand, together with interest
at the highest lawful default rate which could be charged by Bank on any
Indebtedness.

2.7 On each occasion on which Debtor evidences to Bank the account balances
on and the nature and extent of the Accounts Receivable which are included in
a borrowing base report as an eligible account, Debtor shall be deemed to
have warranted that except as otherwise indicated (a) each of those Accounts
Receivable is valid and enforceable without performance by Debtor of any act;
(b) each of those account balances are in fact owing, (c) there are no
setoffs, recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable, (d) as to any Accounts Receivable
represented by a note, trade acceptance, draft or other instrument or by any
chattel paper or document, the same have been endorsed and/or delivered by
Debtor to Bank, (e) Debtor has not received with respect to any Account
Receivable, any notice of the death of the related account debtor, nor of the
dissolution, liquidation, termination of existence, insolvency, business
failure, appointment of a receiver for, assignment for the benefit of
creditors by, or filing of a petition in bankruptcy by or against, the
account debtor, and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the account
debtor is not an affiliate of Debtor, the United States of America or any
department, agency or instrumentality of it, or a citizen or resident of any
jurisdiction outside of the United States. Debtor will do all acts and will
execute all writings requested by Bank to perform, enforce performance of,
and collect all Accounts Receivable. Debtor shall neither make nor permit any
modification, compromise or substitution for any Account Receivable without
the prior written consent of Bank except for modifications and compromises
made in the ordinary course of business in a manner consistent with past
practice and to the extent made prior to the occurrence of an Event of
Default. Debtor shall, at Bank's request, arrange for verification of
Accounts Receivable directly with account debtors or by other methods
acceptable to Bank.

2.8 Debtor at all times shall be in compliance in all material respects with
all applicable laws, including without limit any laws, ordinances,
directives, orders, statutes, or regulations an object of which is to
regulate or improve health, safety, or the environment ("Environmental
Laws").

2.9 If Bank, acting in its sole discretion, redelivers Collateral to Debtor
or Debtor's designee for the purpose of (a) the ultimate sale or exchange
thereof; or (b) presentation, collection, renewal, or registration of
transfer thereof; or (c) loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange; such redelivery shall be in trust for the
benefit of Bank and shall not constitute a release of Bank's security
interest in it or in the proceeds or products of it unless Bank specifically
so agrees in writing. If Debtor requests any such redelivery, Debtor will
deliver with such request a duly executed financing statement in form and
substance satisfactory to Bank. Any proceeds of Collateral coming into
Debtor's possession as a result of any such redelivery shall be held in trust
for Bank and immediately delivered to Bank for application on the
Indebtedness. Bank may (in its sole discretion) deliver any or all of the
Collateral to Debtor, and such delivery by Bank shall discharge Bank from all
liability or responsibility for such Collateral. Bank, at its option, may
require delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.

2.10 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its nominees; (b)
receive or collect by legal proceedings or otherwise all dividends, interest,
principal payments and other sums and all other distributions at any time
payable or receivable on account of the Collateral, and hold the same as
Collateral, or apply the same to the Indebtedness, the manner and
distribution of the application to be in the sole discretion of Bank; (c)
enter into any extension, subordination, reorganization, deposit, merger or
consolidation agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and accept
other property in exchange for the Collateral and hold or apply the property
or money so received pursuant to this Agreement; and (d) take such actions in
its own name or in Debtor's name as Bank, in its sole discretion, deems
necessary or appropriate to establish exclusive control (as defined in the
Uniform Commercial Code) over any Collateral of such nature that perfection
of Bank's security interest may be accomplished by control.

2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then
shall have with respect to Collateral so delivered all the rights and powers
of Bank under this Agreement,
and after that Bank shall be fully discharged from all liability and
responsibility with respect to Collateral
so delivered.

2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial condition of
Borrower and is not relying on any information furnished by Bank. Debtor
assumes full responsibility for obtaining any further information concerning
the Borrower's financial condition, the status of the Indebtedness or any
other matter which the undersigned may deem necessary or appropriate now or
later. Debtor waives any duty on the part of Bank, and agrees that Debtor is
not relying upon nor expecting Bank to disclose to Debtor any fact now or
later known by Bank, whether relating to the operations or condition of
Borrower, the existence, liabilities or financial condition of any guarantor
of the Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may have
upon Debtor's risk or Debtor's rights against Borrower. Debtor knowingly
accepts the full range of risk encompassed in this Agreement, which risk
includes without limit the possibility that Borrower may incur Indebtedness
to Bank after the financial condition of Borrower, or Borrower's ability to
pay debts as they mature, has deteriorated.

2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and against
any and all claims, damages, fines, expenses, liabilities or causes of action
of whatever kind, including without limit consultant fees, legal expenses,
and attorney fees, suffered by any of them as a direct or indirect result of
any actual or asserted violation of any law by Debtor or any of its
employees, agents, affiliates, officers, directors or other persons under its
direction or control, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including without
limit Environmental Laws.

3. COLLECTION OF PROCEEDS.

3.1 Debtor agrees to collect and enforce payment of all Collateral until Bank
shall direct Debtor to the contrary (which direction may only be given
following the occurrence of an Event of Default). Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement of all
Collateral and to hold in trust for Bank all payments received in connection
with Collateral and from the sale, lease or other disposition of any
Collateral, all rights by way of suretyship or guaranty and all rights in the
nature of a lien or security interest which Debtor now or later has regarding
Collateral. Immediately upon and after such notice, Debtor agrees to (a)
endorse to Bank and immediately deliver to Bank all payments received on
Collateral or from the sale, lease or other disposition of any Collateral or
arising from any other rights or interests of Debtor in the Collateral, in
the form received by Debtor without commingling with any other funds, and (b)
immediately deliver to Bank all property in Debtor's possession or later
coming into Debtor's possession through enforcement of Debtor's rights or
interests in the Collateral. Debtor irrevocably authorizes Bank or any Bank
employee or agent to endorse the name of Debtor upon any checks or other
items which are received in payment for any Collateral, and to do any and all
things necessary in order to reduce these items to money. Bank shall have no
duty as to the collection or protection of Collateral or the proceeds of it,
nor as to the preservation of any related rights, beyond the use of
reasonable care in the custody and preservation of Collateral in the
possession of Bank. Debtor agrees to take all steps necessary to preserve
rights against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or other
disposition of any Collateral.

3.2 Debtor agrees that immediately upon Bank's request (which notice may only
be given following the occurrence of an Event of Default) the Indebtedness
shall be on a "remittance basis" as follows: Debtor shall at its sole expense
establish and maintain (and Bank, at Bank's option may establish and maintain
at Debtor's expense): (a) an United States Post Office lock box (the "Lock
Box"), to which Bank shall have exclusive access and control. Debtor
expressly authorizes Bank, from time to time, to remove contents from the
Lock Box, for disposition in accordance with this Agreement. Debtor agrees to
notify all account debtors and other parties obligated to Debtor that all
payments made to Debtor (other than payments by electronic funds transfer)
shall be remitted, for the credit of Debtor, to the Lock Box, and Debtor
shall include a like statement on all invoices; and (b) a non-interest
bearing deposit account with Bank which shall be titled as designated by Bank
(the "Cash Collateral Account") to which Bank shall have exclusive access and
control. Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at
Bank's request, shall include a like statement on all invoices. Debtor shall
execute all documents and authorizations as required by Bank to establish and
maintain the Lock Box and the Cash Collateral Account.

3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of Debtor to
Bank on account of partial or full payment of, or with respect to, any
Collateral shall, at Bank's option, (a) be applied to the payment of the
Indebtedness, whether then due or not, in such order or at such time of
application as Bank may determine in its sole discretion, or, (b) be
deposited to the Cash Collateral Account. Debtor agrees that Bank shall not
be liable for any loss or damage which Debtor may suffer as a result of
Bank's processing of items or its exercise of any other rights or remedies
under this Agreement, including without limitation indirect, special or
consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and against
all such third party claims, demands or actions, and all related expenses or
liabilities, including, without limitation, attorney fees, except for claims
arising solely as a result of Bank's gross negligence or willful misconduct.

4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.

4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:

     (a) Any failure to pay the Indebtedness or any other indebtedness when
due, or such portion of it as may be due, by acceleration or otherwise; or

     (b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or commitment
between Borrower, Debtor, or any guarantor of any of the Indebtedness
("Guarantor") and Bank and continuance beyond any applicable period of cure;
or

     (c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of Borrower,
Debtor, or any Guarantor shall be, or shall prove to have been, false or
materially misleading when made, given, or furnished; or

     (d) Any material loss, theft, substantial damage or destruction to or of
any Collateral which is not covered by insurance, or the issuance or filing
of any attachment, levy, garnishment or the commencement of any similar
proceeding in connection with any Collateral; or

     (e) Bank in good faith deems the margin of Collateral insufficient or
itself insecure (subject to the provisions of Section 1-208 of the Uniform
Commercial Code) or shall in good faith fear deterioration, removal, or waste
of Collateral; or

     (f) A default shall occur under any instrument, agreement or other
document evidencing, securing or otherwise relating to any of the
Indebtedness and continue beyond any applicable period of cure.

4.2 Upon the occurrence of any Event of Default, Bank may at its discretion
and without prior notice to Debtor declare any or all of the Indebtedness to
be immediately due and payable, and shall have and may exercise any one or
more of the following rights and remedies:

     (a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions of the
Uniform Commercial Code and other applicable law;

     (b) Institute legal proceedings to foreclose upon the lien and security
interest granted by this Agreement, to recover judgment for all amounts then
due and owing as Indebtedness, and to collect the same out of any Collateral
or the proceeds of any sale of it;

     (c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all Collateral;
and/or

     (d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and take
possession of all or any of it and/or render it unusable; and without being
responsible for loss or damage to such Collateral, hold, operate, sell,
lease, or dispose of all or any Collateral at one or more public or private
sales, leasings or other disposition, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all notice of sale,
lease or other disposition, and advertisement, and other notice or demand,
any right or equity of redemption, and any obligation of a prospective
purchaser or lessee to inquire as to the power and authority of Bank to sell,
lease, or otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise be required
by, or available to Debtor under, applicable law are expressly waived by
Debtor to the fullest extent permitted. At any sale pursuant to this Section
4.2, whether under the power of sale, by virtue of judicial proceedings or
otherwise, it shall not be necessary for Bank or a public officer under order
of a court to have present physical or constructive possession of Collateral
to be sold. The recitals contained in any conveyances and receipts made and
given by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by applicable law,
conclusively establish the truth and accuracy of the matters stated
(including, without limit, as to the amounts of the principal of and interest
on the Indebtedness, the accrual and nonpayment of it and advertisement and
conduct of the sale); and all prerequisites to the sale shall be presumed to
have been satisfied and performed. Upon any sale of any Collateral, the
receipt of the officer making the sale under judicial proceedings or of Bank
shall be sufficient discharge to the purchaser for the purchase money, and
the purchaser shall not be obligated to see to the application of the money.
Any sale of any Collateral under this Agreement shall be a perpetual bar
against Debtor with respect to that Collateral. At any sale or other
disposition of Collateral pursuant to this Section 4.2, Bank disclaims all
warranties which would otherwise be given under the Uniform Commercial Code,
including without limit a disclaimer of any warranty relating to title,
possession, quiet enjoyment or the like, and Bank may communicate these
disclaimers to a purchaser at such disposition. This disclaimer of warranties
will not render the sale commercially unreasonable.

4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct payment of
it to Bank. Bank may, itself, upon the occurrence of any Event of Default so
notify and direct any account debtor or obligor. At the request of Bank,
whether or not an Event of Default shall have occurred, Debtor shall
immediately take such actions as Bank shall request to establish exclusive
control (as defined in the Uniform Commercial Code) by Bank over any
Collateral which is of such a nature that perfection of a security interest
may be accomplished by control.

4.4 The proceeds of any sale or other disposition of Collateral authorized by
this Agreement shall be applied by Bank first upon all expenses authorized by
the Uniform Commercial Code and all reasonable attorney fees and legal
expenses incurred by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to remaining Indebtedness and the surplus,
if any, shall be paid over to Debtor or to such other person(s) as may be
entitled to it under applicable law. Debtor shall remain liable for any
deficiency, which it shall pay to Bank immediately upon demand. Debtor agrees
that Bank shall be under no obligation to accept any noncash proceeds in
connection with any sale or disposition of Collateral unless failure to do so
would be commercially unreasonable. If Bank agrees in its sole discretion to
accept noncash proceeds (unless the failure to do so would be commercially
unreasonable), Bank may ascribe any commercially reasonable value to such
proceeds. Without limiting the foregoing, Bank may apply any commercially
reasonable discount factor in determining the present value of proceeds to be
received in the future or may elect to apply proceeds to be received in the
future only as and when such proceeds are actually received in cash by Bank.

4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum to which
Bank may be entitled for the breach of this Agreement by Debtor. Nothing in
this Agreement shall reduce or release in any way any rights or security
interests of Bank contained in any existing agreement between Borrower,
Debtor, or any Guarantor and Bank.

     4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of Bank. No
waiver of any default or forbearance on the part of Bank in enforcing any of
its rights under this Agreement shall operate as a waiver of any other
default or of the same default on a future occasion or of any rights.

4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest and which, except as to subclause
(ii) below, may only be exercised following the occurrence of an Event of
Default) the true and lawful attorney of Debtor (with full power of
substitution) in the name, place and stead of, and at the expense of, Debtor
and (b) authorizes Bank or any agent of Bank, in its own name, at Debtor's
expense, to do any of the following, as Bank, in its sole discretion, deems
appropriate:

     (i) to demand, receive, sue for, and give receipts or acquittances for
any moneys due or to become due on any Collateral (including without limit to
draft against Collateral) and to endorse any item representing any payment on
or proceeds of the Collateral;

     (ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or desirable by Bank
to evidence, perfect, or continue the security interests granted in this
Agreement; and

     (iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.

4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to Bank at
any place designated by Bank which is reasonably convenient to Bank and
Debtor.

4.9 The following shall be the basis for any finder of fact's determination
of the value of any Collateral which is the subject matter of a disposition
giving rise to a calculation of any surplus or deficiency under Section 9.615
(f) of the Uniform Commercial Code (as in effect on or after July 1, 2001):
(a) the Collateral which is the subject matter of the disposition shall be
valued in an "as is" condition as of the date of the disposition, without any
assumption or expectation that such Collateral will be repaired or improved
in any manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for cash
promptly (but no later than 30 days) following the disposition; (c) all
reasonable closing costs customarily borne by the seller in commercial sales
transactions relating to property similar to such Collateral shall be
deducted including, without limitation, brokerage commissions, tax
prorations, attorneys' fees, whether inside or outside counsel is used, and
marketing costs; (d) the value of the Collateral which is the subject matter
of the disposition shall be further discounted to account for any estimated
holding costs associated with maintaining such Collateral pending sale (to
the extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion testimony
given or considered in connection with a determination of the value of such
Collateral must be given by persons having at least 5 years experience in
appraising property similar to the Collateral and who have conducted and
prepared a complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of any such Collateral
shall be a factor in determining the amount of proceeds which would have been
realized in a disposition to a transferee other than a secured party, a
person related to a secured party or a secondary obligor under Section 9-
615(f).

5. MISCELLANEOUS.

5.1 Until Bank is advised in writing by Debtor to the contrary, all notices,
requests and demands required under this Agreement or by law shall be given
to, or made upon, Debtor at the first address indicated in Section 5.15
below.

5.2 Debtor will give Bank not less than 30 days prior written notice of all
contemplated changes in Debtor's name, location, chief executive office,
principal place of business, and/or location of any Collateral, but the
giving of this notice shall not cure any Event of Default caused by this
change.

5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.

5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and any
related obligations, including without limit this Agreement. In connection
with the above, but without limiting its ability to make other disclosures to
the full extent allowable, Bank may disclose all documents and information
which Bank now or later has relating to Debtor, the Indebtedness or this
Agreement, however obtained to any assignee or participant who agrees to hold
such information confidential in the same manner as the Bank. Debtor further
agrees that Bank may provide information relating to this Agreement or
relating to Debtor to the Bank's parent, affiliates, subsidiaries, and
service providers.

5.5 In addition to Bank's other rights, any indebtedness owing from Bank to
Debtor can be set off and applied by Bank on any Indebtedness at any time(s)
after maturity and without notice or demand notice to anyone. Any such action
shall not constitute an acceptance of collateral in discharge of the
Indebtedness.

5.6 Debtor, to the extent not expressly prohibited by applicable law, waives
any right to require the Bank to: (a) proceed against any person or property;
(b) give notice of the terms, time and place of any public or private sale of
personal property security held from Borrower or any other person, or
otherwise comply with the provisions of Sections 9-611 or 9-621 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's power.
Debtor waives notice of acceptance of this Agreement and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of default,
notice of intent to accelerate or demand payment of any Indebtedness, any and
all other notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Indebtedness, and agree(s) that the Bank may,
once or any number of times, modify the terms of any Indebtedness,
compromise, extend, increase, accelerate, renew or forbear to enforce payment
of any or all Indebtedness, or permit Borrower to incur additional
Indebtedness, all without notice to Debtor and without affecting in any
manner the unconditional obligation of Debtor under this Agreement. Debtor
unconditionally and irrevocably waives each and every defense and setoff of
any nature which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this Agreement,
and acknowledges that such waiver is by this reference incorporated into each
security agreement, collateral assignment, pledge and/or other document from
Debtor now or later securing the Indebtedness, and acknowledges that as of
the date of this Agreement no such defense or setoff exists.

5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid or the
value of any Collateral given by Debtor pursuant to this Agreement.

5.8 In the event that applicable law shall obligate Bank to give prior notice
to Debtor of any action to be taken under this Agreement, Debtor agrees that
a written notice given to Debtor at least ten days before the date of the act
shall be reasonable notice of the act and, specifically, reasonable
notification of the time and place of any public sale or of the time after
which any private sale, lease, or other disposition is to be made, unless a
shorter notice period is reasonable under the circumstances. A notice shall
be deemed to be given under this Agreement when delivered to Debtor or when
placed in an envelope addressed to Debtor and deposited, with postage
prepaid, in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an overnight
courier. The mailing shall be by overnight courier, certified, or first class
mail.

5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of this
Agreement shall automatically continue or be reinstated in the event that any
payment received or credit given by Bank in respect of the Indebtedness is
returned, disgorged, or rescinded under any applicable law, including,
without limitation, bankruptcy or insolvency laws, in which case this
Agreement, shall be enforceable against Debtor as if the returned, disgorged,
or rescinded payment or credit had not been received or given by Bank, and
whether or not Bank relied upon this payment or credit or changed its
position as a consequence of it. In the event of continuation or
reinstatement of this Agreement, Debtor agrees upon demand by Bank to execute
and deliver to Bank those documents which Bank determines are appropriate to
further evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of Debtor to do so shall not affect in
any way the reinstatement or continuation.

5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns and to
any other holder who derives from Bank title to or an interest in the
Indebtedness or any portion of it, and shall bind Debtor and the heirs, legal
representatives, successors, and assigns of Debtor. Nothing in this Section
5.10 is deemed a consent by Bank to any assignment by Debtor.

5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given to or
conferred upon Bank are made or given jointly and severally.

5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform Commercial
Code, as those meanings may be amended, revised or replaced from time to
time. "Uniform Commercial Code" means Act No. 174 of the Michigan Public Acts
of 1962, as amended, revised or replaced from time to time, including without
limit as amended by Act No. 348 of the Michigan Public Acts of 2000.
Notwithstanding the foregoing, the parties intend that the terms used herein
which are defined in the Uniform Commercial Code have, at all times, the
broadest and most inclusive meanings possible. Accordingly, if the Uniform
Commercial Code shall in the future be amended or held by a court to define
any term used herein more broadly or inclusively than the Uniform Commercial
Code in effect on the date of this Agreement, then such term, as used herein,
shall be given such broadened meaning. If the Uniform Commercial Code shall
in the future be amended or held by a court to define any term used herein
more narrowly, or less inclusively, than the Uniform Commercial Code in
effect on the date of this Agreement, such amendment or holding shall be
disregarded in defining terms used in this Agreement.

5.13 No single or partial exercise, or delay in the exercise, of any right or
power under this Agreement, shall preclude other or further exercise of the
rights and powers under this Agreement. The unenforceability of any provision
of this Agreement shall not affect the enforceability of the remainder of
this Agreement. This Agreement constitutes the entire agreement of Debtor and
Bank with respect to the subject matter of this Agreement. No amendment or
modification of this Agreement shall be effective unless the same shall be in
writing and signed by Debtor and an authorized officer of Bank. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Michigan, without regard to conflict of laws principles.

5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and conditions of
that Indebtedness nor shall anything contained in this Agreement prevent Bank
from making demand, without notice and with or without reason, for immediate
payment of any or all of that Indebtedness at any time(s), whether or not an
Event of Default has occurred.

5.15 Debtor represents and warrants that Debtor's exact name is the name set
forth in this Agreement. Debtor further represents and warrants the following
and agrees that Debtor is, and at all times shall be, located in the
following place [mark applicable provision]:

 Debtor is an individual, and Debtor is located (as determined pursuant to
the Uniform Commercial Code) at Debtor's principal residence which is (street
address, state and county or parish):
 .
X Debtor is a registered organization which is organized under the laws of
one of the states comprising the United States (e.g. corporation, limited
partnership, registered limited liability partnership or limited liability
company), and Debtor is located (as determined pursuant to the Uniform
Commercial Code) in the state under the laws of which it was organized, which
is: Delaware

 Debtor is a domestic organization which is not a registered organization
under the laws of the United States or any state thereof (e.g. general
partnership, joint venture, trust, estate or association), and Debtor is
located (as determined pursuant to the Uniform Commercial Code) at its sole
place of business or, if it has more than one place of business, at its chief
executive office, which is (street address, state and county or parish): .

 Debtor is a registered organization organized under the laws of the United
States, and Debtor is located in the state that United States law designates
as its location or, if United States law authorizes the Debtor to designate
the state for its location, the state designated by Debtor, or if neither of
the foregoing are applicable, at the District of Columbia. Debtor is located
(as determined pursuant to the Uniform Commercial Code) at (street address,
state and county or parish): .

 Debtor is a foreign individual or foreign organization or a branch or agency
of a bank that is not organized under the laws of the United States or a
state thereof. Debtor is located (as determined pursuant to the Uniform
Commercial Code) at: _______________________.

     If Collateral is located at other than the address specified above, such
Collateral is located and shall be maintained at

     See attached Schedule of Collateral Locations

     STREET ADDRESS
     CITY STATE ZIP CODE COUNTY

     Collateral shall be maintained only at the locations identified in this
Section 5.15.

5.16 A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement under the Uniform Commercial Code and may
be filed by Bank in any filing office.

5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.

6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

7. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*None, if left blank)
Debtor:

                               JOLT TECHNOLOGY, INC.
                               By: /s/ Kirk A. Waldron
                               SIGNATURE OF KIRK A. WALDRON
                               Its: Treasurer
                               TITLE (If applicable)


<PAGE>

GUARANTY

The undersigned, for value received, unconditionally and absolutely
guarantee(s) to Comerica Bank (Bank) a Michigan banking corporation, and to
the Bank's successors and assigns, payment when due, whether by stated
maturity, demand, acceleration or otherwise, of all existing and future
indebtedness to the Bank of Smtek International, Inc. ("Borrower) whose
address is 2151 Anchor Court, Thousand Oaks, California 91320, or any
successor in interest, including without limit any debtor-in-possession or
trustee in bankruptcy which succeeds to the interest of this party or person
(jointly and severally the "Borrower" however this indebtedness has been or
may be incurred or evidenced, whether absolute or contingent direct or
indirect, voluntary or involuntary, liquidated or unliquidated, joint or
several, and whether or not known to the undersigned at the time of this
Guaranty or at the time any future indebtedness is incurred (the
"Indebtedness").

The Indebtedness guaranteed includes without limit: (a) any and all direct
indebtedness of the Borrower to the Bank, including indebtedness evidenced by
any and all promissory notes; (b) any and all obligations or liabilities of
the Borrower to the Bank arising under any guaranty where the Borrower has
guaranteed the payment of indebtedness owing to the Bank from a third party;
(c) any and all obligations or liabilities of the Borrower to the Bank
arising from applications or agreements for the issuance of letters of
credit; (d) any and all obligations or liabilities of the Borrower to the
Bank arising out of any other agreement by the Borrower including without
limit any agreement to indemnify the Bank for environmental liability or to
clean up hazardous waste; (e) any and all indebtedness, obligations or
liabilities for which the Borrower would otherwise be liable to the Bank were
it not for the invalidity, irregularity or unenforceability of them by reason
of any bankruptcy, insolvency or other law or order of any kind, or for any
other reason, including without limit liability for interest and attorneys'
fees on, or in connection with, any of the indebtedness from and after the
filing by or against the Borrower of a bankruptcy petition whether an
involuntary or voluntary bankruptcy case, including, without limitation, all
attorneys fees and costs incurred in connection with motions for relief from
stay, cash collateral motions, nondischargeability motions, preference
liability motions, fraudulent conveyance liability motions, fraudulent
transfer liability motions and all other motions brought by Borrower,
Guarantor, Bank or third parties in any way relating to Bank's rights with
respect to such Borrower, Guarantor, or third party and/or affecting any
collateral securing any obligation owed to Bank by Borrower, Guarantor, or
any third party, probate proceedings, on appeal or otherwise; (f) any and all
amendments, modifications, renewals and/or extensions of any of the above,
including without limit amendments, modifications, renewals and/or extensions
which are evidenced by new or additional instruments, documents or
agreements; and (g) all costs of collecting indebtedness, including without
limit reasonable attorneys' fees and costs.

The undersigned waive(s) notice of acceptance of this Guaranty and
presentment, demand, protest, notice of protest, dishonor, notice of
dishonor, notice of default, notice of intent to accelerate or demand payment
of any indebtedness, and diligence in collecting any indebtedness, and
agree(s) that the Bank may modify the terms of any indebtedness, compromise,
extend, increase, accelerate, renew or forbear to enforce payment of any or
all indebtedness, or permit the Borrower to incur additional indebtedness,
all without notice to the undersigned and without affecting in any manner the
unconditional obligation of the undersigned under this Guaranty. The
undersigned further waive(s) any and all other notices to which the
undersigned might otherwise be entitled. The undersigned acknowledge(s) and
agree(s) that the liabilities created by this Guaranty are direct and are not
conditioned upon pursuit by the Bank of any remedy the Bank may have against
the Borrower or any other person or any security. No invalidity, irregularity
or unenforceability of any part or all of the indebtedness or any documents
evidencing the same, by reason of any bankruptcy, insolvency or other law or
order of any kind or for any other reason, and no defense or setoff available
at any time to the Borrower, shall impair, affect or be a defense or setoff
to the obligations of the undersigned under this Guaranty.

The undersigned deliver(s) this Guaranty based solely on the undersigned's
independent investigation of the financial condition of the Borrower and is
(are) not relying on any information furnished by the Bank. The undersigned
assume(s) full responsibility for obtaining any further information
concerning the Borrower's financial condition, the status of the indebtedness
or any other matter which the undersigned may deem necessary or appropriate
from time to time. The undersigned waive(s) any duty on the part of the Bank,
and agree(s) that it is not relying upon nor expecting the Bank to disclose
to the undersigned any fact now or later known by the Bank, whether relating
to the operations or condition of the Borrower, the existence, liabilities or
financial condition of any co-guarantor of the indebtedness, the occurrence
of any default with respect to the indebtedness, or otherwise,
notwithstanding any effect these facts may have upon the undersigned's risk
under this Guaranty or the undersigned's rights against the Borrower. The
undersigned knowingly accept(s) the full range of risk encompassed in this
Guaranty, which risk includes without limit the possibility that the Borrower
may incur indebtedness to the Bank after the financial condition of the
Borrower, or its ability to pay its debts as they mature, has deteriorated.

The undersigned represent(s) and warrant(s) that: (a) the Bank has made no
representation to the undersigned as to the creditworthiness of the Borrower;
and (b) the undersigned has (have) established adequate means of obtaining
from the Borrower on a continuing basis financial and other information
pertaining to the Borrower's financial condition. The undersigned agree(s) to
keep adequately informed of any facts, events or circumstances which might in
any way affect the risks of the undersigned under this Guaranty .  The
undersigned grant(s) to the Bank a security interest in and the right of
setoff as to any and all property of the undersigned now or later in the
possession of the Bank. The undersigned subordinate(s) any claim of any
nature that the undersigned now or later has (have) against the Borrower to
and in favor of all indebtedness and agree(s) not to accept payment or
satisfaction of any claim that the undersigned now or later may have against
the Borrower without the prior written consent of the Bank. Should any
payment, distribution, security, or proceeds, be received by the undersigned
upon or with respect to any claim that the undersigned now or may later have
against the Borrower, the undersigned shall immediately deliver the same to
the Bank in the form received (except for endorsement or assignment by the
undersigned where required by the Bank) for application on the indebtedness,
whether matured or unmatured, and until delivered the same shall be held in
trust by the undersigned as the property of the Bank. The undersigned further
assign(s) to the Bank as collateral for the obligations of the undersigned
under this Guaranty all claims of any nature that the undersigned now or
later has (have) against the Borrower (other than any claim under a deed of
trust or mortgage covering real property) with full right on the part of the
Bank in its own name or in the name of the undersigned, to collect and
enforce these claims.

The undersigned agree(s) that no security now or later held by the Bank for
the payment of any indebtedness, whether from the Borrower, any guarantor, or
otherwise, and whether in the nature of a security interest, pledge, lien,
assignment, setoff, suretys hip, guaranty, indemnity insurance or otherwise,
shall affect in any manner the unconditional obligation of the undersigned
under this Guaranty, and the Bank, in its sole discretion, without notice to
the undersigned, may release, exchange, enforce and otherwise deal with any
security without affection in any manner the unconditional obligation of the
undersigned under this Guaranty. The undersigned acknowledges(s) and agree(s)
that the Bank has no obligation to acquire or perfect any lien on or security
interest in any asset(s) whether realty or personalty, to secure payment of
the indebtedness, and the undersigned is (are) not relying upon any asset(s)
in which the Bank has or may have a lien or security interest for payment of
the indebtedness.

The undersigned acknowledge(s) that the effectiveness of this Guaranty is not
conditioned on any or all of the indebtedness being guaranteed by anyone
else.  Until the indebtedness is irrevocably paid in full, the undersigned
waive(s) any and all rights to be subrogated to the position of the Bank or
to have the benefit of any lien, security interest or other guaranty now or
later held by the Bank for the indebtedness or to enforce any remedy which
the Bank now or later has against the Borrower or any other person. Until the
indebtedness is irrevocably paid in full, the undersigned shall have no right
of reimbursement indemnity, contribution or other right of recourse to or
with respect to the Borrower or any other person. The undersigned agree(s) to
indemnity and hold harmless the Bank from and against any and all claims,
actions, damages, costs and expenses, including without limit reasonable
attorneys' fees, incurred by the Bank in connection with the undersigned's
exercise of any right of subrogation, contribution, indemnification or
recourse with respect to this Guaranty. The Bank has no duty to enforce or
protect any rights which the undersigned may have against the Borrower or any
other person and the undersigned assume(s) full responsibility for enforcing
and protecting these rights.

Notwithstanding any provision of the preceding paragraph or anything else in
this Guaranty to the contrary, if any of the undersigned is or becomes an
"Insider" or "affiliate" (as defined in Section 101 of the Federal Bankruptcy
Code, as it may be amended) with respect to the Borrower, then that
undersigned irrevocably and absolutely waives any and all rights of
subrogation, contribution, indemnification, recourse, reimbursement and any
similar rights against the Borrower (or any other guarantor) with respect to
this Guaranty, whether such rights arise under an express or implied contract
or by operation of law. It is the intention of the parties that the
undersigned shall not be (or be deemed to be) a "Creditor" (as defined in
Section 101 of the Federal Bankruptcy Code, as it may be amended) of the
Borrower (or any other guarantor) by reason of the existence of this Guaranty
in the event that the Borrower becomes a debtor in any proceeding under the
Federal Bankruptcy Code. This waiver is given to induce the Bank to enter
into certain written contracts with the Borrower included in the
Indebtedness. The undersigned warrant(s) and agree(s) that none of Bank's
rights, remedies or interests shall be directly or indirectly impaired
because of any of the undersigned's status as an "insider" or affiliate of
the Borrower, and undersigned shall take any action, and shall execute any
document, which the Bank may request in order to effectuate this warranty to
the Bank.

If any indebtedness is guaranteed by two or more guarantors, the obligation
of the undersigned shall be several and also joint, each with all and also
each with any one or more of the others, and may be enforced at the option of
the Bank against each severally, any two or more jointly, or some severally
and some jointly The Bank, in its sole discretion, may release any one or
more of the guarantors for any consideration which it deems adequate, and may
fail or elect not to prove a claim against the estate of any bankrupt,
insolvent, incompetent or deceased guarantor; and after that, without notice
to any other guarantor, the Bank may extend or renew any or all Indebtedness
and may permit the Borrower to incur additional Indebtedness, without
affecting in any manner the unconditional obligation of the remaining
guarantor(s). This action by the Bank shall not, however, be deemed to affect
any right to contribution which may exist among the guarantors.

Any of the undersigned may terminate their obligation under this Guaranty as
to future indebtedness (except as provided below) by (and only by) delivering
written notice of termination to the Bank; provided, the termination shall
not be effective until the opening of business on the fifth (5th) day
following Bank's receipt of the written notice of termination. Any such
notice of termination to be effective must be sent by certified or registered
mail, return receipt requested or by reputable overnight delivery service
addressed as follows: Comerica Bank, 500 Woodward Avenue, 7th Floor, Detroit,
Michigan 48226 Attention: Comerica Business Credit/Group Manager. Any
termination shall not affect in any way the unconditional obligations of the
remaining guarantor(s), whether or not the termination is known to the
remaining guarantor(s). Any termination shall not affect in any way the
unconditional obligations of the terminating guarantor(s) as to any
indebtedness existing at the effective date of termination or any
indebtedness created after that pursuant to any commitment or agreement of
the Bank or any Borrower loan with the Bank existing at the effective date of
termination (whether advances or readvances by the Bank are optional or
obligatory), or any modifications, extensions or renewals of any of this
Indebtedness, whether in whole or in part, and as to all of this Indebtedness
and modifications, extensions or renewals of it, this Guaranty shall continue
effective until the same shall have been fully paid. The Bank has no duty to
give notice of termination by any guarantor(s) to any remaining guarantor(s).
The undersigned shall indemnify the Bank against all claims, damages, costs
and expenses, including without limit reasonable attorneys' fees and costs,
incurred by the Bank in connection with any suit, claim or action against the
Bank arising out of any modification or termination of a Borrower loan or any
refusal by the Bank to extend additional credit in connection with the
termination of this Guaranty.

Notwithstanding any prior revocation, termination, surrender or discharge of
this Guaranty (or of any Lien, pledge or security interest securing this
Guaranty) in whole or part, the effectiveness of this Guaranty, and of all
liens, pledges and security interests securing this Guaranty, shall
automatically continue or be reinstated, as the case may be, in the event
that (a) any payment received or credit given by the Bank in respect of the
indebtedness is returned, disgorged or rescinded as a preference,
impermissible setoff, fraudulent conveyance, diversion of trust funds, or
otherwise under any applicable state or federal law, including, without
limitation, laws pertaining to bankruptcy or insolvency, in which case this
Guaranty, and all liens, pledges and security interests securing this
Guaranty, shall be enforceable against the undersigned as if the returned,
disgorged or rescinded payment or credit had not been received or given by
the Bank, and whether or not the Bank relied upon this payment or credit or
changed its position as a consequence of it; or (b) any liability is imposed,
or sought to be imposed, against the Bank relating to the environmental
condition of, or the presence of hazardous or toxic substances on, in or
about, any property given as collateral to the Bank by the Borrower, whether
this condition is known or unknown, now exists or subsequently arises
(excluding only conditions which arise after any acquisition by the Bank of
any such property, by foreclosure, in lieu of foreclosure or otherwise, to
the extent due to the wrongful act or omission of the Bank), in which case
this Guaranty, and all liens, pledges and security interests securing this
Guaranty, shall be enforceable against the undersigned to the extent of all
liabilities, costs and expenses (including without limit reasonable
attorneys' fees and costs), incurred by the Bank as the direct or indirect
result of any environmental condition or hazardous or toxic substances. In
the event of continuation or reinstatement of this Guaranty and the liens,
pledges and security interests securing it, the undersigned agree(s) upon
demand by the Bank to execute and deliver to the Bank those documents which
the Bank determines are appropriate to further evidence (in the public
records or otherwise) this continuation or reinstatement, although the
failure of the undersigned to do so shall not affect in any way the
reinstatement or continuation. If the undersigned do(es) not execute and
deliver to the Bank upon demand such documents, the Bank and each Bank
officer is irrevocably appointed (which appointment is coupled with an
interest) the true and lawful attorney of the undersigned (with full power of
substitution) to execute and deliver such documents in the name and on behalf
of the undersigned. For purposes of this Guaranty,"Environmental condition"
includes, without limitation, conditions existing with respect to the surface
or ground water, drinking water supply, land surface or subsurface and the
air; and "hazardous or toxic substances" shall include any and all substances
now or subsequently determined by any federal, state or local authority to be
hazardous or toxic, or otherwise regulated by any of these authorities.

Although the intent of the undersigned and the Bank is that Michigan law
shall apply to this Guaranty, regardless of whether Michigan law applies, the
undersigned further agree(s) as follows: With respect to the limitation, if
any, stated in the Additional Provisions below on the amount of principal
guaranteed under this Guaranty, the undersigned agree(s) that (a) this
limitation shall not be a limitation on the amount of Borrower's indebtedness
to the Bank; (b) any payments by the undersigned shall not reduce the maximum
liability of the undersigned under this Guaranty unless written notice to
that effect is actually received by the Bank at or prior to the time of the
payment; and (c) the liability of the undersigned to the Bank shall at all
times be deemed to be the aggregate liability of the undersigned under this
Guaranty and any other guaranties previously or subsequently given to the
Bank by the undersigned and not expressly revoked, modified or invalidated in
writing.

The undersigned waive(s) any right to require the Bank to: (a) proceed
against any person, including without limit the Borrower; (b) proceed against
or exhaust any security held from the Borrower or any other person; (c) give
notice of the terms, time and place of any public or private sale of personal
property security held from the Borrower or any other person, or otherwise
comply with the provisions of Section 9-504 of the Michigan or other
applicable Uniform Commercial Code; (d) pursue any other remedy in the Bank's
power; or (e) make any presentments or demands for performance, or give any
notices of nonperformance, protests, notices of protest, or notices of
dishonor in connection with any obligations or evidences of indebtedness held
by the Bank as security, in connection with any other obligations or
evidences of indebtedness which constitute in whole or in part indebtedness,
or in connection with the creation of new or additional indebtedness.

The undersigned authorize(s) the Bank, either before or after termination of
this Guaranty, without notice to or demand on the undersigned and without
affecting the undersigned's liability under this Guaranty, from time to time
to: (a) apply any security and direct the order or manner of sale of it,
including without limit, a nonjudicial sale permitted by the terms of the
controlling security agreement, mortgage or deed of trust, as the Bank in its
discretion may determine; (b) release or substitute any one or more of the
endorser or any other guarantors of the indebtedness; and (c) apply payments
received by the Bank from the Borrower to any indebtedness of the Borrower to
the Bank, in such order as the Bank shall determine in its sole discretion,
whether or not this indebtedness is covered by this Guaranty, and the
undersigned waive(s) any provision of law regarding application of payments
which specifies otherwise. The Bank may without notice assign this Guaranty
in whole or in part. Upon the Bank's request, the undersigned agree(s) to
provide to the Bank copies of the undersigned's financial statements.

The undersigned waives to the extent permitted by applicable law any defense
based upon or arising by reason of (a) any disability or other defense of the
Borrower or any other person; (b) the cessation or limitation from any cause
whatsoever, other than final and irrevocable payment in full, of the
Indebtedness; (c) any lack of authority of any officer, director, partner,
agent or any other person acting or purporting to act on behalf of the
Borrower which is a corporation, partnership, limited liability company or
other type of entity, or any defect in the formation of the Borrower; (d) the
application by the Borrower of the proceeds of any Indebtedness for purposes
other than the purposes represented by the Borrower to the Bank or intended
or understood by the Bank or the undersigned; (e) any act or omission by the
Bank which directly or indirectly results in or aids the discharge of the
Borrower or any Indebtedness by operation of law or otherwise; or (f) any
modification of the Indebtedness, in any form whatsoever including without
limit any modification made after effective termination, and including
without limit, the renewal, extension acceleration or other change in time
for payment of the Indebtedness, or other change in the terms of any
Indebtedness, including without limit increase or decrease of the interest
rate. The undersigned understands that, absent this waiver, Bank's election
of remedies, including but not limited to its decision to proceed to
nonjudicial foreclosure on any real property securing the Indebtedness, could
preclude Bank from obtaining a deficiency judgment against Borrower and the
undersigned pursuant to California Code of Civil Procedure sections 580a,
580b, 580d of 726 and could also destroy any subrogation rights which the
undersigned has against Borrower. The undersigned further understands that
absent this waiver, California law, including without limitation, California
Code of Civil Procedure sections 580a, 580b, 580d or 726, could afford the
undersigned one or more affirmative defenses to any action maintained by Bank
against the undersigned on this Guaranty.

The undersigned waives any and all rights and provisions of California Code
of Civil Procedure section 580a, 580b, 580d and 726, including, but not
limited to any provision thereof that: (i) may limit the time period for Bank
to commence a lawsuit against Borrower or the undersigned to collect any
indebtedness owing by Borrower or the undersigned to Bank; (ii) may entitle
Borrower or the undersigned to a judicial or nonjudicial determination of any
deficiency owed by Borrower or the undersigned to Bank, or to otherwise limit
Bank's right to collect a deficiency based on the fair market value of such
real property security; (iii) may limit Bank's right to collect a deficiency
judgment after a sale of any real property securing the Indebtedness; and
(iv) may require Bank to take only one action to collect the indebtedness or
that may otherwise limit the remedies available to Bank to collect the
indebtedness.

The undersigned waives all rights and defenses arising out of an election of
remedies by Bank even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has
destroyed the undersigned's rights of subrogation and reimbursement against
Borrower by the operation of Section 580d of the Code of Civil Procedure or
otherwise.

The undersigned acknowledges and agrees that this is knowing and informed
waiver of the undersigned's rights as discussed above and that Bank is
relying on this waiver in extending credit to Borrower.

The undersigned acknowledge(s) that the Bank has the right to sell, assign,
transfer, negotiate, or grant participation in all or any part of the
indebtedness and any related obligations, including without limit this
Guaranty. In connection with that right, the Bank may disclose any documents
and information which the Bank now or later acquires relating to the
undersigned and this Guaranty, whether furnished by the Borrower, the
undersigned or otherwise to any assignee or participant who agrees to hold
such information confidential in the same manner as the Bank. The undersigned
further agree(s) that the Bank may disclose these documents and information
to the Borrower. The undersigned agree(s) that the Bank may provide
information relating to this Guaranty or to the undersigned to the Bank's
parent, affiliates, subsidiaries and service providers.

The total obligation under this Guaranty shall be UNLIMITED unless
specifically limited in the Additional Provisions of this Guaranty, and this
obligation (whether unlimited or limited to the extent indicated in the
Additional Provisions) shall include, IN ADDITION TO any limited amount of
principal guaranteed, any and all interest on all indebtedness and any and
all costs and expenses of any kind, including without limit reasonable
attorneys' fees and costs, incurred by the Bank at any time(s) for any reason
in enforcing any of the duties and obligations of the undersigned under this
Guaranty or otherwise incurred by the Bank in any way connected with this
Guaranty, the indebtedness or any other guaranty of the indebtedness
(including without limit reasonable attorneys' fees and other expenses
incurred in any suit involving the conduct of the Bank, the Borrower or the
undersigned). All of these costs and expenses shall be payable immediately by
the undersigned when incurred by the Bank, without demand, and until paid
shall bear interest at the highest per annum rate applicable to any of the
indebtedness, but not in excess of the maximum rate permitted by law. Any
reference in this Guaranty to attorneys' fees shall be deemed a reference to
fees, charges, costs and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs
if a suit or action is instituted, and whether attorneys' fees or court costs
are incurred at the trial court level, on appeal, in a bankruptcy,
administrative or probate proceeding or otherwise. Any reference in the
Additional Provisions or elsewhere (a) to this Guaranty being secured by
certain collateral shall NOT be deemed to limit the total obligation of the
undersigned under this Guaranty or (b) to this Guaranty being limited in any
respect shall NOT be deemed to limit the total obligation of the undersigned
under any prior or subsequent guaranty given by the undersigned to the Bank.

The undersigned unconditionally and irrevocably waive(s) each and every
defense and setoff of any nature which, under principles of guaranty or
otherwise, would operate to impair or diminish in any way the obligation of
the undersigned under this Guaranty, and acknowledge(s) that each such waiver
is by this reference incorporated into each security agreement, collateral
assignment, pledge and/or other document from the undersigned now or later
securing this Guaranty and/or the indebtedness, and acknowledge(s) that as of
the date of this Guaranty no such defense or setoff exists. The undersigned
acknowledge(s) that the effectiveness of this Guaranty is subject to no
conditions of any kind.

This Guaranty shall remain effective with respect to successive transactions
which shall either continue the indebtedness, increase or decrease it, or
from time to time create new indebtedness after all or any prior indebtedness
has been satisfied, until this Guaranty is terminated in the manner and to
the extent provided above.

The undersigned warrant(s) and agree(s) that each of the waivers set forth
above are made with the undersigned's full knowledge of their significance
and consequences, and that if any of these waivers are determined to be
contrary to any applicable law or public policy, these waivers shall be
effective only to the extent permitted by law.

This Guaranty constitutes the entire agreement of the undersigned and the
Bank with respect to the subject matter of this Guaranty. No waiver, consent,
modification or change of the terms of this Guaranty shall bind any of the
undersigned or the Bank unless in writing and signed by the waiving party or
an authorized officer of the waiving party, and then this waiver, consent,
modification or change shall be effective only in the specific instance and
for the specific purpose given. This Guaranty shall inure to the benefit of
the Bank and its successors and assigns. This Guaranty shall be binding on
the undersigned and the undersigned's heirs, legal representatives,
successors and assigns including, without limit, any debtor in possession or
trustee in bankruptcy for any of the undersigned. The undersigned has (have)
knowingly and voluntarily entered into this Guaranty in good faith for the
purpose of inducing the Bank to extend credit or make other financial
accommodations to the Borrower, and the undersigned acknowledge(s) that the
terms of this Guaranty are reasonable. If any provision of this Guaranty is
unenforceable in whole or in part for any reason, the remaining provisions
shall continue to be effective THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.

Additional Provisions (If any): None.

THE UNDERSIGNED AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED, EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS GUARANTY OR THE INDEBTEDNESS.

IN WITNESS WHEREOF, the undersigned has (have) signed this Guaranty on
September 25, 2001.

                                          GUARANTOR(S) SMTEK, INC.
Witness (as to all signatures):
/s/ Mitchell J. Freedman                  By: /s/ Kirk A. Waldron
                                          Signature of Kirk A. Waldron
                                          Its: Treasurer
                                          JOLT TECHNOLOGY, INC.
                                          By: /s/ Kirk A. Waldron
                                          Signature of Kirk A. Waldron
                                          Its: Treasurer
                                          TECHNETICS, INC.
                                          By: /s/ Kirk A. Waldron
                                          Signature of Kirk A. Waldron
                                          Its: Treasurer
                                          GUARANTOR'S ADDRESS
                                          2151 Anchor Court
                                          Thousand Oaks, California 91320