Note and Security Agreement
$ 23,000,000.00
December 30, 1997

For value received, and intending to be legally bound,
Undersigned, as defined below, promises to pay to

Mellon Bank, N.A.

("Bank")  or its  order at  Harrisburg,  Pennsylvania,  the sum of  Twenty-Three
Million and NO/100 ($ 23,000,000.00), or such lesser or greater principal amount
as may be  outstanding  from  time to time  under the  Revolving  Line of Credit
Agreement dated August 31, 1994 (as amended and supplemented  from time to time,
the  "Credit  Agreement"),  outstanding  balance  from the date of this Note and
Security Agreement  ("Note") at the rate(s)  ("Contractual  Rate(s)")  specified
herein.

Payment and principal and interest shall be due and payable, as set forth in the
attached supplement to Note and Security Agreement.

This Note and Security  Agreement is given in  replacement of that original Note
and Security  Agreement  dated  August 31, 1994,  and as amended and restated on
November 1. 1994,  December 29, 1994,  February 1, 1995, April 3, 1995, June 21,
1995, and November 14, 1996, in order to extend the maturity date. This is not a
novation  of the  prior  Note and  Security  Agreement(s).  All  prior  security
interests granted shall carry to this Note and Security Agreement.

After maturity, whether by acceleration or otherwise, interest shall accrue at a
rate 2 percent per annum above the Contractual  Rate(s) specified until all sums
due hereunder  are paid.  Interest  shall  continue to accrue after the entry of
judgment by  confession or otherwise at the  Contractual  Rate(s) until all sums
due hereunder and/or under the judgment are paid, unless the Contractual Rate(s)
is (are) altered by Subsequent  maturity.  Undersigned agrees to pay to Bank, as
consideration for Bank's commitment under the Credit Agreement, (i) a commitment
fee equal to N/A % per annum on the unborrowed  Commitment Amount (as defined in
the Credit Agreement),  from time to time, for each day of the Commitment Period
(as defined in the Credit Agreement), and (ii) a facility fee equal to N/A % per
annum in the Commitment  Amount (whether borrowed or unborrowed) for each day of
the Commitment  Period,  in each base payable for the preceding period for which
such fee has not been paid,  (a) on the last day of each N/A,  and N/A after the
date hereof,  (b) on the date of each reduction of the Commitment  amount on the
amount so reduced, and (c) on the last day of the Commitment Period.

If any  law,  regulation,  order,  decree  or  guideline  or  interpretation  or
application   thereof   by  any   governmental   authority   charged   with  the
interpretation or administration  thereof or compliance by Bank with any request
or directive of any governmental  authority  (whether or not having the force of
law) shall either  impose,  modify or deem  applicable  any capital  adequacy or
similar  requirement  against assets  (funded or  contingent)  of, or credits or
commitments  to  extend  credit  extended  by Bank and the  result of any of the
foregoing is to increase the cost to, reduce the income receivable by, or impose
any  expense  (including  loss of margin)  upon Bank with  respect to the Credit
Agreement,  this Note, or the making,  maintenance or funding of any part of the
Loans (or, in the case of capital adequacy or similar  requirement,  to have the
effect of reducing  the rate of return on Bank's  capital,  taking into  account
Bank's  policies  with regard to  adequacy)  by an amount which Bank deems to be
material,  Bank  shall  from  time  to time  notify  Undersigned  of the  amount
determined in good faith by Bank (which determination shall be conclusive absent
manifest error) to be necessary to compensate Bank for such increase,  reduction
or  imposition.  Such amount shall be due and payable by Undersigned to Bank ten
(10) business days after such notice is given.

So long as Bank is the  holder  hereof,  Bank's  book's,  and  records  shall be
presumed,  except in the case or manifest error,  to accurately  evidence at all
times all  amounts  outstanding  under this Note and the date and amount of each
advance and payment made pursuant hereto.

The  prompt  and  faithful  performance  of  all  of  Undersigned's  obligations
hereunder,  including without  limitation time of payment,  is of the essence of
this Note.

Certain terms used in this Note are defined in Section 9 below.

1. Security  Interest.  Undersigned hereby grants to Bank a security interest in
the following property now owned or hereafter acquired by Undersigned:

(b) all  inventory  (whether  held for sale or  lease or to be  furnished  under
contracts of service),  raw  materials,  work in process,  and materials used or
consumed  in the  conduct of  Undersigned's  business,  and all books,  records,
invoices and other documents which describe or evidence the same;

(d) all  accounts,  contract  rights,  general  intangibles,  choses in  action,
instruments,  chattel  paper,  documents  (including  all documents of title and
warehouse receipts) and all rights to the payment of money, however evidenced or
arising;

(g) In  addition  to the  foregoing,  Undersigned  (1) grants to Bank a security
interest in all accessions, parts, accessories, attachments and appurtenances in
any way used with,  attached  or related  to,  installed  in, any  equipment  or
inventory  constituting  "Collateral"  hereunder;  (2) grants to Bank a security
interest in all substitutions for, renewals of,  improvements,  replacements and
additions to, and the products and proceeds  (cash and non-cash) of all property
constituting "Collateral" hereunder and any insurance policies relating thereto;
(3)  grants to Bank a  security  interest  in,  lien  upon,  and right of setoff
against, all deposit accounts, credits, securities,  moneys or other property of
Undersigned which may at any time be in the possession of, delivered to, or owed
by Bank,  including any proceeds or returned or unearned  premiums of insurance,
and the proceeds  (cash and  non-cash) of all the  foregoing  property;  and (4)
assigns to Bank all moneys  which may become  payable on any policy of insurance
required to be  maintained  under this Note,  including any returned or unearned
premiums.

All such property subject to Bank's security interests described in this section
1 is  referred  to herein  collectively  as the  "Collateral".  With  respect to
Section 4  hereunder,  the term  "Collateral"  shall not  include  the  property
described in subsections (g) (3) and (g) (4) of this Section 1.

All security  interests in Collateral  shall be deemed to arise and be perfected
under and  governed by the Uniform  Commercial  Code,  except to the extent that
such law does not apply to certain types of transactions or Collateral, in which
case applicable law shall govern.

2. Obligations  Secured.  The Collateral shall secure the following  obligations
("Obligations")  of  Undersigned  to Bank:  (a) all amounts at any time owing or
payable  under this Note;  (b) all costs and  expenses  incurred  by Bank in the
collection or enforcement of this Note or the protection of the Collateral;  (c)
all future advances made by bank for taxes, levies, insurance, and repairs to or
maintenance  of the  Collateral;  and (d) any other  indebtedness,  liability or
obligation of Undersigned to Bank, past, present, or future, direct or indirect,
absolute or contingent,  individual, joint or several, now due or to become due,
whether as drawer, maker, endorser,  guarantor, surety or otherwise, except that
none of the  security  interests  created  herein  shall  secure any  obligation
incurred by Undersigned which is defined as "consumer credit" by Federal Reserve
Board  Regulation  Z, 12  C.F.R.  226.1 et seq.,  and is not  exempted  from the
application of that Regulation.

3. Representations.  Undersigned hereby makes the following  representations and
warranties  which  shall be true and  correct on the date of this Note and shall
continue  to be true and correct at the time of the  creation of any  Obligation
secured hereby and until the Obligations  secured hereby shall have been paid in
full: (a) Undersigned's residence and/or Chief Executive Office, as the case may
be, is as stated below or as otherwise  stated in a  subsequent  written  notice
delivered to Bank pursuant to the terms  hereof,  (b)  Undersigned  has good and
marketable  title to the  Collateral  subject to no security  interest,  lien or
encumbrance, except as indicated to the contrary to Bank in writing prior to the
execution of this Note; and (c) if any of the Undersigned is an individual, each
such  individual  is at least 18 years of age and under no legal  disability  or
incapacity.

4.  Covenants.  Undersigned  covenants  and agrees  that  until the  Obligations
secured  hereunder  have  been  paid in  full,  Undersigned  shall:  (a) use the
proceeds of the Loans evidenced hereby only for the purpose(s)  specified to the
Bank at or prior to the execution  hereof,  (b) not permit use of the Collateral
for any illegal  purposes;  (c) promptly notify Bank in writing of any change in
its or their residence or Chief Executive Office;  (d) not permit removal of any
of the Collateral  from county to county or state to state unless Bank has given
written consent in advance;  (e) maintain at all times good and marketable title
to all Collateral,  free and clear of any security interest, lien or encumbrance
(except as to which Bank may grant its prior written consent pursuant to section
4(f)  below),  and defend  such  title  against  the  claims and  demands of all
persons; (f) not (1) affix the Collateral or permit the Collateral to be affixed
to real estate or to any other goods,  (2) lease,  mortgage,  pledge or encumber
the Collateral,  (3) permit the Collateral's identity to be lost, (4) permit the
Collateral to be levied upon or attached under any legal process,  (5) permit or
cause any  security  interest  or lien to arise with  respect to the  Collateral
(other than those created in this Note),  or (6) except  Collateral  customarily
sold by  Undersigned  in the  ordinary  course of  business  and so sold in such
manner for full value,  sell,  consign,  part with  possession  of, or otherwise
dispose of the  Collateral or any rights  therein,  except as Bank may grant its
prior  specific  written  consent  with  respect to acts or events  specified in
subsections  (1), (2), (5) or (6) hereof-,  (g) maintain the  Collateral in good
condition and repair, excepting only reasonable wear and tear; pay and discharge
all taxes and other levies on the Collateral, as well as the costs of repair and
maintenance  thereof;  and  furnish to Bank upon  request  documentary  proof of
payment of such taxes,  levies and costs; (h) provide  additional  collateral at
such  times and  having  such  value as Bank may  request,  if Bank  shall  have
reasonable  grounds for believing  that the value of the  Collateral  has become
insufficient  to secure all  Obligations  evidenced or secured by this Note; (i)
purchase  and maintain  policies of insurance  (including  flood  insurance)  to
protect the Collateral or other property against such risks and casualties,  and
in such  amounts,  as shall be  required by Bank and/or  applicable  law,  which
policies shall (1) be in form and substance  satisfactory to Bank, (2) designate
Bank as loss payee and, at Bank's option, as additional insured,  and (3) be (or
certificates  evidencing  same shall be deposited with Bank;  (j) provide,  upon
request, financial or other information, documentation or certifications to Bank
(including  balance  sheets  and  income  statements),  all in form and  content
satisfactory to Bank; (k) execute, upon demand by Bank, any financing statements
or other  documents  which  Bank may  deem  necessary  to  perfect  or  maintain
perfection of the security  interests created in this Note and pay all costs and
fees  pertaining to the filing of any  financing,  continuation  or  termination
statements  with regard to such  security  interests;  (l) procure,  and cause a
statement of Bank's  security  interest to be noted on, any certificate of title
issued  or  required  by law to be issued  with  respect  to any  motor  vehicle
constituting  part of the  Collateral,  and  cause  any such  certificate  to be
delivered  to Bank within 10 days from the later of the date of this Note or the
date of the issuance of such  certificate;  (m) pay,  upon  demand,  all amounts
incurred by Bank in connection with any action or proceeding  taken or commenced
by Bank to enforce or collect  this Note or protect,  insure or realize upon the
Collateral,  including  attorney's  fees  equal to the  lesser of (a) 20% of the
above sum and interest then due hereunder, or $500.00,  whichever is greater, or
(b) the maximum amount  permitted by law, and attorney's  costs and all costs of
legal  proceedings;  and (n)  immediately  notify  Bank if any of  Undersigned's
accounts arise out of contracts with the United States or any department, agency
or  instrumentality  thereof,  and  execute any  instruments  and take any steps
required  by Bank in order  that all moneys due and to become due under any such
contracts  shall be  assigned  to Bank and  notice  thereof  given to the United
States under the Federal Assignment of Claims Act.

5. Events of Default. The occurrence of any of the following shall constitute an
"Event of Default' hereunder:(a) default in payment or performance of any of the
Obligations evidenced or secured by this Note or any other evidence of liability
of Undersigned  to Bank;  (b) the breach by any Obligor  (defined as Undersigned
and each surety or guarantor of any of  Undersigned's  liabilities  to Bank,  as
well as any person or entity  granting  Bank a security  interest in property to
secure the Obligations evidenced hereby) of any covenant contained in the Credit
Agreement,  this Note,  or in any separate  security,  guarantee  or  suretyship
agreement between Bank and any Obligor,  the occurrence of any default hereunder
or under the terms of any, such  agreement or the discovery by Bank of any false
or misleading representation made by any Obligor herein or in any such agreement
or in any other information  submitted to Bank by any Obligor;  (c) with respect
to any,  Obligor:  (1) death or incapacity of any individual or general partner;
or (2) dissolution of any partnership or corporation; (d) any assignment for the
benefit of creditors  by any Obligor;  (e)  insolvency  of any Obligor;  (f) the
filing or commencement of any petition, action, case or proceeding, voluntary or
involuntary,  under any state or federal law regarding  bankruptcy,  insolvency,
reorganization, receivership or dissolution, including the Bankruptcy Reform Act
of 1978, as amended,  by or against any Obligor;  (g) default under the terms of
any lease of or mortgage on the premises  where any  Collateral is located;  (h)
garnishment, attachment or taking by governmental authority of any Collateral or
other  property  of  the  Undersigned  which  is  in  Bank's  possession;  (i) a
determination by bank, which  determination  shall be conclusive if made in good
faith,  that a material adverse change has occurred in the financial or business
condition of Undersigned;  or (j) the maturity of any life insurance policy held
as  Collateral  under  this  Note by  reason  of the  death  of the  insured  or
otherwise.

6. Acceleration;  Remedies. Upon the occurrence of any Event of Default: (a) all
amounts  due under this Note,  including  the unpaid  balance of  principal  and
interest hereof, shall become immediately due and payable at the option of Bank,
without any demand or notice  whatsoever;  (b) Undersigned shall, upon demand by
Bank,  assemble the  Collateral  and  promptly  make it available to Bank at any
place designated by Bank with is reasonably convenient to both parties; (c) Bank
may  immediately  and without  demand  exercise  any of it s rights and remedies
granted herein,  under  applicable law, or which it may otherwise have,  against
the Undersigned,  the Collateral, or otherwise; and (d) Bank may, without notice
or  process  of any  sort,  peaceably  enter  any  premises  where  any  vehicle
constituting a part of the Collateral is located and take possession, retain and
dispose of such vehicle and all property  located in or upon it. Bank shall have
no obligation to return any property not  constituting  Collateral  found in any
such  vehicle  unless  Bank  actually  receives  Undersigned's  written  request
therefor   specifically   describing   such  property   within  72  hours  after
repossession  thereof.  Notwithstanding  any provision to the contrary contained
herein, upon the occurrence of an Event of Default as described in Section 5 (f)
hereof,  all  amounts  due under  this Note  shall  become  immediately  due and
payable,  without any demand, notice, or further action by Bank whatsoever,  and
an action therefor shall immediately accrue.



7. Bank's Rights.  Undersigned  hereby  authorizes Bank, and Bank shall have the
continuing  right, at its sole option and discretion,  to: (a) do anything which
Undersigned is required but fails to do hereunder,  and in particular  Bank may,
if  Undersigned  fails to do so,  (1)  insure  or take any  reasonable  steps to
protect the Collateral,  (2) pay all taxes,  levies,  expenses and costs arising
with respect to the Collateral, or (3) pay any premiums payable on any policy of
insurance required to be obtained or maintained  hereunder,  and add any amounts
paid under this Section 7(a) to the principal amount of the indebtedness secured
by this Note; (b) direct any insurer to make payment of any insurance  proceeds,
including any returned or unearned  premiums,  directly to Bank,  and apply such
moneys to any  Obligations or other amounts  evidenced or secured hereby in such
order of fashion as Bank may elect; (c) inspect the Collateral at any reasonable
time; (d) pay any amounts Bank elects to pay or advance  hereunder on account of
insurance,  taxes,  or other costs,  fees, or charges arising in connection with
the  Collateral,  either  directly  to the payee of such cost,  fee,  or charge,
directly to Undersigned,  or to such payee(s) and Undersigned  jointly,  and (e)
pay the  proceeds  of the  Loans  evidenced  by  this  Note to any or all of the
Undersigned  Individually  or  jointly,  or to such other  persons as any of the
Undersigned may direct.

In  addition to all rights  given to Bank by this Note,  Bank shall have all the
rights and  remedies of a secured  party  under any  applicable  law,  including
without limitation, the Uniform Commercial Code.

B.  Miscellaneous  Provisions (a)  Undersigned  waives protest of all commercial
paper at any time held by Bank on which Undersigned is in any way liable, notice
of nonpayment at maturity of any and all accounts,  and (except where  requested
hereby)  notice  of action  taken by Bank;  and  hereby  ratifies  and  confirms
whatever   Bank  may  do.  Bank  shall  be   entitled  to  exercise   any  right
notwithstanding  any prior exercise,  failure to exercise or delay in exercising
any such  right.  (b) Bank  shall  retain the lien of any  judgment  entered on
account of the indebtedness  evidenced  hereby, as well as any security interest
previously granted to secure repayment of the indebtedness evidenced hereby, and
Undersigned warrants that Undersigned has no defense whatsoever to any action or
proceeding  that may be brought to  enforce  or  realize  on such  judgment  or
security  interest.  (c) If any  provision  hereof  shall for any reason be held
invalid or unenforceable, no other provision shall be affected thereby, and this
Note shall be construed as if the invalid or  unenforceable  provision had never
been a part of it. The  descriptive  headings  of this Note are for  convenience
only  and  shall  not in any way  affect  the  meaning  or  construction  of any
provision  hereof.  (a) The rights and privileges of Bank contained in this Note
shall  inure to the benefit of its  successors  and  assigns,  and the duties of
Undersigned  shall  bind all heirs,  personal  representatives,  successors  and
assigns.  (a) This Note shall in all  respects  be  governed  by the laws of the
state in which this Note is  payable  (except to the  extent  that  federal  law
governs),  and all references to the Uniform  Commercial Code shall be deemed to
refer to the Uniform  Commercial Code as enacted in such state.  (f) Undersigned
hereby  irrevocably  appoints  Bank  and each  holder  hereof  as  Undersigned's
attorney-in-fact to: (1) endorse  Undersigned's name to any draft or check which
may be payable to  Undersigned in order to collect the proceeds of any insurance
or any  returned or unearned  premiums in respect of any  policies of  insurance
required  to be  maintained  hereunder;  and (2)  take  any  action  Bank  deems
necessary to perfect or maintain  perfection of any security interest granted to
Bank herein,  including  executing  any document on  Undersigned's  behalf.  (g)
Undersigned  shall bear the risk of loss of,  damage to, or  destruction  of the
Collateral,  and  Undersigned  hereby  releases Bank from all claims for loss or
damage  to the  Collateral  caused by any act or  omission  on the part of Bank,
except for willful  misconduct.  (h) Copies or reproductions of this document or
of any financing statement may be filed as a Financing statement.

9.  Definitions.  As used herein:  (a)  "account",  "chattel  paper",  "contract
right",  "document",  "instrument",  and  "inventory"  have the same  respective
meanings  given to those  terms in the Uniform  Commercial  Code;  (b)  "general
intangibles" has the meaning given to that term in the Uniform  Commercial Code,
including  without  limitation,  customer  lists,  books and records  (including
without  limitation,  all  correspondence,  files,  tapes,  cards, book entries,
computer runs computer  programs and other papers and documents,  whether in the
possession or control of Undersigned or any computer service bureau),  rights in
franchises  and  sales  contracts,   patents,  copyrights,   trademarks,  logos,
goodwill, trade names, label designs, royalties, brand names, plans, blueprints,
inventions,  patterns, trade secrets, licenses, jigs, dies, molds, and formulas;
(c)  "Chief  Executive  Office"  means the place from which the main part of the
business  operations  of an  entity is  managed;  and (d)  "Undersigned"  refers
individually and collectively to all makers of this Note, including, in the case
of any partnership,  all general  partners of such partnership  individually and
collectively,  whether or not such  partners  sign below.  Undersigned  shall be
jointly  and  severally  bound by the terms  hereof,  and,  with  respect to any
partnership executing this Note, each general partner shall be bound hereby both
in such general partner's individual and partnership capacities.

Capitalized  terms not  defined in this Note shall  have the same  meanings  set
forth in the Credit Agreement.


10. Confession of Judgment.  Undersigned hereby empowers the prothonotary or any
attorney  of any  court of  record  to appear  for  Undersigned  and to  confess
judgment  as often as  necessary  against  Undersigned  in favor of the  holder
hereof,  as of any term,  for the above  sum plus  interest  due under the terms
hereof,  together with costs of legal  proceedings and an attorney's  commission
equal to the lesser of (a) 20% of the above sum and interest  then due hereunder
or $500.00,  whichever is greater,  or (b) the maximum amount  permitted by law,
with  release  of all  errors.  Undersigned  waives all laws  exempting  real or
personal property from execution.

SIGNATURES

Attest/Witness:
/s/ Joseph E. Zavacky
Controller and Assistant Secretary

Corporation

C-COR Electronics, Inc.

/s/ Chris A. Miller
VP-Finance

Business Address:
60 Decibel Road
State College, PA  16801