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                                                                  EXHIBIT 10.12C

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                               SECURITY AGREEMENT


      This SECURITY AGREEMENT (the "Agreement") is made as of this 29th day of
September, 2000, by and between FLEET NATIONAL BANK, a national banking
association with a place of business at 777 Main Street, Hartford, Connecticut
06115 ("Bank" or "Secured Party") and EDAC TECHNOLOGIES CORPORATION, a Wisconsin
corporation with a principal place of business at 1806 New Britain Avenue,
Farmington, Connecticut 06032 ("Debtor" or "Borrower").

                                   WITNESSETH:

         WHEREAS, On October 3, 1985, Bank and EDAC TECHNOLOGIES CORPORATION, a
Wisconsin corporation with a principal place of business at 1806 New Britain
Avenue, Farmington, Connecticut 06032 ("Borrower") entered into a certain
Revolving Loan and Security Agreement which has been amended and restated from
time to time, and in its entirety by a certain Fifth Amended and Restated
Revolving Loan, Term Loan, Equipment Loan and Security Agreement dated February
28, 1995, as amended by a certain Sixth Amendment to Revolving Loan, Term Loan,
Equipment Loan and Security Agreement dated July 31, 1995, as further amended by
a certain Seventh Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement and Reaffirmation of Guaranties dated as of January 26, 1996,
as further amended by a certain Eighth Amendment to Revolving Loan, Term Loan,
Equipment Loan and Security Agreement and Reaffirmation of Guaranties dated as
of April 10, 1996, as further amended by a certain Ninth Amendment to Revolving
Loan, Term Loan, Equipment Loan, Security Agreement, Modification of Notes and
Reaffirmation of Guaranties dated May 27, 1997 between Borrower and Bank, as
further amended by a certain Tenth Amendment to Revolving Loan, Term Loan,
Equipment Loan and Security Agreement and Reaffirmation of Guaranties dated May
22, 1998, as further amended by a certain Eleventh Amendment to Loan and
Security Agreement, Modification of Notes and Reaffirmation of Guaranties dated
as of June 30, 1998 and as further amended by a certain Twelfth Amendment to
Loans and Security Agreement Modification of Notes and Reaffirmation of
Guaranties dated as of November 25, 1998 (as amended and in effect from time to
time, the "Loan Agreement"); and

       WHEREAS, pursuant to the Loan Agreement, the Bank has made: (i) a
$13,000,000 revolving loan (the "Revolving Loan"), as evidenced by a certain
Second Amended and Restated Revolving Promissory Note dated as of June 30, 1998
(the "Revolving Note"), (ii) a $14,000,000 term loan (the "Acquisition Term
Loan"), as evidenced by a certain Term Promissory Note dated June 30, 1998 (the
"Acquisition Term Note"), (iii) a $541,153.34 term loan (the "Consolidated
Equipment Loan"), as evidenced by a certain Amended and Restated Promissory Note
dated March 27, 1997 (the "Consolidated Equipment Note"), (iv) a $4,000,000 term
loan (the "Term Loan"), as evidenced by a certain Term Promissory Note dated
March 22, 1993 (the "Term Note"), (v) a $1,000,000 construction to permanent
loan (the "Construction Loan"), as evidenced by a certain Construction to
Permanent Loan Promissory Note dated July 31, 1995 (the "Construction Note"),
(vi) a $3,000,000 equipment loan (the "Third Equipment Loan"), as evidenced by

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a certain Equipment Promissory Note III dated as of March 27, 1997 (the "Third
Equipment Note"), and (vii) a $3,000,000 equipment loan (the "Fourth Equipment
Loan"), as evidenced by a certain Equipment Promissory Note IV dated as of May
22, 1998 (the "Fourth Equipment Note" and collectively with the Revolving Note,
Acquisition Term Note, Consolidation Equipment Note, Term Note, Construction
Note and Third Equipment Note, as amended and in effect from time to time,
collectively, the "Original Notes"); and

       WHEREAS, the Borrower has executed a certain Term Note dated of even date
herewith ("Note") in the principal amount of SEVEN MILLION AND 00/100 DOLLARS
($7,000,000.00) which Note supersedes and replaces the Original Notes in their
entirety and evidences the same indebtedness that has been evidenced by the
Original Notes; and

      WHEREAS, Bank has requested that Debtor agree to provide certain
collateral to secure repayment of Debtor's obligations to Bank pursuant to the
Note and any other present or future loan, advance or extension of credit by
Bank to Debtor; and

      WHEREAS, Debtor has agreed to provide said collateral; and

      NOW, THEREFORE, in consideration of the foregoing and of the covenants set
forth herein, Secured Party and Debtor hereby agree as follows:

                             Section 1. DEFINITIONS.

      All capitalized terms used herein or in any certificate, report or other
document delivered pursuant hereto, unless otherwise defined, shall have the
meanings assigned to them below.

      Section 1.1. "Accounts" means all rights of Debtor to payment for goods
sold or leased or for services rendered, all sums of money or other proceeds due
or becoming due thereon, all instruments pertaining thereto, all guarantees and
security therefor, and Debtor's rights pertaining to and interest in such goods,
including the right of stoppage in transit, replevin or reclamation; all Chattel
Paper; all amounts due from affiliates of Debtor; all insurance proceeds; all
other rights and claims to the payment of money, under contracts or otherwise;
and all other property constituting "accounts" as such term is defined in the
Uniform Commercial Code.

      Section 1.2. "Collateral" means all Accounts, Chattel Paper, Documents,
Goods, Fixtures, Securities, Documents of Title, Inventory, Instruments, General
Intangibles, Equipment and Records now owned or acquired at any time hereafter
by Debtor, wherever located or situated, and the products and proceeds
(including condemnation proceeds) of the foregoing, all accessions and additions
thereto and all substitutions and replacements therefor.
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      Section 1.3. "Chattel Paper" means "chattel paper" as that term is defined
in the Uniform Commercial Code.

      Section 1.4. "Documents" means "documents" as that term is defined in the
Uniform Commercial Code.

      Section 1.5. "Documents of Title" means "documents of title" as defined in
the Uniform Commercial Code.

      Section 1.6. "Encumbrance" or "Encumbrances" means any security interest,
mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement,
lessor's interest under a financing lease or any analogous arrangements in any
of Debtor's properties or assets, intended as, or having the effect of,
security.

      Section 1.7. "Equipment" means all machinery, equipment and fixtures,
office furniture, furnishings and trade fixtures, specialty tools and parts,
motor vehicles and materials handling equipment of Debtor, together with
Debtor's interest in, and right to, any and all manuals, computer programs, data
bases and other materials relating to the use, operation or structure of any of
the foregoing; and all other property constituting "equipment" as such term is
defined in the Uniform Commercial Code.

      Section 1.8. "Event of Default" has the meaning set forth in Section 7
hereof.

      Section 1.9. "Fixtures" means "fixtures" as that term is defined in the
Uniform Commercial Code.

      Section 1.10. "General Intangibles" means all rights with respect to
trademarks, service marks, trade names, trade styles, patents, copyrights, mask
works, trade-secrets information, other proprietary rights and rights to prevent
others from doing acts that constitute unfair competition with Debtor or
misappropriation of its property, including without limitation any sums (net of
expenses) that Debtor may receive arising out of any claim for infringement of
its rights in any of the foregoing, and all rights of Debtor under contracts to
enjoy performance by others or to be entitled to enjoy rights granted by others,
including without limitation any licenses; all tax refunds; all rights, title
and interest of Debtor in and to all documents, books, records and other
information (on whatever medium recorded, and including without limitation
computer programs, tapes, discs, punch cards, data processing software and
related property and rights) maintained by Debtor that reflect the conduct of
Debtor's business, such as financial records, marketing and sales records,
research and development records, and design, engineering and manufacturing
records; all rights under service bureau service contracts; all computer data
and the concepts and ideas on which said data is based; all developmental ideas
and concepts, papers, plans, schematics, drawing, blueprints, sketches and
documents; all data bases; all customer lists; and all other property
constituting "general intangibles" as such term is defined in the UCC.
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      Section 1.11. "Goods" means "goods" as that term is defined in the UCC.

      Section 1.12. "Instruments" means "instruments" as that term is defined in
the UCC.

      Section 1.13. "Inventory" means any and all goods, merchandise and other
personal property (including warehouse receipts and other negotiable and
non-negotiable documents of title covering any such property) of Debtor that are
held for sale, lease or other disposition, or for display or demonstration, or
leased or consigned, or that are raw materials, piece goods, supplies,
work-in-process, finished goods, goods returned by customers, or materials used
or consumed or to be used or consumed in Debtor's business, whether in transit
or in the possession of Debtor or another, including without limitation all
goods covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers and goods located on the premises of any carriers,
forwarding agents, truckers, warehousemen, vendors, selling agents or other
third parties; all proprietary rights, patents, plans, drawings, diagrams,
schematics, assembly and display materials relating to any of the foregoing; and
all other property constituting "inventory" as such term is defined in the UCC.

      Section 1.14. "Obligations" means any and all loans, advances,
indebtedness, liabilities, obligations, covenants or duties of Borrower to Bank
of any kind or nature, including obligations to pay money and to perform acts or
refrain from taking action, whether arising under a loan, lease, credit card,
line of credit, letter of credit, guaranty, indemnity, overdraft, confirmation,
acceptance, interest rate protection, currency exchange or other type of
financing arrangement, and any and all extensions and renewals thereof, and
modifications and amendments thereto, whether in whole or in part, whether
created directly by Bank or acquired by assignment, purchase, discount or
otherwise, whether any of the foregoing are direct or indirect, joint or
several, absolute or contingent under, due or to become due, now existing or
hereafter arising under any present or future agreement or instrument, and
whether or not evidenced by a writing and specifically including but not being
limited to unpaid principal and all accrued and unpaid interest thereon,
together with all fees, expenses, including attorneys' fees, penalties, and
other amounts owing by or chargeable to by Debtor under the Note.

      Section 1.15. "Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture or other entity of whatever nature, whether public or private.

      Section 1.16. "Records" means all books, records, customer lists, ledger
cards, computer programs, computer tapes, disks, printouts and records and other
property and General Intangibles at any time evidencing or relating to any of
the types (or items) of property covered by this Agreement, whether now in
existence or hereafter created.
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      Section 1.17. "Securities" means all of the securities and instruments of
Debtor, including without limitation all stocks, bonds, Treasury bills,
certificates of deposit and mutual or money market fund shares; and all sums due
or to become due on any of the foregoing, and all securities, instruments or
other property purchased or acquired as a result of the investment and
reinvestment thereof as hereinafter provided, and all other property
constituting "securities" as such term is defined in the UCC.

      Section 1.18. "Uniform Commercial Code" or "UCC" means the Uniform
Commercial Code as in effect in the State of Connecticut.

                               Section 2. GRANT.

      As security for the prompt and complete payment and performance of the
Obligations, Debtor hereby grants to Secured Party a continuing security
interest in, and assigns and pledges to Secured Party, all of its right, title
and interest in and to the Collateral.

      Section 3. REPRESENTATIONS, WARRANTIES AND COVENANTS

      Debtor makes the following representations and warranties, and agrees to
the following covenants, each of which representations, warranties and covenants
shall be continuing and in force so long as this Agreement is in effect:

      Section 3.1. Name; Debtor/Collateral Location; Changes.

              (a)    The name of Debtor set forth on the first page hereof is
                     the true and correct legal name of Debtor and the Debtor
                     has not done business as or used any other name in the last
                     five (5) years, except as set forth on Schedule A hereof.

              (b)    The address of Debtor set forth on the first page hereof is
                     Debtor's chief executive office and the place where its
                     business records are kept. All tangible Collateral other
                     than Securities is located at such chief executive office.

              (c)    Debtor will not change its name, identity or organizational
                     structure or chief executive office or place where its
                     business records are kept, or move any tangible Collateral
                     (other than Securities), or merge into or consolidate with
                     any other Person, unless Debtor shall have given Secured
                     Party at least thirty (30) days' prior written notice
                     thereof and shall have delivered to Secured Party such new
                     UCC financing statements or other documentation as may be
                     necessary or required by Secured Party to ensure the
                     continued perfection and priority of the security interests
                     granted by this Agreement.
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      Section 3.2. Organization; Good Standing. If Debtor is other than an
individual, it is duly organized, validly existing and in good standing under
the laws of the state of its organization and duly qualified and in good
standing in every other state in which the nature of its business or properties
requires such qualification.

      Section 3.3. Authorization of Agreement; No Consents; No Conflicts. The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary action, corporate or otherwise, and do not and will not: (i)
require any consent or approval of the stockholders of Debtor, if any; (ii)
contravene the terms of the charter, by-laws or other organizational papers of
Debtor; (iii) violate any applicable law, rule or regulation of any governmental
agency; (iv) contravene any provision of any agreement, instrument, order or
undertaking binding on Debtor or by which any of its properties are bound or
affected; (v) other than as contemplated hereby, result in or require the
imposition of any Encumbrance on any of the properties or assets of Debtor; or
(vi) other than filings required by the Uniform Commercial Code, require the
approval or consent of, or filing or registration with, any Federal, state or
local governmental or other agency, authority or instrumentality, or any other
Person.

      Section 3.4. Ownership of Collateral; Absence of Liens and Restrictions.
The Debtor is, and in the case of property acquired after the date hereof, will
be, the sole legal and equitable owner of the Collateral, holding good and
marketable title to the same free and clear of all Encumbrances except for the
security interests granted hereunder or permitted hereby, and has good right and
legal authority to assign, deliver, and creates a security interest in the
Collateral in the manner herein contemplated. The Collateral is genuine and is
what it is purported to be. The Collateral is not subject to any restriction
that would prohibit or restrict the assignment, delivery or creation of the
security interest contemplated hereunder.

      Section 3.5. Second Priority Security Interests. This Agreement, together
with the filing of UCC financing statements in the appropriate offices, creates
a valid and continuing second lien on and perfected security interest in the
Collateral (except for property located in the United States in which a security
interest may not be perfected by filing under the UCC), subject only to General
Electric Capital Corporation's security interest in the Collateral, and is
enforceable as such against creditors of Debtor, any owner of the real property
where any of the Collateral is located, any purchaser of such real property and
any present or future creditor obtaining a lien on such real property. Except as
set forth on Schedule A attached hereto, no financing statement under the
Uniform Commercial Code of any state or other instrument evidencing a lien that
names Debtor as debtor is on file in any jurisdiction and Debtor has not signed
any such document or any agreement authorizing the filing of any such financing
statement or instrument. All rights of Secured Party and Debtor are subject to
the agreements between Debtor and General Electric Capital Corporation.

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      Section 3.6. Validity of Accounts. Each Account is and shall be a valid,
legal and binding obligation of the account Debtor purported to be obligated
thereon, enforceable in accordance with its terms and free of material setoffs,
defenses or counterclaims.

      Section 3.7. Fixture Conflicts; Required Waivers. The Debtor intends, to
the extent not inconsistent with applicable law, that the Collateral shall
remain personal property of Debtor and shall not be deemed to be a Fixture
irrespective of the manner of its attachment to any real estate. The Debtor will
deliver to Secured Party such disclaimers, waivers or other documents as Secured
Party may request, executed by each Person having an interest in such real
estate.

      Section 3.8. Inspection; Verification of Accounts. The Debtor will at all
reasonable times allow Secured Party to examine, inspect or make extracts from
or copies of Debtor's books and records, inspect the Collateral and arrange for
verification of Accounts constituting Collateral directly with Debtor's
accountants, the account Debtors or by other methods.

      Section 3.9. Accounts; Collection and Delivery of Proceeds. The Debtor
will diligently collect all of its Accounts until Secured Party exercises its
rights to collect the Accounts pursuant to this Agreement. The Debtor shall, at
the request of Secured Party, notify account Debtors of the security interest of
Secured Party in any Account and that payment thereof is to be made directly to
Secured Party. Upon request of Secured Party, any proceeds of Accounts or
Inventory constituting Collateral received by Debtor, whether in the form of
cash, checks, notes or other instruments, shall be held in trust for Secured
Party and Debtor shall deliver said proceeds daily to Secured Party, without
commingling, in the identical form received (properly endorsed or assigned where
required to enable to Secured Party to collect same).

      Section 3.10. Equipment and Inventory; Insurance. The Debtor will keep the
Collateral insured at all times by insurance in such form and amounts as may be
satisfactory to Secured Party, and in any event (without specific request by
Secured Party) will insure the Collateral against physical hazard insurance on
an "all risks" basis, including fire, theft, and, in the case of motor vehicles,
collision. Such insurance shall be with insurance companies satisfactory to
Secured Party and shall be payable to Secured Party as an additional insured and
Debtor, as their respective interests may appear. Such insurance shall provide
for not less than thirty (30) days' notice of cancellation, change in form or
non-renewal to Secured Party, and shall insure the interest of Secured Party
regardless of any breach or violation by Debtor or any other person of the
warranties, declarations or covenants contained in such policies. The Debtor
shall insure the Collateral in amounts sufficient to prevent the application of
any co-insurance provisions. The Debtor shall evidence its compliance with the
foregoing by delivering a certificate with respect to each policy concurrently
with the execution hereof, annually thereafter, and from time to time upon the
request of Secured Party.
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      Section 3.11. Equipment and Inventory; Maintenance and Use, Payment of
Taxes. The Debtor will keep the Collateral in good order and repair, will not
use the same in violation of law or any policy of insurance thereon, and will
pay promptly when due all taxes and assessments on the Collateral or on its use
or operation.

      Section 3.12. General Intangibles; Registration, Maintenance of Copies.
The Debtor will apply for, and pursue diligently applications for, registration
of its ownership of the General Intangibles and for which registration is
appropriate, and will use such other measures as are appropriate to preserve its
rights in its other General Intangibles. The Debtor will, at the request of
Secured Party, retain off-site current copies of all materials created by or
furnished to Debtor on which is recorded then-current information about any
computer programs or data bases that Debtor has developed or otherwise has the
right to use from time to time. Such materials include, without limitation,
magnetic or other computer media on which object, source or other code is
recorded or that are documentation of those computer programs or data bases, in
the nature of listing printouts, narrative descriptions, flow diagrams and
similar things. The Debtor will, at the request of Secured Party, deliver a set
of such copies to Secured Party for safekeeping and retention or transfer in the
event of foreclosure.

      Section 3.13. Securities; Voting, Dividends, Certificates, Options, Etc.
Until the occurrence of a Default or an Event of Default, Debtor shall retain
the right to vote any of the Securities constituting Collateral in a manner not
inconsistent with the terms of this Agreement. If Debtor, as registered holder
of such Securities, receives (i) any dividend or other distribution in cash or
other property in connection with the liquidation or dissolution of the issuer
of such Securities, or in connection with the redemption or payment of such
Securities, or (ii) any stock certificate, option or right, or other
distribution, whether as an addition to, in substitution of, or in exchange for,
such Securities, or otherwise, Debtor agrees to accept same in trust for Secured
Party and to deliver same forthwith to Secured Party or its designee, in the
exact form received, with Debtor's endorsement or reassignment when necessary,
to be held by Secured Party as Collateral.

      Section 3.14. Securities; Delivery or Registration. Upon request of
Secured Party, Debtor will (i) deliver all of its Securities constituting
Collateral and represented by certificates, including without limitation all
stock of its Subsidiaries, to Secured Party to hold pursuant to the terms of
this Agreement, and (ii) register in the name of Secured Party or its designee
any uncertificated Security constituting Collateral or Secured Party's security
interest therein on the books maintained by or on behalf of the issuer thereof
or the depository therefor.

      Section 3.15. Further Assurances. Upon the written request of Secured
Party, and at the sole expense of Debtor, Debtor will promptly execute and
deliver such further instruments and documents and take such further actions as
Secured Party may deem

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desirable to obtain the full benefits of this Agreement and of the rights and
powers herein granted, including, without limitation, filing of any financing
statement under the UCC, execution of assignments of General Intangibles,
delivery of appropriate stock or bond powers, transfer of Collateral (other than
Inventory, Accounts and Equipment) to Secured Party's possession. The Debtor
authorizes Secured Party to file any such financing statement without the
signature of Debtor to the extent permitted by applicable law, and to file a
copy of this Agreement in lieu of a financing statement. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately delivered to Secured Party, duly endorsed in a manner satisfactory
to it.

             Section 4. NOTICES AND REPORTS PERTAINING TO COLLATERAL

      The Debtor will, with respect to the Collateral:

              (a)    promptly furnish to Secured Party, from time to time upon
                     request, reports in form and detail satisfactory to Secured
                     Party;

              (b)    promptly notify Secured Party of any Encumbrance other than
                     those listed on Schedule A hereof asserted against the
                     Collateral, including any attachment, levy, execution or
                     other legal process levied against any of the Collateral,
                     and of any information received by Debtor relating to the
                     Collateral, including the Accounts, the account Debtors, or
                     other Persons obligated in connection therewith, that may
                     in any way adversely affect the value of the Collateral or
                     the rights and remedies of Secured Party with respect
                     thereto;

              (c)    promptly notify Secured Party when it obtains knowledge of
                     actual or imminent bankruptcy or other insolvency
                     proceeding of any account Debtor or issuer of Securities;

              (d)    deliver to Secured Party, as Secured Party may from time to
                     time request, delivery receipts, customers' purchase
                     orders, shipping instructions, bills of lading and any
                     other evidence of shipping arrangements;

              (e)    concurrently with the reports required to be furnished
                     under subsection (a), and immediately if material in
                     amount, notify Secured Party of any return or adjustment,
                     rejection, repossession, or loss or damage of or to
                     merchandise represented by Accounts or constituting
                     Inventory and of any credit, adjustment or dispute arising
                     in connection with the goods or services represented by
                     Accounts or constituting Inventory; and
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              (f)    promptly after the application by Debtor for registration
                     of any General Intangibles, as contemplated in Section
                     3.13, notify Secured Party thereof.

      The Debtor authorizes Secured Party to destroy all invoices, delivery
receipts, reports and other types of documents and records submitted to Secured
Party in connection with the transactions contemplated herein at any time
subsequent to twelve (12) months from the time such items are delivered to
Secured Party.

      Section 5. SECURED PARTY'S RIGHTS WITH RESPECT TO COLLATERAL

      The Secured Party may, at its option and at any time, whether or not the
Obligations are due, without notice or demand on Debtor, take the following
actions with respect to the Collateral:

              (a)    with respect to any Accounts: (i) notify account Debtors of
                     the security interest of Secured Party in such Accounts and
                     that payment thereof is to be made directly to Secured
                     Party; (ii) demand, collect, and receipt for any amounts
                     relating thereto, as Secured Party may determine; (iii)
                     commence and prosecute any actions in any court for the
                     purposes of collecting any such Accounts and enforcing any
                     other rights in respect thereof; (iv) defend, settle or
                     compromise any action brought and, in connection therewith,
                     give such discharges or releases as Secured Party may deem
                     appropriate; (v) receive, open and dispose of mail
                     addressed to Debtor and endorse checks, notes, drafts,
                     acceptances, money orders, bills of lading, warehouse
                     receipts or other instruments or documents evidencing
                     payment, shipment or storage of the goods giving rise to
                     such Accounts or securing or relating to such Accounts, on
                     behalf of and in the name of Debtor; and (vi) sell, assign,
                     transfer, make any agreement in respect of, or otherwise
                     deal with or exercise rights in respect of, any such
                     Accounts or the goods or services which have given rise
                     thereto, as fully and completely as though Secured Party
                     were the absolute owner thereof for all purposes;

              (b)    with respect to any Equipment and Inventory: (i) make,
                     adjust and settle claims under any insurance policy related
                     thereto and place and pay for appropriate insurance
                     thereon; (ii) discharge taxes and other Encumbrances at any
                     time levied or placed thereon; (iii) make repairs or
                     provide maintenance with respect thereto; and (iv) pay any
                     necessary filing fees and any taxes arising as a
                     consequence of any such filing. The Secured Party shall
                     have no obligation to make any such expenditures nor shall
                     the making thereof relieve Debtor of its obligation to make
                     such expenditures; and
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              (c)    with respect to any Securities: (i) transfer them at any
                     time to itself, or to its nominee, and receive the income
                     thereon and hold the same as Collateral hereunder or apply
                     it to any matured Obligations; and (ii) demand, sue for,
                     collect or make any compromise or settlement it deems
                     desirable.

      Except as otherwise provided herein, Secured Party shall have no duty as
to the collection or protection of the Collateral nor as to the preservation of
any rights pertaining thereto, beyond the safe custody of any Collateral in its
possession.

                            Section 6. SET-OFF RIGHTS

       Debtor hereby grants to Bank, a continuing lien, security interest and
right of setoff as security for all liabilities and obligations to Bank, whether
now existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of FleetBoston
Financial Corporation and its successors and assigns or in transit to any of
them. At any time, without demand or notice (any such notice being expressly
waived by Debtor), Bank may setoff the same or any part thereof and apply the
same to any liability or obligation of Debtor even though unmatured and
regardless of the adequacy of any other collateral securing the Note. ANY AND
ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE NOTE, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF DEBTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

                               Section 7. DEFAULTS

      An event of default ("Event of Default") shall exist hereunder if any of
the following events or conditions occur:

              (a)    failure to pay any Obligation when due or perform any
                     covenant, agreement or obligation contained herein or in
                     any agreement, instrument or other document evidencing,
                     securing or otherwise delivered in connection with the
                     Obligations;

              (b)    failure of any representation or warranty, statement or
                     information herein or in any documents or financial
                     statements delivered or disclosed to Secured Party in
                     connection with this Agreement or the Obligations to be
                     true and correct;
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              (c)    loss, theft or substantial damage of or to a material
                     portion of the Collateral, or the issuance of an attachment
                     or an injunction against Debtor affecting any of the
                     Collateral;

              (d)    default under any instrument constituting, or under any
                     agreement (including, without limitation, any insurance
                     policy) relating to a material portion of, any Collateral;

              (e)    death, incapacity, dissolution, termination of existence,
                     insolvency or business failure of Debtor or any indorser,
                     guarantor or surety of or for any Obligation; appointment
                     of a trustee, receiver, custodian, liquidator or other
                     similar official for Debtor or any such party or any
                     substantial part of its property; assignment for the
                     benefit of creditors by, or the commencement of any
                     proceeding under any bankruptcy or insolvency laws by or
                     against, Debtor or any such party; or

              (f)    occurrence of an Event of Default under the Note.

                 Section 8. SECURED PARTY'S RIGHTS AND REMEDIES

              (a)    If an Event of Default shall have occurred and be
                     continuing:

                     (i)    Secured Party may, at its option, without notice or
                            demand, cause all of the Obligations to become
                            immediately due and payable and take immediate
                            possession of the Collateral, and for that purpose
                            Secured Party may, so far as Debtor can give
                            authority therefor, enter upon any premises on which
                            any of the Collateral is situated and remove the
                            same therefrom or remain on such premises and in
                            possession of such Collateral for purposes of
                            conducting a sale or enforcing the rights of Secured
                            Party therein or for completing the manufacture,
                            processing or production thereof;

                     (ii)   Debtor will, upon demand, assemble the Collateral
                            and make it available to Secured Party at a place
                            and time designated by Secured Party that is
                            reasonably convenient to both parties;

                     (iii)  Secured Party may collect and receive all income and
                            proceeds in respect of the Collateral and exercise
                            all rights of Debtor with respect thereto, including
                            without limitation the right to exercise all voting
                            and corporate rights at any meeting of the
                            shareholders of the issuer of any Securities and to
                            exercise any and all rights of conversion, exchange,

<PAGE>   14
                                       13


                            subscription or any other rights, privileges or
                            options pertaining to any Securities as if Secured
                            Party were the absolute owner thereof, including the
                            right to exchange, at its discretion, any and all of
                            any Securities upon the merger, consolidation,
                            reorganization, recapitalization or other
                            readjustment of the issuer thereof, all without
                            liability except to account for property actually
                            received (but Secured Party shall have no duty to
                            exercise any of the aforesaid rights, privileges or
                            options and shall not be responsible for any failure
                            to do so or delay in so doing);

                     (iv)   Secured Party may sell, lease or otherwise dispose
                            of the Collateral at a public or private sale, with
                            or without having the Collateral at the place of
                            sale, and upon such terms and in such manner as
                            Secured Party may determine, and Secured Party may
                            purchase any Collateral at any such sale. Unless the
                            Collateral threatens to decline rapidly in value or
                            is of the type customarily sold on a recognized
                            market, Secured Party shall send to Debtor prior
                            written notice (which, if given within ten (10) days
                            of any sale, shall be deemed to be reasonable) of
                            the time and place of any public sale of the
                            Collateral or of the time after which any private
                            sale or other disposition thereof is to be made. The
                            Debtor agrees that upon any such sale the Collateral
                            shall be held by the purchaser free from all claims
                            or rights of every kind and nature, including any
                            equity of redemption or similar rights, and all such
                            equity of redemption and similar rights are hereby
                            expressly waived and released by Debtor. In the
                            event any consent, approval or authorization of any
                            governmental agency is necessary to effectuate any
                            such sale, Debtor shall execute all applications or
                            other instruments as may be required; and

                     (v)    in any jurisdiction where the enforcement of its
                            right hereunder is sought, Secured Party shall have,
                            in addition to all other rights and remedies, the
                            rights and remedies of a secured party under the
                            UCC.

              (b)    Prior to any disposition of Collateral pursuant to this
                     Agreement Secured Party may, at its option, cause any of
                     the Collateral to be repaired or reconditioned (but not
                     upgraded unless mutually agreed) in such manner and to such
                     extent as to make it saleable.
<PAGE>   15
                                       14


              (c)    The Secured Party is hereby granted a license or other
                     right to use, without charge, Debtor's labels, patents,
                     copyrights, rights of use of any name, trade secrets, trade
                     names, trademarks and advertising matter, or any property
                     of a similar nature, relating to the Collateral, in
                     completing production of, advertising for sale and selling
                     any Collateral; and Debtor's rights under all licenses and
                     all franchise agreements shall inure to Secured Party's
                     benefit.

              (d)    The Debtor recognizes that Secured Party may be unable to
                     effect a public sale of all or a part of the Securities by
                     reason of certain prohibitions contained in the Securities
                     Act of 1933 (as amended from time to time, the "Securities
                     Act") or the securities laws of various states (the "Blue
                     Sky Laws"), but may be compelled to resort to one or more
                     private sales to a restricted group of purchasers who will
                     be obliged to agree, among other things, to acquire the
                     Securities for their own account, for investment and not
                     with a view to the distribution or resale thereof. The
                     Debtor acknowledges that private sales so made may be at
                     prices and upon other terms less favorable to the seller
                     than if the Securities were sold at public sales. The
                     Debtor agrees that Secured Party has no obligation to delay
                     sale of any of the Securities for the period of time
                     necessary to permit the Securities to be registered for
                     public sale under the Securities Act or the Blue Sky Laws,
                     and that private sales made under the foregoing
                     circumstances shall be deemed to have been made in a
                     commercially reasonable manner.

              (e)    The Secured Party shall be entitled to retain and to apply
                     the proceeds of any disposition of the Collateral, first,
                     to its reasonable expenses of retaking, holding, protecting
                     and maintaining, and preparing for disposition and
                     disposing of, the Collateral, including attorneys' fees and
                     other legal expenses incurred by it in connection
                     therewith; and second, to the payment of the Obligations in
                     such order of priority as Secured Party shall determine.
                     Any surplus remaining after such application shall be paid
                     to Debtor or to whomever may be legally entitled thereto,
                     provided that in no event shall Debtor be credited with any
                     part of the proceeds of the disposition of the Collateral
                     until such proceeds shall have been received in cash by
                     Secured Party. The Debtor shall remain liable for any
                     deficiency.

                            Section 9. MISCELLANEOUS

      Section 9.1. Waivers. The Debtor waives presentment, demand, notice,
protest, notice of acceptance of this Agreement, notice of any loans made,
credit or other extensions granted, collateral received or delivered or any
other action taken in reliance hereon and all other demands and notices of any
description, except for such demands

<PAGE>   16
                                       15


and notices as are expressly required to be provided to Debtor under this
Agreement or any other document evidencing the Obligations. With respect to both
the Obligations and the Collateral, Debtor assents to any extension or
postponement of the time of payment or any other forgiveness or indulgence, to
any substitution, exchange or release of Collateral, to the addition or release
of any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromise or adjustment of any
thereof, all in such manner and at such time or times as Secured Party may deem
advisable. The Secured Party may exercise its rights with respect to the
Collateral without resorting, or regard, to other collateral or sources of
reimbursement for Obligations. The Secured Party shall not be deemed to have
waived any of its rights with respect to the Obligations or the Collateral
unless such waiver is in writing and signed by Secured Party. No delay or
omission on the part of Secured Party in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
bar or waive the exercise of any right on any future occasion. All rights and
remedies of Secured Party in the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, are cumulative and not
exclusive of any remedies provided by law or any other agreement, and may be
exercised separately or concurrently.

      Section 9.2. Expenses. The Debtor shall, on demand, pay or reimburse
Secured Party for all reasonable expenses (including attorneys' fees of outside
counsel or allocation costs of in-house counsel) incurred or paid by Secured
Party after September 29, 2000 in connection with the preparation, negotiation
and closing, and the administration or enforcement, of this Agreement, its
on-site periodic examinations of the Collateral and any other amounts permitted
to be expended by Secured Party hereunder, including without limitation such
expenses as are incurred to preserve the value of the Collateral and the
validity, perfection, priority and value of any security interest created
hereby, the collection, sale or other disposition of any of the Collateral or
the exercise by Secured Party of any of the rights conferred upon it hereunder.

      Section 9.3. Successors and Assigns. This Agreement shall be binding upon
Debtor, its successors and assigns, and shall inure to the benefit of and be
enforceable by Secured Party and its successors and assigns. Without limiting
the generality of the foregoing sentence, Secured Party may assign or otherwise
transfer any agreement or any note held by it evidencing, securing or otherwise
executed in connection with the Obligations, or sell participations in any
interest therein, to any other person or entity, and such other person or entity
shall thereupon become vested, to the extent set forth in the agreement
evidencing such assignment, transfer or participation, with all the rights in
respect thereof granted to Secured Party herein.

       Section 9.4. Amendment. This Agreement may not be amended or modified
except by a writing signed by Debtor and Secured Party, nor may Debtor assign
any of its rights hereunder.
<PAGE>   17
                                       16


      Section 9.5. Cross Collateral. The security interests, liens and other
rights and interests in and relative to any of the real or personal property of
Debtor now or hereafter granted to Bank by Debtor by or in any instrument or
agreement, including but not limited to this Agreement, shall serve as security
for any and all liabilities of Debtor to Bank, including but not limited to the
liabilities described in this Agreement and the Note and, for the repayment
thereof, Bank may resort to any security held by it in such order and manner as
it may elect.

      Section 9.6. Commercial Transaction. DEBTOR ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS AGREEMENT IS PART IS A COMMERCIAL TRANSACTION AND
WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903A OF THE CONNECTICUT
GENERAL STATUTES OR BY OTHER APPLICABLE LAW WITH RESPECT TO ANY PREJUDGMENT
REMEDY WHICH THE BANK MAY SEEK OR BE PERMITTED TO USE.

      Section 9.7. Jury Trial. DEBTOR AND BANK (BY ACCEPTANCE OF THIS AGREEMENT)
MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR
ACTIONS OF BANK RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE
LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. EXCEPT AS PROHIBITED BY LAW, DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. DEBTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR BANK TO ACCEPT THIS SECURITY AGREEMENT AND MAKE THE
LOAN.

      Section 9.8. Reinstatement. This Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by Bank
in respect of the Obligations is rescinded or must otherwise be restored or
returned by Bank upon the insolvency, Bankruptcy, dissolution, liquidation or
reorganization of Debtor or upon the appointment of any intervenor or
conservator of, or trustee or similar official for, Debtor

<PAGE>   18
                                       17


or any substantial part of its properties, or otherwise, all as though such
payments had not been made.

      Section 9.9. Notices. All notices, requests or demand to or upon a party
to this Agreement shall be given or made by the other party hereto in writing
and by depositing in the mails postage prepaid, return receipt requested
addressed to the addressee at the address set forth below.

If to Bank:

      Fleet National Bank
      MS: CT EH 40223B
      777 Main Street
      Hartford, Connecticut 06115
      Attn: Area Manager-Managed Asset Division

with a copy to:

      Updike, Kelly & Spellacy, P.C.
      One State Street
      Hartford, CT  06103
      Attn:  Thomas A. Gugliotti, Esq.

If to Debtor:

      EDAC Technologies Corporation
      1806 New Britain Avenue
      Farmington, Connecticut 06032
      Attn:

with a copy to:


      --------------

      --------------

      --------------
      Attn:  Peter Blain, Esq.

      No other method of giving notice, request or demand is hereby precluded
provided such shall not be deemed given until such notice is actually received
at the address of the addressee.

      Section 9.10. Governing Law; Consent to Jurisdiction. This Agreement and
the rights and obligations of the parties hereunder shall be governed by and
construed and interpreted in accordance with, the laws of the State of
Connecticut. Debtor agrees that

<PAGE>   19
                                       18


any suit for the enforcement of this Agreement, may be brought in the courts of
the State of Connecticut or any federal court sitting therein and consents to
the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon Debtor by mail at the address referred to Section 9.9.
hereof. The Debtor hereby waives any objection that Debtor may now or hereafter
have to the venue of any such suit or any such court or that such suit is
brought in an inconvenient court.

      Section 9.11. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.

      Section 9.12. Headings. All article, section and subsection headings in
this Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

      Section 9.13. Interpretation and Construction. The following rules shall
apply to the interpretation and construction of this Agreement unless the
context requires otherwise: (a) the singular includes the plural and the plural
includes the singular; (b) words importing any gender include the other genders;
(c) references to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute to which reference
is made and all regulations promulgated pursuant to such statutes; (d)
references to "writing" shall include printing, photocopy, typing, lithography
and other means of reproducing words in a tangible, visible form; (e) the words
"including", "includes" and "include" shall be deemed to be followed by the
words "without limitation"; (f) references to the introductory paragraph,
preliminary statements, articles, sections (or subdivisions of sections),
exhibits or schedules are to those of this Agreement unless otherwise indicated;
(g) references to agreements and other contractual instruments shall be deemed
to include all subsequent amendments and other modifications to such
instruments, but only to the extent that such amendments and other modifications
are permitted or not prohibited by the terms of this Agreement; (h) references
to Persons include their respective permitted successors and assigns; and (i)
"or" is not exclusive.


<PAGE>   20
                                       19


      IN WITNESS WHEREOF, Secured Party and Debtor have executed this Agreement
as of the date first set forth above.


                                     SECURED PARTY:

                                     FLEET NATIONAL BANK


                                     By:
                                         ---------------------
                                         Name:
                                         Its
                                         Duly authorized


                                     DEBTOR:

                                     EDAC TECHNOLOGIES CORPORATION


                                     By:
                                         ---------------------
                                         Name:
                                         Its
                                         Duly authorized



<PAGE>   21


                                   SCHEDULE A