Document:

Exhibit 10.3

                                    GUARANTY

            This GUARANTY (this "GUARANTY"), dated as of February 1, 2002, by
and between Precision Partners Holding Company, a Delaware corporation
("GUARANTOR"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation,
individually and as agent (in such capacity, "AGENT") for the lenders from time
to time signatory to the Credit Agreement, as hereinafter defined.

                              W I T N E S S E T H:

            Reference is made to that certain Credit Agreement, dated as even
herewith (as amended, restated, supplemented, or otherwise modified from time to
time, the "CREDIT AGREEMENT"), by and among (a) PRECISION PARTNERS, INC., a
Delaware corporation ("PRECISION"), GALAXY INDUSTRIES CORPORATION, a Michigan
corporation ("GALAXY"), MID STATE MACHINE PRODUCTS, a Maine corporation ("MID
STATE"), NATIONWIDE PRECISION PRODUCTS CORP., a New York corporation
("NATIONWIDE"), GENERAL AUTOMATION, INC., an Illinois corporation ("GA"),
GILLETTE MACHINE & TOOL CO., INC., a New York corporation ("GILLETTE"), GALAXY
PRECISION PRODUCTS CORP., a Delaware corporation ("GPPC") and CERTIFIED
FABRICATORS, INC., a California corporation ("CERTIFIED") (Precision, Galaxy,
Mid State, Nationwide, GA, Gillette, GPPC, and Certified, together with their
permitted successors and assigns being sometimes hereinafter called
collectively, the "BORROWERS"); (b) the Guarantor; (c) the Agent, (d) General
Electric Capital Corporation, in its capacity as revolving credit agent
(together with any successor thereto appointed pursuant to the Credit Agreement,
the "REVOLVING CREDIT AGENT"), (e) GECC Capital Markets, Inc., as Lead Arranger
and (f) the Lenders, as hereinafter defined. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meaning ascribed
thereto in the Credit Agreement.

            Pursuant to the terms of the Credit Agreement, (i) General Electric
Capital Corporation, as revolving lender (together with any and all assignees or
transferees thereof or successors thereto, the "REVOLVING LENDERS") has agreed
to make available to the Borrowers a Revolving Loan facility pursuant to which
the Revolving Lenders will from time to time make available to the Borrowers
advances and letters of credit in an aggregate amount not to exceed $25,000,000
at any one time outstanding, (ii) GENERAL ELECTRIC CAPITAL CORPORATION and
ABLECO FINANCE LLC, as term lenders (together with any and all assignees or
transferees thereof or successors thereto, the "TERM LENDERS") have agreed to
make available to the Borrowers a Term Loan in the aggregate principal amount of
$44,050,000, and (iii) GENERAL ELECTRIC CAPITAL CORPORATION as lessor (together
with any and all assignees or transferees thereof or successors thereto, the
"LESSORS") have agreed to lease certain equipment to certain Borrowers pursuant
to the Master Lease (the "MASTER LEASE") (the Term Lenders, the Revolving
Lenders and the Lessors being hereinafter called collectively, the "LENDERS").

            Guarantor directly or indirectly owns 100% of the outstanding Stock
of Borrowers and as such will derive direct and indirect economic benefits from
the making of the Loan and other Credit Accommodations provided to Borrowers
pursuant to the Credit Agreement and the Master Lease.

            In order to induce Agent and Lenders to enter into the Credit
Agreement, the Master Lease and other Operative Documents and to induce Lenders
to make the Loan and other Credit Accommodations as provided for in the Credit
Agreement and the Master Lease, Guarantor has agreed to guarantee payment of the
Obligations.

            NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce Lenders to provide the Loan and other
Credit Accommodations under the Credit Agreement and the Master Lease, it is
agreed as follows:

1.    DEFINITIONS.

      Capitalized terms used herein shall have the meanings assigned to them in
the Credit Agreement, unless otherwise defined herein.

      References to this "Guaranty" shall mean this Guaranty, including all
amendments, modifications and supplements and any annexes, exhibits and
schedules to any of the foregoing, and shall refer to this Guaranty as the same
may be in effect at the time such reference becomes operative.

2.    THE GUARANTY.

      2.1 Guaranty of Guaranteed Obligations of Borrowers. Guarantor hereby
unconditionally guarantees to Agent and Lenders, and their respective permitted
successors, endorsees, transferees and assigns, the prompt payment (whether at
stated maturity, by acceleration or otherwise) of the Obligations of Borrowers
(hereinafter the "Guaranteed Obligations") and agrees to pay any and all
expenses (including reasonable counsel fees and expenses) incurred by the Agent
and Lenders in enforcing any rights under this Guaranty. Guarantor agrees that
this Guaranty is a guaranty of payment and not of collection, and that its
obligations under this Guaranty shall be primary, absolute and unconditional,
irrespective of, and unaffected by:

            (a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in this Guaranty, any other Operative Document or
any other agreement, document or instrument to which any Credit Party and/or
Guarantor is or may become a party;

            (b) the absence of any action to enforce this Guaranty or any other
Operative Document or the waiver or consent by Agent and/or Lenders with respect
to any of the provisions thereof;

            (c) the existence, value or condition of, or failure to perfect
Agent's Lien against, any Collateral for the Guaranteed Obligations or any
action, or the absence of any action, by Agent in respect thereof (including,
without limitation, the release of any such security); or

            (d)   the insolvency of any Credit Party; or

            (e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being agreed by Guarantor that its obligations under this Guaranty shall not
be discharged until the Termination Date. Guarantor shall be regarded, and shall
be in the same position, as principal debtor with respect to the Guaranteed
Obligations. Guarantor agrees that any notice or directive given at any time to
Agent which is inconsistent with the waiver in the immediately preceding
sentence shall be null and void and may be ignored by Agent and Lenders. It is
agreed among Guarantor, Agent and Lenders that the foregoing waivers are of the
essence of the transaction contemplated by the Operative Documents and that, but
for this Guaranty and such waivers, Agent and Lenders would decline to enter
into the Credit Agreement and the Master Lease.

      2.2. Demand by Agent or Lenders. In addition to the terms of the Guaranty
set forth in Section 2.1 hereof, and in no manner imposing any limitation on
such terms, it is expressly understood and agreed that, if, at any time, the
outstanding principal amount of the Guaranteed Obligations under the Credit
Agreement and the Master Lease (including all accrued interest thereon) is
declared to be immediately due and payable, then Guarantor shall, upon demand,
pay to the holders of the Guaranteed Obligations the entire outstanding
Guaranteed Obligations due and owing to such holders. Payment by Guarantor shall
be made to Agent for the benefit of Lenders in immediately available funds to an
account designated by Agent, or at the address set forth herein for the giving
of notice to Agent or at any other address that may be specified in writing from
time to time by Agent, and shall be credited and applied to the Guaranteed
Obligations.

      2.3. Enforcement of Guaranty. In no event shall Agent have any obligation
(although it is entitled, at its option) to proceed against Borrowers or any
other Credit Party or any Collateral pledged to secure Guaranteed Obligations
before seeking satisfaction from the Guarantor, and Agent may proceed, prior or
subsequent to, or simultaneously with, the enforcement of Agent's rights
hereunder, to exercise any right or remedy which it may have against any
Collateral, as a result of any Lien it may have as security for all or any
portion of the Guaranteed Obligations.

      2.4 Waiver. In addition to the waivers contained in Section 2.1 hereof,
Guarantor waives and agrees that it shall not at any time insist upon, plead or
in any manner whatever claim or take the benefit or advantage of, any appraisal,
valuation, stay, extension, marshaling of assets or redemption laws, or
exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by Guarantor of its Guaranteed
Obligations under, or the enforcement by Agent or Lenders of, this Guaranty.
Guarantor hereby waives diligence, presentment and demand (whether for
non-payment or protest or of acceptance, maturity, extension of time, change in
nature or form of the Guaranteed Obligations, acceptance of further security,
release of further security, composition or agreement arrived at as to the
amount of, or the terms of, the Guaranteed Obligations, notice of adverse change
in Borrowers' financial condition or any other fact which might increase the
risk to Guarantor) with respect to any of the Guaranteed Obligations and this
Guaranty. Guarantor represents, warrants and agrees that, as of the date of this
Guaranty, its obligations under this Guaranty are not subject to any offsets or
defenses against Agent or Lenders or any Credit Party of any kind. Guarantor
further agrees that its obligations under this Guaranty shall not be subject to
any counterclaims, offsets or defenses against Agent or any Lender or against
any Credit Party of any kind which may arise in the future.

      2.5. Benefit of Guaranty. The provisions of this Guaranty are for the
benefit of Agent and Lenders and their respective permitted successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any Credit Party and Agent or Lenders, the obligations of any Credit
Party under the Operative Documents. In the event all or any part of the
Guaranteed Obligations are transferred, indorsed or assigned by Agent or any
Lender to any Person or Persons, in accordance with the terms of the Credit
Agreement and the Master Lease, any reference to "Agent" or "Lender" herein
shall be deemed to refer equally to such Person or Persons.

      2.6.  Modification  of Guaranteed  Obligations,  Etc.  Guarantor  hereby
acknowledges  and agrees  that Agent and  Lenders may at any time or from time
to time, with or without the consent of, or notice to, Guarantor:

            (a)   change or extend the  manner,  place or terms of payment of,
or renew or alter all or any portion of, the Guaranteed Obligations;

            (b) take any action under or in respect of the Operative Documents
in the exercise of any remedy, power or privilege contained therein or available
to it at law, equity or otherwise, or waive or refrain from exercising any such
remedies, powers or privileges;

            (c)   amend or modify,  in any manner  whatsoever,  the  Operative
Documents;

            (d) extend or waive the time for any Credit Party's performance of,
or compliance with, any term, covenant or agreement on its part to be performed
or observed under the Operative Documents, or waive such performance or
compliance or consent to a failure of, or departure from, such performance or
compliance;

            (e) take and hold Collateral for the payment of the Guaranteed
Obligations guaranteed hereby or sell, exchange, release, dispose of, or
otherwise deal with, any property pledged, mortgaged or conveyed, or in which
Agent or Lenders have been granted a Lien, to secure any Guaranteed Obligations;

            (f)   release  anyone  who may be  liable  in any  manner  for the
payment of any amounts  owed by  Guarantor or any Credit Party to Agent or any
Lender;

            (g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of Guarantor
or any Credit Party are subordinated to the claims of Agent and Lenders; and/or

            (h) apply any sums by whomever paid or however realized to any
amounts owing by Guarantor or any Credit Party to Agent or any Lender in such
manner as Agent or any Lender shall determine in its discretion; and Agent and
Lenders shall not incur any liability to Guarantor as a result thereof, and no
such action shall impair or release the Guaranteed Obligations of Guarantor
under this Guaranty.

            2.7   Contribution with Respect to Obligations.

            a. To the extent that the Guarantor shall make a payment of all or
any of the Obligations (a "Payment") which, taking into account all other
Payments then previously or concurrently made by any other Credit Party, exceeds
the amount which the Guarantor would otherwise have paid if each Credit Party
had paid the aggregate Obligations satisfied by such Payment in the same
proportion the Guarantor's "Allocable Amount" (as defined below) (as determined
immediately prior to such Payment) bore to the aggregate Allocable Amounts of
each of the Credit Parties as determined immediately prior to the making of such
Payment, then, following payment in full in cash of the Obligations and
termination of the Commitments, the Guarantor shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Credit Party for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Payment; provided however,
that nothing in this Section 2.7 shall permit the Guarantor to make any payments
otherwise prohibited by the terms of the Operative Documents.

            b. As of any date of determination, the "Allocable Amount" of the
Guarantor shall be equal to the maximum amount of the claim which could then be
recovered from the Guarantor under this Section 12 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.

            c. This Section 2.7 is intended only to define the rights of the
Guarantor and nothing set forth in this Section 2.7 is intended to or shall
impair the obligation of the Guarantor to pay any amounts as and when the same
shall become due and payable in accordance with the terms of this Agreement.
Nothing contained in this Section 2.7 shall limit the liability of any Borrower
to pay the Loans made directly or indirectly to that Borrower and accrued
interest, Fees and expenses with respect thereto for which such Borrower shall
be primarily liable.

      d. The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Guarantor to which such
contribution and indemnification is owing.

      2.8. Reinstatement. This Guaranty shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Credit Party or Guarantor for liquidation or reorganization, should any Credit
Party or Guarantor become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any
significant part of such Credit Party's or Guarantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment of the Guaranteed Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by Agent or any Lender, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Guaranteed Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.

      2.9. Deferral of Subrogation, Etc. Notwithstanding anything to the
contrary in this Guaranty, or in any other Operative Document, and except as set
forth in Section 2.7 hereof, Section 12.7 of the Credit Agreement or other
contribution agreements among the Credit Parties not prohibited by any Operative
Document, Guarantor hereby:

            (a) expressly and irrevocably waives, on behalf of itself and its
successors and assigns (including any surety) until the Termination Date, any
and all rights at law or in equity to subrogation, to reimbursement, to
exoneration, to contribution, to indemnification, to set off or to any other
rights that could accrue to a surety against a principal, to a guarantor against
a principal, to a guarantor against a maker or obligor, to an accommodation
party against the party accommodated, to a holder or transferee against a maker,
or to the holder of any claim against any Person, and which Guarantor may have
or hereafter acquire against any Credit Party in connection with or as a result
of Guarantor's execution, delivery and/or performance of this Guaranty, or any
other documents to which Guarantor is a party or otherwise;

            (b) acknowledges and agrees (i) that this waiver is intended to
benefit Agent and Lenders and shall not limit or otherwise effect Guarantor's
liability hereunder or the enforceability of this Guaranty, and (ii) that Agent,
Lenders and their respective successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 2.8; and

            (c) the Agent agrees on behalf of Lenders that if (i) the Guarantor
shall pay to the Agent all of the Guaranteed Obligations, and (ii) the
Termination Date shall have occurred, the Agent and the Lenders will, at the
Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer or subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from the payment made by the
Guarantor under this Guaranty.

      2.10. Election of Remedies. If Agent may, under applicable law, proceed to
realize benefits under any of the Operative Documents giving Agent and Lenders a
Lien upon any Collateral owned by any Credit Party, either by judicial
foreclosure or by non-judicial sale or enforcement, Agent may, at its sole
option, determine which of such remedies or rights it may pursue without
affecting any of such rights and remedies under this Guaranty. If, in the
exercise of any of its rights and remedies, Agent shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against
any Credit Party, whether because of any applicable laws pertaining to "election
of remedies" or the like, Guarantor hereby consents to such action by Agent and
waives any claim based upon such action, even if such action by Agent shall
result in a full or partial loss of any rights of subrogation which Guarantor
might otherwise have had but for such action by Agent. Any election of remedies
which results in the denial or impairment of the right of Agent to seek a
deficiency judgment against any Credit Party shall not impair Guarantor's
obligation to pay the full amount of the Guaranteed Obligations. In the event
Agent shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Operative Documents, Agent may bid all or less than the
amount of the Guaranteed Obligations and the amount of such bid need not be paid
by Agent but shall be credited against the Guaranteed Obligations. The amount of
the successful bid at any such sale shall be conclusively deemed to be the fair
market value of the collateral and the difference between such bid amount and
the remaining balance of the Guaranteed Obligations shall be conclusively deemed
to be the amount of the Guaranteed Obligations guaranteed under this Guaranty,
notwithstanding that any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which Agent
and Lenders might otherwise be entitled but for such bidding at any such sale.

      2.11. Funds Transfers. If Guarantor shall engage in any transaction as a
result of which Borrowers are required to make a mandatory prepayment with
respect to the Guaranteed Obligations under the terms of the Credit Agreement or
the Master Lease (including any issuance or sale of such Guarantor's Stock or
any sale of its assets), Guarantor shall distribute to, or make a contribution
to the capital of, the Borrowers an amount equal to the mandatory prepayment
required under the terms of the Credit Agreement or the Master Lease.

3.    DELIVERIES.

      In a form satisfactory to Agent, Guarantor shall deliver to Agent (with
sufficient copies for each Lender), concurrently with the execution of this
Guaranty, the Credit Agreement and the Master Lease, the Operative Documents and
other instruments, certificates and documents as are required to be delivered by
Guarantor to Agent under the Credit Agreement and the Master Lease.

4.    REPRESENTATIONS AND WARRANTIES.

      To induce Lenders to make the Loan and other Credit Accommodations under
the Credit Agreement and the Master Lease, Guarantor makes the representations
and warranties as to Guarantor contained in the Credit Agreement and the Master
Lease, each of which is incorporated herein by reference, and the following
representations and warranties to Agent and each Lender, each and all of which
shall survive the execution and delivery of this Guaranty:

      4.1. Corporate Existence; Compliance with Law. Guarantor (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (ii) is duly qualified to do business and
is in good standing under the laws of the jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not result in a material
adverse effect upon the properties, business, or financial condition of
Guarantor; (iii) subject to the specific representations regarding Environmental
Laws in Section 3.17 of the Credit Agreement, has the requisite corporate power
and authority and the legal right to own, pledge and mortgage its properties;
(iv) has all licenses, permits, consents or approvals from or by, and has made
all material filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct the lack of which would have a material adverse effect on
the properties, business or financial condition of Guarantor; (v) is in
compliance with its charter and by-laws; and (vi) subject to specific
representations set forth in the Credit Agreement regarding ERISA, Environmental
Laws, tax and other laws, is in compliance with all applicable provisions of
law, except where the failure to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

      4.2. Corporate Power; Authorization; Enforceable Guaranteed Obligations.
The execution, delivery and performance of this Guaranty and all other Operative
Documents and all instruments and documents to be delivered by Guarantor
hereunder and under the Credit Agreement and the Master Lease are within
Guarantor's corporate power, have been duly authorized by all necessary
corporate action, including the consent of stockholders where required, are not
in contravention of any provision of Guarantor's charter or by-laws, do not
violate any law or regulation, or any order or decree of any Governmental
Authority, do not conflict with or result in the breach of, or constitute a
default under, or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Guarantor is a party or by which Guarantor or any of its
property is bound, do not result in the creation or imposition of any Lien upon
any of the property of Guarantor, other than those in favor of Agent, for itself
and the benefit of Lenders and Permitted Encumbrances, and the same do not
require the consent or approval of any Governmental Authority or any other
Person except those referred to in Section 2.1(c) of the Credit Agreement, all
of which have been duly obtained, made or complied with prior to the Closing
Date. On or prior to the Closing Date, this Guaranty and each of the Operative
Documents to which Guarantor is a party shall have been duly executed and
delivered for the benefit of or on behalf of Guarantor, and each shall then
constitute a legal, valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles (whether enforcement is sought by proceeding in
equity or at law).

5.    FURTHER ASSURANCES.

      Guarantor agrees, upon the written request of Agent or any Lender, to
execute and deliver to Agent or such Lender, from time to time, any additional
instruments or documents reasonably considered necessary by Agent or such Lender
to cause this Guaranty to be, become or remain valid and effective in accordance
with its terms.

6.    PAYMENTS FREE AND CLEAR OF TAXES.

      All payments required to be made by Guarantor hereunder shall be made to
Agent and Lenders free and clear of, and without deduction for, any and all
present and future Taxes. If Guarantor shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder, (a) the sum payable shall
be increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 6) Agent or Lenders, as applicable, receive an amount equal to the
sum they would have received had no such deductions been made, (b) Guarantor
shall make such deductions, and (c) Guarantor shall pay the full amount deducted
to the relevant taxing or other authority in accordance with applicable law.
Within thirty (30) days after the date of any payment of Taxes, Guarantor shall
furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof. Guarantor shall indemnify and, within ten (10) Business Days of
demand therefor, pay Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this
Section 6) paid by Agent or such Lender, as appropriate, and any liability
(including penalties, interest and reasonable expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.

7.    OTHER TERMS.

      7.1. Entire Agreement. This Guaranty, together with the other Operative
Documents, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements relating to a
guaranty of the Loan and other Credit Accommodations and advances under the
Operative Documents and/or the Guaranteed Obligations.

      7.2. Headings. The headings in this Guaranty are for convenience of
reference only and are not part of the substance of this Guaranty.

      7.3. Severability. Whenever possible, each provision of this Guaranty
shall be interpreted in such a manner to be effective and valid under applicable
law, but if any provision of this Guaranty 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 Guaranty.

      7.4 Right of Set-off. Upon the occurrence and during the continuance of
any Event of Default, the Agent or any Lender may, and is hereby authorized to,
at any time and from time to time, without notice to the Guarantor (any such
notice being expressly waived by the Guarantor) and to the fullest extent
permitted by law, set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Agent or any Lender to or for the credit or the account of
the Guarantor against any and all obligations of the Guarantor now or hereafter
existing under this Guaranty, irrespective of whether or not the Agent or any
Lender shall have made any demand under this Guaranty and although such
obligations may be contingent or unmatured. The Agent and each Lender agree to
notify the Guarantor promptly after any such set-off and application made by the
Agent or such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Agent and
the Lenders under this Section 7.4 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which Agent and Lenders
may have.

      7.5. Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or whenever any
of the parties desires to give or serve upon another any such communication with
respect to this Guaranty, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be addressed to
the party to be notified as follows:

            (a) If to Agent, at:

                      General Electric Capital Corporation
                      410 Merritt Seven, Second Floor
                      Norwalk, CT  06856

                      Attention:
                      Telecopy Number:  (___)

                      with copies to:

                      Ober, Kaler, Grimes & Shriver
                      120 E. Baltimore Street
                      Baltimore, MD  21202

                      Attention: Darlene Davis
                      Telecopy Number: (410) 547-0699

            (b) If to any Lender, at the address of such Lender specified in the
Credit Agreement or any Assignment Agreement.

            (c) If to Guarantor, at the address of such Guarantor specified on
Schedule I to the Credit Agreement, or at such other address as may be
substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Every notice, demand, request, consent, approval, declaration or
other communication hereunder shall be deemed to have been validly served, given
or delivered (i) upon the earlier of actual receipt and three (3) Business Days
after the same shall have been deposited with the United States mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (ii)
upon transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States mail as otherwise provided in this Section
7.5), (iii) one (1) Business Day after deposit with a reputable overnight
carrier with all charges prepaid, or (iv) when delivered, if hand-delivered by
messenger.

      7.6. Successors and Assigns. This Guaranty and all obligations of
Guarantor hereunder shall be binding upon the successors and assigns of
Guarantor (including a debtor-in-possession on behalf of Guarantor) and shall,
together with the rights and remedies of Agent, for the benefit of Lenders,
hereunder, inure to the benefit of Agent and Lenders, all permitted future
holders of any instrument evidencing any of the Obligations and their respective
permitted successors and assigns. No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Obligations or any portion thereof or interest therein
made in accordance with the Operative Documents shall in any manner affect the
rights of Agent and Lenders hereunder. Guarantor may not assign, sell,
hypothecate or otherwise transfer any interest in or obligation under this
Guaranty.

      7.7. No Waiver; Cumulative Remedies; Amendments. Neither Agent nor any
Lender shall by any act, delay, omission or otherwise be deemed to have waived
any of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Agent and Guarantor and then only to the extent therein set
forth. A waiver by Agent, for itself and the ratable benefit of Lenders, of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Agent would otherwise have had on any future occasion.
No failure to exercise nor any delay in exercising on the part of Agent or any
Lender, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Guaranty may be waived, altered, modified,
supplemented or amended except by an instrument in writing, duly executed by
Agent and Guarantor.

      7.8.  Termination.  This  Guaranty is a  continuing  guaranty  and shall
remain in full force and effect until the  Termination  Date.  Upon payment in
full of the  Guaranteed  Obligations,  Agent shall  deliver to Guarantor  such
documents as Guarantor may reasonably request to evidence such termination.

      7.9.  Counterparts.  This  Guaranty  may be  executed  in any  number of
counterparts,  each of which shall collectively and separately  constitute one
and the same agreement.

8.    SECURITY.

      To secure payment of Guarantor's obligations under this Guaranty,
concurrently with the execution of this Guaranty, Guarantor has entered into a
Security Agreement pursuant to which the Guarantor has granted to Agent for the
benefit of Lenders a security interest in substantially all of its personal
property and a Pledge Agreement pursuant to which Guarantor has pledged all of
the Stock of Precision to Agent for the benefit of Lenders.

9.    GOVERNING LAW.

      EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE OPERATIVE DOCUMENTS,
IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE GUARANTOR HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
CITY OF NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GUARANTOR, AGENT AND LENDERS PERTAINING
TO THIS GUARANTY OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER OPERATIVE
DOCUMENTS, PROVIDED THAT AGENT, LENDERS AND GUARANTOR ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS
GUARANTY SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. THE GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND GUARANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. THE GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GUARANTOR AT THE ADDRESS SET
FORTH ON ANNEX I TO THE CREDIT AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3)
BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

10.   WAIVER OF JURY TRIAL.

      BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS
ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON
AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR
RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND GUARANTOR ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN
CONNECTION WITH, THIS GUARANTY OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO.

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Guaranty as of the date first above written.

                                    PRECISION PARTNERS HOLDING COMPANY

                                    By: /s/  Frank Reilly
                                       ---------------------------------
                                    Name:    Frank Reilly
                                    Title:   Executive Vice President
                                             and Chief Financial Officer

                                    GENERAL ELECTRIC CAPITAL
                                    CORPORATION, individually and as Agent

                                    By: /s/ Howard Norowitz
                                       ---------------------------------
                                    Name:   Howard Norowitz
                                    Title:  Assistant Vice PresidentExhibit 10.4

                               SECURITY AGREEMENT
                               ------------------

      SECURITY AGREEMENT, dated as of February __, 2002, by and between
PRECISION PARTNERS INC., a Delaware corporation ("PRECISION"), its subsidiaries
as identified in the Credit Agreement (the "SUBSIDIARIES"); PRECISION PARTNERS
HOLDING COMPANY (the "GUARANTOR"; together with Precision and the Subsidiaries,
the "GRANTORS"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, as agent (in such capacity, "AGENT") for the lenders from time to
time signatory to the Credit Agreement.

                                   WITNESSETH:

      Reference is made to that certain Credit Agreement, dated as even herewith
(as amended, restated, supplemented, or otherwise modified from time to time,
the "CREDIT AGREEMENT"), by and among (a) Precision, GALAXY INDUSTRIES
CORPORATION, a Michigan corporation ("GALAXY"), MID STATE MACHINE PRODUCTS, a
Maine corporation ("MID STATE"), NATIONWIDE PRECISION PRODUCTS CORP., a New York
corporation ("NATIONWIDE"), GENERAL AUTOMATION, INC., an Illinois corporation
("GA"), GILLETTE MACHINE & TOOL CO., INC., a New York corporation ("GILLETTE"),
GALAXY PRECISION PRODUCTS CORP., a Delaware corporation ("GPPC") and CERTIFIED
FABRICATORS, INC., a California corporation ("CERTIFIED") (Precision, Galaxy,
Mid State, Nationwide, GA, Gillette, GPPC, and Certified, together with their
permitted successors and assigns being sometimes hereinafter called
collectively, the "BORROWERS"); (b) the Guarantor; (c) the Agent, (d) General
Electric Capital Corporation, in its capacity as revolving credit agent
(together with any successor thereto appointed pursuant to the Credit Agreement,
the "REVOLVING CREDIT AGENT"), (e) GECC Capital Markets, Inc., as Lead Arranger
and (f) the Lenders, as hereinafter defined. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meaning ascribed
thereto in the Credit Agreement.

      Pursuant to the terms of the Credit Agreement, (i) General Electric
Capital Corporation, as revolving lender (together with any and all assignees or
transferees thereof or successors thereto, the "REVOLVING LENDERS") has agreed
to make available to the Borrowers a Revolving Loan facility pursuant to which
the Revolving Lenders will from time to time make available to the Borrowers
advances and letters of credit in an aggregate amount not to exceed $25,000,000
at any one time outstanding, (ii) GENERAL ELECTRIC CAPITAL CORPORATION and
ABLECO FINANCE LLC, as term lenders (together with any and all assignees or
transferees thereof or successors thereto, the "TERM LENDERS") have agreed to
make available to the Borrowers a Term Loan in the aggregate principal amount of
$44,050,000, and (iii) GENERAL ELECTRIC CAPITAL CORPORATION as lessor (together
with any and all assignees or transferees thereof or successors thereto, the
"LESSORS") have agreed to lease certain equipment to certain Borrowers pursuant
to the Master Lease (the "MASTER LEASE") (the Term Lenders, the Revolving
Lenders and the Lessors being hereinafter called collectively, the "LENDERS").

      In order to induce Agent and Lenders to enter into the Credit Agreement,
the Master Lease and other Operative Documents and to induce Lenders to make the
Loans and other Credit Accommodations as provided for in the Credit Agreement
and the Master Lease, Grantors have agreed to grant a continuing Lien on the
Collateral (as hereinafter defined) to secure the Obligations.

      Each Grantor will derive benefits, directly and indirectly, from the
proceeds of the Loans and the Master Lease, both in its separate capacity and as
a member of the integrated group to which each of the Grantors belong, since the
successful operation of the integrated group is dependent upon the continued
successful performance of the functions of the integrated group as a whole.

      Each Grantor has determined that the execution, delivery and performance
of this Agreement directly benefit, and are in the best interest of such
Grantor.

      NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

      1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Credit Agreement. All other
undefined terms contained in this Security Agreement, unless the context
indicates otherwise, have the meanings provided for by the Code to the extent
the same are used or defined therein.

      2. GRANT OF LIEN.

      (a) To secure the prompt and complete payment of all of the Obligations
(specifically including, without limitation, each Grantor's Obligations arising
under the cross-guaranty provisions of Section 12 of the Credit Agreement), each
Grantor hereby grants, assigns, conveys, mortgages, pledges and hypothecates to
Agent, for the benefit of Lenders, a Lien upon all of its right, title and
interest in, to and under all of the assets of each Grantor, including the
following property, whether now owned by or owing to, or hereafter acquired by
or arising in favor of such Grantor (including under any trade names, styles or
derivations thereof), and whether owned or consigned by or to, or leased from or
to, such Grantor, and regardless of where located (all of which being
hereinafter collectively referred to as the "Collateral"):

            (i)   all Accounts;

            (ii)  all Commercial Tort Claims specified on Schedule V;

            (iii) all Chattel Paper;

            (iv)  all Contracts;

            (v)   all Documents;

            (vi)  all Equipment, other than any such Equipment which is
subject to a Lien permitted by subsection (k) of the definition of "Permitted
Encumbrances" and the terms of such Lien prohibit the grant of a security
interest in such Equipment, until such time as the granting of a Lien in such
Equipment hereby is no longer prohibited under the terms of such Lien;

            (vi)  all General Intangibles (including payment intangibles and
Software);

            (vii) all Goods (including Inventory and Fixtures);

            (viii) all Instruments;

            (ix)  all Investment Property;

            (x)   all Borrower Accounts, Concentration Accounts, Disbursement
Accounts, and all other Deposit Accounts and other bank accounts
and all deposits therein;

            (xiv) all Copyrights, Patents and Trademarks and all Licenses;

            (xv)  all Letter-of-Credit Rights;

            (xvi) all Supporting Obligations;

            (xvii) all money, cash or cash equivalents of any Grantor; and

            (xviii) to the extent not otherwise included, all other tangible
and intangible personal property of such Grantor (whether or not subject to the
Code), commercial tort claims, insurance claims and other rights to payments,
and all Proceeds, including all Cash Proceeds and Non-Cash Proceeds, and
products of the foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing; provided that no security
interest shall be granted hereby in any such item to the extent that any
applicable law, rule or regulation prohibits such grant, except as such grant is
otherwise permitted by Section 9-407 and Section 9-408 of the Code; provided,
further that no Grantor hereby grants, assigns, conveys, mortgages, pledges or
hypothecates any right or interest in any Indebtedness owing to it by any other
Credit Party.

            (b) In addition, to secure the prompt and complete payment,
performance and observance of the Obligations and in order to induce Agent and
Lenders as aforesaid, each Grantor hereby grants to Agent to the extent
permitted by law, for the benefit of Lenders, a right of setoff against the
property of such Grantor held by Agent or any Lender, consisting of property
described above in Section 2(a) now or hereafter in the possession or custody or
in transit to Agent or any Lender, for any purpose, including safekeeping,
collection or pledge, for the account of such Grantor, or as to which such
Grantor may have any right or power. Notwithstanding anything herein to the
contrary, after any Lender has exercised its right of setoff pursuant hereto, it
will notify the Borrowers, the Agent, the Revolving Credit Agent and the other
Lenders of such exercise.

      3. AGENT'S AND LENDERS' RIGHTS: LIMITATIONS ON AGENT'S AND LENDERS'
OBLIGATIONS.

            (a) It is expressly agreed by Grantors that, anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Neither Agent nor any
Lender shall have any obligation or liability under any Contract or License by
reason of or arising out of this Security Agreement or the granting herein of a
Lien thereon or the receipt by Agent or any Lender of any payment relating to
any Contract or License pursuant hereto. Neither Agent nor any Lender shall be
required or obligated in any manner to perform or fulfill any of the obligations
of any Grantor under or pursuant to any Contract or License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract or License, or to present or file any claims, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.

            (b) Agent may at any time after an Event of Default shall have
occurred and be continuing, upon prior notice to any Grantor, notify Account
Debtors, parties to the Contracts and obligors in respect of Instruments and
Chattel Paper, that the Accounts and the right, title and interest of any
Grantor in and under such Contracts, Instruments and Chattel Paper have been
assigned to Agent, and that payments shall be made directly to Agent. Upon the
reasonable request of Agent, each Grantor shall go notify Account Debtors,
parties to Contracts and obligors in respect of Instruments and Chattel Paper.

            (c) Agent may after a Default pursuant to 8(g) or 8(h) of the Credit
Agreement or after an Event of Default shall have occurred and be continuing, in
Agent's own name or in the name of any Grantor communicate with Account Debtors,
parties to Contracts, obligors in respect of Instruments and obligors in respect
of Chattel Paper to verify with such Persons, to Agent's reasonable
satisfaction, the existence, amount and terms of any such Accounts, Contracts,
Instruments or Chattel Paper. Each Grantor, at its own expense, shall deliver to
Agent the results of each physical verification, if any, which such Grantor may
in its discretion have made, or caused any other Person to have made on its
behalf, of all or any portion of its Inventory.

      4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants
that:

            (a) Each Grantor is the sole owner of each item of the Collateral
upon which it purports to grant a Lien hereunder, and has good and marketable
title thereto free and clear of any and all Liens other than Permitted
Encumbrances.

            (b) No effective security agreement, financing statement, equivalent
security or Lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except such as
may have been filed (i) by any Grantor in favor of Agent pursuant to this
Security Agreement or the other Operative Documents, (ii) in connection with any
Permitted Encumbrances, and (iii) as to which UCC-3 termination statements are
being filed on the date hereof.

            (c) This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
listed on Schedule I hereto, a perfected Lien in favor of Agent, for the benefit
of Lenders, on the Collateral with respect to which a Lien may be perfected by
filing pursuant to the Code. Upon the taking of such actions required by Section
3.16 of the Credit Agreement, such Lien will be prior to all other Liens, except
Permitted Encumbrances that, as a matter of law, would be prior to Liens in
favor of Agent for the benefit of Lenders, and is enforceable as such as against
any and all creditors of and purchasers from any Grantor (other than purchasers
of Inventory in the ordinary course of business). All action by any Grantor
necessary to protect and perfect such Lien on each item of the Collateral has
been duly taken.

            (d) As of the date hereof, Schedule II hereto lists all Instruments
and Chattel Paper of each Grantor. All action by any Grantor necessary to
protect and perfect the Lien of Agent on each item set forth on Schedule II
(including the delivery of all originals thereof to Agent and the legending of
all Chattel Paper as required by Section 5(h) hereof) has been duly taken. Upon
the taking of such actions required by Section 3.17 of the Credit Agreement, the
Lien of Agent, for the benefit of Lenders, on the Collateral listed on Schedule
II hereto is prior to all other Liens, except Permitted Encumbrances that, as a
matter of law, would be prior to the Liens in favor of Agent as a matter of law,
and is enforceable as such against any and all creditors of and purchasers from
any Grantor.

            (e) Each Grantor's name as it appears in its organization documents,
jurisdiction of incorporation, organizational identification number, chief
executive office, principal place of business, corporate offices, all warehouses
and premises where Collateral is stored or located, and the locations of all of
its books and records concerning the Collateral are set forth on Schedule III
hereto. Each Grantor has only one state of incorporation or organization.

            (f) As of the date of the most recent Collateral Report, except as
specifically disclosed in such Collateral Report delivered to Agent, there are
no Accounts that are not Eligible Accounts.

            (g) As of the date of the most recent Collateral Report, except as
specifically disclosed in such Collateral Report delivered to Agent, there is no
Inventory that is not Eligible Inventory.

            (h) As of the date of this Agreement, no Grantor has any interest
in, or title to, any Patent, Trademark or Copyright except as set forth in
Schedule IV hereto. This Security Agreement is effective to create a valid and
continuing Lien on and, upon filing of the Copyright Security Agreements with
the United States Copyright Office and filing of the Patent Security Agreements
and the Trademark Security Agreements with the United States Patent and
Trademark Office, perfected Liens in favor of Agent on each Grantor's Patents,
Trademarks and Copyrights and such perfected Liens are enforceable as such as
against any and all creditors of and purchasers from any Grantor. Upon filing of
Copyright Security Agreements with the United States Copyright Office and filing
of the Patent Security Agreements and the Trademark Security Agreements with the
United States Patent and Trademark Office and the filing of appropriate
financing statements listed on Schedule I hereto, all action necessary or
reasonably desirable to protect and perfect Agent's Lien on each Grantor's
Patents, Trademarks or Copyrights as of the date hereof shall have been duly
taken.

            (i) On the date hereof, no Grantor holds any Commercial Tort Claims
or is aware of any such pending claims, except for such claims set forth in
Schedule V hereto.

            (j)   On the date  hereof,  no Grantor  maintains  any  securities
account or any commodities account.

      5. COVENANTS. Each Grantor covenants and agrees with Agent, for the
benefit of Lenders, that from and after the date of this Security Agreement and
until the Termination Date:

            (a) Further Assurances: Pledge of Instruments. At any time and from
time to time, upon the reasonable written request of Agent and at the sole
expense of Grantors, each Grantor shall promptly and duly execute and deliver
any and all such further instruments and documents and take such further actions
as Agent may require to obtain the full benefits of this Security Agreement and
of the rights and powers herein granted, including (i) using commercially
reasonable efforts to secure all consents and approvals necessary or appropriate
for the assignment to or for the benefit of Agent of any License or Contract
held by such Grantor or in which such Grantor has any rights not heretofore
assigned, (ii) filing, or authenticating the filing of, any financing or
continuation statements, or amendments thereto, under the Code with respect to
the Liens granted hereunder or under any other Operative Document, (iii)
transferring Collateral to Agent's possession (for the benefit of Lenders) if
such Collateral consists of Chattel Paper, Instruments or if a Lien on such
Collateral can be perfected only by possession, (iv) obtaining, or using
commercially reasonable efforts to obtain, waivers of Liens, if any exist, from
landlords and mortgagees in accordance with the Credit Agreement or the Master
Lease, (v) if at any time after the date hereof, any Grantor acquires or holds
any Commercial Tort Claim, such Grantor shall as soon as practicable, but in no
event later than three (3) Business Days after Grantor acquires such Commercial
Tort Claim, notify Agent in a writing signed by the Grantor setting forth a
brief description of such Commercial Tort Claim and grant to the Agent a
security interest therein and in the proceeds thereof, which writing shall
incorporate the provisions hereof and shall be in form and substance
satisfactory to the Agent, and (vi) taking all actions required by the Code or
by other law, as applicable, in any relevant Code jurisdiction, or by other law
as applicable in any foreign jurisdiction. Each Grantor also hereby authorizes
Agent, for the benefit of Lenders, to file any such financing or continuation
statements and amendments thereto without the signature of such Grantor that (a)
indicate the Collateral (i) as all assets of such Grantor or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Code, or (ii) as being of an equal or
lesser scope or with greater detail, and (b) contain any other information
required by part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether such
Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor, and (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral as
ex-tracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Each Grantor agrees to furnish any
such information to Agent promptly upon request. Each Grantor also ratifies its
authorization for Agent to have filed any financing statements or amendments
thereto if filed prior to the date hereof. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instrument, other than checks and notes received in any
Grantor's ordinary course of business, shall be duly endorsed in a reasonable
manner satisfactory to Agent immediately upon such Grantor's receipt thereof.

            (b) Maintenance of Records, Grantors shall keep and maintain, at
their own cost and expense, satisfactory and complete records of the Collateral,
including a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral. All Chattel Paper shall be marked with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of General Electric Capital Corporation, as Agent, for the
benefit of certain Lenders."

      (c) Covenants Regarding Patent, Trademark and Copyright Collateral.

                  (i)   Grantors shall notify Agent as soon as practicable, but
in no event later than three (3) business days after they know or have reason to
know that any application or registration relating to any Patent, Trademark or
Copyright (now or hereafter existing) may become abandoned or dedicated, or of
any material adverse determination or development (including the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court)
regarding any Grantor's ownership of any Patent, Trademark or Copyright, its
right to register the same, or to keep and maintain the same.

                  (ii)  In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for the
registration of any Patent, Trademark or Copyright with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency without giving Agent prior written notice thereof, and, upon
reasonable request of Agent, Grantor shall execute and deliver any and all
Patent Security Agreements, Copyright Security Agreements or Trademark Security
Agreements as Agent may reasonably request to evidence Agent's Lien on such
Patent, Trademark or Copyright, and the General Intangibles of such Grantor
relating thereto or represented thereby.

                  (iii) Grantors shall take all actions necessary or reasonably
requested by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the Patents,
Trademarks and Copyrights (now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings.

                  (iv)  In the event that any of the Patent, Trademark or
Copyright Collateral is infringed upon, or misappropriated or diluted by a third
party, such Grantor shall notify Agent promptly after such Grantor learns
thereof. Such Grantor shall, unless such Grantor shall reasonably determine that
the lack of such Patent, Trademark or Copyright Collateral is not material and
adverse to the conduct of its business or operations, promptly sue for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and shall take such other
actions as Agent shall reasonably deem appropriate under the circumstances to
protect such Patent, Trademark or Copyright Collateral.

            (d) Indemnification. Each Grantor shall save, indemnify and keep
Agent and Lenders harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
reasonable attorneys' fees and disbursements and other costs of investigation or
defense, including those incurred upon any appeal) which may be instituted or
asserted against or incurred by any such party as the result of this Agreement
or arising out of the transactions contemplated hereunder, or incurred to
enforce any provision of any Account, Chattel Paper, Contract, Document, General
Intangible or Instrument, in accordance with the terms of the Credit Agreement.

            (e) Compliance with Terms of Accounts, etc. In all material
respects, each Grantor will perform and comply with all obligations in respect
of its Accounts, Chattel Paper, Contracts and Licenses and all other agreements
to which it is a party or by which it is bound relating to the Collateral.

            (f) Limitation on Liens on Collateral. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral against,
and take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Encumbrances, and will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under the Collateral
against the claims and demands of all Persons whomsoever.

            (g) Limitations on Disposition. No Grantor will sell, lease,
transfer or otherwise dispose of any of the Collateral, or contract to do so
except as permitted by the Credit Agreement or the Master Lease.

            (h) Further Identification of Collateral. Grantors will, if so
requested by Agent, furnish to Agent, as often as Agent reasonably requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Agent may reasonably
request, all in such detail as Agent may specify.

            (i) Notices. Grantors will advise Agent promptly, in reasonable
detail, (i) of any Lien (other than Permitted Encumbrances) or claim made or
asserted against any of the Collateral, and (ii) of the occurrence of any other
event which would have a material adverse effect on the aggregate value of the
Collateral or on the Liens created hereunder or under any other Operative
Document.

            (j) Control. Each Grantor shall take any or all action that may be
necessary or advisable or that Agent may reasonably request in order for the
Agent to obtain control in accordance with Sections 9-105 through 9-107 of the
Code with respect to the following Collateral: (i) Electronic Chattel Paper,
(ii) Investment Property and (iii) Letter-of-Credit Rights.

            (k) Letter-of-Credit. Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly, and in any event within three
(3) Business Days after becoming a beneficiary, notify Agent thereof and enter
into a tri-party agreement with Agent and the issuer and/or confirmation bank
with respect to Letter-of-Credit Rights assigning such Letter-of-Credit Rights
to Agent and directing all payments thereunder to the Collection Account, all in
form and substance reasonably satisfactory to Agent.

            (l) Electronic Control. Each Grantor shall take all steps necessary
to grant the Agent control of all electronic chattel paper in accordance with
the Code and all "transferable records" as defined in each of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act.

            (m) Terminations. Each Grantor acknowledges that it is not
authorized to file any financing statements without the prior written consent of
Agent and agrees that it will not do so without the prior written consent of
Agent, subject to such Grantor's rights under Section 9-509(d)(2) of the Code.

      6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.

            (a) On the Closing Date each Grantor shall execute and deliver to
Agent a power of attorney (the "Power of Attorney") substantially in the form
attached hereto as Exhibit A. The power of attorney granted pursuant to the
Power of Attorney is a power coupled with an interest and shall be irrevocable
until the Termination Date. The powers conferred on Agent, for the benefit of
Lenders, under the Power of Attorney are solely to protect Agent's interests
(for the benefit of Lenders) in the Collateral and shall not impose any duty
upon Agent or any Lender to exercise any such powers. Agent agrees that (a) it
shall not exercise any power or authority granted under the Power of Attorney
unless an Event of Default has occurred and is continuing, and (b) Agent shall
account for any moneys received by Agent in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that none
of Agent or any Lender shall have any duty as to any Collateral, other than a
duty of reasonable care for any Collateral in its possession and Agent and
Lenders shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers. NONE OF AGENT, LENDERS OR THEIR
RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES
SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY
POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY
TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A
COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.

            (b) Each Guarantor hereby (i) authorizes the Agent to file one or
more financing or continuation statements and amendments thereto, relating to
the Collateral, and (ii) ratifies such authorization to the extent that the
Agent has filed any such financing or continuation statements, or amendments
thereto prior to the date hereof. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.

      7. REMEDIES: RIGHTS UPON DEFAULT.

            (a) In addition to all other rights and remedies granted to it under
this Security Agreement, the Credit Agreement, the Master Lease, the other
Operative Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Obligations, if any Event of Default shall
have occurred and be continuing, Agent may exercise all rights and remedies of a
secured party under the Code. Without limiting the generality of the foregoing,
each Grantor expressly agrees that if any Event of Default shall have occurred
and be continuing Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon such Grantor or any other Person
(all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code and other applicable law),
may forthwith enter upon the premises of such Grantor where any Collateral is
located through self-help, without judicial process, without first obtaining a
final judgment or giving such Grantor or any other Person notice and opportunity
for a hearing on Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase, or
sell or otherwise dispose of and deliver said Collateral (or contract to do so),
or any part thereof, in one or more parcels at a public or private sale or
sales, at any exchange at such prices as it may reasonably deem acceptable on
commercially reasonable terms, for cash or on credit or for future delivery
without assumption of any credit risk. If any Event of Default shall have
occurred and be continuing, Agent or any Lender shall have the right upon any
such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for the benefit of Lenders, the whole or any
part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption each Grantor hereby releases. Such sales may be
adjourned and continued from time to time with or without notice. Agent shall
have the right to conduct such sales on any Grantor's premises or elsewhere and
shall have the right to use any Grantor's premises without charge for such time
or times as Agent deems reasonably necessary or advisable.

      Each Grantor further agrees, upon the occurrence of and during the
continuation of an Event of Default, at Agent's request, to assemble the
Collateral and make it available to Agent at places which Agent shall select,
whether at such Grantor's premises or elsewhere. Until Agent is able to effect a
sale, lease, or other disposition of Collateral, Agent shall have the right upon
the occurrence and during the continuance of an Event of Default to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Agent. Agent shall have no obligation to any Grantor to maintain
or preserve the rights of such Grantor as against third parties with respect to
Collateral while Collateral is in the possession of Agent. Agent may, if it so
elects upon the occurrence and during the continuance of an Event of Default,
seek the appointment of a receiver or keeper to take possession of Collateral
and to enforce any of Agent's remedies (for the benefit of Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment. Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Obligations as
provided in the Credit Agreement or the Master Lease, and only after so paying
over such net proceeds, and after the payment by Agent of any other amount
required by any provision of law, shall Agent account for the surplus, if any,
to any Grantor. To the maximum extent permitted by applicable law, each Grantor
waives all claims, damages, and demands against Agent or any Lender arising out
of the repossession, retention or sale of the Collateral except such as arise
solely out of the gross negligence or willful misconduct of Agent or such Lender
as finally determined by a court of competent jurisdiction. Each Grantor agrees
that ten (10) days prior notice by Agent of the time and place of any public
sale or of the time after which a private sale may take place is reasonable
notification of such matters. Grantors shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay all Obligations, including reasonable attorneys' fees and other reasonable
expenses incurred by Agent or any Lender to collect such deficiency.

            (b) Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.

      8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. For the
purpose of enabling Agent to exercise rights and remedies under Section 7 hereof
(including, without limiting the terms of Section 7 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Agent, for the benefit of Lenders, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to such
Grantor) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

      9. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL. Agent
and each Lender shall use reasonable care as required by the Code or applicable
law, with respect to the Collateral in its possession or under its control.
Neither Agent nor any Lender shall have any other duty as to any Collateral in
its possession or control or in the possession or control of any agent or
nominee of Agent or such Lender, or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto. The
Agent shall be deemed to have exercised reasonable care in the custody and
presentation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Agent accords its own property of
like tenor.

      10. REINSTATEMENT. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.

      11. NOTICES. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give and serve upon any
other party any communication with respect to this Security Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be given in the manner, and deemed received, as
provided for in the Credit Agreement or the Master Lease.

      12. SEVERABILITY. Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security 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 Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement, the Master Lease, the other Operative Documents
which, taken together, set forth the complete understanding and agreement of
Agent, Lenders and Grantors with respect to the matters referred to herein and
therein.

      13. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor any Lender shall by
any act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder, and no waiver shall be valid unless in writing, signed by
Agent and the affected Grantor and then only to the extent therein set forth. A
waiver by Agent of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which Agent would otherwise have
had on any future occasion. No failure to exercise nor any delay in exercising
on the part of Agent or any Lender, any right, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law.
None of the terms or provisions of this Security Agreement may be waived,
altered, modified or amended except by an instrument in writing, duly executed
by Agent and Grantors.

      14. LIMITATION BY LAW. All rights, remedies and powers provided in this
Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Security Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.

      15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 10 hereof,
this Security Agreement shall terminate upon the Termination Date.

      16. SUCCESSORS AND ASSIGNS. This Security Agreement and all Obligations of
Grantors hereunder shall be binding upon the successors and assigns of each
Grantor (including any debtor-in-possession on behalf of such Grantor) and
shall, together with the rights and remedies of Agent, for the benefit of Agent
and Lenders, hereunder, inure to the benefit of Agent and Lenders, all permitted
future holders of any instrument evidencing any of the Obligations and their
respective permitted successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
therein made in accordance with the Operative Documents shall in any manner
affect the Lien granted to Agent, for full benefit of Agent and Lenders,
hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer any
interest in or obligation under this Security Agreement.

      17. COUNTERPARTS. This Security Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.

      18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
OPERATIVE DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH
GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTORS, AGENT AND LENDERS
PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR
TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF
THE OTHER OPERATIVE DOCUMENTS, PROVIDED THAT AGENT, LENDERS AND GRANTORS
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED,
FURTHER, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION
WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
GRANTOR AT THE ADDRESS SET FORTH ON ANNEX I TO THE CREDIT AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.

      19. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND
GRANTORS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

      20. SECTION TITLES. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

      21. NO STRICT CONSTRUCTION. The parties hereto have participated jointly
in the negotiation and drafting of this Security Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.

      22. ADVICE OF COUNSEL. Each of the parties represents to each other party
hereto that it has discussed this Security Agreement and, specifically, the
provisions of Section 18 and Section 19 with its counsel.

      23. BENEFIT OF LENDERS. All Liens granted or contemplated hereby shall be
for the benefit of Lenders, and all proceeds or payments realized from
Collateral in accordance herewith shall be applied to the Obligations in
accordance with the terms of the Credit Agreement and the Master Lease.

<PAGE>

      IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.

                                          PRECISION PARTNERS, INC.

                                          By:  /s/  Frank Reilly
                                             ------------------------------
                                          Name:  Frank Reilly
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                                          GALAXY INDUSTRIES CORPORATION
                                          MID STATE MACHINE PRODUCTS
                                          NATIONWIDE PRECISION PRODUCTS CORP.
                                          GENERAL AUTOMATION, INC.
                                          CERTIFIED FABRICATORS, INC.
                                          GALAXY PRECISION PRODUCTS CORP.
                                          GILLETTE MACHINE & TOOL CO., INC.

                                          By:  /s/  Frank Reilly
                                             ------------------------------
                                          Name:  Frank Reilly
                                          Title: Vice President

                                          PRECISION PARTNERS HOLDING
                                          COMPANY

                                          By:  /s/  Frank Reilly
                                             ------------------------------
                                          Name:  Frank Reilly
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                                          GENERAL ELECTRIC CAPITAL CORPORATION,
                                          individually and as Agent

                                          By: /s/  Howard Norowitz
                                             ------------------------------
                                          Name:  Howard Norowitz
                                          Title: Assistant Vice President

<PAGE>

                                   SCHEDULE I
                                       to
                               SECURITY AGREEMENT

                              FILING JURISDICTIONS

      Precision Partners, Inc.:
            Delaware Secretary of State
            Monmouth County Clerk's Office
      Precision Partners Holding Company:
            Delaware Secretary of State
      Galaxy Precision Products Corporation:
            Delaware Secretary of State
      Mid State Machine Products:
            Maine Secretary of State
            County of Kennebec Clerk's Office
            U.S. Patent and Trademark Office
      Galaxy Industries Corporation:
            Michigan Secretary of State
            County of Wayne Clerk's Office
      Certified Fabricators, Inc.:
            California Secretary of State
            County of Orange Clerk's Office
      Gillette Machine & Tool Co., Inc.
            New York Secretary of State
      Nationwide Precision Products Corp.:
            New York Secretary of State
      General Automation, Inc.:
            Illinois Secretary of State
            County Clerk's Office

<PAGE>

                                   SCHEDULE II
                                       to
                               SECURITY AGREEMENT

                                   INSTRUMENTS
                                       AND
                                  CHATTEL PAPER

CHATTEL PAPER:  None.

INSTRUMENTS: None.

<PAGE>

                                  SCHEDULE III
                                       to
                               SECURITY AGREEMENT

                  SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL
                   AND RECORDS CONCERNING GRANTORS' COLLATERAL

I.    Jurisdictions of Incorporation and Organizational Identification Numbers

            See Schedule 3.1 to the Credit Agreement

II.   Chief Executive Offices and principal places of business

            See Schedule 3.2 to the Credit Agreement

III.  Corporate Offices

            See Schedule 3.2 to the Credit Agreement

IV.   Warehouses

         PRECISION PARTNERS, INC.

         100 Village Court, Suite 301, Hazlet, New Jersey, Monmouth County

         NATIONWIDE PRECISION PRODUCTS CORP.

         200 Tech Park Drive, Henrietta, New York, Monroe County

         Plant Building #6 West, 789 Elmgrove Road, Rochester, New York, Monroe
         County

         GENERAL AUTOMATION, INC.

         3300 Oakton Street, Skokie, Illinois, Cook County

         CERTIFIED FABRICATORS, INC.

         6291 Burnham Avenue, Buena Park, California, Orange County
         6530 Altura, Buena Park, California, Orange County
         6332 Burnham Avenue, Buena Park, California, Orange County
         6280 Manchester Blvd., Suite 300, Buena Park, California, Orange County

         GALAXY INDUSTRIES CORPORATION

         7777 Ronda Drive, Canton, Michigan, Wayne County
         47440 Michigan Avenue, Canton, Michigan, Wayne County

         GILLETTE MACHINE & TOOL CO., INC.

         955 Millstead Way, Rochester, New York, Monroe County
         44 Paul Road, Rochester, New York, Monroe County
         45 Jet View Drive, Rochester, New York, Monroe
         County

         MID STATE MACHINE PRODUCTS

         1501 Verti Drive, Winslow, Maine, Kennebec County
         Unit #96 Benton Avenue, Winslow, Maine, Kennebec County

         GALAXY PRECISION PRODUCTS CORP.

         None.

         PRECISION PARTNERS HOLDING COMPANY

         None.

V.    Other Premises at which Collateral is Stored or Located

         GILLETTE MACHINE & TOOL CO., INC.

         955 Millstead Way, Rochester, New York, Monroe County
         44 Paul Road, Rochester, New York, Monroe County
         45 Jet View Drive, Rochester, New York, Monroe
         County

         MID STATE MACHINE PRODUCTS

         1501 Verti Drive, Winslow, Maine, Kennebec County
         Unit #96 Benton Avenue, Winslow, Maine, Kennebec County
         179 Louis Street, Knewington, Connecticut

VI.   Locations of Records Concerning Collateral

            See Schedule 3.2 to the Credit Agreement

<PAGE>

                                   SCHEDULE IV

                       Patents, Trademarks and Copyrights

--------------------------------------------------------------------------------
Trademark Registration Number   Description                         Registration
                                                                    Date
--------------------------------------------------------------------------------

1,268,864                       THE MID-STATE TOMBSTONE             03/06/84
                                Design portion is representation
                                of a tombstone with the border
                                lined for the color orange.
--------------------------------------------------------------------------------

      None of the Companies has any other Intellectual Property Collateral.

<PAGE>

                                   SCHEDULE V

                             Commercial Tort Claims

None.

<PAGE>

                                    EXHIBIT A

                                POWER OF ATTORNEY

      This Power of Attorney is executed and delivered by ________________, a
______________ corporation ("Grantor") to General Electric Capital Corporation,
a New York corporation (hereinafter referred to as "Attorney"), as Agent for the
benefit of Lenders, under a Credit Agreement, a Master Lease Agreement and a
Security Agreement, each dated as of February____, 2002, and other related
documents (the "Operative Documents"). No person to whom this Power of Attorney
is presented, as authority for Attorney to take any action or actions
contemplated hereby, shall be required to inquire into or seek confirmation from
Grantor as to the authority of Attorney to take any action described below, or
as to the existence of or fulfillment of any condition to this Power of
Attorney, which is intended to grant to Attorney unconditionally the authority
to take and perform the actions contemplated herein, and Grantor irrevocable
waives any right to commence any suit or action, in law or equity, against any
person or entity which acts in reliance upon or acknowledges full authority
granted under this Power of Attorney. The power of attorney granted hereby is
coupled with an interest, and may not be revoked or canceled by Grantor without
Attorney' s written consent.

      Grantor hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
following the occurrence and during the continuance of an Event of Default, to
take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of the Operative Documents and, without limiting the generality of the
foregoing, Grantor hereby grants to Attorney the power and right, on behalf of
Grantor, without notice to or assent by Grantor, and at any time, following the
occurrence and during the continuance of an Event of Default, to do the
following: (a) open a post office box on behalf of Grantor, open mail for
Grantor, and ask, demand, collect, give acquittances and receipts for, take
possession of, endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Grantor; (b)
effect any repairs to any asset of Grantor, or continue or obtain any insurance
and pay all or any part of the premiums therefor and costs thereof, and make,
settle and adjust all claims under such policies of insurance, and make all
determinations and decisions with respect to such policies; (c) pay or discharge
any taxes, liens, security interests, or other encumbrances levied or placed on
or threatened against Grantor or its property; (d) defend any suit, action or
proceeding brought against Grantor if Grantor does not defend such suit, action
or proceeding or if Attorney believes that Grantor is not pursuing such defense
in a manner that will maximize the recovery to Attorney, and settle, compromise
or adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate;
(e) file or prosecute any claim, litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed reasonably appropriate by Attorney for the purpose of
collecting any and all such moneys due to Grantor whenever payable and to
enforce any other right in respect of Grantor's property; (f) communicate in its
own name with any party to any Contract with regard to the assignment of the
right, title and interest of such Grantor in and under the Contracts and other
matters relating thereto; and (h) execute, in connection with any sale provided
for in any Operative Document, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral and to
otherwise direct such sale or resale, all as though Attorney were the absolute
owner of the property of Grantor for all purposes, and to do, at Attorney's
option and Grantor's expense, at any time or from time to time after an Event of
Default, all acts and other things that Attorney reasonably deems necessary to
perfect, preserve, or realize upon Grantor's property or assets and Attorney's
Liens thereon, all as fully and effectively as Grantor might do. Grantor hereby
ratifies, to the extent permitted by law, all that said Attorney shall lawfully
do or cause to be done by virtue hereof.

      IN WITNESS WHEREOF, this Power of Attorney is executed by Grantor, and
Grantor has caused its seal to be affixed pursuant to the authority of its board
of directors this ____ day of ___________, 2002.

ATTEST:

By:_____________________________

Title:____________________________

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